Cyprus's parliament is due to convene this afternoon to debate an astonishing eurozone demand that it tax all bank deposits at up to 10% in return for a €10B bailout. While approval is not guaranteed, Cypriots rushed to take as much money as allowed out of ATMs. And although EU Commissioner Olli Rehn ruled out a deposit raid in other eurozone countries, menacingly for savers, eurogroup chief Jeroen Dijsselbloem would not. "We are in a new world," says an economist. Update: The parliamentary debate has been postponed until tomorrow. [View news story]
That's theft, but it reminds us that live is a struggle for survival and one cannot have absolulute faith in any single state or institutions. Instead, if one wants to survive and want to insure the living standards of his offpring for several generations, diversification is key, not only across assets classes, but also among various jurisdiction and ownership structures.
The CBOE Volatility Index today dropped below 12 for the first time since 2007 and against a long-term average of 20.4. Contrary to what contrarians believe, writes Mark Hulbert, low VIX levels are not necessarily bearish. Thinking about VIX as what it is - a measure of expected volatility - rather than as a "fear gauge" might help do away with this misperception. VXX -2.2%. [View news story]
This market is rallying on ridiculously low breadth and volume, big defensives stocks are leading and cyclicals are taking a beat, and that's all after massive insider selling. Bullishness and complacency everywhere you look. Markets can stay irrational for a while, but eventually, we all know what happens.
Your P/e average since 89 cannot be more biased, you carefully select the biggest multi-year bull run which includes p/es above 40 (in year 2002). I would prefer to see a century long average which also includes depressions.
Preparing For A Potential Deflationary Scenario [View article]
I understand (and probably agree) with Faber's deflationary view, given that there are very powerful secular structural deflationary forces currently at work (such as population growth and age structure changes), and the long-term trend is for this to intensify. However, deflation lifts real interest rates, i.e. the money in your wallet 'pays' you interest simply because everything else gets cheaper. To me, this includes gold. To suggest gold as a deflation hedge is very strange to say the least.
I guess what is fueling this rally are the long/ short strategies used by some big players, this would explain so much divergence and mixed signals on low volume. These are characteristics of a major topping process, as no one has the conviction to go long without shorting something as a hedge. In a true bull market you would go long everything without hedging.
Top Line Sales And Profit Growth Falter As The Dow Approaches All Time Highs [View article]
Maybe some trend following systems are still supporting the markets, since there hasn't been a 'confirmation' i.e. crash powerfull enough to break it. Looks like robots are jumping in on weakness. But the big players, insiders, etc.. are willing to dump, but cannot really since there is no market for so muck stock, and this would cause a crash, which would kill the value of their remaining holdings. So its best to sell as much as possible while you still can, without breaking the trend. Only problem is, when the trend eventully breaks, its going to get very ugly as everyone, big, small, robots and etc.. start selling at the same time and even uglier when leveraged traders start getting margin calls. Trouble is, a four year bear market rally is a powerfull trend and the topping process takes a while, but will eventually be completed.
Record Insider Selling Marks Top In Equities [View article]
Agree in part with the argument of GDP vs. total market cap, but now 40% of S&P revenue is generated abroad. I would like to see a chart of total global market cap divided by global gdp.
BRIC By BRIC, The Emerging Markets House Being Dismantled [View article]
If you still believe in emerging markets, much better to invest in western blue chips that have a large proportion of sales and revenues in these markets than to buy shares of local companies. Reason: emerging markets have no real democracy and have much less political and institutional stability. The powerful bend the rules according to their interests and are not accountable like Putin does in Russia. Hence, asset security is much lower, which implies, the risk premium should be substantially higher than in a place like US or UK. Nevertheless, by investing in FTSE or S&P companies, you already get a good degree of emerging market exposure, and your assets and rights as investor are much safer. Liquidity is also much better and you get your dividend in your own currency.
Sorry Bulls, But This Is Still A Secular Bear Market [View article]
The secular bull market such as the 1980 -2000 was not generated by asset price inflation, but by new technologies and by political and social developments that improved productivity and efficiency and added REAL value to the global economy as a whole. To name a few: internet, cellphone, PCs, fall of communism and reunification of germany, european union, globalization and the opening of several previoulsy closed economies to international trade and investment. Currently there seem to be few such opportunities, maybe cuba or n.korea? Or developing Africa?But these, unlike eastern europe, lack cheap qualified labour. Where will productivity growth come from in the near term? As long as we do not have a way of expanding capitalism and creating disruptive technological and political change, we will be in an economy dependent on asset price inflation, and by definition, a bear market. Long-term i.e. post 2015 - 2020, I am very optimistic. Space is the next frontier.
Analists expectations have been very pessimistic, the bar was set very low for this season. Its more reliable to look at actual and past earnings and sales growth. This paints a very different picture.
Every day the turkey watches the farmer come to feed him and the same thing happens, on Christmas eve the turkey sees the farmer coming, and thinks he's getting food, but instead, we all know what happens. Beware of past patterns, they do not repeat for ever.
U.S. Equities: Climb, Consolidate, Correct Or Crash? [View article]
Only thing I am not sure if I agree is when you list reduced trading deficit as 'positive'. I would be more inclined to see it as a sign of slowing internal demand, and therefore, bearish.
This temporary hawkishness ahead of the sequestration helps shifting a little bit of the pressure to politicians, the FED needs to make clear from time to time that other policy makers also need to play they part in the game, that's when a market pullback happens. Its a bit like torture on the waterboard, you do not let the prisioner die, but you make him suffer until just before it looks like he will pass out.
Cyprus's parliament is due to convene this afternoon to debate an astonishing eurozone demand that it tax all bank deposits at up to 10% in return for a €10B bailout. While approval is not guaranteed, Cypriots rushed to take as much money as allowed out of ATMs. And although EU Commissioner Olli Rehn ruled out a deposit raid in other eurozone countries, menacingly for savers, eurogroup chief Jeroen Dijsselbloem would not. "We are in a new world," says an economist. Update: The parliamentary debate has been postponed until tomorrow. [View news story]
The CBOE Volatility Index today dropped below 12 for the first time since 2007 and against a long-term average of 20.4. Contrary to what contrarians believe, writes Mark Hulbert, low VIX levels are not necessarily bearish. Thinking about VIX as what it is - a measure of expected volatility - rather than as a "fear gauge" might help do away with this misperception. VXX -2.2%. [View news story]
Is Record-High Market Overvalued? [View article]
Citigroup: Destined To Double By 2014? [View article]
The S&P 500 Is Trading For 17.9x Last Year's Earnings, Not 13.7x Next Year's Earnings [View article]
Preparing For A Potential Deflationary Scenario [View article]
Is The Dow Doing A Blow-Off Top? [View article]
Top Line Sales And Profit Growth Falter As The Dow Approaches All Time Highs [View article]
Record Insider Selling Marks Top In Equities [View article]
BRIC By BRIC, The Emerging Markets House Being Dismantled [View article]
Sorry Bulls, But This Is Still A Secular Bear Market [View article]
Is The S&P 500 Overbought? [View article]
The Pullback Memo [View article]
U.S. Equities: Climb, Consolidate, Correct Or Crash? [View article]
Fed Minutes Analysis, Key Facts Dissected [View article]