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The Last Boomer

The Last Boomer
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  • Gundlach: 10-year yield could go to 2.2% [View news story]
    I was buying TLT when the 10-year was between 2.8 and 3 at the beginning of the year. These were my reasons:
    - GDP growth is lackluster;
    - traders mistakenly think that the Fed drives the long-term rates when they are predominantly market-driven;
    - as the big guys get out of the short end that is actually controlled by the Fed, they still have to hold bonds and they'll buy the long end;
    - there has been a 33-year trend of declining interest rates that was not about to be broken in this slow economic environment;
    - and the most important one: 100% of the economists predicted rising interest rates.
    Now, buying is just half of a good trade. It remains to be seen if I'll pick the right moment to sell and protect the gains. I rarely get the timing right.
    Aug 17 12:50 AM | 1 Like Like |Link to Comment
  • Why Retail Sales Aren't Important [View article]
    The supply side argument makes some sense only in the long term: the development and investment in new technologies creates jobs and new demand. In the short term it works as described by AndersonBizSolutions. I do corporate strategy and I have never seen anybody engaging in expansion if the demand is not there. The question that I get asked most often by decision makers is about the existing and potential demand. CBP is a smart guy but this supply side nonsense only diminishes his contributions.
    Aug 14 11:44 PM | Likes Like |Link to Comment
  • Calm Before The Storm? [View article]
    I thought business investment was lagging because of overcapacity: why build new assets when you don't fully use the ones you already have.
    Another cause for lower investment is that newer and better technology offers cheaper alternatives. Why invest in Microsoft Outlook for the company email needs when Google Mail is good enough and much cheaper? Why buy my own servers when I can get by with cheaper Amazon web services? Why pay for airplane tickets and hotels when Blujeans offers quality video and audio communication and file sharing? The list is endless.
    Aug 8 10:48 PM | 1 Like Like |Link to Comment
  • Why Is Employment Today So Much Lower Than We Expected 7 Years Ago? [View article]
    I have to agree with jyard01 that mortgage lenders have completely swung in the other extreme. After giving money to anybody with a pulse during the bubble years, now they have tightened their standards too much and place unnecessary hurdles. I recently bought a house and went through hell with the underwriter. It was a thousand little things that they demanded, and then demanded again and when I thought I was done, just days before closing they kept asking for things. I remember sending page 5 and 6 of my bank statements at least 3 times to the clerk over a period of only 2 days. Either they were completely disorganized or they were trying to cover they asses three times over. At one point the thought of living in a van for the rest of my life started to look strangely appealing, as they say in this Zillow radio commercial.
    Aug 6 03:26 PM | 2 Likes Like |Link to Comment
  • Soft earnings and new home sales data hit homebuilders [View news story]
    This is a good way to look at this but it begs a few questions. Why aren't the employed young people buying homes? I have a sample of one: my daughter who is getting married this summer. She is a banker, he is a doctor. Both well paid, secure jobs. They bought a small apartment in a vibrant urban area. I did the opposite: bought a bigger house further out of the city. The problem is that I don't see any young people where I live. We need them to start buying big suburban houses; instead they are buying or renting small urban dwellings. If this is a real trend, I am not sure we'll ever go back to what is considered "normal" levels of home sales.
    Jul 24 12:08 PM | 9 Likes Like |Link to Comment
  • Why I Am Buying AK Steel [View article]
    I am still holding a sizable position I built around $6 several months ago. So far, so good. Still not selling.
    Jul 18 09:49 PM | Likes Like |Link to Comment
  • How To Prepare For Rising Interest Rates [View article]
    Every time the Fed ended a QE cycle (1,2, etc.), yields went down. See this chart:
    Jul 10 02:13 PM | 1 Like Like |Link to Comment
  • GDP contracted 2.9% [View news story]
    I don't like the weather excuse because we will have more and more instances of extreme weather that will impact the economy. Weather should not be considered anymore as a "one-time event". Accelerating climate change and extreme weather should become an integral part of economic and investment forecasting. Most likely the way it is going to impact the forecasting is to increase the uncertainty. The error term, the "noise" in the forecasting models should become more salient which will make the forecasts less reliable.
    Jun 25 09:08 AM | 2 Likes Like |Link to Comment
  • Natural Gas Transportation: What's Taking The U.S. So Long? [View article]
    I am at a loss to understand why US is so far behind a lot of countries in adopting natural gas for transportation, especially given the abundance of natural gas here. It's cleaner, it's cheaper, it would improve hugely our trade deficit. Aside from inertia, what could possibly explain the lack of progress?!
    Jun 16 03:17 PM | 7 Likes Like |Link to Comment
  • Iraq in flames again, rebounding oil industry threatened [View news story]
    The group that overtook Mosul is ISIL, the same Islamist group that fights Bashar al-Assad in Syria. Suddenly, the USA and Bashar have a common enemy. Oh, the irony! And how was that: "the enemy of my enemy is my ..."
    Jun 11 11:04 AM | 5 Likes Like |Link to Comment
  • The Disconcerting 'Wealth Effect' Disconnect [View article]
    I wonder if the divergence between net worth and consumer spending is due to the rising inequality. How this chart will look like if split by net worth deciles? My guess is that at the bottom there is no net worth at all. At the top there must be a lot of rising net worth but how many lobsters can the 1% eat to boost consumer spending?
    Jun 5 08:16 AM | 4 Likes Like |Link to Comment
  • The Nifty Fifty Market [View article]
    This is one of the best articles I have read lately on SA. I keep track of the divergence between small caps (IWM) and S&P (SPY) but did not notice that S&P is carried essentially by only 10% of the stocks. Many people here made the good comment that the very large caps under-performed the small ones and now they may be just catching up. It seems the same thing is happening with defensive sectors catching up after under-performing in 2013. For example, XLU under-performed XLI by about 25% in 2013; this year XLU is beating XLI by about 10%. Still a lot of catching up to do to erase the gap in performance. At the end of the day, the investment implications from this situation should be based on your beliefs about where in the cycle we are. If you believe that we have still ways to go before we hit another recession, then this is just a consolidation period that will create good buying opportunity among the small caps and the cyclical sectors. If you believe that we are past the mid point in the cycle (Hale Stewart says that there are some indications we are there), then you draw the conclusions that the author draws: it is time to hide in big caps and defensive sectors. Given how slow and protracted this recovery has been, I am more aligned with the view that we still have room to grow.
    Jun 5 06:18 AM | 1 Like Like |Link to Comment
  • How Low Can The 30-Year Treasury Yield Go? [View article]
    In the last decade we had only once growth of four percent. If we assume that most likely the economy will grow at three percent, then the yields on the 30-year have ways to go.
    May 31 02:19 PM | 2 Likes Like |Link to Comment
  • Michael Pettis: Hard Commodity Prices Will Continue To Fall With Decade-Long Chinese Slowdown [View article]
    Pettis suggests that the commodities used in construction and industrial manufacturing like iron, copper, and cement will collapse. Agricultural commodities march to a different beat.
    May 22 10:25 PM | 3 Likes Like |Link to Comment
  • Freeport McMoRan: A Focus On Environmental Metrics [View article]
    Eggs Scrambled Good (ESG)
    On a more serious note: Environmental, Social, and Governance
    May 22 10:23 PM | 2 Likes Like |Link to Comment