Doug Kass: 15 Surprises For 2013
- Written by Doug Kass | Thursday, January 10, 2013
[Note: This is an excerpt from the original article]
What Is the Consensus for 2013?
As we enter 2013, investors and strategists are again grouped in a narrow consensus on economic growth (+2% real GDP), bond yields (higher) and year-end 2013 closing stock market price targets (on average at about 1575, a gain of 10%).
On the latter issue of stock prices, strategists are unusually tight in their year-end S&P 500 forecasts, with Bank of America, Bank of Montreal, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, KKR, JPMorgan and Oppenheimer all in the range between 1550 and 1615, representing, on average, about a 10% gain for the full year. BTIG and Barclays are at 1525. Only UBS (1425) and Morgan Stanley (1434) stand out from the crowd.
Again, let's use Goldman Sachs' principal views of expected economic growth, corporate profits, inflation, interest rates and stock market performance as a proxy for consensus.
Here are Goldman Sachs' forecasts for 2012, 2013 and 2014:
The Rationale Behind My Downbeat Surprises for 2013
■ No meaningful spending or entitlement cuts will be made;
■ Unsustainable and diminished value of fiscal and monetary policy;
■ An aging recovery and aging stock market;
■ Investment narrative shifts to the earnings cliff and to the end of profit margin expansion;
■ A market that starts the year at reasonable if not high valuations relative to headwinds;
■ Full-year estimated S&P 500 range of 1275-1480 with a close of 1425; and
■ Fade (sell/short) early January stock market strength.
"Say what you will about Congress, but it has created jobs for people who would be unfit to work anywhere else."
-- Andy Borowitz
Last year my surprise list had an out-of-consensus positive tone to it, but this year it is noticeably downbeat relative to generally upbeat expectations.
As contrasted to 2012, when most were dour in market view (and wrong!), the 2013 consensus is an optimistic one and now holds to the view that European economic growth is stabilizing while growth in China and in the U.S. is reaccelerating. The popular view goes on to believe that even our dysfunctional leaders in Washington will not upset the growing consensus that it is clear sailing for equities and trouble ahead for bonds.
Once again, the bullish consensus is tightly grouped with the expectation that the S&P 500 will close the year at 1550-1615 (up from 1425 at the close of 2012) and that the 10 year U.S. note yield will trade at 2.50% or higher (up from 1.80% at the close of 2012).
These consensus views might prove too optimistic on stock prices and too pessimistic on bond prices. I believe that the U.S. stock market will make its 2013 high in the first two weeks of January, be in a yearlong range of 1275-1480 and close the year at 1425 and that the 10-year U.S. note will be below 2.00% in the first six months of 2013.
Many of my more downbeat surprises for 2013 are an outgrowth of an aging economic recovery (now four years old), a maturing stock market (of a similar age!) coupled with the recognition that running trillions of dollars in deficits while maintaining zero interest rates are unsustainable policy strategies.
I am also concerned that the multiplier being applied to the tax increases agreed to last week will be greater than many expect, serving to weigh on domestic economic growth.
As well, it is also my view that the trajectory of economic growth in 2013 (and corporate profits) will also be adversely impacted by the manner in which businesses and consumers react to the tax hikes and the growing animosity and contentiousness in Washington, D.C., in the months ahead.
Indeed, I fully expect the upcoming deliberations between the revenge-lusting Republicans in the House and the equally dogmatic and partisan incumbent President and Democratic Senate to not result in any meaningful cut in spending or entitlements reform. I do, however, expect these negotiations to have a direct and distinct adverse impact on economic growth, confidence and profits.
The dependency on our economy and on business and consumer confidence to Washington's ability to compromise and deliver intelligent policy will prove, at the very least, unsettling to the markets in the year ahead. At worst, it will undermine the economic expansion.
In addition, policy alternatives are diminishing.
U.S. monetary policy is now effectively shooting blanks, and fiscal policy will now turn to be a drag on growth. Moreover, the likely reluctance and inertia by our leaders in addressing our budget will continue to turn off the individual investor class to stocks this year.
Finally, my ursine tone is also a reflection that, by most measures, the U.S. stock market is not meaningfully undervalued and that given the dynamic of the headwinds of slowing economic growth, a poor profit outlook and the developing weakness of policy are unlikely to be revalued upward in 2013 (as many strategists suggest).
Without Further Ado...
Below are my 15 surprises for 2013. This year I have reduced the surprise list from 20 to 15. As I did last year, following each surprise, I have included a specific strategy that might be employed in order for an investor to profit from the occurrence of these possible improbables.
Surprise No. 1: The U.S. economy disappoints relative to consensus expectations.
Amid contentious and hyperpartisanship of political debate, consumer and business confidence sours, adversely impacting personal spending, job growth and capital spending plans:
- U.S. real GDP growth expands by only +1.5% (or less) in 2013.
- There is no grand bargain, as the debt ceiling and budget issues are kicked down the road.
- The only real development in the budget debate is that a financial transaction tax is adopted in exchange for a one-year increase in Medicare eligibility.
- By midyear either Janet Yellen or Alan Blinder replaces Ben Bernanke as Fed Chairman and the administration's entire economic advisory team is turned over.
Question: How many politicians does it take to screw up our economy?
Answer: 537 (436 members of the House, 100 members of the Senate and one president)
The consensus view is that while the upcoming budget debate will likely get ugly and go down to the wire, a 10-year, $2 trillion agreement will be negotiated.
Unfortunately, the last meaningful agreement (in 2013) between the Republican and Democratic parties was the twenty-fourth-hour fiscal cliff compromise on Jan. 1, 2013.
The squabbling and enmity of the recent fiscal cliff debate poisons all future budget talks. The Obama administration is unwilling to make spending concessions anywhere that is needed to make substantive progress on our fiscal deficit. The Republicans are equally entrenched in policy view.
This subcommittee has demonstrated in hearings and comprehensive reports how various schemes have helped shift income to offshore tax havens and avoid U.S. taxes.... The resulting loss of revenue is one significant cause of the budget deficit and adds to the tax burden that ordinary Americans bear.
-- Sen. Carl Levin (D-Mich.), Senate Permanent Subcommittee on Investigations
The debate grows increasingly contentious and vitriolic. Congressional Democrats, prodded by the president, introduce the idea of a wealth tax.
A Levin-led subcommittee investigation determines and highlights that Apple (which deferred taxes on over $35 billion in offshore income between 2009-2011) and many other companies -- including Hewlett-Packard, Google and Microsoft -- have adversely impacted the budget deficit by unfairly allocating revenue and intellectual property offshore to lower the taxes they pay in the U.S. (and have even avoided taxes in the U.S. by moving subsidiaries to Nevada). The investigation reveals that Apple was a pioneer (as early as in the mid-1980s) of an accounting technique known as the "double Irish with a Dutch sandwich," which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then on to the Caribbean. The Levin subcommittee finds that this tax avoidance technique employed by Apple has been imitated by hundreds of other international companies.
The Democrats in Congress propose a closing of such corporate tax loopholes and more strict rules regarding non-U.S. tax havens. This creates a complete impasse when Republicans react violently to it. Congressional Republicans, on the other hand, offer sizeable entitlement benefit cuts which turns off the Democrats.
During the debate it becomes clear that the risks of destabilizing outcomes are rising (e.g., a technical default on U.S. debt and a downgrade by all of the major ratings agencies), and investors panic. The S&P 500 hits a low of 1275.
The surprise is that there is no grand bargain in 2013 that brings our country closer to fiscal sustainability -- indeed, there is virtually no bargain (on tax and entitlement reforms nor in discretionary spending cuts) in the new year at all.
The debt ceiling is finally raised, though only minor spending cuts are instituted. At the last moment, the Democrats agree to a one-year increase in Medicare eligibility in exchange for an Elizabeth Warren-inspired campaign (in conjunction with Congressional Democrats) to introduce a financial transaction tax to be imposed on securities trades by year-end. (See surprise No. 4.)
After the debate comes to a close it is apparent that the ability of the administration to enact previously sought gun control laws, immigration reform and other projects is in serious jeopardy.
Foreign leaders openly discuss the waning role of our country's leadership in the world. The U.S. dollar suffers as our standing in the global economy erodes.
Meanwhile, though the fiscal drag from last week's fiscal cliff agreement appears to many to be a manageable $250 billion-$280 billion (or less than -1.0% taken off U.S. GDP), the actual multiplier of this drag is greater than most are projecting (over -1.5%). The growing tortured debate, animosity and fiscal uncertainty that follows between both parties during the January-March period chills the economy further and adversely impacts business and consumer confidence. Corporate fixed investment, hirings and industrial production suffer, and it becomes clear that there is little economic momentum in the U.S. and that, among other issues, corporate pricing power is harmed by increased competition from non-U.S.-based companies.
Most market participants begin to accept the notion that the Fed is essentially out of bullets and can no longer impact our economy at the margin and that it doesn't possess the sort of durable and effective fiscal remedies that are needed to materially address the complexity of the secular challenges facing the country (education, the jobs market, etc.).
By midyear President Obama seeks scapegoats for economic policy failure. He replaces most of his team at the Council of Economic Advisers as well as Fed Chairman Bernanke (with Alan Blinder or Janet Yellen) a full six months before Bernanke's term is officially over in January 2014.
Despite recent concerns that the Fed will end quantitative easing, more easing lies ahead during 2013, and, in all likelihood, the amount of bond buying will be raised not ended or reduced (as suggested in the recent Fed minutes release).
A weaker-than-expected domestic economy in the first half of the year underscores the fragility of the consumer (in particular).
First-quarter 2013 real GDP is +0.5% to +1.0%, worse than consensus expectations. Second-quarter 2013 real GDP shows little improvement (but only to +1.0% to +1.5%) from the first quarter.
Overall full-year U.S. GDP disappoints relative to the consensus (and particularly relative to the Fed's forecast of +3% growth) and approximates +1.5% (or less) for all of 2013.
Strategy: Buy index puts in the first half of 2013.
Surprise No. 2: The 2013-2014 earnings cliff sinks the markets in 2013's first half.
- The investment narrative shifts from fiscal cliff concerns to earnings and margin cliff worries.
- Slowing economic growth and lower margins pressure corporate profits and S&P 500 earnings drop to $95-$97 a share, well below consensus.
- Real estate activity and home prices flatten out.
- Retail sales are conspicuously weak.
- The stock market puts in its yearly high in the first two weeks of January.
- A Tale of Two Cities: a down stock market in the first half and an advancing stock market in the second half.
- The S&P 500 range for year 2013 is 1275-1480 and closes the year flat (just as it did in 2011).
The 2012 improvement seen in the residential real estate markets moderates, as sales activity/turnover and home price appreciation flattens.
Already refinancing applications (-23%) and new mortgage applications (-15%) have taken a bad fall in the last half of December 2012. Low interest rates from 2009-2012 have done their job in reviving the U.S. housing market, and that stimulus should be seen as bringing forward home sales -- now it is up to the domestic economy to resuscitate demand.
On the latter point I am less optimistic about the foundation of growth for the U.S. economy and the financial fate of the consumer who is now just absorbing a new tax hike (see surprise No. 1). Finally, let's not lose sight that the Obamacare surcharge of 3.8% will be applied to home sales in 2013.
Retail sales suffer, as spent-up not pent-up consumers are stunned by having less money in their wallets.
In 2013 we discover that there is a limit to the consumer in the face of our dysfunctional leaders' inability to deliver a grand bargain. A payroll tax increase, higher top income tax rates and the Obamacare surcharge, coupled with disappointing capital spending and weak hirings, represent the brunt of the domestic growth shortfall relative to consensus expectations.
Surprisingly, automobile sales, benefiting from pent-up demand (much like housing last year) continue to improve slowly, to a surprisingly strong 16 million-17 million SAAR rate by year-end, and represent a standout feature of the domestic economy throughout the new year.
Wage growth is muted, interest rates remain low, and inflationary pressures are nonexistent, helping to keep profit margins from slipping too far. Nonetheless, slowing domestic economic growth and reduced final demand -- personal consumption expenditures are further hurt by the droughts and rising food prices -- weigh significantly on corporate profits.
Full-year 2012 S&P 500 earnings come in at $102 a share, while 2013 S&P profits disappoint at $95-$97 a share, well below consensus of about $106-$108 a share, top-down estimates of $107-$109 a share and bottom-up forecasts of $112-$113 a share.
Though starting out strong, the stock market in 2013 is a tale of two cities, with a weak first half and a stronger second half. The 2013 S&P 500 range is 1275-1480. The S&P 500 ends the year flat.
Beginning-of-the-year equity fund inflows, breathless optimism (of a technically inspired kind) and the initial excitement over the fiscal cliff resolution lift the S&P 500 to its yearly high in the first two weeks of January 2013. Unfortunately, the lack of intelligent, thoughtful leadership becomes ever more apparent in February-March, and ultimately the S&P 500 bottoms at about 1275 (or at 13.5x my projected S&P profit surprise) during the spring.
The VIX exceeds 25, and risk premiums remain elevated amid the increased political rancor.
While dividend payout rates are low and corporate balance sheets in strong shape -- there is less than meets the eye here as it should be noted that much of the cash hoards are positioned in non-U.S.-taxed overseas accounts -- a smaller amount of money is returned to shareholders as dividend growth and share buybacks slow down as business confidence ebbs and the economy decelerates.
Though most believe that a spending deal will be forced by the pressures of a weakening stock market and economy, there is no agreement or real addressing of the deficit forthcoming despite a slide in equities and the backdrop of falling corporate profits and weaker economic growth taking center stage.
In the second half of 2013, coincident with a slow improvement in domestic growth, the market stages a persistent recovery back toward year-end 2012 levels of 1425 (as investors get inured to the political dysfunction and grow increasingly accepting of a period of slowing secular economic growth), exactly duplicating the flat market experience of 2011.
The VIX falls back under 15 by the second half of the year.
I would emphasize that a flat year in the U.S. stock market is a much rarer occurrence than many would think. According to The Chart Store's Ron Griess, in the 84 years since 1928, when S&P data was first accumulated, the index was unchanged in only two years (1947 and 2011). In only four of the 83 years was the annual change in the S&P 500 under 1%: 1947 (0.00%), 1948 (-0.65%), 1970 (+0.10%) and 2011 (+0.0%).
Strategy: Buy index puts in the first half of 2013; short Market Vectors Retail ETF.
Surprise No. 3: A dysfunctional Washington, D.C., has profound political implications, and an influential third party (the People's Party) is formed.
- A divorced Hillary Clinton officially bows out of the 2016 Presidential contest.
- Michael Bloomberg becomes the leader of a new third party.
- Senator Elizabeth Warren emerges as the Democratic presidential frontrunner.
- Governor Scott Walker is the Republican presidential frontrunner.
Despite widespread expectations of a 1992 repeat of a Bush vs. Clinton presidential contest in 2016, the consensus is proven wrong.
Shortly after a successful recovery from a concussion and blood clot, Bill and Hillary Clinton announce that they will divorce. Soon thereafter, Hillary Clinton declares that she has no intention to run as the Democratic presidential nominee for 2016, setting the Democratic leadership in turmoil.
Alienated, saddened and disappointed by the current political alternatives and a dysfunctional Washington, D.C., a meaningful movement of Democratic and Republican moderates toward the creation of a new and independent third party, known as the People's Party, gains steam.
Although it is early in the process and despite being initially reluctant, New York Mayor Michael Bloomberg becomes the standard-bearer of the People's Party, and he announces his intention to run for president.
The People's Party is named after the short-lived political party with the same name that was established in the late 1890s during the populist movement in the U.S. Originally based among poor, white cotton farmers in the South and hard-pressed wheat farmers in the plains, it represented a radical crusading form of agrarianism that possessed a hostility toward banks, railroads and elites generally. Often it formed coalitions and was aligned with labor unions and generally was seen as anti-elitist and in opposition to established interests (in banking and railroads) and mainstream parties.
Several of the wealthiest Americans -- including Bill Gates, Warren Buffett and several well-known billionaire hedge fund managers -- commit huge amount of financial and intellectual support to Bloomberg and the People's Party.
Surprisingly, Senator Elizabeth Warren (not Joe Biden or Andrew Cuomo) is viewed as the leading Democratic presidential candidate by year-end 2013, and Wisconsin Governor Scott Walker (not Marco Rubio or Jeb Bush) becomes the frontrunner for the Republican Party's presidential nomination.
Surprise No. 4: A tax on securities transactions is instituted in exchange for an increase in Medicare eligibility -- its implementation has broadly negative ramifications for financial stocks and hedge funds.
- Financial stocks underperform and miss profit forecasts.
- The transaction tax forces a further consolidation in the hedge fund industry.
- Hedge fund fees decline.
"Speculators may do no harm as bubbles on a steady stream of enterprise. But the situation is serious when enterprise becomes the bubble on a whirlpool of speculation."
-- John Maynard Keynes (when he first proposed a securities transaction tax in 1936)
In conjunction with Congressional Democrats (and in exchange for an increase in Medicare age eligibility), Senator Elizabeth Warren spearheads a successful campaign to force the House to introduce a financial transaction tax attached to all securities trades. The legislation is sold to Americans (and to the Republicans) as a way to:
1. curb market volatility;
2. reduce the disruptive role of high-frequency trading on the markets; and
3. increase tax revenue.
The ramifications of this tax are broad -- financial stocks suffer, and the hedge fund industry retrenches, consolidates and lowers fees.
The implementation of a financial transaction tax, weak capital markets, reduced merger and acquisition activity, continued pressure on net interest margins and poor loan demand lead to well-below-consensus bank and brokerage industry profits and underperforming stocks.
In 2013's macro-driven market, correlations remain at historically high levels (see below), rendering excess return generation hard to deliver by the hedge fund community. Moreover, the implementation of a financial transaction tax pressures trading-based and high-frequency-trading hedge fund strategies to close, and nearly one third of the existing hedge funds close shop in 2013.
As pressure on returns intensifies, a large institutional manager introduces a menu of low-fee hedge funds that further accelerate hedge fund closures. Hedge fund management fees move toward 1% (or lower), and performance fees move toward 10%, as the industry begins to resemble the traditional money management industry.
Several large hedge funds lower fees and structure fees to more resemble Warren Buffett's hedge fund in the 1960s, which charged no management fee but took in 25% on performance above a 6% threshold return.
Strategy: Short Financial Select Sector SPDR and GS.
Surprise No. 5: Under political, economic and stock market pressure, Obama begins to move back toward the center, but it is too late.
By midyear (after failed budget deficit debate) it will be clear to the president that his legacy is in serious jeopardy.
In response, Obama takes a surprising move to the center. His administration's team is turned upside down, and the president, in search of economic growth and a more vibrant jobs market, will approve legislation to allow fracking on federal lands. In addition, he completely turns around on his previous Keystone Pipeline stance and green lights the project.
Several previously somnolent regional bank stock prices positioned in areas of potential fracking activity revel in the administration's move. For example, Northwest Bancshares, a bank holding company right smack in the middle of Pennsylvania's fracking sites, rises by 25%.
The move fractures the Democratic Party and emboldens the Republicans. For both the president and the Republicans, it is too little and too late, as the approval ratings of both plummet to all-time lows and the aforementioned third party (led by Bloomberg) gains popularity (see surprise No. 3).
By year-end the People's Party is estimated to have as much as 20% of the national vote.
Strategy: Buy NWBI.
Surprise No. 6: Despite a growing concern that interest rates will rise, the yield on the 10-year U.S. note remains range-bound.
The big up move in yields that I have (long) expected and that has now become consensus is delayed by at least another six months.
The yield on the 10-year U.S. note stays in a relatively tight range of between 1.5% and 2.0% in 2013, as slowing global growth remains the bond market's dominant influence.
Strategy: Buy bonds on weakness via iShares Barclays 20+ Year Treasury Bond Fund; short bonds on strength via ProShares UltraShort 20+ Year Treasury.
Surprise No. 7: There will be four market influencing black swan events in 2013.
As I have observed, there is a growing frequency of black swans around the world, and 2013 will be no exception -- climate change and technological disruptions play a significant role on the financial markets this year:
1. Another major drought lies ahead. Droughts in the U.S., Brazil and Russia have a knock-off impact on much higher commodity and food prices, experiencing a greater-than-5% rise in 2013. A 5%-plus rise in food prices further adversely impacts the consumer's purchasing power.
2. A coronal mass ejection. The sun emits solar flares (or coronal mass ejections) that penetrate the Earth's atmosphere and initially wipe out most GPS systems, disrupt numerous communications systems, electronic devices and power grids all over the world. Electricity is lost in several regions of the world for weeks. A mini panic ensues, as concerns about broader damage emerge.
3. More flash crashes. A series of mini flash crashes occur in the first six months of the year. One such flash causes a major bank to lose close to $2 billion. In part to raise revenue and in part to curb market volatility and to halt the proliferation of high-frequency trading, a securities transaction tax is instituted by year-end.
4. A cyberattack. The U.S. experiences a major cyberattack on the power grid or other key infrastructure target. The source of the attack is not detected. Cybersecurity stocks soar, while the overall market experiences a 3%-4% drop.
Strategy: Buy Sourcefire and Palo Alto Networks.
Surprise No. 8: Apple's share price and earnings continue to disappoint in the first half of 2013.
- A consistently low share price for Apple persists in the first half as earnings estimates are steadily reduced, owing to lower production rates.
- Tech stocks (in general) and Apple's stock (in particular) sell off after Senator Levin's subcommittee finds that companies have avoided huge amounts of U.S. taxes in offshore tax havens.
- Two important product releases lead to an improving share price for Apple in the second half.
Last year, I wrote that Apple would be a positive surprise in 2012, though I turned negative on the company's fundamentals and share price in late September.
This year I have a negative surprise in store for Apple -- at least for the first half of the year.
The aforementioned Senator Levin subcommittee investigations on offshore tax havens (see surprise No. 1) highlight Apple's tax avoidance strategies. The share price drops below $500 a share in first quarter 2013, as investors begin to recognize that it is likely that Apple's future earnings will be taxed at a much higher rate than in the past.
Meanwhile, Apple's core operating profits disappoint due to a more competitive landscape, lessening demand for iPads and iPhones and emerging margin pressures. Apple's earnings estimates (and price targets) are cut, and full-year 2013 results fall short of $40 a share.
Microsoft's Surface sales start off poorly but gain traction by the end of 2013. Google Nexus, Amazon, Kindle, Surface and Samsung all sell at lower price points throughout the year, as price competition emerges in the tablet market.
Apple's consensus 2014 profit estimates move toward an expected year-over-year decline. The stock spends most of 2013 below $550 a share, but, in the last half of the year, two revolutionary product additions lift the share price to over $600 by year-end. (Samsung's stock performance continues to outpace that of Apple in all of 2013.)
In the third quarter Apple announces three new products in 2013: iTV, iMed and iHomes.
iTV is a yawner, but the latter two are revolutionary product additions.
With iMed, Apple enters the medical information market, providing a platform for the medical field to keep, store and transfer records in real time. This expands the use of iPads exponentially.
Also introduced is the iHomes program, an iTunes-like software to control all electrical (and some non-electrical, like plumbing) elements in a home remotely. The software receives rave reviews from The Wall Street Journal's Walt Mossberg, after which Apple announces it will not license the software for use on Android devices. (Google shares drop 60 points on the announcement.)
Strategy: Avoid Apple in the first half of year; buy Apple and short Google in the second half of the year.
Surprise No. 9: The big market winners and losers of 2013.
- The winners: Ford and Altisource Asset Management.
- The losers: XLF, Morgan Stanley, Citigroup, Goldman Sachs, JPMorgan Chase and asset managers.
Over the past few years (2010-2012), Altisource Portfolio Solutions was my stock of the year. The shares of Altisource Portfolio Solutions, which traded at around $15 a share in late 2009, rose to nearly $130 a share several months ago.
So, what is the next Altisource Portfolio Solutions, and what will be the stock of the year for 2013?
My answer is that we don't have to go far from Altisource Portfolio Solutions. The stock of the year will be the recent spinoff of Altisource Portfolio Solutions, Altisource Asset Management. With a sharp trajectory of earnings growth (resembling that of Altisource Portfolio Solutions in 2010-2012), I expect Altisource Asset Management will trade over $150 a share sometime this year.
Last year's surprise large-cap stock was Bank of America, which, after dropping by over 50% in 2011, climbed by over 100% in 2012.
My surprise large-cap pick for 2013 is Ford.
Trading at $13.50 a share, I expect Ford's share price to rise to above $17.50 a share in 2013 based on a combination of surprisingly strong domestic automobile industry sales (in excess of 16 million SAAR) and a revaluation (upward) in the company's P/E ratio.
After an initial burst to the upside, overowned financial stocks are the big losers in 2013, as the financial transaction tax, weak capital markets, still-low interest rates and tepid merger-and-acquisition activity weigh on the sector.
Strategy: Long AAMC and F.
Surprise No. 10: Takeover activity slows to a standstill.
Though interest rates are low and there is an abundance of excess cash on corporations' balance sheets, economic uncertainty meaningfully curtails merger-and-acquisition activity in 2013.
There is one large exception: Oracle takes over Hewlett-Packard (at only a modest premium). Mark Hurd returns to become Hewlett-Packard's CEO. Hewlett-Packard's current CEO Meg Whitman rejoins Kleiner Perkins.
Strategy: Avoid investment and brokerage stocks.
Surprise No. 11: A comprehensive New York Times expose reveals that all Chinese economic data has been fabricated.
Surprise No. 12: There is no reallocation out of bonds and into stocks in 2013.
Despite a growing consensus that the reallocation trade is imminent and will reverse the trends of money moving out of stocks and into bonds (in place since 2007), outflows from domestic equity funds and inflows into bond funds continue throughout the year. In support, I would note that, according to AMG, bond/equity fund flows started 2013 just the way they ended last year, with large outflows totaling -$3.5 billion coming out of domestic equity funds and with inflows into fixed income.
Strategy: Short T. Rowe Price and Franklin Resources.
Surprise No. 13: Signs of life are found on Mars.
There are signs of life on Mars but not in Washington, D.C.!
The Curiosity rover conducts a chemical test in early 2013 that uncovers complex carbon based compounds in Martian soil.
Surprise No. 14: Procter & Gamble splits apart into three separate companies and Avon Products is courted.
Another activist hedge fund investor joins Bill Ackman's Pershing Square and acquires a large position in Procter & Gamble. Under pressure from an expanding shareholder group, Procter & Gamble decides to split into three separate entities. The shares rise by $7-$10 a share on the announcement.
As was the case of Procter & Gamble, several activist investors pressure Avon Products to consider being acquired.
Strategy: Long PG and AVP and out-of-the-money calls.
Surprise No. 15: There are numerous surprises in entertainment and in sports.
- Move over Taylor Swift, as "The Voice's" Cassadee Pope wins more Grammys than any new entertainer in history.
- The New York Yankees, seen as too old and too slow, shock the world and win the 2013 World Series.
- The Oklahoma Thunder win the NBA Championship.
- The Seattle Seahawks win the 2013 Super Bowl.
- Alabama trounces Notre Dame by 28 points in tonight's BCS Championship game, but Notre Dame's men's basketball team reaches the Final Four.
- Tiger Woods wins a major and comes close to a second win. He marries a famous entertainer.
- Three-year-old thoroughbred Violence wins the Kentucky Derby.
- I finish in first place at the World Series of Poker in November and win $8.2 million.
I recently sat down with Gerri Willis at Fox Business News, along with Rick Sharga to discuss the economy and whether it is really JUST the weather that is dragging on the economic reports as of late...or is it something else?
This is a subject I have touched on recently stating:
"The recent "polar vortexes" have crippled much of the North and the North East with record low temperatures and severe weather and snow conditions. The economic impact of just the first polar vortex that hit in December is already calculated to be well above a $10 billion dollar hit to the economy. Surging electricity and heating costs are eating into real disposable incomes which is diverting consumption away from retailers. Inclement weather has shut down manufacturing activity and will crimp demand for employment and new orders as witnessed by the sharply reduced employment report in December and this week's ISM survey.
The chart below is the STA Economic Composite Index (for details on its construction read this) from January 2011 to present. As you can see, the trend of economic growth has clearly been on the decline rather than gaining strength as has been hoped by the majority of economists. I have also labeled events that have contributed to the rolling recoveries and slowdowns along the way."
Moreover, as I discuss in the interview below, the trend of consumer weakness, which makes up 70% of economic growth, has declined to levels that are more normally associated with very slow growth economies.
I also agree with Rick's views on the mortgage and housing market. See my latest housing updates below.
- Beware Of Long Term Investing Advice
- 30% Up Years: The Case For "Cashing In"
- Why Benchmarking Your Portfolio Is A Losing Bet
- 10 Investment Rules To Live By
- "Housing" - Is It Really Recovering?
- What Is A "Liquidity Trap" And Why Is Bernanke Caught In It?
- Reiterating Bond "Buy" - 35 Years Of History Confirms
- 4 Tools Of Corporate Profitability & The Economic Consequences
- Evaluating 3 Bullish Arguments
- The Great "American" Divide
- 5 Questions That Every Market Bull Should Answer
- The Fallacy Of The Fed Model
- Why You Can't Beat The Index
- Market And Investing Wisdoms
- Visualizing Bob Farrell's 10 Investing Rules
- 10 Immutable Laws Of Money
- The Next Secular Bull Market Is Still A Few Years Away
- 4 Keys To Successful Long Term Investing
- Thoughts On Long Term Investing
- 10 More Years Of Low Returns
- 5 Mistakes That Will Crush Your Retirement Dream
daily exchange archives
- ► 2014 (52)
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- ► February (23)
- • 5 Things To Ponder: Reality Check
- • Quick Reversal In Investor Sentiment
- • Housing: Is It Really Just The Weather?
- • Chart Of The Day: Confidence & Retail Sale...
- • Revisiting Why Benchmarking Is A Bad Strate...
- • FBN Willis Report: Is It Really Just The W...
- • Chart Of The Day: S&P Tracing A Top?
- • Will Consumer Credit Drive The Next Economi...
- • Is Housing Set To Lift Off?
- • 5 Things To Ponder: Sex, Money And The Car...
- • 5 Years Later - What Did The ARRA Achieve?
- • Bloomberg Interview: Saving For Retirement
- • 5 Things To Ponder: Cash, QE, Investing & 1...
- • Answering A Question On Peak Employment
- • Complacency Rapidly Returns To The Market
- • Markets Push Resistance As Yellen Keeps Her...
- • NFIB: Confidence Improves, Obama Creates Un...
- • Have We Reached "Peak Employment"
- • 5 Things To Ponder: Market Correction Over...
- • Was 2009 A Generational Stock Market Low?
- • Putting The Market Mayhem Into Perspective
- • Mother Nature Blocks Economic Run
- • Markets Oversold Enough For A Bounce
- ► January (24)
- • MoneyLife Interview With Chuck Jaffe On "My...
- • Is The Correction Over? Looking For Clues
- • MyRA's: A Few Bullet Points
- • Where Does This Market Rally Rank?
- • 5 Things To Ponder: Random Thoughts Editio...
- • Margin Debt Surges In December
- • The 2014 State Of The Union
- • Market Rout Shows First Signs Of "Panic".
- • 5 Things To Ponder: Valuations, Triggers &...
- • CFNAI: Was It " A Summer Of Recovery" Just ...
- • Chart Of The Day: JOLT Quit/Discharge Rati...
- • Corporate Profits & Income Inequality
- • Past Is Prologue: Repeating The Secular Bea...
- • An Update On The Housing Recovery
- • NFIB/Gallup - Government Is The Problem
- • The Coming Market Meltup And 2016 Recession
- • 5 Things To Ponder: Beer Goggles, Fires An...
- • The Only Employment Chart That Matters
- • Market Bulls Should Consider These Charts
- • Fox Business: End Of QE / Summer Correctio...
- • A Quick Look At Retail Sales
- • Will Corporate Spending Float The Economy i...
- • 5 Things To Ponder: Markets, Valuations & I...
- • 5 Things To Ponder: The "2014 New Year's" E...
- ► 2013 (289)
- ► December (21)
- • Correcting Some Misconceptions About A New ...
- • 5 Things To Ponder This Weekend: "It's A Wr...
- • 3 Things To Ponder Over Christmas
- • Will The Consumer Rise In 2014?
- • 5 Things To Ponder: The Taper Edition
- • Fed's Economic Projections - Myth Vs. Reali...
- • Do Stocks Offer Protection From Rising Rate...
- • 2014 A Bull Year? Of Course...But Maybe...
- • Fox Business: Is The Rush To IPO A Warning...
- • Is The Consumer Slowing Down?
- • NFIB - Not Much Holiday Cheer
- • Is The Deficit Reduction Just A Mirage
- • 5 Things To Ponder This Weekend - The Risk ...
- • Woodhill's Formula For Prosperity
- • 6 Things To Ponder: Bulls, Bears, Valuation...
- • ISM Survey Being Driven By Inventory Restoc...
- • ADP Report Points To A 193k BLS Employment ...
- • Asymmetrical Bubbles
- • 10 Lessons To Learn From Poker
- • Low Labor Force Participation Is Not Due To...
- • QE Deflationary? No Kidding!
- ► November (23)
- • 5 Things To Ponder Over Thanksgiving
- • 3 Myth's About Rising Interest Rates
- • 30% Up Years: The Case For "Cashing In"
- • 5 Things To Ponder This Weekend:
- • QE's Economic Miss & Future Valuation Overs...
- • Bernanke/Yellen To Drive Stocks 30% Higher
- • Employment Data Faked For Political Gain
- • Analyzing Earnings As Of Q3 2013
- • Summers' IMF Presentation States Nothing Ne...
- • 6 Things To Ponder This Weekend: Market Bub...
- • Yellen Promises More. Evidence Suggests Le...
- • Too Much Bubble Talk
- • Confessions Of A Quantitative Easer
- • NFIB: Optimism Fades
- • The Market In Pictures
- • Q3 GDP - An Inventory Restocking Story
- • LEI - The Fed May Be Skewing The Data
- • 5+1 Things To Ponder This Weekend (11/08/13...
- • Why The Fed Likely Won't Taper...Anytime So...
- • White Paper: Bond Strategies For A Rising ...
- • Economy In Pictures (Update: 11/4/13)
- • 4 Things To Ponder This Weekend (11/1/13)
- • No Joe, There Is Nothing Weird With Jobs Da...
- ► October (28)
- • Using ADP To Estimate 153k In October BLS R...
- • Larry Summers Admits The Fed Is In A Liquid...
- • Retail Sales Sluggish As ACA Approaches
- • Op Ed: Fed Should Get Out Of The Market's W...
- • The "Party Conversation" Indicator
- • 4 Things To Ponder This Weekend (10/25/13)
- • Chart(s) Of The Day: Is A Major Correction ...
- • Are We Entering The 3rd Stage Of The Bull M...
- • Updating The ADP/BLS Estimation Model
- • Fox26: Debt Ceiling Over - Stocks Set To Ri...
- • "Dow 20,000" - A Discussion With Gordon Lon...
- • Some Thoughts On Debts, Deficits & Economic...
- • 4 Things To Ponder This Weekend
- • The Most Dangerous Line Uttered During The ...
- • Market Update: Stocks Surge As Expected On...
- • Retail Sales Slow As Shopping Season Heats ...
- • 5 Things To Ponder This Week
- • The Long Game Of Hiking The Debt Ceiling
- • Stocks Surge As Expected On A "Deal"
- • Yellen, The Fed & The Debt Ceiling Debate
- • Market Update: Stocks Stumble To Support
- • NFIB: Processing Error Removes Optimism
- • 4 Things To Ponder About The Shut Down/Debt...
- • Market Update: Stocks Stumble On Default C...
- • The Rising Risks To The Markets
- • Surveys Vs. Data - Employment Estimate 160k
- • ObamaCare vs. Affordable Care Act
- • Gov't Shuts Down - Markets Rally?
- ► September (24)
- • Fox Business: Time To Take Profits
- • CNBC - Debt Ceiling & Risk To The Markets
- • Historical Performance During Government Sh...
- • 6 Things To Ponder This Weekend (9/27/13)
- • 10 Reasons The Market Will (Or Won't) Crash
- • Has The Fed Lost All Control?
- • No Strategy Works All The Time
- • Investment Learning From The Law
- • 6 Things To Ponder This Weekend
- • Fed's Economic Projections - Myth Vs. Reali...
- • The Real Reason For "No Taper"
- • "No Taper" = Market Surge As Shorts Run For...
- • Could Stocks Be Ready To Melt Up?
- • Eurozone Recovery Fades - Will The U.S. Fol...
- • Yellen In, Syria Done, 8 Risks That Remain
- • Why Benchmarking Your Portfolio Is A Losing...
- • The Rise Of The Welfare State
- • NFIB: "Small Business Going Nowhere"
- • Commercial Lending Suggests Weaker Employme...
- • The Only Chart Of Employment That Matters
- • Analyzing Earnings As Of Q2 2013
- • Fox Business: Markets In Correction Mode
- • You Can't Time The Market?
- • Q.E. - The #1 Threat To The Economy
- ► August (24)
- • Corporate Profits & What Siegel Is Missing
- • 2nd Q GDP: A Good News/Bad News Story
- • COTD: Earnings & Profits Per Share Suggest...
- • Deep Thoughts From Howard Marks
- • A History Of Real GDP & Population Growth
- • COTD: The Long View On Interest Rates
- • Long Term Stock Returns Depends On When You...
- • Is Unemployment About To Spike Higher?
- • Is The U.S. In A Recession? Interview With...
- • STA Risk Ratio Gives Warning Signal
- • CFNAI: Updating The Most Important Economic...
- • Will Rising Rates Kill The Stock Market?
- • Cramer's Miss On The Corporate/Economic Rel...
- • Inflation Composite Not Suggesting Stronger...
- • The Fed "Taper" And Market Direction
- • NFIB "Making Lemonade"
- • Are We Re-Tracing A Market Peak?
- • 10 Investment Rules To Live By
- • Ray Dalio: Eurocrisis Ain't Over
- • If Housing Is Booming - Why Do We Need Anot...
- • Why Is The "Smart Money" Selling?
- • July Records Biggest Inflows...Into Cash?
- • Why The Unemployment Rate Is Irrelevant
- • Revisions To PCE May Dash Fed's Hopes
- ► July (23)
- • Post-GDP Revisions Reveals Weaker Economy
- • 3 Risks That Could Cause A Short Term Corre...
- • Is It "The Great Rotation" Or "Bad Behavior...
- • Obama's Economic Report Card
- • "Housing" - Is It Really Recovering?
- • CFNAI: Headline Disguises The Supply/Deman...
- • Is This A 2007 Redux?
- • Chart Of The Day: Coincident To Lagging Rat...
- • Rising Rates Squash Housing Recovery
- • Bernanke: The Only Game In Town
- • Something Amiss With Retail Sales Numbers
- • 16 Thoughts On Investing And Financial Safe...
- • What Is A "Liquidity Trap" And Why Is Berna...
- • Bernanke's Comments Reverses Recent Sell-Of...
- • NFIB: Some Good, Mostly Not
- • Reiterating Bond "Buy" - 35 Years Of Histor...
- • Consumer Adjusted Oil Prices Hit $120
- • Fox Business: Jobs Report & Where To Inves...
- • The Diminishing Effects Of QE Programs
- • 3 Reasons Why I Expect A Weak June Jobs Rep...
- • Net Bullish Sentiment Drops Sharply
- • Top 100 Most Valued Companies
- • Market Rally: Oversold Bounce In Downtrend
- ► June (28)
- • CPI vs. "Main Street" Inflation
- • Bonds & Stocks: Investors Continue To Make...
- • Personal Income & Spending: Improved But Tr...
- • "Code Blue" For GDP - Paging Dr. Bernanke
- • Economic Data Shows Improvement
- • Fox26: Market Correction & Fed
- • CFNAI: Improved But Still Weak
- • Earnings Season Set To Disappoint
- • 5 Reasons Why Now Is The Time To Buy Bonds
- • Initial "Sell Signal" Is In
- • Deflation: The Fed's Real Worry
- • Fed's Economic Projections - Myth Vs. Reali...
- • 3 Reasons Stocks May Stumble Despite Fed
- • 3-Pitfalls To Fed's Tapering
- • What Inflation Says About Bonds & The Fed
- • Empire Manufacturing Index: Do Not Look In...
- • Chart Of The Day: Interest Rates Vs. S&P 5...
- • The Economy In Pictures
- • Consumer Confidence Spurs Retail Sales
- • Fox 26: Digging Into The May Jobs Report
- • CNBC: My Take On Employment Data
- • Gallup: Consumer Spending Is Up - Retail Da...
- • NFIB: Optimism Improves But Don't Get Too E...
- • Is The Eurozone Crisis Set To Flare Up?
- • Employment - The Macro Trends
- • 4 Tools Of Corporate Profitability & The Ec...
- • The Truth About Wall Street Analysts & Why ...
- • The Most Important Economic Number
- ► May (26)
- • 3 Reasons For Higher Market Highs
- • Consumer Confidence - Was It Really That Go...
- • Evaluating 3 Bullish Arguments
- • The Fed's Real Worry - A Pick Up In Deflati...
- • Japan - A Few Thoughts On The "Crash"
- • Chart Of The Day: Existing Home Sales
- • Bernanke's Link To "Mother Nature"
- • Five Lessons from Apple's Fall
- • Economic And Employment Composites Indicate...
- • The Great "American" Divide
- • Why Bonds Aren't Dead & The Dollar Will Get...
- • Chart Of The Day: S&P 500 Now At Extremes
- • Fed May Quietly Taper QE Before September
- • 5 Questions That Every Market Bull Should A...
- • Clues To Watch For The End Of QE "Infinity"
- • Should Companies "Twitter" Their Earnings
- • Fox 26: The Disconnect Between The Market ...
- • "Risk On" Rally - Don't Forget The Risk Par...
- • The "Labor Hoarding" Effect
- • Lacy Hunt: Cyclical Hurdles For A Highly Ov...
- • David Rosenberg - The Potemkin Rally
- • Mohamed El-Erian: Putting It All Together
- • A. Gary Shilling - Six Realities In An Age ...
- • Jeff Gundlach - Why Own Bonds At All
- • Niall Ferguson – The Great Degeneration
- • Economic Data Continues To Disappoint
- ► April (23)
- • March Spending Driven By Surge In Services
- • It's A Bit Early To Declare A Winner In The...
- • Durable Goods: Another Straw For The Camel
- • Economic Slowdown More Than A "Soft Patch"
- • Has Real Estate Sales Activity Peaked?
- • STA Economic & Employment Composites Paint ...
- • Random Observations & Rising Risks
- • Fox Business: Market & Investing Debate
- • Goldman Sachs: A Consumption Setback
- • More Evidence That The Economic Peak Is In
- • Gold Crash: What It's Not Telling Us
- • Video - The Potential Impact Of The Obama B...
- • Fox Business: Spring Cleaning Your Portfol...
- • Understanding The AMT
- • S&P 500: Recent Consolidation Allows Push H...
- • NFIB: No Sign Of Economic Improvement
- • What Do Interest Rates Tell Us About The Ec...
- • Economy In Pictures: Have We Seen The Peak?
- • Fox26 - March Unemployment Report
- • The Fallacy Of The Fed Model
- • Chart Of The Day: ISM Composite Index
- • Why You Can't Beat The Index
- • The Great Disconnect: Markets Vs. Economy
- ► March (19)
- • The 2012 Compendium Of Tax Filing Tips
- • Economic Data Shows Underlying Weakness
- • Fox26 - What Should Investors Be Doing Righ...
- • Chart Of The Day: Reality Vs Belief
- • Fed's Economic Projections - Myth Vs Realit...
- • Fox Business News - The Cyprus Effect
- • The Fed Has Already Imposed A "Cyprus Tax" ...
- • COTD: Risk Ratio Pushing Extremes
- • Fox Business News/Melissa Francis - Is Now ...
- • S&P Hits 1560 Target As Risks Rise
- • Digging Behind The February Retail Sales Re...
- • NFIB: "No Sign Of A Surge In Confidence"
- • The Real February Employment Report - In Pi...
- • What The Markets And Taylor Swift Have In C...
- • Chart Of The Day: Retiree's No Better Off T...
- • Dow At Highs - Buy, Sell or Hold?
- • The Dow - Not Really All Time Highs
- • There Is No Asset Bubble?
- • Personal Incomes & The Decline Of The Ameri...
- ► February (19)
- • Get Ready For The Run To All-Time Highs
- • The Real Story Behind The Bounce In Core Ca...
- • Housing, Confidence & Richmond Fed
- • Economic Recovery And The EOCI Index
- • LEI - Is There A Disconnect?
- • Market And Investing Wisdoms
- • Is It Time To Buy Gold? The Update
- • Visualizing Bob Farrell's 10 Investing Rule...
- • Global Recession Tugs At U.S. Economy
- • Chart Of The Day: The S&P 500 Wedge Tighten...
- • In Search Of The Economic Recovery
- • Sex, Lies And Money (Video)
- • Why You Should Own Bonds
- • 10 Immutable Laws Of Money
- • Chart Of The Day: Productivity Not Pointing...
- • Economic Indicators Not Reflecting Exuberan...
- • The Next Secular Bull Market Is Still A Few...
- • Fox26 - Stock Market Rally And Buying Tops
- • Seasonal Adjustments Are B.S. - I Can Handl...
- ► January (31)
- • Chart Of The Day: Incomes & The Cliff Effe...
- • Help Wanted Index Pointing To Employment Sl...
- • Was The Election Bought With Taxpayer Dolla...
- • GDP - Digging Into The "Unexpected" Decline
- • Market/Economy - A Few Observations
- • X-Factor Report 1/28/13 - Will The Market E...
- • Is The Consumer Really Deleveraging?
- • LEI - Revisions Show Slower Growth
- • The Visible Hand Of The Fed
- • Chart Of The Day: Economic Policy Uncertai...
- • Chart Of The Day: Richmond Fed Survey
- • The Real Housing Recovery Story
- • Pray The Bond Bubble Doesn't Pop
- • Charts Of The Day: The Economic Recovery S...
- • Bullish Optimism Beginning To Reach Extreme...
- • Getting Started With A Budget
- • Housing, CPI And Why I Only Have A Nickel L...
- • Economic Data - Mixed Bag Of Reports
- • What Are The Odds The Market Will End The Y...
- • Signs Of A Fed Driven Rally
- • Philly Fed Survey - 2012 Revisions Show Muc...
- • Why You Are Powerless Against The Governmen...
- • Consumer Credit - What Deleveraging?
- • NFIB - Higher Taxes Not Included
- • An Argument For The Debt Ceiling
- • Rise Above - Two Outcomes To Debt Ceiling D...
- • Interview W/ Congressman Brady on Fiscal Cl...
- • Heads Or Tails - The 2013 Coin Toss
- • Cliff Deal Charts - Just Charts
- • Cliff Resolved - Deficit Set To Explode
- • Senate "Cliff" Bill Unlikely To Pass House
- ► December (21)
- ► 2012 (282)
- ► December (19)
- • Fox Business - Investing Ahead Of FIscal Cl...
- • Interview With Baker-Patrick On Impact Of F...
- • Consumer Confidence Composite Turns Down
- • Chart Of The Day: Claims Not Translating I...
- • Chart Of The Day: Retail Sales & Excuses
- • "Sandy Effect" Boosts Economic Data
- • Economic Deluge Chart Book
- • Why Reported Inflation Seems Different Than...
- • Chart Of The Day: Sandy Weighs On Empire I...
- • Sandy Effect Pushes Production Higher
- • Fed Downgrades Economic Outlook
- • Trade Deficit - Recession Warning Ticks Up
- • NFIB: More About The Economy Than The Elect...
- • Client Brief: Dealing With Uncertainty
- • Have We Seen The Peak Of Employment?
- • Consumer Debt - Still A Long Way To Go.
- • ISM Composite - Back To Pre-Crash Levels
- • Thought Experiment: Why Obama Wants The Fis...
- • ISM - Outlook Declines
- ► November (23)
- • Personal Income And Spending Weigh On Econo...
- • Bill Ackman: The Basics Of Stock Market In...
- • Q3 GDP - The Devil Is In The Details
- • Housing Recovery: What Has Been Forgotten
- • The Definition Of Insanity: Republicans
- • CFNAI: Not Seeing The Growth Economists' Pr...
- • Chart Of The Day: LEI -- Leading To Laggin...
- • Be Careful Jumping On Bernanke's Bandwagon
- • Market Bounces Off Support - What Now?
- • Chart Of The Day: Decoupling Has Ended
- • Already Weak Manufacturing Impacted By Sand...
- • Retail Sales - You Can't Blame It All On Sa...
- • Personal Finance Seminar Presentation
- • NFIB - Pre-Election Hopes Of Romney Win
- • America Isn't The Greatest Country Anymore
- • "The Star Spangled Banner Is Stupid"
- • Net Export Prices And Wholesale Trade
- • Trade Deficit - Increase In Exports To Be S...
- • Post-Election Wrap Up: Economy and Investi...
- • The Next Four Years Won't Be As Good As The...
- • Recession Probability - 100%
- • ISM Composite, Employment & Black Helicopte...
- • Economic Data Flood - Weakness Behind The H...
- ► October (25)
- • Market Thoughts: Hurricane, Election & Fis...
- • Debt And Deficits - Killing Economic Prospe...
- • Personal Incomes Offset By Rise In Food & E...
- • GDP: The Warning From Exports
- • New Home Sales - Not As Strong As Headlines...
- • Chart Of The Day: Where Do Your Tax Dollars...
- • Richmond Fed Survey - More Evidence Of Weak...
- • Debt - Driving The Economy Since 1980
- • Reviewing Risk/Reward And Entry Targets
- • Chart Of The Day: LEI Coincident-To-Laggin...
- • Philly Fed Bounces - Internals Weaken
- • Housing Starts and Permits: Euphoria May B...
- • Market Rallies As Expected
- • Retail Sales - Not As Strong As Headlines S...
- • Chart Of The Day: JOLT Survey And The Peak ...
- • Trade Deficit - Recession Risks Increase
- • What Wholesale Trade Can Tell Us About 3Q E...
- • Fox Business - Bull/Bear Market Report
- • NFIB - Small Businesses Don't Agree With BL...
- • Unemployment 7.8% to 22% - Is There A Bette...
- • Why The Real Unemployment Rate Is 16.9%
- • Romney Got It Right On Jobs and Taxes
- • What Is The ADS And Why Is It Signaling A R...
- • 3 Major Risks To The 4th Quarter
- • Have Investors Really Missed Anything?
- ► September (25)
- • Second Recession Horseman Goes Down
- • GDP And Durable Goods - Heading To Recessio...
- • Market Sell Off Pushes Toward Support Level...
- • What To Expect From Post-Election Year Mark...
- • Economic Data Continues To Weaken
- • 4 Keys To Successful Long Term Investing
- • QE3 And Bernanke's Folly - Part II
- • Romney Should Be Fighting For The 47%
- • China: A Love-Hate Relationship
- • QE3 - Mortgage Rates And Housing
- • QE3 And Bernanke's Folly - Part I
- • Fed Announces QE - Initial Thoughts
- • Analyzing The ECRI Recession Call
- • Import Prices and Wholesale Trade - Weaknes...
- • Trade Deficit - Exports A Major Concern
- • NFIB - Good News Beneath The Surface
- • CNBC - The Fed, QE3 and Jobs
- • Employment Report - Worse Than It Looks
- • MarketWatch - 3 Factors Deciding The Next P...
- • ECB - A Program To Nowhere
- • When Good Employment News Is Really Bad New...
- • Draghi To Announce Sterilized Bond Purchase...
- • Productivity Increases And The Employment C...
- • ISM and Construction Spending Show Weakness
- • Stage For EuroCrisis Resurgence Being Set
- ► August (30)
- • The Incredible Lightness Of "Hope"
- • PCE - A Tale Of The Consumer
- • Q2 GDP - Nothing Good Happening Here
- • QE3 Mechanism Is Broken
- • Investing For The Next Recession
- • Pigeons At The Table
- • Durable Goods And New Home Sales
- • Monday Reading List
- • Is It Time To Buy Gold?
- • Chart Of The Day: Confidence Waning
- • To The Contrary - QE-3 Is Not Coming Soon
- • Three Things That Will Influence The Electi...
- • No Recession Now - But When?
- • Do You Feel Lucky? Well Do Ya?
- • The Monday Morning Reading List
- • Thoughts On The Market
- • Chasing Yield Can Be Hazardous To Your Reti...
- • Gold, Dollar & Rates Say No QE
- • NFIB - Dear Administration, Are You Listeni...
- • Everything Needs To Go Right
- • End Of Week Economic Data Roundup
- • Want More Tax Revenue? Increase Jobs Not R...
- • Market "Hope" Rally Overbought
- • Are Investors Really That Bearish?
- • Chart Of The Day: Follow The Money
- • Bullish Data Says No Q.E. Coming
- • BLS - Jobs Increase As Businesses Cut
- • Fed And ECB - No Action As Expected
- • CBNC - ECB and Knight Trading Glitch
- • Economic Reports Confirm Deterioration
- ► July (20)
- • Consumer Spending Points To Weaker Employme...
- • FOMC, ECB and Jobs - A Trifecta Of Potentia...
- • 2nd Quarter GDP - Weaker In All The Wrong P...
- • ECB Spurs Short Covering Rally
- • Major Sell Signal Triggered
- • Richmond Fed - Recession Risks Increase
- • CFNAI And Market Update
- • Thoughts On Long Term Investing
- • LEI, Philly Fed, Housing And The 100 Days O...
- • Corporate Profits Surge At Expense Of Worke...
- • Markets Have Trapped Fed On QE3
- • Will QE 3 Save Us From Recession
- • Consumers Flash Warning Signal
- • Import-Export Prices And Jobless Claims
- • Trade and Mortgage Data - More Evidence Of ...
- • NFIB Weakness And Recession Risks
- • Looking At The Economic Forest
- • Homes: The Case Of M2V And The Elusive Reco...
- • Coming This Fall - The Best Time To Invest
- • Euro Crisis: 366 Days Later
- ► June (25)
- • Consumer Spending Leads To Lower Q2 GDP
- • Q1 GDP - Consumer Weaker As Weather Saves T...
- • Durable Goods - Highly Volatile But Trend T...
- • June Rally Complete - Summer Sell Off Ahead...
- • The Fed And Goldilocks Economic Forecasting
- • Negative Economic Trends Clearing Way For Q...
- • CHART OF THE DAY: Fed Lowers Economic Outl...
- • No Q.E. As Expected - "Twist" Extended
- • No QE3 Tomorrow - Replay Of 2011 Continues
- • CHART OF THE DAY: JOLT Survey And Peak Emp...
- • Have A State Pension? Don't Count On It.
- • Inflation, Dollar And Interest Rates Open D...
- • Retail Sales In Decline
- • Deflationary Presssures Rising - PPI
- • CHART OF THE DAY: Negative Net Export Pric...
- • NFIB - Shows Flaws In Current Policy Mix
- • Why Spain's Bailout May Spell The End Of Th...
- • Trade - A Wholesale And Int'l Disappointmen...
- • Risks To The Market Rebound
- • Forecasting The Rebound And Bottom
- • St. Bernanke's Fight Against The Deflation ...
- • CHART OF THE DAY: US Best Place To Invest
- • ISM Composite - Economic Weakness Returns
- • TheStreet.Com - Gold Run Not Over
- • The Lie That Is Social Security
- ► May (27)
- • Yahoo! Summer Portfolio Management Ideas
- • Yahoo! Low Interest Rates Hurts Economy
- • Fox Business - Tending Your Portfolio
- • CNBC - Eurozone Slowdown Will Impact US
- • Housing Recovery - Hope and Reality
- • Interview - Southwest Airlines, Facebook an...
- • Durable Goods Disappointing
- • 4-Issues For The Market Ahead
- • Richmond Fed Showing More Weakness
- • Sell Signal Confirmed - Initial Targets Set
- • Risk Ratio Indicating More Correction Comin...
- • Confirmed "Sell Signal" Approaches
- • Industrial Production And The Recovery
- • Composite Inflation Index Declines
- • Real Retail Sales Under Pressure
- • Sex, Money and Largesse - The Hidden Depres...
- • Trade Defict - Confirming Weaker Q1 GDP
- • The Clock Is Ticking On The Next Eurozone C...
- • Initial Sell Signal In - Confirmation Is Li...
- • NFIB - Optimistic But Still At Recessionary...
- • Economic Trends Don't Paint A Robust Pictur...
- • Strategic Investment Conference - Dr. Lacy ...
- • Strategic Investment Conference - David Ros...
- • Strategic Investment Conference - Dr. Woody...
- • Strategic Investment Conference - Niall Fer...
- • 3 Likely Triggers Of The Next Recession
- • ISM Report Bucking The Trend
- ► April (19)
- • The "Consumption Dysfunction" Continues
- • Q1 GDP - Weaker Than Expected
- • Social Security Has A Real Problem - Employ...
- • Decline In Durable Goods Indicative Of Broa...
- • Impatience Will Lead To Our Demise
- • Market Cracks Support - Correction Gets Ser...
- • LEI - Slower Growth Of The Growth Update
- • Philly Fed Points To Weaker Profits Ahead
- • Mother Nature's Bail Out Coming To An End
- • 10 More Years Of Low Returns
- • 5 Mistakes That Will Crush Your Retirement ...
- • Earnings Likely To Be "Better Than Expected...
- • Market Hits Support - Now What?
- • The Return Of Economic Weakness
- • The Correction Has Started
- • The "Real" Employment Report - March 2012
- • Now The Media Is Hooked On QE Crack
- • Wave 5 Of The Cyclical Bull Market
- • CHART OF THE DAY: Signs Of Recovery?
- ► March (24)
- • The Consumption Dysfunction
- • WTF! Chart Of The Day
- • An Update On Margin Debt
- • Hyperinflation Isn't A Threat
- • Surprise! Jobs Drive Consumer Confidence
- • Death Of The Gold Bull Market?
- • Housing And The Elusive Recovery
- • LEI - Slower Growth Of The Growth
- • The Long Road Ahead
- • The "Fly" In Ryan's Budget Ointment
- • 1.8 Million Jobs Lost In 2012
- • Why 4% GDP Will Remain Elusive
- • The Stretching Of Limits
- • Rising Costs And Profit Margins
- • Retail Sales - A Lot About Weather
- • Correction: There Has Been No Correction
- • CHART OF THE DAY: Ceridian-UCLA PCI
- • NFIB - Index Up But Internals Weaken
- • Employment Report And The Market
- • Is The Investing Game Rigged?
- • OIl Prices Will Hurt The Consumer
- • Has The Correction Started?
- • The Immediacy Trap
- • 1st Quarter GDP To Be Much Weaker
- ► February (22)
- • Oil Prices WILL Slow The Economy (Revised)
- • Don't Feed The Animals
- • The Housing Recovery In One Index
- • Consumer Sentiment Responds To Market Rally
- • The Straw That Potentially Breaks The Camel...
- • Media Headlines Will Lead You To Ruin
- • Philly Fed Future Activity Points To Weakne...
- • Housing Headlines Improve - Reality Doesn't
- • The "Real" American Dream
- • Industrial Production - The Revival May Hav...
- • Consumer Confidence Has Everything To Do Wi...
- • NFIB - Optimistic But Still In The Foxhole
- • Financial Stress Composite Rising
- • Trade Data Trends Signal Weakness Ahead
- • Consumer Credit And The American Conundrum
- • Is Now The Time To Jump In?
- • Gold - The Technical Rundown
- • Bringing The NILF Mystery To Light
- • Gallop Points To Weaker Employment Report T...
- • Earning Less - Why The Poor Get Poorer
- • ISM - Misses Expectations
- • ADP Signals Weak Job Report Friday
- ► January (23)
- • Chicago ISM - Has The Recovery Peaked?
- • Home Prices Fall Further
- • PCE Points To Weaker GDP Ahead
- • Q4 GDP - "Prognosis Still Negative"
- • Fed Meeting - Reconciling A Weak Economy
- • Why Home Prices Have Much Further To Fall
- • IMF Cuts Global Forecast - US Won't Dodge T...
- • Complacency Risk Is High
- • Prices Paid And Coming Earnings Weakness
- • Housing Is Not Affordable
- • Industrial Production Confirming Changes To...
- • Patiently Waiting For The Golden Cross
- • Consumer Sentiment Rises - Still In Recessi...
- • Why QE3 Won't Help "Average Joe"
- • Industrial Production May Be About To Weake...
- • Consumer Spending May Dissapoint
- • NFIB - Small Businesses More Optimistic
- • Markets Throw Off A Buy Signal
- • The Real Employment Situation Report For De...
- • Improvement In Employment - At Least For No...
- • Markets Getting Over Bought / Over Bullish
- • Market Rallies To Resistance - Now What?
- • ISM & Construction Spending - Modest Improv...
- ► December (19)
- ► 2011 (277)
- ► December (22)
- • 2012 Outlook - Anything Other Than The Apoc...
- • Q3 GDP - "Prognosis Negative"
- • The Eurozone Is Saved?
- • Market Rally To Nowhere
- • Housing Starts Up - Patient Still Critical
- • NAHB Housing Market Index
- • A Little Followed Indicator Hints At Recess...
- • Inflation Pressures Rising In The Core
- • Economic Deluge - Economy Shows Some Positi...
- • Is The Gold Run Over?
- • Import Prices Jump - Recession Odds Increas...
- • NFIB - Bounce Off The Bottom
- • No Holiday Cheer In Retail Sales
- • A Million Dollars Ain't What It Used To Be
- • STA RIsk Ratio Turns Up - We've Seen This B...
- • Consumer Sentiment Ticks Up
- • What Are Initial Claims Not Telling Us?
- • Is Consumer Spending Really Surging?
- • Could Gasoline Prices Trigger A Recession
- • Market Rallies Into EU Meeting
- • ISM Composite Index Ticks Up
- • The Real Employment Situation Report
- ► November (29)
- • Economic Data - Headlines Bullish
- • Markets Surge As World Engages In Global Ba...
- • Was That The Consumer's Last Gasp?
- • Housing - The Margin Effect
- • Economic "Run Down" - Weakness Emerges
- • GDP - Revised Down
- • Is Market Warning Of The Next Lehman Event?
- • EOCI Index Improves - Is It All Clear?
- • Philly Fed Survey - Predicting A Peak In Ea...
- • US Debt To GDP Now 98.9% And Rising
- • Inflation - A Continued Problem For Consume...
- • Economy Shows Tenative Signs Of Improvement
- • Debate - Is US Becoming Japan
- • Presidential And Decennial Cycles - What Ab...
- • Consumer Sentiment Driven By Market Rally
- • Net Export Prices Turn Down
- • What "Average Joe" Really Thinks
- • Blood Bath As Italy Faces Crisis
- • Are Oil Prices Confirming ECRI Recession Ca...
- • Oil Price Spike Update
- • No Joy In NFIB Report
- • Market Vs Economic Cycles And Sector Rotati...
- • Employment - The Good, Bad & Ugly
- • ISM Non-Manufacturing Index - Not Adding Up
- • Productivity Up - Costs Down
- • Fed's Outlook Much Weaker Than Reported
- • Food Stamp Usage Sets New Record
- • Fed Trapped By Inflation
- • Manufacturing Not Showing GDP Strength
- ► October (24)
- • STA Risk Ratio Turns Up
- • Buy Signal Is In - But Move Slowly
- • Recession Still Likely Despite Bump In GDP
- • A Haircut, Boost and Drop
- • New Homes Sales - Glued To The Bottom
- • Consumer Is Key To Next Recession
- • Case-Shiller 20-City Index Flat As HARP Wil...
- • CFNAI - Better But Still Negative
- • Understanding Federal Debt: Point - Counter...
- • Temporary Bounce In Philly Fed Confirmed By...
- • Inflation Rises Along With Housing Hopes
- • Snipe Hunting In The Housing Market
- • Der Spiegel is Der Wrong
- • Inventories, Sentiment and Sales - Behind T...
- • The Empire Is Tarnished
- • A JOLT To The System
- • NFIB and PCI - More Signs Of Weakness
- • 1929-45 Vs Today - Following The Same Path
- • Unemployment Report Worse Than It Looks
- • Bearish Sentiment Abounds
- • ISM Composite Index - Been Here Before
- • Yield Spread Confirming Recession Call
- • Market Breaks Its Neck
- • ISM Manufacturing Index - Backlog Drawdown ...
- ► September (34)
- • 5 Months Down - Time For A Bounce?
- • Economic Trifecta - But No Winners
- • Economy Upticks & Jobless Claims Fall
- • Gallup - Economic Confidence Slides
- • Can Margin Debt Give Us A Clue On Market Di...
- • Euro Tarp - Why It Will Be A Screaming Fail...
- • Consumer Doldrums
- • Chicago Fed National Activity "Slowing Down...
- • End Of Week Technical Wrap Up
- • The Yield Spread Is Lying About The Coming ...
- • Leading Indicators Predict Weaker Economy
- • Why The Fed's "Silver Bullet" Won't Kill Th...
- • Fed Buy's Paltry $ 400 Billion - Need A Hug...
- • Market Weak - Waiting On The Fed
- • Housing Still A Drag
- • Consumer Confidence Remains At Lowest Level...
- • Coordinated Central Bank Intervention Creat...
- • Philly Fed Survey - Predicting Recession
- • CPI Rises - Inflation Hits Home
- • Consumers Tapping Out Savings To Spend
- • PPI - Pushing A Slowdown
- • NFIB Confidence Slides Lower
- • Export Prices Still A Negative For The Econ...
- • The Great American Economic Lie
- • High Yield Spread Signaling Recession
- • The Economy Weakens More
- • Obama's $ 400 Billion For Jobs And Counting
- • Trade Deficit - Points To Possible Uptick I...
- • Another Domino Falls For The Market
- • Corporate Profits Are In Trouble
- • Are Stocks Undervalued?
- • European Markets Down Sharply
- • Jobs - What Jobs?
- • Why Unemployment Is About To Surge
- ► August (38)
- • Market Bounce OR New Bull Market
- • Chicago ISM Confirms Weakness
- • Consumer Confidence Collapses - Again
- • Personal Incomes Still Under Pressure
- • Annotated Bernanke Speech - The Elusive Eco...
- • Corporate Profits - Hinting At Recession
- • GDP - Revised Down
- • The Deficit Spending Trap
- • Will Ben Go For Another Round Of QE?
- • Boomers - Are Going To Be A Real Drag
- • No Job = No New House
- • Beware Of Long Term Investing Advice
- • Technical Market Overview
- • EOCI Index Now At Recession Levels
- • Composite Inflation Index Warning Of Slower...
- • 7 Things That Make Me Worried
- • The Difference Between "WHAT" and "WHEN"
- • Empire Fed Index - 3 Strikes You're Out
- • Rosenberg On The Economy
- • Consumer Confidence Collapses
- • Trade Deficit Points To Sub-1% 2nd Qtr GDP
- • 7 Things My Mom Taught Me About Investing
- • Blood In The Streets - Part II
- • Ceridian UCLA Consumer Pulse - Going Flatli...
- • Market Bounce - Was It Stealth QE3?
- • FOMC Meeting Ends - No Change To Stance
- • NFIB Survey Says...Higher Taxes Won't Work
- • Panic Attack! Markets Extremely Oversold
- • Employment Report Less Than Meets The Eye
- • Market Trashed Again! Panic Hits.
- • Recession Almost A Certainty
- • QE 3 Coming - But Won't Save The Economy
- • Yield Curves & The Fed Model
- • ISM Composite Index - Continues Decline
- • Market Trashed - What Now?
- • Personal Income Under Pressure
- • ISM - Clinging On For Dear Life
- • Debt Deal - A Complete Failure
- ► July (38)
- • We Are All Guessing
- • Dismal Economic Numbers
- • 10 Lessons Learned From Poker
- • STA Risk Ratio - Still On Sell Signal
- • GDP - 2nd Quarter Estimate
- • Consumer Un-Confidence
- • Are We Headed For A Second Recession? Upda...
- • Chicago Fed National Activity Index Confirm...
- • Decline In Profits Leads Index
- • EOC Index Shows Economic Weakness
- • Help Wanted - Not So Much
- • Existing Home Sales - A Resumption Of Decli...
- • Housing Starts - Bouncing Along The Bottom
- • You Can't Have A Jobless Recovery
- • NAHB Housing Index - No Signs Of Life
- • Commentary: A Default Would Devastate D.C.-...
- • Tax Reform -The Overlooked Solution
- • Empire Index - Harbinger Of Bad Things To C...
- • Consumers Believe It's Really A Recession
- • Inflation Index Flashes Warning
- • Bernanke Gives US Congress "The Finger"
- • Retail Sales & Jobless Claims
- • Why The Trade Deficit Is Warning Of Weak GD...
- • QE 3 - "To Infinity And Beyond"
- • No Fear - That's Not A Good Thing
- • More Fed Stimulus - As Expected
- • NFIB - No Jobs For You
- • Why Economists Don't Have A Clue About Jobs
- • Raising Taxes Won't Raise Revenue
- • Why The Jobs Report Is Worse Than It Seems
- • Why Oil Price Spikes "Feel" Worse
- • The Average Investor Doesn't Stand A Chance
- • How To Just Get By On Food Stamps
- • Jobless Still Jobless- Teens Hired For The ...
- • ISM Composite Index Showing Contraction
- • Outperforming The Market By 30% With No Ris...
- • ISM Report - Little To Be Excited About
- • Greenspan - QE Was A Failure
- ► June (38)
- • Market Failed At Resistance - Now What?
- • Full Employment - Hope vs Reality
- • Existing Home Sales Reflect Balance Sheet R...
- • Myths Of Retirement Planning
- • Implications Of Household Debt Deleveraging
- • LEI Warning Of Economic Stumbling Economy
- • Greece Ripple Effects Could Create US Finan...
- • Consumer Confidence Falls
- • Economy Failing Right On Time
- • New Home Starts - It's The Job Market Stupi...
- • Composite Price Index - Pushing Upper Limit...
- • Empire Composite Index Signals Economic Con...
- • PPI - Ratio Pointing To Economic Weakness
- • NFIB Employment Expectations Dispells 5% Ec...
- • Trade Deficit - A Roadmap To Economic Stren...
- • How Far Might A Bounce Go?
- • What Is Really Driving The Weakness In The ...
- • Obama Says He Has No Fear Of A Double Dip
- • NYSE Margin Debt
- • Beranke Speech - A Prelude To QE 3
- • Don't Get Suckered!
- • QE3 - Just A Matter Of Time
- • Job Report Shocker
- • Where's My Bottom
- • STA Risk Ratio Indicator Update - Still Cor...
- • ISM Composite Index Confirmed Market Top
- • Not The American Dream I Was Told About
- • Never Buy Stocks Again? Seriously?
- • Where Is The Confidence?
- • ISM Manufacturing Report Hits The Brakes
- • A Weaker Dollar Equals A Weaker Economy
- • Market Bounce
- • SF Bay Bridge - "Made In China"
- • Consumer Confidence At Recession Levels
- • The Decline Of The American "Saver"
- • Greece Fire - NY Post
- • The Breaking Point
- • Financial Profits Reduce Economic Prosperit...
- ► May (32)
- • Consumer Confidence Falls
- • Slide In Corporate Profits - Part II
- • Personal Incomes Still Feeding The Gas Tank
- • Change In Corporate Profits Leads To Market...
- • Economic Surprises - The Wrong Kind
- • New Orders For Durable Goods - Another Nail...
- • STA Buy/Sell Indicator Flashes Sell Signal
- • New Home Sales Not Inspiring
- • STA Economic Output Index Takes A Plunge
- • Debt To GDP And A Sustainable Level
- • The Virtuous Cycle Of The Economy
- • Economy Shifting Into Slower Gear
- • 7 Impossible Trading Rules To Follow
- • Housing Starts Fall - Again
- • Cyclical Bull Markets In Secular Bear Marke...
- • Empire Manufacturing Index
- • More Inflation For Consumers!
- • Headline Inflation Pushing Up
- • Weakness In GDP Continues (X-M)
- • Small Business Optimism Getting Worse!
- • Import Prices Flashing Warning Signal
- • Home Prices Following The Path To Destructi...
- • The Hyperinflation Index
- • Unemployment Rate Climbs To 9.0%
- • The Link Between Productivity & Jobs
- • Commodities Stumble
- • Jobless Claims Jump
- • ISM Composite Index vs S&P 500
- • ADP & ISM Non-Manufacturing Index Have A Lo...
- • Gallup: More Than Half Of Americans Still S...
- • "Let Them Eat IPads"
- • Have We Seen The Peak In This Business Cycl...
- ► April (22)
- • Fallacy Of The Falling Dollar
- • 1.8% GDP Not So Great!
- • Bernanke's Folly - High Oil Prices Are Flee...
- • Consumer Confidence - STILL Not So Confiden...
- • Tracking The Next Gasoline Induced Recessio...
- • New Home Sales Tick Up
- • STA Risk Ratio Throwing Off Warning Signal
- • The Philly Fed Survery Says....#&^%@!!
- • Americans Receive MORE In Government Handou...
- • NYSE Margin Debt Reaching Danger Zone
- • Housing Starts Not Starting
- • Pitchfork and Torches For The Rich
- • S&P Downgrades US Credit Outlook To Negativ...
- • Why You Can't Invest For The "Long Term"
- • Jobless Claims & PPI - Not Looking Better
- • Who Pays The Taxes!
- • Retail Sales Confirms Consumer Weakness
- • Gallop Poll Confirms NFIB Index - Economy S...
- • Small Business Still Not Optomistic
- • Trade Deficit Narrows - But Not In A Good W...
- • NYSE Margin Debt Climbs
- • High Commodity Prices Not The Result Of The...
- ► December (22)