What We're Reading

Opinion (145)


Looking Back At The Market

The ECB left its key lending rates at record low levels, and the four-week moving average for initial claims is at an eight-year low.  That sounds like a pretty good setup for a stock market that worries about earnings prospects tied to a stronger dollar, loves the thought of central bank policy rates holding near the zero bound, and is anxious to see evidence the U.S. economy is gaining momentum.

Despite the setup, it has been a swing and a miss so far for the stock market, which has once again been greeted with steady, and broad-based, selling pressure.

ECB President Mario Draghi is getting a lot of blame for the disappointing price action based on reports that his presentation regarding the ECB's asset-backed securities purchase program was lacking and the…

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Open Mouth - Insert Size Nine

The odds of any weather forecast predicting rain in the Dallas-Fort Worth area of Texas are heavily skewed in favor of the naysayers any given time of year.   

We live with 0-20% humidity daily; a far cry from the Chicago of which I was accustomed for 50 years.  Down here arthritis pain, or I should say inflation due to humidity or cold, is a distant memory (thank goodness).

So one becomes the Rodney Dangerfield heckler in the crowd when the weatherman, or weather[dot]com for that matter, forecasts rain.  You plow ahead and plan that birthday BBQ or soccer game anyway.  You wash the car and exterior windows of the house in full anticipation that once again, the rain will evaporate before ever hitting the ground once more.  Rain is seldom, welcomed and evaporates quickly.  Welcome to DFW.

Yesterday was such a day as I monitored weather[dot]com’s radar map and posted to my old Chicago friends on Facebook “it looks as though…

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Putting The Hong Kong Protests In Context

Pro-democracy protesters in Hong Kong have set a Wednesday deadline for a response from the government to meet their demands for reforms, threatening wider actions if Hong Kong's top leader does not meet with them.  Reports are that the protestors were considering various options, including widening the protests, pushing for a labor strike and possibly occupying a government building if the deadline is not met.

The protesters want a reversal of a decision by China's government in August that a pro-Beijing panel will screen all candidates in the territory's first direct elections, scheduled for 2017 — a move they view as reneging on a promise that the chief executive will be chosen through "universal suffrage."

The Economist…

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Talk Of Softbank-4-Dreamworks

Having recommended DWA long earlier this month, I was thrilled to see this headline today.  Now we're beginning to see what Softbank will do with a portion of their profits from the Alibaba ($BABA) investment after their IPO last week.

According to Hollywood Reporter, Japanese conglomerate SoftBank is in talks to acquire DreamWorks Animation in a deal that would value the company at $3.4 billion, according to a source with knowledge of the situation. 

SoftBank has been in the news lately because of its $20 million investment…

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The Bulls Push Back

Just when the (last few remaining) bears were enjoying some market wide liquidation, China apparently launched some stealth QE of their own reversing AUD/JPY and sending markets plowing over weak bears.  From Bloomberg:


According to Government Sachs

"This amount is roughly the same as a 50 bps cut to RRR for the whole banking system on a static basis.  Still, such an easing would be consistent with our expectation that…

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If The Scots Divorce, It Could Easily Bode For More

Polls released this week showed for the first time that a majority – an extremely small majority, but a majority nonetheless – of Scots favor independence, although other polls suggest the no camp remains in the lead. A poll is not the election, which will be held Sept. 18, but it is still a warning that something extraordinary might happen very soon. The political union between Scotland and England might be abolished after 300 years. The implications of this are enormous and generally ignored.

Obviously, this raises a host of question about how such a divorce might take place, whether the expected time frame – divorce by 2016 – will be adhered to, and how state property might be divided. It also raises the question of Scottish foreign policy. Will Scotland remain in NATO? Will it have membership…

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Down Days Happen

On down days such as this, one could easily assume some profits are being taken ahead of the Alibaba IPO the third week of September.  Some will look for signs of a market top (as they nervously do each day).  We could also sit and ponder if the dollar strength is weighing or over seas tensions are bothering the market but in truth, it doesn't matter.

Best thing to do is to check your stops, adjust as necessary and take note of just "who" is holding up amongst the selling.  I'm not referring sectors per se or to laggards or beaten up names, but what one could consider leaders with more "room to run" and not being sold first by finds. Funds, after all, know more than we do.

Better to explain it, those who may be seeing selling BUT are stil holding up (green) as eager…

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Investment Firm Director Snake In The Grass

Companies would expect their investment firm, especially management and Senior members, to not only dissuade insider trading, but to lead by example.  Here's a complete failure.

Case in point Mr. Michael Anthony Dupre Lucarelli.  The Director of Market Intelligence at a Manhattan-based investor relations firm.  Market Intelligence?  Serious oxymoron going on there?  Maybe not an oxymoron such as "honest politician" or "almost pregnant" but snake in the grass, no doubt (allegedly).

Today the SEC charged the "Director" of insider trading by more than a dozen clients.  The charges were filed against Mr. Lucarelli alleging he garnered nearly $1 million in illicit profits.


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Jackson Hole 'Pop' Continues

Markets being forward looking, I believe we're seeing a snap back ahead of this weeks Jackson Hole meeting (Aug 21-23) where policymakers will discuss at length their thinking around the labor markets of major economies, perhaps dropping clues about the path for monetary policy in the months ahead.

The spotlight will be on Janet Yellen, who will speak on Friday in her first appearance at Jackson Hole as Fed chair.

Most will recall Ben Bernanke two years ago that paved the way for an unprecedented $85 billion per month stimulus plan.

While most don't expect anything spectacular out of the Fed…

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Icahn: "income inequality.....is dampening GDP growth"

Among other things, I’m known to be a “reductionist.”  In my line of work you must be good at pinpointing what to focus on – that is, the major underlying truths and problems in a situation. I then become obsessive about solving or fixing whatever they may be. This combination is what perhaps has lead to my success over the years and is why I’ve chosen to be so outspoken about shareholder activism, corporate governance issues, and the current economic state of America. Currently, I believe that the facts “reduce” to one indisputable truth which is that we must change our system of selecting CEOs in order to stay competitive and get us out of an extremely dangerous financial situation. With exceptions, I believe that too many companies in this country are terribly run and there’s no system in place to hold the CEOs and Boards of these inadequately managed companies accountable. There are numerous challenges we are facing today whether it be monetary policy, unemployment, income…

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Market Snapshot August 3rd

Everyone knows our beloved five year rally seems to be weakening of late.  The big question is just "how" weak will it become.  If anyone tells you they know that answer, stop reading that website.  Certainly more and more sectors are now exhibiting profit taking even as fund managers lounge sipping Mai Tai's from their catamarans off the coast.  Indeed selling can beget more selling, however that doesn't mean we may not see a few days of buying to test overhead resistance and see if it holds; if the "top" is truly in.

Now is not a time (imo) to add to a long position.

Now is a time to be hedged or flat in a long portfolio.

Now is the time for day trades or brief swing trades.

Now is a time to let the charts show you direction.

A second enormous…

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Debunking High CEO Pay For Performance

In the business world, we're continually taught that high CEO pay is a necessary evil in order to attract top talent, and therefore, top returns.  Or "pay for performance" as they would have you believe. 

A recent analysis of CEO compensation data publicly released by Equilar oddly shows little correlation between the two.

This graph shows the pay of 200 CEOs and the stock returns of their companies: (click to enlarge)

The trend line—the average of how much a CEO’s ranking is affected by stock performance—shows that a CEO’s income ranking is only 1 percent based on the company’s stock return. That means that 99 percent of the ranking has nothing to do with performance at all. (The size and profitability of companies didn’t affect the random patterns.)

If “pay…

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Amazon At War

Is Amazon's cloud play becoming gloomy?  Amazon, specifically Amazon Web Service (AWS) is in an out war with for the cloud with Google, Microsoft, and many, many others and it doesn't look as though these pressures are going to ease up any time soon.  Indeed everyone has or is (late bloomers) is getting into the cloud and of course, cost savings by having your own data servers is quite the enticement.

A quick look at the facts.

AWS sales dipped this quarter as Amazon announced Thursday that for its second quarter that the category that includes AWS saw a 3% sequential revenue slip. That “other” category — which…

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Quote Of The Week - How Great Leaders Inspire

"If you hire people just because they can do a job, they’ll work for your money. But if you hire people who believe what you believe, they’ll work for you with blood and sweat and tears."  - Simon Sinek

When we, in the investment world, think of great innovators,it beckons thoughts of Alexander Graham Bell, the Wright brothers and modern day leaders such as Apple's Steve Jobs and possibly Amazon's Steve Bezos and Tesla's Elon Musk.

They've transformed or are currently transforming how we live each day.

Sadly Antonio Meucci doesn't come to mind, although the Italian…

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