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Yesterday’s posted interview with David Malpass brings into sharp focus a key aspect of the US economic recovery that far too few investors are tuned into. Specifically, the underappreciated dynamic that second, third, and lower tier companies (the backbone of employment growth in the US) may not...
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Now that the S&P 500 has hit my full year target of 1050 (made last December 30 as published in the Wall Street Journal’s “MarketBeat” blog ) - with 3 months still left to go, I might note, cyclical bulls (like me) who have turned increasingly more cautious over the past two months...
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The stock market rally since early March appears to have three distinct phases to it. The first phase was the backing off from the economic abyss. The second phase was a bounce to fair value normalcy. The third phase (the one we are in now) is what I would call the return to business as usual phase ...
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Since peaking on July 10, the Macro Economic Reports Indicator (first introduced on this blog on June 17) has stagnated. Including the two major macro economic reports issued this week (consumer confidence and durable goods orders), the indicator now sits a full 3 points below its July 10 peak (see table...
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15 times $70 = 1050 1050 minus 10% = 945 This is the fair value math for the S&P 500. An appropriate P/E times a believable operating earnings number (12 months forward – mid 2010) minus an appropriate discount rate (stocks are, after all, a discounting mechanism). Of course, one can debate...
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The Fourth of July is just a few days away. So, how about a four step process to investment fireworks for this summer? The media is attributing yesterday’s stock market swoon as being driven by the disappointing report on US consumer sentiment. No doubt it is a contributing factor, however, a single...
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As dramatic as yesterday’s market decline was, there are several reasons to conclude that a market that was clearly fully valued (see last week’s June 9 postings) was one that was susceptible to any signs of economic and/or political areas of concern. On the economic side of the equation...
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excerpt from this week's "Sectors and Styles Strategy Report": The huge disconnect continues. As noted in last week’s report and in several blog postings, the financial markets are signaling not just economic stabilization but a robust (V shaped) recovery. Whether this comes to pass...
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Time flies when you’re having fun. For it was a mere 9 ½ weeks ago stocks were as desirable as a hug and a kiss from a Mexican lover, a point President Obama made note of just a few days ago re he and Hillary. For the bulls, these 9 ½ weeks were like the movie of same name –...
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For many, today’s date has a special social significance. For prudent investors, however, today is a day that this year marks a point of caution – unless you buy into one of two arguments being passed about: stocks warrant a higher than average P/E or stocks have made their lows as certain...
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Money has no soul. There are times when investing is a very callous business. Such times are now when investors must dispassionately assess the investment consequences of the swine flu disease. In this regard, it is advisable to recognize that the economic (and thus investment) impact of the virus as...
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While it is encouraging that equities have rallied to the point where many 200 day moving averages are either flat or nearly so and nearly all sectors, styles, regions, and countries are above their 50 day moving average, not to mention the fact that many 50 day MAs have an upward slope, there are reasons...
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Equities ended the first quarter on a more optimistic note. This pertains not just because stocks are rallied yesterday but to the fact that many investors stared into the abyss of the Great Depression II and came to the conclusion that a couple trillion dollars thrown at the world economy along with...
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Let me start by saying that on many levels, I agree with Paul Krugman. I read his blog regularly and find his work to be of significant value. I also share many of his political views and leanings. But when he makes the market efficiency argument, he has entered a space where he is wholly unqualified...
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Billionaires are now Slumdog Millionaires because: A. The credit markets remain frozen B. The US economy is falling off the cliff C. Corporate earnings are headed substantially lower (<$50 S&P 500 operating earnings) D. The socialist programs of the Obama administration threaten capitalism as...