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Conventional Wisdumb

Conventional Wisdumb
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  • ZeroHedge cuts through BofA's (BAC) "accountant fudge heaven" in its Q1s, which is apparently bamboozling even analysts, to declare that only three things matter: 1) The approaching refi cliff, in terms of tens of billions in maturities; 2) sliding sales and trading revenues; 3) reserve release gimmicks. Shares are -0.3% after being higher earlier.  [View news story]
    "Mark to Imagination" accounting.
    Apr 19, 2012. 10:12 AM | 4 Likes Like |Link to Comment
  • Ugly chart of the day: The recent trend in federal tax receipts suggests the economy is not "getting stronger," as Tim Geithner maintains; if anything, it looks like the opposite.  [View news story]
    Angel,

    "...they're too stupid to know that they're stupid."

    I love that line. I have my own variant. Good link.
    Apr 19, 2012. 10:11 AM | 1 Like Like |Link to Comment
  • Initial Jobless Claims: 386K vs. 365K consensus (prior week revised to 388K from 380K). Continuing claims +26K to 3.27M.  [View news story]
    bbro,

    When you use a 52 week average, it takes a lot to move the needle so I am having trouble understanding how you use this as a leading indicator. Can you explain it a little better?

    For example, if jobless claims are averaging 350k/week and then spike for 4 weeks to 600k the average would move up by less than 20k which would seem like a small move. However, if claims went to 600k for 4 weeks in a row, I think there would be expectations that a recession was imminent assuming there was no obvious temporary exogenous factor.

    Thanks.
    Apr 19, 2012. 09:07 AM | 4 Likes Like |Link to Comment
  • The slides from Jeff Gundlach's "To QE3 or not to QE3" presentation last night. Don't fight the Fed is the message from slides 15 & 16 - showing the strong correlation between QE (and The Twist, which Gundlach considers QE3) and the S&P 500. (from the oral presentation)  [View news story]
    cimitree,

    You can ignore the slide and move on. It is a political discussion in the sense that the politics as they are today will affect the investing environment and therefore will affect how you invest.

    Jeff is apolitical but discusses politics. The point is that spending never gets cut even when it is promised in exchange for tax cuts so we end up getting tax cuts and increased spending.

    I suggest you actually listen to the presentation/webcast once it is reposted on the website assuming you are still interested.

    As an investor with Jeff, I have done very well. I would describe myself as a political conservative.
    Apr 18, 2012. 11:12 AM | 1 Like Like |Link to Comment
  • The Dow faces a pesky headwind with IBM down 1.9% premarket following its Q1 report. Bespoke notes that the company has a 12% weighting in the index - triple the oft-criticized Apple weighting in the S&P 500. [View news story]
    A price-weighted index for a stock that trades with a price more than 20 times the lowest price stock on the index is a joke especially for those that don't have a clue about how the index is constructed.
    Apr 18, 2012. 09:32 AM | Likes Like |Link to Comment
  • The Dow faces a pesky headwind with IBM down 1.9% premarket following its Q1 report. Bespoke notes that the company has a 12% weighting in the index - triple the oft-criticized Apple weighting in the S&P 500. [View news story]
    That is absolutely correct - you are buying AAPL twice if you buy it in the QQQ's and own it individually.

    I remember way back when in the late 90's, Nortel (NT) was 40% of the market cap of the TSX before blowing up.
    Apr 18, 2012. 09:30 AM | Likes Like |Link to Comment
  • The slides from Jeff Gundlach's "To QE3 or not to QE3" presentation last night. Don't fight the Fed is the message from slides 15 & 16 - showing the strong correlation between QE (and The Twist, which Gundlach considers QE3) and the S&P 500. (from the oral presentation)  [View news story]
    My favorite (paraphrased) quote of Jeff's beyond the Shakespeare references which were absolutely awesome - that man was an incredible student of humanity:

    "80% of your return/money is made 20% of the time."

    In my personal life this particular ratio would be more like 99% of my money was made in 1% of the time but that was because I was incredibly lucky.
    Apr 18, 2012. 09:28 AM | Likes Like |Link to Comment
  • Non-performing loans at Spanish banks rose to an 18-year high of 8.16% in February from 7.91% in December, reaching a total of €143.82B. The latest figures contrast with a rate that was below 1% in the years prior to the collapse of the property market, and will only exacerbate fears the banks, if not the government, will need a bailout.  [View news story]
    "At the start of April, ECB's Draghi noted, "let's keep in mind that it [the LTRO] is not capital", adding that "if a bank does not have capital, it would be better to raise it now"."
    http://bit.ly/IKaIhy
    Apr 18, 2012. 09:24 AM | Likes Like |Link to Comment
  • An interesting look into Facebook's (FB) $1B Instagram acquisition, which Mark Zuckerberg navigated in all of three days and which he failed to tell the Facebook board about until the day before the deal was announced. We give him 10 out of 10 for speed and enthusiasm, though it doesn't quite match the blue-chip image the company is trying to build pre-IPO. (see also)  [View news story]
    $100 billion dollar valuation and run like a pet project. Caveat Emptor.

    A $10 billion valuation would have made this company the Netscape of the current generation.
    Apr 18, 2012. 09:22 AM | Likes Like |Link to Comment
  • Ugly chart of the day: The recent trend in federal tax receipts suggests the economy is not "getting stronger," as Tim Geithner maintains; if anything, it looks like the opposite.  [View news story]
    Terry,

    Which news are you referring to: ABC, CBS, NBC, MSNBC?

    Probably all of the above.

    I remember when you first posted on this site you were optimistic, positive, friendly, and polite. In short you were a lot like our President.

    Now you are nasty, obnoxious, boring, and very uninspiring once again just like our President.

    Heck maybe you really are the President :)
    Apr 17, 2012. 10:04 PM | 6 Likes Like |Link to Comment
  • So what explains today's big rally, with the Dow now up ~200? Apple is rebounding, but its fall yesterday didn’t hurt the broader averages much. Banks are cranking up the dividends, but earnings are mostly lower Y/Y. Spain auctioned off short-term debt, but it had to pay through the nose. Maybe it's technical, as the S&P moved above its 50-day MA, or maybe it's history: stocks typically rally after Tax Day.  [View news story]
    AIP,

    I read the story. A good link. Where does it say the 10.4% figure you are quoting?

    I can't find it in there. The first sentence in the quote is interesting because why didn't it keep going up?

    The recent slowdown probably reflects the end of the 100% expensing tax credit that ended in December. Demand was pulled forward and restocking was done in Q1. The current demand seems to have gone down from that peak based upon the last month's numbers and the recent durable good's orders.

    We'll see if there is a rebound in April but most of the recent numbers are showing trend growth slowing but I agree a recession seems very remote at this time.
    Apr 17, 2012. 03:58 PM | Likes Like |Link to Comment
  • So what explains today's big rally, with the Dow now up ~200? Apple is rebounding, but its fall yesterday didn’t hurt the broader averages much. Banks are cranking up the dividends, but earnings are mostly lower Y/Y. Spain auctioned off short-term debt, but it had to pay through the nose. Maybe it's technical, as the S&P moved above its 50-day MA, or maybe it's history: stocks typically rally after Tax Day.  [View news story]
    The Rise of The Machines.
    Apr 17, 2012. 02:27 PM | 3 Likes Like |Link to Comment
  • ICSC Retail Store Sales: -1.0% W/W, vs. +0.5% last week. +3.2% Y/Y, vs. +4.5% last week. The retail sales softened due to Easter over and amid unseasonably cool weather.  [View news story]
    "black swans" work in both directions - they are not always negative.

    The negative "black swan" would actually be a recession since it is considered impossible right now which is why it would be genuinely put the world on its head.
    Apr 17, 2012. 11:23 AM | Likes Like |Link to Comment
  • ICSC Retail Store Sales: -1.0% W/W, vs. +0.5% last week. +3.2% Y/Y, vs. +4.5% last week. The retail sales softened due to Easter over and amid unseasonably cool weather.  [View news story]
    Real
    Apr 17, 2012. 10:52 AM | Likes Like |Link to Comment
  • ICSC Retail Store Sales: -1.0% W/W, vs. +0.5% last week. +3.2% Y/Y, vs. +4.5% last week. The retail sales softened due to Easter over and amid unseasonably cool weather.  [View news story]
    bbro,

    One week doesn't make a trend. Although I believe we won't get the recession that ECRI is forecasting (unless of course it is like the last time when we were 10 mths into it before anyone noticed), I do think we get weak growth that will be close to recessionary just like last year. If this happens, I think we get a selloff in the markets again but nothing catastrophic.

    The really interesting event would be a GDP growth exceeding 3.5% and if that happened well then I think we might be able to put fears behind us until Jan 2013 depending upon who gets elected.

    Jobless claims are trending up again which suggests that a lot of strength in the early part of the year was in fact due to the weather but we'll see won't we?
    Apr 17, 2012. 10:42 AM | Likes Like |Link to Comment
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