What Experts Say about This Past Week--Investment & Finance Thread Jan. 25

Weekly investment & finance thread ^ | Jan. 25, 2015 | Freeper Investors

[expat_panama]

Considering the top headlines were about soft footballs this has to have been an easy no-brainer week for investments.  Maybe; here's what he experts are telling us:                    

[excerpt from Investors Business Daily At Davos, Hypocrites Tell Rest Of Us To Lower Expectations] Former Vice President Al Gore listens to singer Pharrell Williams... [snip] ...talking, of course, about the annual confab at Davos, Switzerland, ... [snip] "The purpose," said former vice president and climate-change entrepreneur Al Gore, standing with hip-hop star Pharrell Williams, "is to have a billion voices with one message, to demand climate action now." OK, so how about you flying commercial, for a start? This year's ration of ridiculousness and hypocrisy is so prominent, even the media have noticed. It's pretty obvious that people who can pay $40,000 to attend Davos and fork over $43 for a hot dog, $47 for a burger or $55 for a Caesar salad — all actual prices at this year's World Economic Forum — would seem to be in a poor position to lecture the rest of us. Even so, Bloomberg highlights remarks by subprime mortgage billionaire Jeffrey Greene that "America's lifestyle expectations are far too high and need to be adjusted so we have less things and a smaller, better existence. We need to reinvent our whole system of life." Greene, according to Bloomberg, "flew his wife, children and two nannies on a private jet plane to Davos for the week." How's that for "less things"? His remarks are more than a little ironic, given one of the main themes of Davos this year: "Income inequality," or getting the rich to pay their "fair share." [snip]		[excerpt from Daily Finance Market Wrap: Stocks Fall on Miners, UPS; Indexes Up for Week] NEW YORK -- U.S. stocks fell modestly Friday, pressured by underwhelming corporate news including guidance from economic activity bellwether UPS and as materials stocks fell after bearish notes. Major indexes, however, rose for the first week in four, boosted in part by the European Central Bank's decision Thursday to further stimulate euro zone growth. Materials shares weighed on the S&P 500, falling 1.6 percent after Goldman Sachs (GS) cut its price target on various miners including a 42 percent downward revision to Freeport McMoRan (FCX) stock to $18. Goldman separately slashed forecasts on commodity prices including aluminum, copper and nickel. UPS (UPS) was among the largest drags on the S&P 500 after a gloomy outlook, alongside Exxon Mobil (XOM). On Friday Credit Suisse (CS) cut Exxon to "underperform." Declines were capped by bullish investor sentiment after Thursday's move from the European Central Bank, which detailed a bigger-than-expected bond-buying program to lift the region's sagging economy and fight deflation. "From where we're sitting, we're sensing continuation [from last year], the trend is still the upside," said Gordon Charlop, a managing director at Rosenblatt Securities in New York. "The corrections and the volatility will be a little more pronounced, a little more dramatic, but the trend remains intact." The Dow Jones industrial average (^DJI) fell 141.38 points, or 0.79 percent, to 17,672.6,the Standard & Poor's 500 index (^GPSC) lost 11.33 points, or 0.55 percent, to 2,051.82 and the Nasdaq composite (^IXIC) added 7.48 points, or 0.16 percent, to 4,757.88. For the week, the Dow rose 0.9 percent, the S&P gained 1.6 percent and the Nasdaq added 2.7 percent. [snip]
Related Threads: Global economy hopes raised after European stimulus The 5 mansions of the billionaire who wants America to live a 'smaller' existence More homeless camps are appearing beyond downtown L.A.'s skid row In Iowa, Cruz imagines ‘reigniting the miracle of America’ In Iowa, Santorum previews ‘blue collar’ pitch for 2016 The United States Is Imploding, On The Eve Of Destruction. Fired US McDonald's workers allege racial discrimination     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, economy.		[excerpt from T.RowePrice Weekly Market Wrap-Ups ]   ...ECB's QE plans drive shift in sentiment... Even as earnings reporting season was in full swing, investor sentiment appeared to be driven in large part by macroeconomic concerns, and not even domestic ones. Reports that the European Central Bank (ECB) might announce a large quantitative easing (QE) program—buying long-term bonds in order to lower borrowing costs and spur growth and inflation—seemed to foster improved sentiment early in the week. U.S. and other global markets rallied on Thursday, when the ECB announced a program that was in fact much larger than what many investors had anticipated. T. Rowe Price's London-based sovereign credit analysts note that while the size of the program is roughly in line with the Fed's recent QE efforts, it should have a larger effect on the European bond market given the smaller amount of bonds available. ...but also drives up dollar, threatening overseas profits for U.S. multinationals T. Rowe Price analysts also expect the program to have a significant effect on the value of the euro relative to the U.S. dollar. Indeed, following the announcement, the dollar reached its highest level against a basket of other currencies since late 2003. While the strong dollar has some positive effects for the U.S. economy, it also threatens the profits of U.S. businesses earning revenues overseas. Earnings down for financial sector, but individual opportunities remain Threats to overseas revenues and declining oil prices have already weighed considerably on earnings expectations. Analytical and database firm FactSet now estimates that overall earnings for the S&P 500 will grow by only 0.25% in the fourth quarter of 2014. Profit expectations have declined significantly for financials firms, along with energy companies. Some better-than-expected bank earnings reported Thursday helped fuel the market's rally, however. [snip]

[1010RD]

Because the rational and the prudent expect prices to behave, all the bailing out punishes the prudent and the rational.

If the credit crises were allowed to play its course with FedGov and the Fed just guaranteeing the system, but not individual institutions, investments, or sectors, we’d be in a boom.

[Zeneta]

There is no such thing as a nongovernmental deflationary spiral. Historical US deflations end naturally, unless government gets involved.

---

I agree 100%.

IMHO, the deflationary spiral is/was a foregone conclusion since 2008.

The Government, the FED, has attempted to overcome this as are central bankers around the world and for the most part they have been successful in only deferring the natural process. The same thing happened after the 1929 crash.

While the FEDS involvement hasn’t allowed this cycle to play out on its own, the de-leveraging among certain components that drive our economy have occurred.

I’d like to see an “Honest” chart of consumer debt from say 1980 to present.

Most Wall Street analysts were surprised by the weak retail sales in the 4th quarter. There was an expectation of “pent-up demand” and with lower fuel costs they thought retail sales would come in higher.

I believe that there is “pent-up demand”, however since the labor participation rate is as low as it has been I’m not completely surprised.

On balance, people don’t take on new or additional debt unless they have a reasonable expectation that they will be able to pay it back.

Optimism or the lack of optimism still rules the day.

Make no mistake, we are in a deflationary cycle.

The US Dollar will go a lot higher.

Back in 2008, I suggested, as did others, that the Euro currency will break apart, I still think that that is a real possibility.

At some point the German sense of “Nationalism” will gain enough political traction that they will tell the rest of the Eurozone to go pound sand, as they should.

It must happen because it will eventually dawn on them that it’s the only solution.

[expat_panama]

OOOPS!!!  Late this AM, (had to fight w/ termites) STOCKS ARE CRASHING!  Metals are so so.  Happened all at once --more news as we find out....

[Lurkina.n.Learnin]

Durable goods sucked. Down 3.4% MOM verses .5+ expectations.

[yldstrk]

s888

[mad_as_he$$]

YIKES!

[Lurkina.n.Learnin]

NYSE looking to apply rule 48 on expected volatile trading

“Just being reported on the wires
•Rule 48 will be in force on market opening
•Mandatory opening indicators are not required

The rule is: Exemptive Relief in an extreme market volatility condition.

(a) In the event that extremely high market volatility is likely to have a Floor-wide impact on the ability of [Designated Market Makers] to arrange for the fair and orderly opening, reopening following a market-wide halt of trading at the Exchange, or closing of trading at the Exchange and that absent relief, the operation of the Exchange is likely to be impaired, a qualified Exchange officer may declare an extreme market volatility condition with respect to trading on or through the facilities of the Exchange.

(b) In the event that an extreme market volatility condition is declared with respect to trading on or through the facilities of the Exchange, a qualified Exchange officer shall be empowered to temporarily suspend at the opening of trading or reopening of trading following a market-wide trading halt: (i) the need for prior Floor Official or prior NYSE Floor operations approval to open or reopen a security at the Exchange (Rules 123D(1) and 79A.30); and/or (ii) applicable requirements to make pre-opening indications in a security (Rules 15 and 123D(1)).

I’m assuming it’s due to the weather and the added effect of durables goods stinking”

http://www.forexlive.com/blog/2015/01/27/nyse-looking-to-apply-rule-48-on-expected-volatile-trading/

[expat_panama]

a market-wide halt of trading at the Exchange, or closing of trading

Huh.  Folks may be overreacting here.  Right now stocks are down less than a couple percent and those stop trading rules were set up after the '87 one-day drop of 20%.  Today's dip may be irritating but right now it's looking like small potatoes...

[expat_panama]

...to hundreds of thousands of "ideas" among smaller businesses, real economic growth will follow...

Agreed and thanks for your thoughts.

While governments can't run an economy we still use 'em to maintain order so we ourselves can run the economy.  Leftwingers look to the Fed for econ growth but the only thing the Fed's good for is keeping a lid on inflation.  Sure, congress passed some dumb law decades ago saying the Fed was supposed to make jobs (oh yeah, and eliminate the 'trade-deficit' too) but we all know that's a crock.

The big surprise to me is how much the Fed has actually managed to do for inflation with just a few tweaks to interest rates now and then.  'Tweaks' is all they got; it's not hard to see how the vast majority of interest rates are market driven.

[expat_panama]

...US deflations end naturally...

--but hey, everything we don't like will eventually end naturally if we wait long enough.  The idea is to have that 'natural end' happen as soon as possible, or better still to not have start in the first place.

[Abigail Adams]

An article about the possibility of another “lost decade” in the stock market:

http://jessefelder.tumblr.com/post/109242478660/heres-why-investors-are-now-facing-another-lost

[expat_panama]

tx, interesting. Doesn’t get enough in to trading specifics (do I buy today or sell?) but it’s more info to keep on hand though.

[Wyatt's Torch]

[Wyatt's Torch]

"Best house in a bad neighborhood"

[abb]

Translation: companies have more cash on hand to do whatever with? Invest, pay out as dividends, whatever?

If that be so, one caveat that Peter Lynch used to note: The Bladder Theory of Corporate Finance - “… as propounded by Hugh Liedtke of Pennzoil: the more cash that builds up in the treasury, the greater the pressure to piss it away.”

[expat_panama]

"Best house in a bad neighborhood"

Right.  This Friday is GDP day and this is pretty much what I'm expecting, tho sometimes I'm wrong...

[expat_panama]

What I’m seeing there is that low interest rates bode well for the econ. That either means things are going to be looking up for us eventually, or it means that this is as good as it gets and when rates go back up we’re SOL...

[Wyatt's Torch]

For my company we have paid down a lot of the debt we were saddled with after an acquisition and subsequent spin IPO. Now all investors ask is “what are you going to do with all of your excess cash”? Buybucks being the 31 request...

[Wyatt's Torch]

Depends on the pace of rising rates. I expect the fed to raise rates in the fall if for no other reason than to show that they will raise rates. (As an aside with all of the easing going on worldwide the US maintaining rates is tantamount to raising :-). But that won’t stop the flood of money into treasuries as the rest of the world slows down. Thus you have a flattened yield curve. the long rates are still going to be good for the economy particularly if it’s a slow ascent back up to “normal”. We just can’t take a “shock”.

[Wyatt's Torch]

AAPL +5% After hours

74+ million iphones sold. Wow.