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  • Dr. Marc Faber's Market Outlook For 2013 [View article]

    The S&P closed at 1402.43 on Friday.

    Interesting that the S&P500 closed at 1402.11 on Jan 5, 2000.

    Gives new meaning to the phrase sideways markets :)
    Dec 30, 2012. 11:29 AM | Likes Like |Link to Comment
  • The NAAIM Manager Sentiment survey soars to 88.1 - "literally off the charts bullish," says Schaeffer's Ryan Detrick, pronouncing himself concerned at so many professionals moved to one side of the boat. (longer-term chart[View news story]

    "I am a firm disbeliever in market timing"

    We could have saved a lot of time with this discussion considering you are not interested in evidence to the contrary :)

    "much better correlated for pessimistic bottoms than with tops."

    That is exactly correct. We do agree. Only the extremes in either direction matter which means 95% of the time this data is noise. When this number get extremely bearish that's a fear gauge and means to quote Buffett:

    “Be Fearful When Others Are Greedy And Greedy When Others Are Fearful”

    Buying at the peak of bearishness on this data would have had you entering the market in April 09 and Oct 2011 (S&P at 1070) which I think would have been great "timing". Of course in hindsight it takes a lot of courage to buy at those times.

    I don't advocate this for particular stocks just the broad index which is the Bogle approach.

    Of all the "black magic, voodoo doctor" indicators out there, I think sentiment indicators are the most useful because they track demand for stocks so in that sense they are actually quite logical and believable. Prices rise when demand is strong and fall when demand is weak.

    Good luck in the New Year.
    Dec 29, 2012. 02:47 PM | 3 Likes Like |Link to Comment
  • The NAAIM Manager Sentiment survey soars to 88.1 - "literally off the charts bullish," says Schaeffer's Ryan Detrick, pronouncing himself concerned at so many professionals moved to one side of the boat. (longer-term chart[View news story]

    "one can note almost no correlation between the SPX and variations in sentiment"

    Did you click on the link?

    It does correlate very well with near market peaks as well as bottoms. The key to interpreting these reports is to look for the extremes in sentiment either bullish or bearish. In the chart above extreme bearishness corresponded with great entry points (March 09, last Oct 2011) and extreme bullishness with corrections (Oct 2007).

    So as a buy and holder this stuff probably doesn't matter but if you are an indexer who wants to buy in to the market you can time your entry points somewhat with this data and other indicators.

    Most of the time it is noise and provides no useful information but peaks in bullishness this high on this survey have been followed by sell-offs.

    "And, frankly, there's been a lot of good news reported lately, mostly ignored while fiscal-cliff phobia plays out in the media."

    That is true but as they say the economy isn't the market. In the short run emotions can have tremendous impact on the markets and this indicator is a reflection of the prevailing emotion at the time. In this case it is greed and apparently these professional investors agree completely with your viewpoint which is why they are so long equities.

    That doesn't mean you should sell but you might want to wait a little bit to buy. Generally a great time to buy is when these professional "investors" are fearful and selling rather than greedy and buying.
    Dec 29, 2012. 01:59 PM | 4 Likes Like |Link to Comment
  • The NAAIM Manager Sentiment survey soars to 88.1 - "literally off the charts bullish," says Schaeffer's Ryan Detrick, pronouncing himself concerned at so many professionals moved to one side of the boat. (longer-term chart[View news story]
    This is kind of freaky. These investors really do believe that the fiscal cliff issue is already priced in to the markets.

    We keep hearing how people are bearish, but which people? The people that invest or the ones that don't?

    Seems to me that what matters most are the actions of market participants rather than the mythical "money on the sidelines".

    This mirrors what's happened in the last few weeks with all the other investment sentiment indicators. This is one of those rare times when investors are lined up on one side and that usually means that we are in store for a correction if you believe this is a contrarian indicator.

    If you click on the link it has a nice graphic. That should set up a nice entry point, I think.
    Dec 29, 2012. 01:32 PM | 3 Likes Like |Link to Comment
  • Insider Monkey's Jake Mann takes a look at how Apple (AAPL -1.1%) invests its $120B in liquid assets. "Corporate securities" (either debt or equities) made up $46.3B of the total at the end of FY12, treasuries made up $20.1B, and U.S. agency securities $19.5B. Another $11.9B was invested in mortgage and asset-backed securities, $5.6B in muni bonds, and $5.5B in foreign government debt. Apple's treasury holdings rose 87.9% Y/Y, easily surpassing the 49% increase seen in its asset base (exc. cash). Corporate securities rose 31.5%. [View news story]
    AAPL is a fixed income fund as well. How interesting.

    I wonder what the duration of their portfolio is.
    Dec 28, 2012. 04:58 PM | 1 Like Like |Link to Comment
  • S&P 500 futures -0.3%, giving up overnight gains in the last couple of hours ahead of a last-ditch cliff-avoidance meeting today between the President and congressional leaders. Europe slides: Stoxx 50 -1%, led by Spain -1.7%[View news story]

    I read this article this morning on CNBC:
    "There's a common misperception about the fiscal cliff— that the tax increases only apply to 2013. Not true.

    In a cruel epilogue to 2012, roughly 28 million families would owe the IRS $86 billion more than they anticipated for this year should the country plunge off the cliff, according to the nonpartisan Tax Policy Center.
    Those families would face the "Alternative Minimum Tax," which was introduced in 1969 to supposedly guarantee that wealthy Americans could not elude the taxman. But the AMT not only flopped, it was never indexed to inflation. So with each passing year, it seeps away from high society and into the wallets of Target and Wal-Mart shoppers. That sets up a disaster for April 15."
    Dec 28, 2012. 11:25 AM | Likes Like |Link to Comment
  • Initial Jobless Claims: -12K to 350K vs. 365K consensus, 362K prior (revised). Continuing claims -32K to 3.23M. [View news story]

    Read this from Hedgeye this morning:

    This week’s jobless claims numbers had 19 states omitted from the data, including California and Texas. While the data is positive with initial jobless claims falling 11k to 350k from 361k, we wouldn’t put too much faith in this data and would wait and see what next week’s numbers hold. Hurricane Sandy is no longer affecting the numbers and claims are generally trending lower, the latter of which is a tailwind we should expect to continue through February."

    How do they handle missing states' data?
    Dec 27, 2012. 10:21 AM | Likes Like |Link to Comment
  • Tax Policy Will Send Unemployment Back To 9% And Tank Stocks [View article]

    Let me see, here is a small list of items that would make any conclusions such as you are advocating spurious:

    Level of interest rates from period to period measured
    Loose or tight monetary policy
    Loose or tight fiscal policy
    Changes in tax policy (AMT)
    Floating Currencies
    Level of unionization (higher, lower, etc)
    Regulations on trade (tariffs, DOHA rounds, WTO)
    Credit crisis (es)
    Debt to GDP levels
    %age of population paying taxes

    You equate lower tax rates with higher incomes for business owners and labor getting "a smaller share of the pie", that strikes me as a political statement rather than an economic argument. The mechanism by which you draw this conclusion is not revealed by your analysis.

    It's a complex system that cannot be simplified into two variables as you have done. You may be right but you haven't proven it.

    What we do know is that increases in taxes lead to lower economic growth according to the CBO. That certainly means a smaller "pie" for everyone. So advocating for higher taxes because it means that labor will get more after tax income is a questionable policy initiative.
    Dec 24, 2012. 12:30 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Decision Time? [View article]

    "All arguments against it seem to be politically motivated propaganda."

    Does that apply to you as well?

    Christina Romer, Obama's economic chair did this study prior to joining the Administration:
    "Tax Increases Reduce GDP
    "Tax changes have very large effects: an exogenous tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent."

    How do changes in the level of taxation affect the level of economic activity? The simple correlation between taxation and economic activity shows that, on average, when economic activity rises more rapidly, tax revenues also are rising more rapidly. But this correlation almost surely does not reflect a positive effect of tax increases on output. Rather, under our tax system, any positive shock to output raises tax revenues by increasing income."

    FYI, even the CBO notes that tax increases reduce GDP when they do their forecasts. Nothing controversial about this subject only partisan distortions make it so.
    Dec 23, 2012. 10:34 PM | 1 Like Like |Link to Comment
  • It's not easy imitating Apple and Samsung: the WSJ reports Motorola Mobility (GOOG) is working on a high-end phone - codenamed the X Phone - but has had trouble incorporating features such as high-end imaging capabilities and a bendable display. The project is run by a former Google product manager; sources (possibly frustrated Motorola workers) say Google has filled Motorola with several dozen execs and product managers with no hardware experience. Motorola also reportedly has an "X Tablet" planned. (previous[View news story]
    They should name it the G-Spot. It would make for some entertaining advertising.
    Dec 23, 2012. 12:49 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Decision Time? [View article]

    "have you seen the polling at Rasmussen???"

    I am interested in what's good for the country not what polls well.

    I am not surprised that the President is winning the argument over "fairness" but it clearly is a political position not an economic one that he is trying to achieve.

    I am not one of the 1% and yet I don't want their taxes to rise at this time because I think it will be bad for the economy and will do virtually nothing to deal with our current issues. It is a distraction.

    We need fundamental tax reform but I am not holding my breath waiting.
    Dec 23, 2012. 12:39 PM | 4 Likes Like |Link to Comment
  • Tax Policy Will Send Unemployment Back To 9% And Tank Stocks [View article]
    Like most authors with a tendentious viewpoint, the author uses statistics to validate their pre-conceived opinion:

    "We often hear the meme, "Low tax rates leave more money in the hands of business owners to create jobs." Low marginal tax rates have certainly left more money in the hands of business owners, but if the policy had been effective at creating jobs it would mean more money was paid to workers to be productive. The fact is a low top marginal tax rate means business owners take more money as personal income and labor gets a smaller share of the pie."

    All these discussions always ignore the effects of tax loopholes, special laws, the change from being taxed as a corporation to being taxed as an individual. Individual tax collections increased so much in Reagan's 1986 tax reform because people switched from being taxed as corporate entities to individual tax treatment due to the lower resulting total tax bill.

    There is so much garbage in our tax code that we should start over.

    Correlation is not causality. Correlation is sensitive to beginning and endpoint datapoints.

    The historical relationship between taxes collected vs GDP tells you the real taxes collected and historically this has been less than 20% even with 90% plus marginal rates so obviously the truth is much more complicated than this simple analysis leads us to believe.

    It is very easy to see find an article using the same data that would result in the opposite conclusion.

    Personally it is obvious to me that a tax increase means that after tax income falls immediately after the tax is imposed. Even the CBO says that's true.

    The author suggests that higher taxes lead to increased growth and higher after tax incomes for labor by some mechanism that he has not defined but I fail to see it.
    Dec 23, 2012. 12:29 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: Decision Time? [View article]

    This article is like most articles on the subject, overly simplistic and partisan:

    "A little “sorry for the last two decades of economic policy” from the Republicans would be nice here."

    This is the one nugget of political truth here. That's the real objective of these discussions.

    So the low taxes for those earning under $250k was a mistake?

    Secondly there are no "tax cuts". Extending the existing rates is only a tax cut under government logic. For the rest of us it is business as usual.

    I do however see his conclusion as more likely than a deal before year end:

    "That’s why a deal in early January probably makes the most sense for all sides. The effects of the fiscal cliff are cumulative, and the economic damage from waiting shortly into the New Year will probably be minimal to nonexistent. But the political dynamic resets in a way that makes a deal much easier to strike. Obama would already have most of the revenue he’s asking for. He could get all the additional revenue he needs without raising rates — he could even let rates drop a point or two to make Republicans feel better about things. Then the deal gets very easy for both sides."

    But I disagree with him that the "damage" will be minimal. I think this will be a major shock to the average person especially if it drags on for a few weeks.
    Dec 23, 2012. 12:05 PM | 3 Likes Like |Link to Comment
  • Weighing The Week Ahead: Decision Time? [View article]
    A link to the "Fiscal Cliff" components for those that are interested:

    Lots of things from a tax standpoint don't seem have to been resolved in the current discussions that are large items but not currently high profile:

    $127 billion on the "payroll tax holiday"
    $24 billion in new "Obamacare" taxes
    Estate tax is set to go up huge - not sure of the dollar value.

    Just these three items alone are pretty significant fiscal drags on their own ignoring any other tax increases likely to pass such as increases in cap gains rates, dividend rates, and likely some increases income tax rates. Especially the payroll tax which because it is so broad based will reduce every employed person's after tax income.

    Will they extend the payroll tax holiday?

    I would be shocked if this wasn't extended even though I think it is a bad idea to do so.
    Dec 23, 2012. 11:52 AM | Likes Like |Link to Comment
  • The Fed is likely to stick with ZIRP through 2018, says David Rosenberg, in his chart-filled outlook for 2013. He's guardedly bullish on stocks, not because earnings or the economy are set to power forward, but because real interest rates are set to remain negative for so long. [View news story]

    I also have been following him since 2008 which depending upon how you look at it has been both a massive success and a failure if you followed his advice all along.

    He advocated gold/silver for a long time, corporate debt, high-yield, commodities, treasuries and some other interesting stuff all of which have performed massively well since the meltdown.

    However he was clearly wrong on the S&P from 2009-2010 (late) before becoming constructive on what he calls SIRP (Safety and Income at a Reasonable Price) which was a positive call on the defensive sectors with high dividend yields. Overall for about a 1 1/2 years he has been pretty positive on select US equities.

    For me the bond call has been a miraculous payoff especially considering that it was very contrarian all along the way from a 4% plus 10 yr to the current level. No one with the exception of Rosie, Hussman, Shilling, and a few others made this type of bold call.

    Everybody was expecting rates to rise so if you believe that you would have missed this run.

    Now however the domestic bond run on price appreciation is dead . If we get strong growth then the short will be the winning trade of this next cycle.

    I have always enjoyed our conversations.

    Good luck. Merry Christmas.
    Dec 22, 2012. 12:06 PM | Likes Like |Link to Comment