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CautiousInvestor

CautiousInvestor
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  • Wall Street Breakfast: Siemens To Acquire Dresser-Rand For $7.6B [View article]
    At the G20 meeting the EU was under pressure to do more to stimulate growth with growing expectations of Draghi but his options are becoming increasingly limited. And his most recent effort to expand lending through targeted long term funding has been somewhat of a failure inasmuch as banks have signed up for only 83 billion euro when hopes were for 1 trillion euro. Many political leaders are failing in tackling needed structural reforms in product/labor markets and live under the chimera that QE is needed when rates are already low and spreads between Germany and the peripherals have tightened.
    Sep 22 07:47 AM | 2 Likes Like |Link to Comment
  • Weighing The Week Ahead: Should Stock Investors Fear Current 'Divergences'? [View article]
    From Dana Lyons:

    The first step was to run the test to independently verify the 47% figure. We did so and found around 45% of Nasdaq stocks were down 20% from their 52-week high — close enough. Suffice it to say that sounds like an alarmingly high number.

    That leads us to the second step: determining context. 47% sounds high but is it really? Well, we ran the test since the beginning of the year and as it turns out, the percentage has been above 40% for most of the time since March. So it may be high, but it isn’t an extremely recent development. If it is one of those divergences that we’ve observed so often lately, it is apparently another one that can persist for some time before causing real damage to the major averages.
    Sep 21 09:27 AM | 6 Likes Like |Link to Comment
  • Weighing The Week Ahead: Should Stock Investors Fear Current 'Divergences'? [View article]
    Jeff, I have been traveling and I think you missed an installment or two but it's great to be able to sit down on Sunday morning and read one of my favorite blogs. You were spot on about last week and I lean to the view there is increasing tension between the committee’s standing statement of keeping rates low for a considerable period versus the rate forecasts. And I believe the language of considerable time has been emasculated. With this, I think the markets are reading the Fed's statement differently and we are seeing markets move in different directions. In addition to macro global, I have been spending more time with technical's and will say the bearishness you note inside the NDX should raise eyebrows but it has been with is for awhile and is doing nothing to halt the advance of the S&P. Similarly divergences between RUT and SPX should be bearish but have not been over the past two years based upon examination of the data. And Urban Carmel of the Fat Pitch notes that a surge in RUT is a greater threat inasmuch as it constitutes beta chasing and is supported by the data. I am not dismissing deteriorating internals and different divergences only saying they are not new and thus far have not induced harm. Lastly, I'm inclined to be believe we will see some volatility in the coming days based upon options measures. Thanks again.
    Sep 21 09:05 AM | 5 Likes Like |Link to Comment
  • Wall Street Breakfast: Amazon Introduces New Kindle Lineup [View article]
    The only functioning groups which might serve as part of a surrogate ground army are the Peshmerga Kurds and certain Sunni's in Anbar province. The Sunni's are suspicious of us, though, because promises were not kept and we had a hand in installing Malaki (a friend of Iran)to head the new government but he quickly revealed his sympathies for the Muslim Brootherhood and was removed by the army. Even with this, Iraq holds some promise. Syria is different. In addition to the Free Syrian Army, there hundreds of splinter groups who are more interested in removing Assad than fighting ISIS but even with a year of training the 5K graduates who join the FSA will no match for ISIS and will retain their core interest in fighting Assad. And within a year, ISIS could easily expand to 50K with the majority in Syria making our Syria strategy totally unworkable. Sadly, everyone knows this except our president.
    Sep 18 07:32 AM | 6 Likes Like |Link to Comment
  • Wall Street Breakfast: Sony Warns Of $2.2B Net Loss [View article]
    Having read a fair amount about Fed interest rate increases and stock prices, I am lost that market players are almost paralyzed awaiting for priestess Yellen's latest cryptic prophecy about the direction of federal Funds rates. Why? "There is no consistent historical relationship between interest rates and the stock market, says Javier Estrada, a professor of finance at the IESE Business School in Barcelona." In contrast, Goldman's shallow study of rate hikes and markets in 1994, 1999 and 2004 shows the market tended to increase in the 3, 6 and 12 months prior to the rate hikes and increased in all intervals, except the 3 month period, following the rate hikes. In a broader study, David Rosenberg found that stocks tend to increase in the first 1/4 of the rate hike cycle. Dennis Quellet, using the Rosenberg data, concludes rate hike cycles are generally not damaging providing inflation is not rising at the time. And other studies suggest if the 10 year is yielding below 5% stocks will not be fazed by rate hikes. In the current environment rate hikes should not pose a threat but our environment is so unique that history may be of little value.
    Sep 17 08:03 AM | 2 Likes Like |Link to Comment
  • Wall Street Breakfast: Microsoft Announces Windows 9 Event Following Mojang Acquisition [View article]
    I think there are so many variables that uncertainty is being created which in itself will weigh upon a currency. Should "yes" prevail, there is concern over division of oil revenues and Scottish willingness to take responsibility for their share of national debt. And this overlooks increasing US rates and falling oil prices.
    Sep 16 08:46 AM | 6 Likes Like |Link to Comment
  • Wall Street Breakfast: RBS, Lloyds To Leave For England If Scots Vote For Independence [View article]
    Lots of great comments on our president. Anyway, when he tried to convince us that ISIS could not be a religious group he relied upon the specious argument that it could not be because it commits atrocities. His knowledge of history must be very dim because in one campaign of the Crusades a task was to rid the world of as many non-Christians as possible - both Muslims and Jews. "The Crusaders gave the Jews two choices in their slogan: "Christ-killers, embrace the Cross or die!" 12,000 Jews in the Rhine Valley alone were killed as the first Crusade passed through. Some Jewish writers refer to these events as the "first holocaust." Once the army reached Jerusalem and broke through the city walls, they slaughtered all the inhabitants that they could find (men, women, children, newborns). After locating about 6,000 Jews holed up in the synagogue, they set the building on fire; the Jews were burned alive. The Crusaders found that about 30,000 Muslims had fled to the al Aqsa Mosque. The Muslim were also slaughtered without mercy." ISIS is and remains a muslim organization.
    Sep 11 10:42 AM | 3 Likes Like |Link to Comment
  • Wall Street Breakfast: RBS, Lloyds To Leave For England If Scots Vote For Independence [View article]
    Wyo, I found his need to explain to the public that ISIS is not a muslim group very, very interesting. Of course its a muslim group and many of its actions are taken to address theological differences but the fact that Obama asserts otherwise is very revealing.
    Sep 11 08:45 AM | 13 Likes Like |Link to Comment
  • Wall Street Breakfast: RBS, Lloyds To Leave For England If Scots Vote For Independence [View article]
    After much dithering, I am glad our reluctant president has formulated a strategy to counter the ISIS threat. Out of necessity the strategy will be heavily dependent on partners in the region, many of whom are at odds with one another and have been incapable of achieving progress without the US to date. The coalition is fraught with tensions and divergent interests which will only increase the challenge of managing a fragile team.
    Sep 11 08:21 AM | 5 Likes Like |Link to Comment
  • Wall Street Breakfast: Dollar General To Go Hostile With $9.1B Bid [View article]
    gggl, I agree with your statement on disinflation lowering interest rates and thereby helping efforts to reduce the deficit as a percent of GDP. Unless I am missing something, I can only see inflation helping "improve" the deficit by pushing more people into higher tax brackets. Whatever the case, disinflation is a lame excuse for missing deficit reduction targets when there are so many other possible reasons including insane macro policies and fierce political opposition to spending cuts from the ruling Socialist party.
    Sep 10 08:50 AM | 5 Likes Like |Link to Comment
  • Wall Street Breakfast: Dollar General To Go Hostile With $9.1B Bid [View article]
    They are popping out the bubbly in Japan after the second quarter contraction was revised down to 7.1%. Even though Japanese machine orders rose more slowly than expected in July to 3.5 %, rising 1.1 % over the previous year and reversing a previous drop of 3 %. That said, real incomes are falling, capital spending is in a free fall, industrial, output remains anemic, household spending fell 6% yoy in July, housing starts have fallen continuously over the last five months and even with a depreciated currency the balance of trade and broader current account remains a problem. The BOJ sums up the situation thusly: A “moderate recovery” is still under way in Japan, supported by solid investment from the public and private sectors and “resilient” consumption, strengthened by a tight labor market and steadily-rising incomes. What planet do they live on?
    Sep 10 08:21 AM | 3 Likes Like |Link to Comment
  • Wall Street Breakfast: Dollar General To Go Hostile With $9.1B Bid [View article]
    French public spending accounts for close to 56% of gross domestic product, the highest level in the euro zone. Hollande’s deficit-cutting strategy is based on two-thirds tax increases, much of it on businesses, and one-third spending cuts. So, in order to narrow the budget deficit they’ve decided to rely upon the taxes, largely on business, which cripples growth the most and make it even harder to shrink deficits and debt as a percentage of GDP. Brilliant.
    Sep 10 07:40 AM | 10 Likes Like |Link to Comment
  • Wall Street Breakfast: Home Depot Confirms Payment Systems Breach [View article]
    It's not in Obama's DNA to lead military exercises, much less declare war. That's why we keep hearing this nonsense about justice, as if Eric Holder is in charge of redressing recent wrongs and has replaced Martin Dempsey. We should broaden our air strike campaign to include Syrian ground, arm the kurds, coax Iraq to be politically more inclusive and find more Arab countries to put boots on the ground. Jordan is a logical candidate as they could easily be next on ISIL's shopping list when you look at the Levant. The time needed to form coalitions will be months if not years, and then there is the delicate matter of taking military action. This will be a protracted affair and the anointed one will be long gone during much of the fight. Turkey is starting to help curb smuggling of fighters and black market oil and diesel fuel sales; one of the the largest remaining issues is who we arm in Syria to take on ISIL in its cradle. The Free Syrian Army? And the English and French idiots who drew up the current boundaries in 1920 conveniently left out a home for the Kurds who now number 30 million. The Kurds need a home and paritioning Iraq is a viable option.
    Sep 9 08:22 AM | 5 Likes Like |Link to Comment
  • Wall Street Breakfast: Google Developing Delivery Drone Fleet [View article]
    Spot on Wyo. But he lies about everything else so why we he not lie about a strategy to counter what could easily prove to be one of the largest geopolitical threats since one or both of the great wars. If asked what it is, he could easily say it is sensitive information and we do not wish to tip our cards but that would not be credible as he routinely announces strike coordinates well in advance to flex his political muscles. If we should do something in serious in Syria, ISIL will be one of the first to know and know in advance.
    Aug 29 12:39 PM | 3 Likes Like |Link to Comment
  • Wall Street Breakfast: Google Developing Delivery Drone Fleet [View article]



    Japan's conflated and conflicting economic policies continue to haunt the country. After the VAT was increased in April, second quarter GDP plunged by 6.8% in annualized terms. Economic thinkers calmly explained more time was needed for expectations to become re-anchored and for structural reforms to be implemented. Well, time has passed and few, if any, reforms have beeen implemented, the trade deficit persists and real wages continue to fall. As one would expect, the economy continues to stumble along. As reported by the FT:

    Japanese stocks and the yen weakened after a barrage of data called into question the prospects for a summer economic recovery.

    Household consumption in July tumbled 5.9 per cent from a year ago, the jobless rate rose to 3.8 per cent, the highest since November, while retail sales dropped 0.5 per cent. Industrial output rose only 0.2 per cent, confounding economists’ expectations of a 1 per cent rise.

    “Today’s data on industrial production and retail sales show that the economy continued to stagnate at the start of the third quarter,” said Marcel Thieliant at Capital Economics.

    Moreover, inflation stalled for a second month in July, suggesting the Bank of Japan could find it difficult to hit its 2 per cent inflation target by next year.
    Aug 29 08:01 AM | 2 Likes Like |Link to Comment
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