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Monthly Archives: October 2013

1929, 1987, 2013

  1929, 1987, and 2013 are the only years in the past century that have seen S&P500 y-o-y real earnings growth of zero (or very nearly) while also seeing a 20%+ market gain.  FYI: 2013 sees negative real y-o-y S&P500 earnings growth when share buy-backs are factored. Hard to stop printing money when you know this. Hard to continue printing too.  Overly expansionist monetary policy fueled the 1987 […] Read the rest of this entry »

The Nightmare Scenario Approaches

At 2pm today the Fed FOMC meeting posted their much-anticipated statement. Expectations were met: nothing new was communicated. The Fed plans to continue QE3 at the same pace and it gave no hint at when tapering would initiate. The same targets were reiterated: 6.5% unemployment (the U3 rate that is riddled with statistical mirages), and an inflation rate of 2% or slightly higher. I […] Read the rest of this entry »

What inflation?

The latest CPI data was released from the BLS an hour ago.  September showed benign inflation at the consumer level. It would appear the Fed’s got a green flag to continue QE until January –according to my inflation estimates. But look at 2014. If the Fed keeps the brick on the gas pedal through April, real-world inflation is likely to reach 4% by next […] Read the rest of this entry »

Greedometer Newsletter posted

This week’s Greedometer newsletter has been posted. In this week’s letter: The Greedometer gauges blow-out to epic levels. A 10th input parameter is added to the strategic Greedometer risk gauge. Insiders continue panic selling. Retail investors pile into stocks and stock market call options. Advisors are uniformly wildly bullish. Euphoria! US & China manufacturing continue a slow and steady slowing. If the Fed surprises […] Read the rest of this entry »

US Manufacturing PMI Update

The U.S. manufacturing sector saw very modest growth in the latest survey of Purchasing Managers (the PMI).  The manufacturing sector has been gradually slowing since peaking in early 2010. The latest report also showed a weakening in new orders. So next month’s reading should be equally weak. Once again, the trend is not your friend. This is the best we can do — and […] Read the rest of this entry »

China PMI update

The China manufacturing PMI data for October just came out. Guess what?  The trend is still not your friend. It’s OK if China’s manufacturing sector stagnates or even very slowly contracts because the economy needs to gradually shift from being heavily reliant on exporting manufactured goods to increasingly driven by domestic consumption.  But that transition has to be slow and smooth.  No easy feat. […] Read the rest of this entry »

This is going to tick you off

This chart is going to tick you off. The top half shows the pace of S&P500 share buy-backs (green), and the ratio of insider selling. To be more complete, the insider selling data is for the preceding 6 month period, and has been pushed back by 1 quarter. I’ll explain why I’ve done this after you take a look at the chart. The bottom […] Read the rest of this entry »

2014: the training wheels come off

The European Central Bank (ECB) released more information about the bank asset quality test it plans to conduct.  Given that previous european bank stress tests were merely deceptive cheerleading exercises, a legitimate job needs to be done to avoid losing credibility (we don’t want a major central bank to lose credibility…). What’s different this time (why take this seriously): The ECB is doing the […] Read the rest of this entry »

Greedometer Newsletter Posted

This week’s letter has been uploaded.

In today’s Greedometer Newsletter…

Among other things, we discuss: The juxtaposition in philosophies of two Nobel prize winners. Lofty P/Es. Record setting use of “buying on margin”. Widespread investor complacency — fear takes a holiday. Declining stock market breadth. The hot air inflating the S&P500. The latest employment report. Property bubbles in Germany and China. …. and of course strategic and tactical market risk levels via the Greedometers. […] Read the rest of this entry »