BS Rally Today August 21, 2009
Posted by Andy Robinson in : News , add a commentWe’ll have to see if next week we finally get the beginning of a correction but it’s obvious that Goldman Sachs has a lot of call options expiring today that they needed to make good. The stellar existing home sales reported are mainly bolstered by the low end price points (ie foreclosures and 1st time buyers looking to cash in on government largess). Foreclosures will continue to rise now that 13% of all mortgages are delinquent so we may get even more “great” economic news over the next few months…at least until the first time home buyers money runs out. This bear market rally has lasted much longer than I expected it to, but count it as a gift and use it to take more money off the table and hold cash. I wouldn’t short since this momentum is extremely strong unless you are buying Nov put options as a hedge for an existing portfolio position.
Economic Fundamentals Improving November 7, 2007
Posted by Andy Robinson in : News , add a commentAnother little piece of news that confirms my burgeoning optimism is the Labor Dept report on productivity and wage growth. It hasn’t moved the market this morning, but the surge in productivity (4.9% last quarter) is crucial to avoiding recession. Equally important is that labor costs have eased slightly, which will help calm inflationary fears and allow for more easing if necessary.
Job Growth Strong November 2, 2007
Posted by Andy Robinson in : News , add a commentThe October payroll numbers were released 20 minutes ago and support the bullish argument for this quarter. Payrolls grew by 166,000 and unemployment stayed the same as last month at 4.7%. This bodes well for consumer spending, which has softened slightly due to the decline in housing prices, but will still thrive as long as jobs and wage growth remains strong. I don’t think we need to be unduly worried by the big stock market drop yesterday. Fundamentals are fine and there’s a lot of money sitting on the sidelines waiting for the 4th quarter rally. Once it looks like it’s starting, we’re going to move up fast because the fund managers and hedgies don’t want to be left behind. This is a good entry point to deploy any cash (if you have any on the sidelines). I’ve been all in for about two months.
Market trips on earnings and consumer spending November 1, 2007
Posted by Andy Robinson in : News , add a commentWith the Dow down over 230 points (as of 10:20 am) investors might get spooked about today’s grim headlines. But consumer spending only softened a tiny bit (0.3% growth rather than the expected 0.4%). Also Exxon missed profits and Citigroup and Bank of America got downgraded. With a time horizon of even 3 months, and mine is considerably longer than that, today’s dip has got to be considered a boon to investors. Although it may annoy me to see Bank of America (which I own) to tumble nearly 4% today, I am not concerned about analyst downgrades. Downgrades tend to be more reactionary to current market conditions than an accurate look into the future. Warren Buffet did not make his fortune buying stocks in favor with Wall Street. He bought names when they were cheap and everyone else was a seller.
Quarter Point Cut October 31, 2007
Posted by Andy Robinson in : News , add a commentAs expected, the Federal Reserve cut federal funds rate by a quarter percent. This should not have any drastic effect on stock prices in the short run due to the fact that this cut was widely expected and priced into the market. It was also the right move given the circumstances. If they’d kept rates firm, investors could have just cause to be concerned that the Fed isn’t being proactive enough in staving off inflation. If we’d cut half a percent, the dollar would have tanked again. Looking a bit further out, there’s enough reason to be confident in equities right now. Earnings have been mostly strong and GDP growth of 3.9% in the fourth quarter was more robust than expected. I am fully invested currently and wish the longs the best of luck in the fourth quarter!
A Falling Dollar, After All August 13, 2007
Posted by Jenna Robinson in : News , add a commentAfter looking at the evidence, economist Robert Murphy agrees with the alarmists:
The US economy is far more flexible now than it was during the dark days of the Carter years. Tax rates are much lower, the Fed isn’t as insane, and financial markets are far more sophisticated at handling risk. Even so, it is hard to avoid the conclusion that the dollar could be ready for another beating.
Congress considering tax increase on private equity June 21, 2007
Posted by Andy Robinson in : News , 1 comment so farCurrently private equity groups, which are publicly traded partnerships, pay a 15% Federal tax rate equal to that of capital gains. To increase revenue, Congress is contemplating raising it to a maximum 35% tax rate. See the article Washington Sees Private Equity as New Source of Revenue for more information. This would have an adverse economic effect as it would discourage private equity groups from going public, thereby reducing the amount of capital that would otherwise be raised.
Allies again? May 7, 2007
Posted by Andy Robinson in : News , add a commentThe victory of French presidential candidate Nicolas Sarkozy is tremendous news for Americans, investors, and the French people. Like the new German Chancellor Angela Merkel (who also holds the revolving EU presidency), Sarkozy favors repairing ties with the US and will be more supportive of free trade and a tough international stance with Iran than his socialist opponent.
US and European Union sign economic partnership May 3, 2007
Posted by Andy Robinson in : News , add a commentIn principle, I am extremely excited by the prospect of increased trade at a lower regulatory cost for businesses! See the article US and EU agree “single market” for more information. Both the United States and European Union recognize the mutual benefits of uninhibited commerce between the two continents. I am afraid that in reality, we may see progress towards reducing regulation on trade stalled over environmental grounds. The EU will doubtless want US environmental regulations to “converge” to their standards at great cost to US business interests. However, as the Open Skies deal illustrates, there is a great deal of progress that can be achieved.
Venezuela seizes last of its privately owned oil fields May 1, 2007
Posted by Andy Robinson in : News , add a commentThe Associated Press has just reported that as of just after midnight this morning, the government has wrested control from private enterprise of the last oil fields. If you haven’t read it, take a look at my older article The Rising Threat of Socialism, which gives a nice overview of the negative impact on the Venezuelan economy that will likely occur as more companies become nationalized. Even President Chavez acknowledges that he will have to give some incentives to the private companies that previously ran the show in order to prevent the loss of expertise that would lead to production shortfalls and cost overruns (both of which he’s experienced before in previous government takeover debacles).