This Swan Is White! – Seeking Alpha 08-25-15

Salient to Investors:

Ivan Martchev at Navellier & Assoc writes:

  • Last week’s equity collapse was predicted by the dramatic increase in the spread between junk bonds and Treasuries. Credit spreads are good overall indicators.
  • The sell-off in junk bonds was caused by weak commodity prices: new capacity in hard commodities and energy has been financed with junk bonds and with disappearing cash flows.

Read the full article at http://seekingalpha.com/article/3463346-this-swan-is-white

Click here to receive free and immediate email alerts of the latest forecasts.

Is A Bear Market Starting? Prepare To Be Mauled, Down And Up – Seeking Alpha 08-24-15

Salient to Investors:

Miles Hoffman writes:

  • Expect at least a 20% move down, and a seasonally bearish Fall.
  • Bear markets have two phases, and can move down and up sharply. The first is where the leading sector of the prior bull market goes into a bear market, while other sectors hold up or perform well. Some sectors perform better in bull markets, others in bear markets. The second phase is capitulation where everything declines.
  • There are long-term secular bull and bear markets and shorter-term cyclical bull and bear markets. Secular bear markets are very volatile, but secular bull markets are usually less volatile and are mostly straight up. A cyclical bear market within a secular bull market, or correction, is not very volatile, excepting 1987.
  • Investors should study behavioral finance.
  • Long-term returns from buying high PE multiples are miniscule.
  • Keynes said that markets can remain irrational a lot longer than you and I can remain solvent.
  • The biggest cyclical bull market move up was in the 1930s bear market.
  • Almost everyone reading Seeking Alpha are not buy and hold investors.
  • Investors put twice as much emphasis on losses.
  • Making money in a bear market is difficult and emotionally draining. There were 9 moves of 20+% in the 1930s bear market that occurred in 27 months. It makes more sense to try to make money on the downside by using inverse ETFs, if you can handle the volatility. You can go short in an IRA with an inverse ETF.
  • The reason that in bear markets some sectors crash while others soar is because professional money managers have to be invested. Clients dislike paying a fee for being in cash. Cash levels are usually 5% or less – the most I have seen is 15%, which took as much explaining to clients as losing stocks.
  • Almost all professional money managers are closet indexers and keep their sector weighting fairly close to those of the S&P 500.
  • Staples, healthcare, and utilities are leading sectors going into a bear market because even in a poor economy, people have to eat and heat.
  • Recession depresses cyclical industry revenues and earnings and drives the stocks to low valuations.
  • The 2000 market top was the last “honest” top, a single sector led bull with a blow off top, driven by the internet and a booming economy.
  • The 2007 market top was a dishonest top, driven by many sectors, and created by a shady Fed which lowered interest rates and diverted the “2000 winnings” into the housing market.
  • The current bull market has no foundation, like the internet revolution, just rot. It was not led by China, which crashed hard to a bottom in 2009, then bounced for a year, before going sideways, violently, for 5 years.
  • The market’s moving averages are sending warnings.
  • The Dow Industrials moves though its lows is being confirmed by the Dow Transports.
  • Bond market traders are smarter than equity traders, so the ratio of junk bonds relative to higher grade corporates is a valuable indicator.
  • High beta stocks relative to low beta stocks is bearish.
  • Small cap to large cap is bearish.
  • The ratio of stocks above and below their moving averages is bearish.

Read the full article at http://seekingalpha.com/article/3462356-is-a-bear-market-starting-prepare-to-be-mauled-down-and-up?ifp=0

Click here to receive free and immediate email alerts of the latest forecasts.

Fareed Zakaria GPS – CNN 08-02-15

Salient to Investors:

Fareed Zakaria said:

  • New America reports that, since 9-11, 74 people have been killed in America by terrorists vs. over 150,000 killed in gun homicides. ShootingTracker.com says that in the first 207 days of 2015 America had 207 mass shootings. Gunpolicy.org says America’s gun homicide rate is 50 times higher than Germany’s. The US does not have 50 times as many mentally disturbed people as Germany does, but does have very many more guns.
  • ISIS’ neighbors are letting the US fight their battles. The US has carried out over 2,000 air strikes against ISIS in Syria vs. just over 100 by US’ Arab allies.
  • Saudi Arabia is the US’ largest defense customer – 1 out of every 7 defense import dollars. Saudi Arabia and the UAE imported more defense equipment than all of Western Europe.

Anne Applebum at the Washington Post said:

  • The world sees American elections as insane. They are the longest in any democracy and by far the most expensive. There is neither the enormous hope nor the enormous fear attached to the presidency that there has been over the last decade or two. The sense that the world and our lives will all be different depending on who is the next US president is fading away.

Timothy Stanley at the Daily Telegraph said:

  • Lunatics with money are never mad, only eccentric in America.
  • Brits see Donald Trump, Herman Cain, Ross Perot as snake oil salesman who promise everything and then burn up.
  • Europeans see American politics as about money, about buying attention, about personality, but most of all about anger.

Jorge Castaneda at NYU said:

  • Most of Trump’s 16 rivals are not pushing back at all against him, specifically about his racist comments about Mexican, Central American, Caribbean or South American migrants to the US.
  • In Mexico, Jeb Bush is expected to become the Republican nominee and is much liked there.

Mina Al-Oraibi at Asharq Al-Awsat and Yale said people in the Middle East and Iraq still see America as very consequential.

Robert Jordan said:

  • Saudi King Salman was considered one of Saudi Arabia’s least corrupt leaders and its hardest working cabinet member.
  • Saudi Arabia’s strategy appears be against Iran at every turn, and to presume she is behind every negative act. Yemen could come back to haunt Saudi Arabia.

Nobel Laureate Kailash Satyarthi said:

  • No child should be born to work at the cost of their childhood and freedom. 168 million children are full-time child laborers – down from 268 million 20 years ago – of which 85 million work in the worst areas of child labor. Officially, 5.5 million are in virtual slavery. Out-of-school children have dropped from 130 million to 58 million.
  • Anger can be a positive power to fight injustice and to convert ideas into action to make a better world.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1508/02/fzgps.01.html

Consistently wrong – The Economist 01-18-14

Salient to Investors:

New research suggests the advice analysts give in bad times seems to be even worse than the boosterism they peddle in good times.

Roger Loh of Singapore Management University and René Stulz of Ohio State found:

  • Analysts’ forecasts of profits and buy/sell recommendations from 1983-2011 were less reliable in falling markets than in rising ones, even after making allowances for increased volatility in such times.
  • Analysts’ forecasts of profits for the next quarter were off by 46% more during periods of financial crisis than at other times.
  • One change in ten in analysts’ stock recommendations moves the price of the share in normal times versus one in seven in falling markets, even though there are more changes during market routs.
  • Investors pay more attention to analysts’ opinions when times are tough, despite them being most likely to be wrong.

Neil Scarth at Frost Consulting said in the most recent crisis analysts budgets were cut by 40%, largely by replacing more experienced analysts with younger, greener ones.

Read the full article at http://www.economist.com/news/finance-and-economics/21594358-bear-market-or-bull-analysts-give-bad-advice-consistently-wrong

Click here to receive free and immediate email alerts of the latest forecasts.

ATMs Face Deadline to Upgrade From Windows XP – BloombergBusinessweek 01-16-14

Salient to Investors:

On April 8, Microsoft cuts off tech support for Windows XP, meaning that most of the 420,000 ATMs in the US running XP will no longer receive regular security patches and won’t be in compliance with industry standards. Most machines that get upgraded will shift to Windows 7.

NCR says XP powers more than 95 percent of the world’s ATMs and in the US.

Read the full article at http://www.businessweek.com/printer/articles/178277-atms-face-deadline-to-upgrade-from-windows-xp

Click here to receive free and immediate email alerts of the latest forecasts.

Biggest Danish Pension Fund Girds for End to Crisis Stimulus – Bloomberg 10-30-13

Salient to Investors:

ATP, Denmark’s biggest pension fund said:

  • Unprecedented stimulus from the biggest central banks has supported prices in “risky” markets, including equities, so investors need to brace themselves for potential disruptions when normalization of monetary policy comes, as recent investor reaction to the Fed’s warning of tapering showed market fragility.
  • Monetary policy is not a long-term solution to economic weakness and central banks only buy time as governments, companies and households adjust.

Norway’s sovereign wealth fund, the world’s biggest, is bracing for a correction in stock prices.

Read the full article at  http://www.bloomberg.com/news/2013-10-30/biggest-danish-pension-fund-girds-for-end-to-crisis-stimulus.html

Click here to receive free and immediate email alerts of the latest forecasts.

China Blogger Questioning Home Prices Taken to Tea Party – Bloomberg 06-05-13

Salient to Investors:

The term “he cha” in Chinese, literally meaning to drink tea, is a euphemism for the informal interrogation of citizens deemed to have stepped out of line.

Accounts of such conversations have proliferated online, describing how police use the talks to try to suppress activities that are considered a threat to stability.

Read the full article at http://www.bloomberg.com/news/2013-06-05/china-blogger-who-began-querying-home-prices-taken-to-tea.html

Click here to receive free and immediate email alerts of the latest forecasts.

Copper, Oil Lead Commodity Decline as China Manufacturing Slows – Bloomberg 04-22-13

Salient to Investors:

Justin Smirk at Westpac Banking said China coming in below expectations is adding to the downside risks in commodities, while Europe is performing badly and the US is not looking great.

Read the full article at http://www.bloomberg.com/news/2013-04-23/copper-oil-lead-commodity-decline-as-china-manufacturing-slows.html

Click here to receive free and immediate email alerts of the latest forecasts.

Buffett Deputies Leaving Billionaire in the Dust Get Funds – Bloomberg 03-04-13

Salient to Investors:

Luke Sims at Eagle Capital Growth Fund said Warren Buffett is trying to build up his stock pickers Combs and Weschler to show he hired the right money managers to succeed him.

Buffett book author Jeff Matthews said the 2012 performance by Combs and Weschler was extraordinary but wants to see how they do in a down market and over the course of a cycle.

Weschler and Combs earn salaries of $1 million plus 10 percent of the excess performance over the S&P 500 on a three-year rolling basis, with 20 percent of each performance pay based on the other’s results as an incentive to collaborate.

Read the full article at http://www.bloomberg.com/news/2013-03-04/buffett-deputies-leaving-billionaire-in-the-dust-get-more-funds.html

 

Free email alerts of articles as soon as they are posted.

Index of U.S. Leading Economic Indicators Rose in January – Bloomberg 02-21-13

Salient to Investors:

Lou Crandall at Wrightson ICAP said economic activity rose in part due to spillover effects from the housing recovery, but a sequence of budget-related concerns overhangs consumer spending.

Ken Goldstein at the Conference Board said the underlying economy remains relatively sound but sluggish, with the biggest positive being housing.

Economists believe Congress won’t find a resolution to prevent automatic spending cuts scheduled to begin March 1.

Michael Feroli at JPMorgan Chase said the higher probability of sequestration means US growth in 2013 will be a quarter point slower than previously estimated.

Read the full article at http://www.bloomberg.com/news/2013-02-21/index-of-u-s-leading-economic-indicators-rose-0-2-in-january.html

Free email alerts of articles as soon as they are posted.