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GaltMachine

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  • After three "jobless recoveries" in the last twenty years, NYT's Hedrick Smith suggests it's time to take a lesson from Henry Ford. History has proven Ford's virtuous circle to be effective, and if business managers "give the middle class a better share of the nation’s economic gains... the economy will grow faster." [View news story]
    Perhaps, a President Romney might turn this around.
    Sep 3 11:49 AM | 13 Likes Like |Link to Comment
  • Weighing The Week Ahead: Jobs, Jobs, Jobs! [View article]
    "Individual investor knowledge. The SEC studied this by doing some tests with fake fund prospectuses. They discovered that investors did not even grasp the basics. Donald Marron has a good account of the study.

    Meanwhile, there is an increase in day trading among individual investors."

    Another unintended consequence of ZIRP. Certainly pokes another hole in that whole Efficient Market Hypothesis crap that we grew up with.
    Sep 2 11:18 AM | 4 Likes Like |Link to Comment
  • Did The Recession Evaporate? [View article]
    Freddy,

    Curious as to what your thoughts are on how the expiration of the 100% expensing credit on durables at the end of last year impacted the economy?

    Its seems like it pulled forward demand from this year and also made Q4 stronger than it would have been without it. The economy seemed to react similarly after the expiration of the the Cash for Clunkers and Handouts for Houses credits.
    Sep 2 11:10 AM | 1 Like Like |Link to Comment
  • The days of economic prosperity may well be behind us, warns Northwestern University's Robert Gordon. The robust economic growth over the past 250 years may be a unique success tale for the history books, but it's not sustainable for the future. Productivity and innovation, Gordon says will eventually succumb to the headwinds of declining demographic trends, gaps in the education system, rising income inequality, globalization, declining energy/environment resources, and of course, debt. [View news story]
    Was the author an Obama voter?
    Sep 1 11:35 AM | 1 Like Like |Link to Comment
  • Initial Jobless Claims: 374K vs. 370K consensus, 374K prior revised (prior week 372K). Continuing claims +9K at 3.32M[View news story]
    bbro,

    Me too. This stupid "Like" trend pioneered by FB has dumbed down the world. Every idiot with an opinion can have their self-esteem reinforced by like-minded idiots - "The Smartest Idiot Award".
    Aug 30 10:11 AM | 2 Likes Like |Link to Comment
  • Russ K's Guide To Economic Indicators (Infographic) [View article]
    Freddy,

    " I am smiling right now, laughing in fact. "

    That's more like it. We all tend to take these discussions way too seriously - I absolutely include myself in this- and forget there is a real living person behind the comment.

    Sounds like you live in a very interesting place.
    Aug 30 09:44 AM | Likes Like |Link to Comment
  • Initial Jobless Claims: 374K vs. 370K consensus, 374K prior revised (prior week 372K). Continuing claims +9K at 3.32M[View news story]
    Poor,

    "Cheap shot. Bbro just lives by numbers but he's not biased."

    Absolutely correct. He plays it straight as he sees it. You may disagree but that's called a difference of opinion and interpretation not bias.
    Aug 30 09:37 AM | 2 Likes Like |Link to Comment
  • Initial Jobless Claims: 374K vs. 370K consensus, 374K prior revised (prior week 372K). Continuing claims +9K at 3.32M[View news story]
    bbro,

    Doesn't look like much job growth either. This number you quote seems to have been stuck at this number for quite a long time without improvement.

    What do you think?

    How does this average compare to the post 2003-2008 period?

    I appreciate it. Thanks.
    Aug 30 08:48 AM | 2 Likes Like |Link to Comment
  • Russ K's Guide To Economic Indicators (Infographic) [View article]
    Freddy,

    Lighten up. Humor is good!

    Life is great!

    Don't worry! Be Happy!

    A smile takes less effort than a frown!
    Aug 29 09:43 PM | 1 Like Like |Link to Comment
  • The economy should hit its stride late into next year, says Moody's Analytic's Mark Zandi. He's forecasting 4% growth into 2014, citing continued strength in U.S. corporations due to cost cuts and better profit margins. All we need to do is "nail down those fiscal issues," Zandi says. “By 2014-15, the surprise is going to be how strong the economy is growing.” [View news story]
    Stone,

    He was one of the key economists on the Obama team and one of the advisors that came up with the jobs saved or created metric from the original stimulus.

    His spreadsheet says it must be so and therefore it is!

    From 2010:

    http://nyti.ms/TwPvyd
    “The economy has shed some three million jobs over the past year, but it would have lost closer to five million without stimulus,” said Mark Zandi, who is currently advising Congressional Democrats but also advised Senator John McCain, the 2008 Republican presidential nominee. “The economy is still struggling, but it would have been much worse without stimulus.”

    Mr. Zandi said: “It’s legitimate to debate the efficiency of the stimulus; one could say, ‘You’re spending $800 billion plus and look at what we’re getting for it.’ But to say that this has not helped the job market is not correct.”
    Aug 29 09:41 PM | Likes Like |Link to Comment
  • Here's an alarming factoid to take away from BoA's John Paulson call today: Paulson's gold fund - the lynchpin in his strategy for recovery - cratered a whopping 22% between early January and July 31, drastically under-performing even the dismal returns of his flagship funds, which were down 13% and 18% respectively over the same period. No matter how you look at it, that kind of volatility is going to be a tough sell for BofA advisors with their clients come this fall. [View news story]
    Hmmm. You pay 2 and 20 for this "performance".

    Man I would love to have that gig.
    Aug 29 09:35 PM | Likes Like |Link to Comment
  • A123 Systems (AONE -10.7%) crashed to a new low of $0.28 today in the absence of major news. Shares are now 40% below the level they traded at before A123 announced a giant and controversial financing deal with China's Wanxiang Group. The Street may be worried the deal will fall through due to political concerns, or will be dilutive to the point where existing shareholders are left with very little. [View news story]
    "Last August, following a nationwide competition among America's clean-energy technology leaders, Vice President Biden traveled to Michigan to announce that A123 was one of the 48 companies to win a Recovery Act grant for advanced battery technology.
    So this is what's possible in a clean-energy economy -- these folks right here, doing extraordinary work. This is what happens when we place our bets on American workers and American businesses. And we're going to continue working to help them manufacture more success stories like these across all sectors of our economy."
    President Obama, April 30th, 2010.
    http://wapo.st/OvQEUL

    Curiously it seems like an endorsement from the President is the kiss of death for any company :)
    Aug 29 05:39 PM | Likes Like |Link to Comment
  • More on Pending Home Sales: "Limited inventory is constraining market activity," says the NAR, with chief spinmeister Lawrence Yun blaming sales weakness in the West on "an acute inventory shortage." More from Yun: "Expected gains in housing starts of 25-30% this year, and nearly 50% in 2013 are insufficient to meet the growing housing demand." [View news story]
    bbro,

    I think it depends upon definition - housing starts includes multi-family - and on this metric you are correct:

    "Housing Starts:
    Privately-owned housing starts in July were at a seasonally adjusted annual rate of 746,000. This is 1.1 percent below the revised June estimate of 754,000, but is 21.5 percent above the July 2011 rate of 614,000.

    Read more at http://bit.ly/QzEIGt"

    Single family starts:

    "Single-family housing starts in July were at a rate of 502,000; this is 6.5 percent below the revised June figure of 537,000. The July rate for units in buildings with five units or more was 229,000."
    Read more at http://bit.ly/QzEIGt

    So as usual it pays to read the fineprint and find out the definition being used :)
    Aug 29 05:32 PM | 1 Like Like |Link to Comment
  • More on Pending Home Sales: "Limited inventory is constraining market activity," says the NAR, with chief spinmeister Lawrence Yun blaming sales weakness in the West on "an acute inventory shortage." More from Yun: "Expected gains in housing starts of 25-30% this year, and nearly 50% in 2013 are insufficient to meet the growing housing demand." [View news story]
    Tack,

    Thanks I will bookmark and check out your suggestions.
    Aug 29 05:28 PM | Likes Like |Link to Comment
  • Q2 GDP (2nd revision): +1.7% in-line with expectation, +1.5% prior. Price index +1.6% in-line with expectation, +1.6% prior. [View news story]
    bbro,

    That's why I pay Jeff Gundlach to do it for me. Duration is the big risk but a pro like Gundlach has managed waters like this before. Has a high emphasis on current yield and very low duration on DBLTX and to a lesser extent DBLFX which are my core fixed income holdings.

    Amazingly most people don't understand MBS's and the fact that they are weirdly correlated with interest rates and in some cases depending upon the tranche can have a negative duration. They also don't understand that you can actually generate capital gains from bonds especially if they are distressed/undervalued for some reason akin to stocks.

    Trying to do that as an individual investor is kind of crazy - I just don't have the resources or the skill to to do the level of evaluation necessary. The bond market is highly inefficient relative to the equity market and this is one reason why skill can make a big difference.

    LQD is passively managed and I think to survive today you need a really good active manager and this is one area of the market where active management works and paying it for it is worth it.

    Jeff's a value guy which corresponds to my philosophy.

    We'll see what happens in the future but right now, not bad. That move up from 1.42 actually resulted in a gain for the funds above.

    Cheers and good luck.
    Aug 29 05:22 PM | Likes Like |Link to Comment
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