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GaltMachine

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  • The put/call ratio on the S&P 500 moves to the danger zone - low enough to signal few enough are hedging against stocks falling as to almost assure that outcome. However, cautions Tommy Thornton, wait for indicator to turn higher before beginning to sell. [View news story]
    Joe,

    The link I provided above provides a graph of the Investor's Intelligence Survey you provided. I also pay attention to this one as well.

    Still not at an overly extreme level - get bears under 20 and bulls over 50 and that's a pretty good sell signal.
    Aug 29, 2012. 01:16 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]
    867,

    One thing often overlooked in these discussions is transaction costs. Houses are probably the single most expensive asset you can sell when it comes to the cost of the transaction - a rule of thumb is 10-15% of the selling price will go to legal, commissions, taxes, moving, etc.

    So it is really the net proceeds from the sale of the house that matter the most to the seller and their banker. Given where prices are today and a further deduction for transaction costs, anybody who bought in the 2000-2009 period is in for a rude awakening.

    Prices are going to have rise a decent amount especially if someone under water before they will be willing to put it up for sale.

    I live in South Florida bought in 2003 and according to the Broward property appraiser my house is worth less than what I paid for it back then.

    We need to get those distressed properties cleared from the system as quickly as possible.
    Aug 29, 2012. 01:11 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,

    Would you play this with one of the etf's like XHB or ITB?

    PE's seem rather high at 19,18 respectively. I am kind of surprised they are that high.

    Thanks.
    Aug 29, 2012. 12:09 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 is somewhat true but are they commensurate with the risk?

    In 2008 you could have got a 5% return virtually risk-free so on a million bucks you would generate $50k of income. On that same money today and in the same instrument you might get $2.5k.

    I call that financial repression.

    By the way, I personally am an investor in corps, MBS's and everything else bond related and I have done very well doing so over the past few years but the average gramma/grandpa shouldn't have to do this. That's all I am saying.
    Aug 29, 2012. 11:04 AM | Likes Like |Link to Comment
  • The put/call ratio on the S&P 500 moves to the danger zone - low enough to signal few enough are hedging against stocks falling as to almost assure that outcome. However, cautions Tommy Thornton, wait for indicator to turn higher before beginning to sell. [View news story]
    bbro,

    Do you look at the OEX in combination with these other indicators?

    http://bit.ly/xQNJ14

    Seems to also be signalling a near-term top.
    Aug 29, 2012. 10:27 AM | 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]
    Funny that was the quote that made me chuckle as well. Inventory would be fine if the prices were attractive to sellers - that's called supply and demand.

    Potentially this could result in upward price pressure assuming buyers were willing to pay more. Sellers at these prices don't want to lock in losses and/or negative equity unless they have no choice.

    This looks like the signs of life in the housing market actually has some legs assuming we don't get that fiscal cliff economic weakness that is screwing with people's expectations.

    P.S. -- Larry Yun deserves a promotion or at least the "Perpetual Employee of The Month Award" - reminds me a lot of SpongeBob.
    Aug 29, 2012. 10:22 AM | 3 Likes Like |Link to Comment
  • July Pending Home Sales:+2.4% to 101.7 vs. +1.0% expected; -1.4% prior. [View news story]
    bbro,

    That's quite the shocking factoid. Well at least there is room for growth without inflationary pressures!
    Aug 29, 2012. 10:15 AM | 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]
    Does anyone believe the price deflator (inflation) is really that low?

    What are the Hedonics on gas, food, and shelter? Somehow the story of rising rents is not translating into inflation?

    Of course it is in the govt's interest to keep this number low so that all the inflation linked accounts (social security, medicare, pensions) don't see annual increases. I feel sorry for old people stuck on fixed incomes in combination with financial repression this is not a pretty story.
    Aug 29, 2012. 10:13 AM | Likes Like |Link to Comment
  • The Treasury sells $35B in two-year notes at 0.273%. Bid-to-cover ratio of 3.94, vs. a recent average of 3.83; indirect bidders take 22.3%, vs. a recent 32.1%. Direct bidders take 16%, vs. a recent 8.7%. [View news story]
    bbro,

    People truly do not understand how our monetary system works. Cullen Roche has done an awesome job of making it simple at PragCap.com.

    We are in the midst of financial repression and I don't think it will be changing for a long time to come. The FED wants inflation but the deflationary forces are still very strong.
    Aug 28, 2012. 01:51 PM | Likes Like |Link to Comment
  • More on Consumer Confidence: At 60.6, the index hits its lowest level since November, led by a sharp drop in optimism about the short-term outlook.  Those expecting business conditions to improve fell to 16.5% from 19%. Those expecting worsening increased to 17.7% from 15.1%. The report hits stocks a bit (Why? Shouldn't this make Fed action more likely?), the S&P 500 -0.2%[View news story]
    bbro,

    Do you pay attention to the Conference Board's LEI?

    Consumer Expectations has a pretty big weighting in the index. A number like this could make it negative all on its own.

    LEI component and weighting:
    10 Avg. consumer expectations for business conditions 0.1551
    Aug 28, 2012. 10:29 AM | Likes Like |Link to Comment
  • More on Richmond Fed: New orders gains 5 points to -20. Capacity utilization gains 7 points to -9. Employment weakens, down 6 points to -5, average workweek down 4 points to -11, the wage index down 6 points to 3. (full report[View news story]
    This is so weird to interpret given that all the "strengthening" is to a lower level of contraction.

    Courtesy of Business Insider:

    "Manufacturing continued to contract in the South East and mid-Atlantic region of the country, although it did so at a less prononced rate, new data out of the Federal Reserve Bank of Richmond shows."

    Read more: http://read.bi/PYnFvW
    Aug 28, 2012. 10:26 AM | Likes Like |Link to Comment
  • August Consumer Confidence: 60.6 vs. 65.8 expected, 65.4 (revised from 65.9) prior. Expectations 70.5 vs. 78.4 prior. Present Situation 45.8 vs. 45.9 prior. [View news story]
    This has a big weighting in the LEI - might be enough to drive it negative on its own in the next release.
    Aug 28, 2012. 10:24 AM | Likes Like |Link to Comment
  • For the first time in four years coffee roasters use more robusta beans than arabica as consumers shift toward cheaper options. According to analysts, the impact on specialty seller Starbucks (SBUX) could be positive for margins as long as demand holds up and also opens up the question if the company will alter its blend recipes to adjust to the industry trend. [View news story]
    Bad move for anyone doing this. Coffee will taste worse (green) so short-term profits will come at the expense of long-term brand value and profits.

    Folgers blew it doing this years ago.
    Aug 28, 2012. 09:35 AM | Likes Like |Link to Comment
  • A great chart of the dispersion of S&P 500 returns over nearly the past 200 years via Heritage Capital. At first glance, it looks like how they might draw up a bell curve in Stat 101, but a closer look reveals the powerful upward drift of returns from human endeavor. [View news story]
    Perhaps the relative volatility of the current modern period versus the past is also a direct reflection of the boom and bust of a credit bubble. Very similar to the boom and bust of the 1920's - very similar pre and post bubble bursting corresponding with extreme return spreads from year to year and the prior 10 year period.

    Look at 1935, 1933 versus 1930, 1931, 1937 that's pretty wild.

    Funny 1929, despite the "crash", wasn't that bad on a relative basis and the 5 years previous were just phenomenal.
    Aug 27, 2012. 03:02 PM | Likes Like |Link to Comment
  • In tandem with the start of its VMworld conference, VMware (VMW -0.2%) is introducing upgrades to its vSphere virtualization platform and vCloud cloud management suite. vSphere, which has ditched a DRAM-based license fee structure that gave rivals Microsoft (MSFT) and Citrix (CTXS) an opening, now includes more advanced networking and data protection capabilities, and vCloud now promises the ability to provision "virtual data centers" featuring thousands of virtual servers. [View news story]
    "vCloud now promises the ability to provision "virtual data centers" featuring thousands of virtual servers."

    That's a powerful vision. Very good for corporate America and SMB's if this is reality and not vaporware.
    Aug 27, 2012. 01:12 PM | Likes Like |Link to Comment
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