Skip to comments.Investment & Finance Thread (Apr. 27 edition)
Posted on 04/27/2014 4:06:29 PM PDT by expat_panama
While we've all been asking 'which way' for the past few weeks all we've been getting is 'nowhere in particular'.
OK, so in the past 3 months we've seen everything leap up but then they all flop back to next to nothing just sitting there for a few weeks.
Seems IBD called it right by saying the correction began 3 weeks ago with no 'uptrend' so far. Major indexes have given us new lows and descending highs --with volume on the bearish side.
We got all kinds of pundits predicting all kinds of directions, but imho the "usually reliable" signs say we may as well get ready for more of the same.
Unless we get a follow thru day tomorrow. 8P
btw, IBD's clear on that follow-thru stuff saying it's no guarantee of things to come. It's just that (like they say) while not every FTD brings in a good uptrend, we know that every good up trend has had a FTD.
This is the thread where folks swap ideas on savings and investment --here's a list of popular investing links that freepers have posted here and tomorrow morning we'll go on with our--
Open invitation continues always for idea-input for the thread, this being a joint effort works well. Keywords: financial, WallStreet, stockmarket.
Sunday afternoon pre-ping...
I’m pumped and ready for my punishment in the morning. Tomorrow when the Nasdaq gives my portfolio a low blow or judo chop, I’ll just grimace and say “Thank you sir can I have another”?
Or— “Come back world, there’s part of my face you haven’t walked on yet!!!”
I told you the last time gold was going to fall and it did. I’m telling you again that it will fall, but most of you don’t listen.
No argument from me on that one, historically gold's price should be a fourth of what it is now--
--but it may take a few years though....
Good morning all! The new week's beginning (2 hrs before the bell) with stock indexes modestly up and metals flat/off.. My 'stack-o-stuff':
Stock Prices Are Cheap! Valuation Geeks Get it Wrong Again Apr 25 by Ronald Delegge
Gold vs. Silver: Is the Ratio Bullish or Bearish? Apr 23 by Ronald Delegge
Election-year Senate vote nears on minimum wage By ALAN FRAM - AP - Mon Apr 28, 2:46AM CDT WASHINGTON (AP) Win or lose and they'll probably lose Democrats hope this week's Senate showdown over raising the federal minimum wage reaps them benefits in November's congressional elections. (full story)
Fannie-Freddie Fate Hangs on Senate Action This Week: Mortgages A U.S. Senate plan for Fannie Mae and Freddie Mac , the most thorough yet for winding down the two mortgage financiers, faces a first test this week with its authors making last-minute changes to gather more support. The 22 members of the Senate Banking Committee will decide as early as tomorrow if Bloomberg
The ratio should be around 15.
That means silver needs to rise and gold to decline to close on the very long historic bench mark.
BANK OF AMERICA: We Screwed Up Calculating How Much Capital We Have
Kabul water park children slides
Youths slide down a huge slide at a public water park in Kabul, October 4, 2013.
This morning Bank of America put out a statement revising its regulatory capital levels lower than the bank previously thought.
As a result, and at the request of the Federal Reserve, the bank will have to suspend its plans to boost dividends and repurchase stock. Naturally, this does not make shareholders happy.
The stock is down almost 3% in premarket trading on the news.
From the bank’s release:
On April 16, the company issued a press release announcing preliminary financial results for the quarter ended March 31, 2014. As part of such release, the company included estimated preliminary Basel 3 capital amounts and ratios as well as Basel 1 capital amounts and ratios for 2013. Subsequent to the press release, the company discovered an incorrect adjustment being applied in the determination of regulatory capital related to the application of the fair value option to certain legacy Merrill Lynch structured notes resulting in an overstatement of its regulatory capital amounts and ratios. The company correctly adjusted for the cumulative unrealized change on structured notes accounted for under the fair value option, but it incorrectly adjusted for cumulative realized losses on Merrill Lynch issued structured notes that had matured or were redeemed by the company subsequent to the date of the Merrill Lynch acquisition.
This month, Bank of America missed earnings estimates due to a one-time legal charge.
A long time ago we used to have one-oz. $20 gold pieces and one-oz silver dollars, but that hardly ever matched open market commodity prices that were all over the place.
They have been doing very well, but maybe these days BAC is one large cap that I might want to step back from...
800M? That is hard to believe. (i.e would be over 10% of the entire world’s population)
Deal is , in the corporate world big banking and financials are the last ones I would trust. Too many examples through the years (even recent) of cooked books.
Here's a great chart from BI Intelligence looking at one of Apple's most quietly powerful advantages.
It has ~600 million accounts on file, most of which are linked to credit cards, which is light years ahead of its competition according to BI Intelligence. Amazon, the biggest e-commerce company in the world only has 224 million accounts.
The 600 million accounts is really astounding when you consider that for people to get an account with Apple, they likely had to spend at minimum $200 for some sort of iPod, iPhone, or iPad.
Free, popular web services like Twitter don't have 600 million users. Yahoo, which is one of the most popular websites in the world has ~700 million monthly users. Apple isn't that far from Yahoo.
The bigger picture here, as far as Apple is concerned, is that the company has a healthy user base. Even if Apple totally botches execution of new products, it's going to be around for a long time with this many users. chart of the day credit card accounts
Business Insider: http://www.businessinsider.com/chart-of-the-day-apple-has-600-million-accounts-blowing-away-every-other-company-2013-11
I like their chart work......fwiw-
I think Jason is living in Costa Rica...these days.
I trade pretty regularly...mostly energy / metals. I do send out a free e-mail now and again...
Anyone here would like to get it...let me know.
Always like to talk charts.
Especially in the Federal government. It's a real political topic, so we hear a lot of vague bizarre adjectives ("completely out of control", "literally exploding") w/o numbers that are open to all and speak for themselves:
Kind of like the way folks talk about global warming.
Wow. I didn’t realize it had dropped like that. Factoring in population growth adds to it also. That must be federal employees only.
A lovely new day to all! After yesterdays "mixed in higher trade" we now got index futures soaring and metals coming out the other end. News:
- Corporate news lifts stocks, tight money markets buoy euro European stocks rose on Tuesday, as optimism surrounding corporate earnings and merger moves eclipsed the crisis in Ukraine, while rising euro zone money market rates and strong German consumer confidence supported the euro.
- Debating "Sell in May" and Berkshire Hathaway With just a few days before the beginning of May, readers of the financial media are being treated to a slew of stories discussing the investment saw, "Sell in May and Go Away." These stories ... Barrons.com
- Toyota moving US base from California to Texas TORRANCE, Calif. (AP) Toyota delivered a surprise pink slip to California on Monday, announcing the company would move its U.S. headquarters and about 3,000 jobs from the Los Angeles suburbs to the outskirts of Dallas. Associated Press
- Bull market won't die until a recession hits: RBC One market strategists says the bull market in equities will keep on humming unless we hit a recession. MarketWatch
There is a smidgeon of good news in Louisiana this morning.
Retirement age increased by bill
Capitol news bureau
April 28, 2014
A House-passed bill that would raise the age state employees could retire headed Monday to the full Senate.
The Senate Retirement Committee advanced House Bill 38. HB38 would change the retirement age to 62 years of age, after five years of service. The current age is 60.
The committee amended the legislation to set a July 1, 2015, start date for the change.
HB38 sponsored by state Rep. Kevin Pearson, R-Slidell, now moves to the Senate floor for debat
That may not be a given. Another way of looking at it is that we're seeing more of a corrective 'downsizing'---
--like how we see in the private sector with productivity rising with a recession. What I'm saying is rather than being 'very hard hit', that gov't payrolls can also be seen as resetting to more appropriate levels.
must be federal employees only.
That may be true; problem is that iirc it includes overseas military as well as stateside civilian, that plus one's from Census Bur. data and the fed graph uses BLS numbers.
Oh I don’t disagree that it was needed. But people can;t have it both ways. They can’t complain about the slow job growth when it is being impacted by declines in government employees. Also on NFP days you will see people say that the job growth is “all government” when that is factually false. People here are their own worst enemies because they refuse to be informed.
Good morning expat:
Any idea if Warren Buffett dumped a bunch of shares of BAC prior to their recent ‘miscalculation’? Not that he would act on inside information...
And then there is this
U.S. Regulatory Costs Are Now Bigger Than Canada’s Entire Economy
Sure they can --and they do it all the time. OK, we're talking about justified complaints. Seriously, there's reason to consider that the impact of gov't payroll declines can actually increase job growth. The thing is that since Jan. '08 we've had a negative correlation between gov't payrolls and total employment--
--so whether or not we're seeing a causal relationship here, we can pretty much accept that boosting gov't payrolls has not measurably helped total employment levels and cutting gov't payrolls hasn't seemed to hurt..
Then again, his status may be changing now --"Why Is Buffett So Quiet With Executive Pay? - Joe Nocera, New York Times".
Does it include private contractors doing jobs once done by government employees?
That is a good point. Also the computer advances during that time period should have had a large impact.
huh, we got a weird Wednesday morning with futures traders, all sectors are down! --metals lead the way and stock indexes follow. For stocks it makes sense after the way yesterday's modest gains came in on light trade (w/ big money expecting a downside). The gains were never quite able to crack though their resistance ceilings and now they've run out of steam. Other news:
- Europe Stocks Hit by Increase in Inflation Rate Wall Street Journal - 2 hours ago The euro edged higher and a recent rally in European stocks stalled Wednesday, with a pickup in inflation inside the currency bloc denting expectations that the European Central Bank is set to provide further monetary stimulus any time soon.
- Why Investors Expect To "Sell In May And Go Away" After a volatile month, ETF investing strategists expect the stock market to follow the seasonal "sell in May and go away" script as many technical indicators are warning that a sell-off lies ...Investor's Business Daily
- Playing Defense In a Market In Transition - Kevin Marder, MarketWatch
- Economy Acts As Predicted, Except When It Doesn't - Irwin Stelzer, TWS
- As Prices Rise, the Housing Recovery Wobbles - Paul Davidson, USA Today
- It Would Be a Shock If the FOMC Changes Direction - Stephen Oliner, RCM
- Fed expected to take further step toward ending bond buying
- The Largest LBO Ever Finally Hits Bankruptcy - Matt Levine, Bloomberg
- 2 giant banks, seen as immune, become targets Prosecutors are looking to address public outrage and alter the belief that Wall Street institutions are too big to jail.
- Senate ready to sink effort to boost minimum wage
- The Minimum Wage Has Its Origins In Racism - Carrie Sheffield, Forbes
Wouldn’t the same be true (and even more so) of private payrolls which are now at an all time high?
ADP out at 8:30 Consensus Est = +200K (Source: FactSet)
We have our earnings call this morning so I’m out of pocket most of the day. Good luck to all!
Act ADP +220K
Prior month revised up from +192K to +209K
a good point. Also the computer advances
The BLS numbers are employee/payroll lists, suppliers/contractors would be on other lists. My take is we're seeing a lot of downsizing/outsourcing like everywhere else. Years ago I could call someone at the IRS for questions, later it was an offshore 'tech support', and now it's all FAQ's online. What would be nice would be if the savings went to lower taxes, but instead we get tax hikes w/ gov't growth.
That's true for private payrolls where efficiency spawns growth, but not all sectors need to grow. We're better off with an improved designed car that uses less structural steel to produce a car that's stronger and safer --that means info/design employment grows and steel production employment falls even while total employment is higher.
We're talking gov't employment here which is down --and rightly so-- their payrolls replaced by tech improvements and outsourcing. This is also why total private employment is like you said--
--at an "all time high" (just barely)-- while total payrolls (including gov't) are still "not quite".
That is what makes me suspect that a lot of the government payroll deduction is actually being shifted to contractors and perhaps at a higher price.
Wednesday, April 30, 2014by Bill McBride on 4/30/2014 08:30:00 AMFrom the BEA: Gross Domestic Product: First Quarter 2014 (advance estimate)
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 0.1 percent in the first quarter (that is, from the fourth quarter of 2013 to the first quarter of 2014), according to the "advance" estimate released by the Bureau of Economic Analysis.
The increase in real GDP in the first quarter primarily reflected a positive contribution from personal consumption expenditures (PCE) that was partly offset by negative contributions from exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.
--and compare that take to how they reported the beginning of THE GREAT RECESSION (from here):
Q4 GDP Plummets to .6%
By Kimberly Amadeo January 30, 2008
The BEA reported that the advance U.S. GDP growth for Q4 2007 plummeted to .6% from an 4.9% in Q3, and 3.9% in Q2. The total GDP for the year was 2.2%, down from the 2006 growth rate of 2.9%. The decline in growth was due to the housing market slowdown and related weak consumer spending. (Source: GDP News Release)
Coincidentally, it is the exact same number as GDP growth in Q1 2007. The last time GDP was that low was in Q1 2003, the tail-end of the last recession. A healthy growth rate is about 2-3%. For a review of the most recent GDP reports, see GDP Current Statistics.
Agreed that we see a problem of sweetheart deals in 'sole-source' contracts breeding political paybacks, but most competitive bid contracts make costs much less as the private sector can get the job done sooo much better than gov't employees can.
PCE was very strong
It is strong at 3.0, but that’s down from 3.5 in Q4 2013.
We Just Saw The Biggest Explosion In Health-Care Spending In Over 30 Years, And It Had A Big Impact On GDP surgeon, doctor, OR
Spending on health care grew an astounding 9.9% in the Bureau of Economic Analysis' advance estimate of first-quarter GDP.
It's the biggest percent change in health-care spending since 1980, when health-care spending jumped 10% in the third quarter. Analysts said it's primarily due to a consumption boost from the implementation of the Affordable Care Act. Adjusted for inflation, America is spending more on health care than ever before.
Personal consumption grew by 3.0%, about half of which was due to the growth in health-care spending, said Ian Shepherdson, chief economist for Pantheon Macroeconomics.
"If health-care spending had been unchanged, the headline GDP growth number would have been -1.0%," Shepherdson said.
A BEA representative said the uptick "reflects additional spending associated with the implementation of the Affordable Care Act."
The first-quarter advance estimate reflects spending from January through March, the first three months when millions of people who gained insurance by signing up on exchanges established by the law or by qualifying for Medicaid coverage under the program's expansion.
Jared Bernstein, the former chief economist to U.S. Vice President Joe Biden and now a senior fellow at the Center on Budget and Policy Priorities, speculated that the growth was more likely associated with the Medicaid expansion at this point.
Sign-ups through the exchanges exploded in March, the last month of the first open enrollment period. Of the more than 8 million people who eventually enrolled in insurance plans, nearly half signed up in March or in a special two-week extended period in April. This means the uptick in health-care spending could be even bigger next quarter.
The detailed consumption data in the advance GDP report displays that spending on doctors and hospital services began to rise rapidly last fall, when the law known as Obamacare was implemented.
"Both are now running at more than twice their pre-Obamacare trend, indicating that pent-up/hidden demand for healthcare was huge," Shepherdson said.
"Next question: How long will it last?"
Here's a chart from Pantheon that shows the growth over the past year in spending on doctor and hospital services, the two factors that dominate the health-care portion of GDP: Obamacare chart
Ian Shepherdson/Pantheon Macroeconomics
Here's a chart from Business Insider's Andy Kierz that shows the annualized quarterly change since 1980: Health care spending
Andy Kiersz/Business Insider
“”If health-care spending had been unchanged, the headline GDP growth number would have been -1.0%,” Shepherdson said. “
That doesn’t sound good.
Wait a second.
We're saying that "affordable" equals "spending more than ever before"?
We have a government that is too big to be honest. Even if it were the most moral, ethical and careful government in the history of the world its reach and scope are so broad that it cannot know what it is doing.
When they hold a gun to your head forcing you to spend more it is not good. It robs you of the money you want to spend on things you want. The ACA will deplete the free cash flow of our economy.
We are falling behind rapidly. Here is a small example: My niece ordered an Android cell phone cover for $8 from China. It was supposed to take a month for delivery. She got it in a week with freebies for extra credit. She lives in Florida.
Yellen is Obama’s baby.
She’ll pump up QE again if this goes sour. GDP as something like .1% growth this past quarter.
It will stay that way until republicans take over the congress. Then the bottom will fall out, and Hillary and everyone else will be fumigating about how the republicans screwed everything up.
Boehner and McConnell will agree with them and agree to pay reparations. Then they will run