tag:blogger.com,1999:blog-109306072012-01-27T07:30:49.191-05:00Financial and Economic Perspectives for the Individual InvestorJack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.comBlogger18281100tag:blogger.com,1999:blog-10930607.post-7520991193850606752012-01-27T07:30:00.001-05:002012-01-27T07:30:49.307-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The initial estimate for Q4 2011 GDP is due out in about an hour. Meanwhile, I just checked and the forecast from <A href="http://www.macroadvisers.com/csx3/csxPage.asp?APPNAME=Macroecon&amp;LABEL=CSXGETPAGE&amp;CLASS=Macroecon.pclsMain&amp;METHOD=pageMain">Macroeconomic Advisers (MA)</A> from yesterday was for annualized real GDP growth of +3.1%. That was up slightly from their reduced forecast of +3.0% from last week. Usually, MA comes in within 0.2% of the headline official number, but this is just the initial, "advance" report and will be revised next month and again in March.</DIV> <DIV>&nbsp;</DIV> <DIV>MA is forecasting Q1 2012 GDP growth of +1.9%. That is up slightly from their reduced forecast from last week, but that "1" handle is still a bit concerting. There is still no sign or hint of an imminent recession, but one has to wonder if that "1" handle will simply be a short-term bump or a more persistent deceleration that could lead to recession.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-752099119385060675?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-5880868004013627102012-01-15T16:53:00.001-05:002012-01-15T16:53:53.815-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Although I am still not ready to make my annual retirement contributions since I haven't yet done (or even started) my taxes to know how much I can contribute, I am at least starting the planning process. My default, and most likely path, is to continue with my autopilot strategy and simply invest once again in the appropriate target date fund. In my case, I expect to retire at age 70 or so in another 13 years or so, so a 2025 target-date fund is most appropriate.</DIV> <DIV>&nbsp;</DIV> <DIV>In recent years I have been using the <A href="http://fundresearch.fidelity.com/mutual-funds/summary/315792663">Fidelity Freedom 2025 Fund (FFTWWX)</A>. I have been thinking about switching to Vanguard's equivalent fund, <A href="https://personal.vanguard.com/us/funds/snapshot?FundId=0304&amp;FundIntExt=INT">Vangard Target Retirement 2025 Fund (VTTVX)</A> since its expenses and return are better, but the total size of my account is still too small to warrant the hassle of moving the account, especially since I already have several Fidelity accounts. Although, I could open a Vanguard account for this year and see how it goes before making the decision to move.</DIV> <DIV>&nbsp;</DIV> <DIV>My other thought is that I'm not so keen on bonds and all the other stuff that goes into a target date fund, so I may decide to go simply with straight stocks or a more aggressive stock mutual fund. That would somewhat defeat the purpose of my autopilot strategy, but at least considering it as a viable alternative and would help me better evaluate whether the target-date approach is best, for me.</DIV> <DIV>&nbsp;</DIV> <DIV>Overall, I am moderately happy with my Fidelity target-date fund, although not thrilled with its performance over the past year, I just have this concern that it is somewhat inefficient in terms of fees and complexity, and may be a little too high a price to pay for the convenience of being on autopilot. OTOH, my portfolio is still too small to warrant a significant investment of my time.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-588086800401362710?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-81727808255484773942012-01-15T15:15:00.000-05:002012-01-15T15:16:10.598-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>I do like to get my free annual credit reports, but it is sort of a pain to get each one, paw through them entry by entry, and then save them locally for future reference, and heaven help you if you need to make corrections, but this week I will endeavor to bite the bullet and pull the trigger and do the deed(s). I do want to get my credit score as well, but that doesn't come for free as the actual reports do.</DIV> <DIV>&nbsp;</DIV> <DIV>Warning: There are lots of sites that purport to offer "free" credit reports, but the only official one is the FTC web site, at <A href="https://www.annualcreditreport.com/cra/index.jsp">AnnualCreditReport.com</A>, as described on the <A href="http://www.ftc.gov/bcp/edu/microsites/freereports/index.shtml">FTC web page</A>.</DIV> <DIV>&nbsp;</DIV> <DIV>For my FICO credit score I usually just buy it, one-time only, not subscription service, from Experian.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-8172780825548477394?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-36456967431172875972012-01-14T10:50:00.001-05:002012-01-14T10:50:57.901-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV style="FONT-STYLE: normal; DISPLAY: inline; FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: small; FONT-WEIGHT: normal; TEXT-DECORATION: none"> <DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV style="FONT-STYLE: normal; DISPLAY: inline; FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: small; FONT-WEIGHT: normal; TEXT-DECORATION: none"> <DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV style="FONT-STYLE: normal; DISPLAY: inline; FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: small; FONT-WEIGHT: normal; TEXT-DECORATION: none"> <DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV><A href="http://www.macroadvisers.com/csx3/csxPage.asp?APPNAME=Macroecon&amp;LABEL=CSXGETPAGE&amp;CLASS=Macroecon.pclsMain&amp;METHOD=pageMain">Macroeconomic Advisors (MA)</A> has lowered their forecast for Q4 annualized real GDP growth to +3.0% from +3.3%, and is also lowering their Q1 forecast to +1.9% from +2.0%. Although it is probably still too early to raise alarm, it is clearly disconcerting that Q4 now just barely has a "3" handle and Q1 has now lost its "2" handle. Growth below 2% is not exactly a sign of a healthy economy.</DIV> <DIV>&nbsp;</DIV> <DIV>The bottom line is that the forecast trend has been pointing towards a decelerating economy over the past month. That by itself is not a cause for alarm per se, but unless we see a reversal of that trend over the next one to two months, Q2 could be dicey. None of this in any way tells us what Q2 will be like, but simply that all bets are off.</DIV> <DIV>&nbsp;</DIV> <DIV>The weekly unemployment insurance initial claims report was disappointing, but one weekly data point doesn't indicate a trend. That will be something else to keep a close eye on. Overall, initial claims have been trending well over the past couple of months.</DIV> <DIV>&nbsp;</DIV> <DIV>The <A href="http://www.businesscycle.com/">ECRI Weekly Leading Index</A> was mixed this week, with the weekly data rising nicely, but the smoothed growth rate declining modestly, telling us only that the outlook is still unclear, but with a somewhat negative bias since the smoothed growth rate is still well below zero. Meanwhile, ECRI is still sticking with their call that the U.S. is tipping into a recession.</DIV> <DIV>&nbsp;</DIV> <DIV>We will definitely keep an eye on the GDP forecast trend over the next six weeks, as well as weekly unemployment insurance initial claims, as we transition from the tail of the holiday sales season and move back into the more normal part of the real economy.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV></DIV></DIV></DIV></DIV></DIV></DIV></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3645696743117287597?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-80694418735735423492012-01-10T20:09:00.001-05:002012-01-10T20:09:49.133-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV style="FONT-STYLE: normal; DISPLAY: inline; FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: small; FONT-WEIGHT: normal; TEXT-DECORATION: none"> <DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV style="FONT-STYLE: normal; DISPLAY: inline; FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: small; FONT-WEIGHT: normal; TEXT-DECORATION: none"> <DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV><A href="http://www.macroadvisers.com/csx3/csxPage.asp?APPNAME=Macroecon&amp;LABEL=CSXGETPAGE&amp;CLASS=Macroecon.pclsMain&amp;METHOD=pageMain">Macroeconomic Advisors (MA)</A> has lowered their forecast for Q4 annualized real GDP growth to +3.3% from +3.4%, but is maintaining their Q1 forecast of +2.0%.</DIV> <DIV>&nbsp;</DIV> <DIV>The bottom line is that they are essentially planting a stake in the ground and implying that there will not be a recession in Q1.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV></DIV></DIV></DIV></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-8069441873573542349?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-13510940625886078482012-01-09T19:22:00.001-05:002012-01-09T19:30:19.007-05:00<div dir="ltr"><div style="color: black; font-family: 'Calibri'; font-size: 12pt;"><div style="color: black; display: inline; font-family: 'Calibri'; font-size: small; font-style: normal; font-weight: normal; text-decoration: none;"><div dir="ltr"><div style="color: black; font-family: 'Calibri'; font-size: 12pt;"><div><a href="http://www.macroadvisers.com/csx3/csxPage.asp?APPNAME=Macroecon&amp;LABEL=CSXGETPAGE&amp;CLASS=Macroecon.pclsMain&amp;METHOD=pageMain">Macroeconomic Advisors (MA)</a> has lowered their forecast for Q4 annualized real GDP growth to +3.4% from +3.6%, but is maintaining their Q1 forecast of +2.0%.<br /><br /></div><div></div><div>The bottom line is that they are essentially planting a stake in the ground and implying that there will not be a recession in Q1.</div><div style="color: black; font-family: 'Calibri'; font-size: 12pt;"><br />-- <a href="mailto:Jack@Finaxyz.com">Jack Krupansky</a></div></div></div></div></div></div><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1351094062588607848?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-43668398910408657092012-01-05T11:42:00.001-05:002012-01-05T11:42:24.624-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV><A href="http://www.macroadvisers.com/csx3/csxPage.asp?APPNAME=Macroecon&amp;LABEL=CSXGETPAGE&amp;CLASS=Macroecon.pclsMain&amp;METHOD=pageMain">Macroeconomic Advisors (MA)</A> has finally come out with their initial forecast for Q1 annualized real GDP growth of +2.0%. They are sticking with their forecast of +3.6% for Q4 of 2011.</DIV> <DIV>&nbsp;</DIV> <DIV>They are essentially planting a stake in the ground and implying that there will not be a recession in Q1.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-4366839891040865709?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-47238820515439184872012-01-02T11:00:00.001-05:002012-01-02T11:00:26.879-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>I can't speak to the prospects of the Occupy movement in other countries since the United States is such a completely different case, but as we start the new year I would like to summarize my perception of where the movement is (in the U.S. only) and what prospects the movement has for the rest of this new year. Basically, the movement started and persists as a "protest" movement. They seek "change" if not "revolution" (whatever that means), but to date they have only managed a number of half-hearted protests of limited size. Sometimes they manage to stage larger rallies with the cooperation of (some) labor unions and students, but other than relatively minor disruptions, they continue to come up empty on the "change" and "revolution" fronts."</DIV> <DIV>&nbsp;</DIV> <DIV>Although the movement grew dramatically in October, they seemed to taper off and stagnate in November and December. Who knows, maybe that was the weather, but if that is true then the movement is even less potent than they seem.</DIV> <DIV>&nbsp;</DIV> <DIV>The big, open, make-or-break question for the whole Occupy movement (in the U.S., at least), is the degree of support and actual participation that will come from average Americans, who although they appear to offer some sympathy for the demands of the movement, seem determined to remain on the sidelines.</DIV> <DIV>&nbsp;</DIV> <DIV>It appears to me that although the movement can easily attract the unemployed, the students without jobs and large student loans, and the otherwise disaffected of society, they stand little chance of actively engaging the vast majority of average Americans with jobs and families and otherwise busy with their daily jobs. Sure, plenty of those people will honk their horns in support or maybe even donate a few bucks or maybe one of their kids will join the movement, that's about as far as they themselves will go.</DIV> <DIV>&nbsp;</DIV> <DIV>One of the reasons that the Occupy movement will not make deeper inroads into the American psyche is that the unity of the movement is only at the level of vague aims, like fairness, political corruption, and social justice, but when you drill down and listen to what individuals in the movement are actually saying and promoting, things like commitment only to direct democracy and opposition to representative democracy and opposition to capitalism itself, it is difficult to imagine that such specific goals are going to be very appealing to many average Americans. In other words, as the movement starts to clarify and detail its goals, their level of support among the general public will wither rather quickly.</DIV> <DIV>&nbsp;</DIV> <DIV>I suggest that you evaluate the movement at three levels: 1) sympathy, 2) support, and 3) commitment. Yes, their has been and will continue to be a significant degree of sympathy for the movement in terms of the issues they raise. There will even be some degree of support, although financial donations have already dropped off dramatically. Commitment is the really tough nut to crack. Sure, the movement appears to have a diehard core that really is truly committed, but that base doesn't appear to be growing and shows little prospect for dramatic growth in the months ahead, and without such growth the movement has little prospect of achieving the degree of "change" and "revolution" they seek.</DIV> <DIV>&nbsp;</DIV> <DIV>Another factor impacting the movement in the U.S. is that America is very diverse and geographically distributed. Egypt, Cairo, Tahrir Square, and the Egyptian people were all relatively synonymous. But in the U.S., New York and Wall Street are geographically separated from our political capital of Washington, D.C. And we have quite a number of major business centers all over the country. That means that Occupy has to try to be everywhere, which means that it has to divide itself, its people, its resources, and its attention, and not have the kind of central focus it had in any of the countries of the Middle East. Even with a more lax and permissive attitude, the D.C. occupation has been only very modest in size. Despite the difficulties caused by the financial crisis, recession, and weak recovery, Americans overall are still in much better shape and have a much brighter outlook on the future, and have a much more diverse range of life styles, aims, and interests than the average crowd outside the U.S. or in the Middle East specifically. Occupy Wall Street has been and remains the central focus of the movement in the U.S., but our social and political diversity and geographic distribution have been severe impediments to the movement.</DIV> <DIV>&nbsp;</DIV> <DIV>In summary, yes, the Occupy movement will remain with us for the coming year, but only as a shadow of their grand vision of last summer and fall. Yes, we will see a number of protests, rallies, and popup disruptions and flash mobs, but overall the level of disruption will be no worse than your garden variety of urban traffic jams and the like. Crowds will number in the dozens and hundreds and only occasionally in the thousands, but not consistently grow into the tens or hundreds of thousands that an effective movement would need on a sustained and regular basis to succeed as a force of change. Yes, the police will remain a constant, vigilant presence, but their response will become more measured as the protests fall into more predictable patterns. Yes, there will be a few protests that get out of hand and become near or actual riots, but overall the protests will be more at the level of minor annoyance and mere street theater spectacle than true "revolution" ala the protests in the Middle East. To put it simply, the United States, for all of its problems, is simply not the Middle East. Besides, the results from Tahrir Square are not looking so appealing of late.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Opixia.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-4723882051543918487?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-78497682445878176692011-12-29T19:19:00.001-05:002011-12-29T19:19:47.483-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>An interesting story on <EM>Bloomberg</EM> entitled "<A href="http://www.bloomberg.com/news/2011-12-29/rail-freight-surge-before-holiday-shows-u-s-skirting-recession.html">Rail-Freight Surge Shows U.S. Skirting Recession</A>" is about the first indication that I have seen that the economy is likely to see some strength in the early part of the coming year. That's good news, but not yet good enough to put the last nail in the coffin for a possible recession in 2012.</DIV> <DIV>&nbsp;</DIV> <DIV>The fact that unemployment insurance initial claims are still trending down is also good news and although it is not an indicator of economic strength per se, it is an indication that economic weakness is not yet upon us.</DIV> <DIV>&nbsp;</DIV> <DIV>The <A href="https://www.ism-chicago.org/chapters/ism-ismchicago/files/ISM-CDecember2011.pdf">Chicago ISM Business Barometer report</A> today was decent, but not strong enough to indicate any true strength going into the new year. Basically, it was suggesting more of the same. That will be great if it really means more of the expected +3.6% GDP growth in Q4, but that remains to be seen. My interpretation of the report is that a recession is unlikely in Q1, but we are not facing enough evidence of economic strength (yet) to be overly optimistic beyond Q1, yet. The report showed that more businesses were still seeing increases of new orders than seeing decreases, but it was still a minority of firms seeing increases, 39% vs. 43% seeing the same level and 18% seeing decreases.</DIV> <DIV>&nbsp;</DIV> <DIV>Overall, this latest data does indicate to me that a recession remains less likely than likely even though ECRI does make a decent case that we may be facing deceleration that would leave the economy vulnerable to a recession if we run into even a moderate shock in the new year.</DIV> <DIV>&nbsp;</DIV> <DIV>What we really need to see is whether businesses ramp their spending up or down over the next few months. The rail-freight report at least suggested that businesses were not (yet) ramping down.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-7849768244587817669?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-39858359075432894282011-12-29T10:31:00.001-05:002011-12-29T10:31:52.285-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>I can't tell you what investments will do great this coming year, but here are a few things I'm fairly confident of:</DIV> <UL> <LI>I don't care what "worked" this past year, or any other year; I only care about what will work going forward. <LI>Past performance does not guarantee future performance. <LI>Things work, until they stop working. <LI>Things are hot, until they're not. <LI>Jumping around (e.g., through "timing") can work well if you have the right combination of skill and luck, but usually is the surest way to increase your losses, even in a bull market. <LI>"Steady and sure" and "stay the course" generally work, over time but not necessarily in any given year or two or three, if you pick solid investments, but "holding" is doomed to fail if you pick the "wrong" investments or if the overall market is down.</LI></UL> <DIV>My retirement investments are down for the year (so far), by a few percent. I'll be making my 2011 retirement contributions sometime over the next four months (as soon as my taxes are done.) Unless I come up with some brilliant insight/discovery, I'll continue to buy a retirement target date fund, such as the Fidelity Freedom Fund that I currently have (and lost money on this year.) I currently have another 12 or so years until retirement.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3985835907543289428?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-51111051023714204852011-12-24T12:56:00.001-05:002011-12-24T12:56:10.480-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The stock market may have finished the week with merely a so-called "whimper", but the Dow did reach two milestones on Friday, breaking out above both the psychological 12,200 level and above the October peak. Both are good news. But, a one-day "whimper" does not indicate a trend, especially when it occurs on a slow, pre-holiday, pre-weekend trading session.</DIV> <DIV>&nbsp;</DIV> <DIV>This coming week will be another slow period where volatility could be high and "fake", temporary trends might appear and then disappear as quickly as they arise.</DIV> <DIV>&nbsp;</DIV> <DIV>This new peak may fall as quickly as it rose, or maybe we will see a modest rally into the end of the year, but at least the good news is that we have the positive combination of "higher highs" and "higher lows" which is the hallmark of a bull market even if there are lots of intervening down days.</DIV> <DIV>&nbsp;</DIV> <DIV>We still have quite a few psychological and technical hurdles ("resistance") to overcome before the Dow exceeds its July and April peaks, so technically the stock market will remain in a trading range for awhile longer. Traders and short-term speculators will have plenty of volatility to trade off of as market participants struggle to cope with conflicting incoming information about the state of the economy and various fiscal authorities in the coming months and year.</DIV> <DIV>&nbsp;</DIV> <DIV>Ultimately, we are waiting for the stock market to pass judgment on the economy and start telling us where the economy is likely to be in nine months.</DIV> <DIV>&nbsp;</DIV> <DIV>The bottom line is: 1) the stock market isn't in such bad shape, all things considered, but 2) stay tuned, since anything could happen.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-5111105102371420485?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-35261523636561719582011-12-24T12:35:00.001-05:002011-12-24T12:35:07.430-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV><A href="http://www.macroadvisers.com/csx3/csxPage.asp?APPNAME=Macroecon&amp;LABEL=CSXGETPAGE&amp;CLASS=Macroecon.pclsMain&amp;METHOD=pageMain">Macroeconomic Advisers (MA)</A> is still forecasting annualized real GDP growth of +3.6% for Q4. They had been forecasting +3.7% growth as of last week. This is still very good news.</DIV> <DIV>&nbsp;</DIV> <DIV>Unfortunately, this doesn't tell us anything about what Q1 or the rest of 2012 might be like.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3526152363656171958?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-23214367606623444882011-12-24T12:28:00.001-05:002011-12-24T12:28:37.901-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The <A href="http://www.businesscycle.com/news_events/news_details/3109">ECRI Weekly Leading Index (WLI)</A> declined sharply this week, and although not directly indicating a recession, it does at least highlight weakness that could easily deteriorate into recession in the coming months. ECRI is still forecasting that we are "tipping into recession", although they are still vague on when exactly such as recession did or will start and how long and how bad it might be. ECRI uses additional, longer leading indexes than only their own "short" leading Weekly Leading Index. In other words, the WLI is simply a "teaser" for the full ECRI story, which is available by subscription only.</DIV> <DIV>&nbsp;</DIV> <DIV>There is significant weekly volatility in the WLI weekly changes, but the smoothed growth rate which dampens that volatility did decline modestly this week, although it had risen the previous two weeks.</DIV> <DIV>&nbsp;</DIV> <DIV>So, this one report was a negative report, but doesn't yet (by itself) indicate that a recession in 2012 is a slam dunk.</DIV> <DIV>&nbsp;</DIV> <DIV>The real risk is that the WLI shows that the overall economy is relatively weak (despite a decent Q4) and that a weak economy tends to be prone to falling into recession if even a modest economic shock (e.g., problems in Europe getting worse) comes along.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-2321436760662344488?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-459736322867309852011-12-24T12:03:00.001-05:002011-12-24T12:03:58.360-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The latest <A href="http://www.workforcesecurity.doleta.gov/press/2011/122211.asp">weekly unemployment insurance report</A> was one of the best in quite some time, with initial claims continuing to fall further below the traditional recession threshold, at 364K vs. the 400K recession threshold. The more stable 4-week moving average of initial claims also continues to decline, at 380,250. This is indeed good news, but we need to see that number consistently below 350K for an extended period of time before we can take much comfort in it as far as indicating whether the economy is "healthy" again.</DIV> <DIV>&nbsp;</DIV> <DIV>Continuing claims were also down, but unfortunately that number is rather useless at this stage since it is unable to tell us how much of the decline was due to people finding work versus people exhausting their unemployment insurance.</DIV> <DIV>&nbsp;</DIV> <DIV>A recession is still a significant risk for 2012, but at least the unemployment insurance data is not pointing to a recession, as of this time.</DIV> <DIV>&nbsp;</DIV> <DIV>January and February will be critical months as we see how many of the current jobs were primarily seasonal and go away in January after the post-holiday retail sales season runs its course. The February data will tell us where we really are, whether we see a recessionary jump in initial claims or something more mild and indicative of at least a marginally healthy economy.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-45973632286730985?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-36805200105939541382011-12-19T00:00:00.001-05:002011-12-19T00:00:35.388-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Just when I was starting to get into my finance blogging on a more frequent basis, now I have a lead on some "real" work, so I'll need to suspend a lot of my blogging until further notice while I pursue this work lead. Sorry about that.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3680520010593954138?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-19665084980642568932011-12-18T11:15:00.001-05:002011-12-18T11:15:44.410-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Although all manner of pundits, commentators, and politicians are lamenting that Congress was only able to extend the payroll tax holiday for two months, I actually think this is a good deal since there is a lot of uncertainty about the economic outlook for 2012. Q4 has been shaping up quite nicely, so it is actually unclear whether the U.S. economy will need the payroll tax cut in 2012 at all. On the flip side, Q4 may be a "last hurrah" before we slip into a recession, in which case the economy will need a lot more financial medicine than the limited palliatives that Congress was considering this past week.</DIV> <DIV>&nbsp;</DIV> <DIV>In the former scenario, the expiration of the payroll tax holiday will be just fine. And if the economy continues to improve, the fiscal health of the Social Security program will be enhanced by letting the holiday expire ASAP.</DIV> <DIV>&nbsp;</DIV> <DIV>In the latter scenario, extending the payroll tax holiday will become a no-brainer, if not as part of an expanded stimulus package.</DIV> <DIV>&nbsp;</DIV> <DIV>What's not to like with either outcome?</DIV> <DIV>&nbsp;</DIV> <DIV>Okay, sure, from a purely political perspective, somebody "wins" and nobody wants to be the "loser", but from an economic perspective, it will be a win-win.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">And even from a purely political perspective, it allows both sides to re-make their political points early in the election season. Another win-win for both sides, although each side will attempt to spin it as a loss for the other side.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Opixia.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1966508498064256893?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-72290278291716919012011-12-15T10:08:00.001-05:002011-12-15T10:08:11.507-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The Industrial Production report for November this morning was slightly disappointing, showing a modest decline when a flat report was expected. Yes, this was a disappointing report, but one data point in a data series never indicates a change in trend. Besides, the ISM Manufacturing report for November did show a production gain. Their reporting periods and sampling may not be closely aligned. Which one is more "right" remains to be seen.</DIV> <DIV>&nbsp;</DIV> <DIV>Incidentally, industrial production is roughly at the level it was in January and February of 2005, so we still have quite a ways to go to get back to a "trend" level of production. Capacity utilization is 2.6% below its long-term average.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-7229027829171691901?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-55205683891414549332011-12-15T09:50:00.001-05:002011-12-15T09:50:58.259-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>We got another decent <A href="http://www.workforcesecurity.doleta.gov/press/2011/121511.asp">unemployment insurance claims report</A> this morning, continuing a downwards trend, in both the initial claims and the 4-week moving average of initial claims. Continuing claims were up very slightly, but the 4-week moving average was down slightly and claims were half a million lower than a year ago, although it is not clear how many of those people found work versus saw their benefits expire.</DIV> <DIV>&nbsp;</DIV> <DIV>Initial claims continue to inch down further below the traditional recession threshold, but are still too close to that threshold for any serious comfort (388K vs. 400K.) Local and state governments continue to shed jobs even as the private sectors is adding jobs, but at a rather meager pace.</DIV> <DIV>&nbsp;</DIV> <DIV>This was definitely a decent report, but still doesn't tell us very much about what is happening on the net employment front which has been showing modest but sluggish growth for quite some time.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-5520568389141454933?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-63070477733749231112011-12-14T17:35:00.001-05:002011-12-14T17:35:46.439-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV><A href="http://www.macroadvisers.com/csx3/csxPage.asp?AppName=Macroecon&amp;Label=CSXGETPAGE&amp;Class=Macroecon.pclsTemplates&amp;Method=pageTemplate2&amp;Message=Public%20Reading%20Room%7CPAGE_READING_ROOM">Macroeconomic Advisers (MA)</A>, the people who calculate GDP at the monthly level (as used by the NBER Business Cycle Dating Committee), just released their estimate of GDP for the month of October which shows that GDP has now fully recovered from the recession, finally.</DIV> <DIV>&nbsp;</DIV> <DIV>Annualized real GDP for October was $13.499 trillion, which blows past GDP of $13.388 trillion at the start of the recession in December 2007, as well as the peak for monthly GDP which was $13.448 in June 2008 (due to tax rebate checks in May, June, and July as per the Economic Stimulus Act of 2008.)</DIV> <DIV>&nbsp;</DIV> <DIV>I wouldn't bill this so much as great news, but simply as a significant milestone.</DIV> <DIV>&nbsp;</DIV> <DIV>Now, if only employment could recover as much lost ground. Industrial Production and personal income are also still lagging in the recovery from the recession. My own personal estimate is that it may take another three to five years for the recovery to complete, at least on the employment front, although industrial production and personal income will likely snap back more rapidly than employment.</DIV> <DIV>&nbsp;</DIV> <DIV>MA notes that half of the the sharp rise GDP in October will likely reverse in November, but they still stick with their tracking forecast of annualized real GDP growth of +3.7% for Q4.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-6307047773374923111?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-75442753486649631802011-12-14T16:54:00.001-05:002011-12-14T16:54:50.981-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Although the morning low for the market did not turn out to be the low for the full day, the market did manage to rise in the last 45 minutes of trading and close a few points above that morning low. That's not super-fantastic news, but it does prove that the sharp decline in the morning was a rather weak, narrow, and technical correction rather than an all-out "rout."</DIV> <DIV>&nbsp;</DIV> <DIV>Traders and short-term speculators will continuing "testing" and probing the market for renewed weakness (or strength) in the days ahead.</DIV> <DIV>&nbsp;</DIV> <DIV>The sharp declines of the past three days are kind of normal when the market has an unclear or weak trend and do not tell us definitively whether further declines or a rebound will be seen in the coming days.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-7544275348664963180?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-30719111130064766992011-12-14T13:36:00.001-05:002011-12-14T13:36:27.453-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>It's too soon to be able to tell for sure whether this current "mini-correction" to the recent stock market rally might blossom into a full-blown correction or at least a definitive return to the existing trading range. Traders and short-term speculators will continue to "test" the market, probing for further weakness – or strength.</DIV> <DIV>&nbsp;</DIV> <DIV>The market may have hit its low for this mini-correction this morning. We'll have to see if that is a definitive low or just an intermediate low with people "taking a breather" (and a little profits) before resuming.</DIV> <DIV>&nbsp;</DIV> <DIV>I personally won't be betting that it was a definitive low, but it certainly acted like it, especially after two full days of correction behind it. It did look as if the market reached "selling exhaustion", at least on a short-term basis, and now maybe there is at least a mini short-squeeze underway. But, all of that could just as easily fall apart and reverse without a moment's notice.</DIV> <DIV>&nbsp;</DIV> <DIV>In any case, none of the market activity of the past few days in any way tells us anything about the longer-term market trend, or even the intermediate-term trend (weeks to months.)</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3071911113006476699?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-34365309723997631732011-12-13T20:20:00.001-05:002011-12-13T20:20:37.753-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Although traders and short-term speculators did manage to push the Dow down below the magical 12,000 level today, they only did it by a mere 45 points, so I would be careful about concluding too much about the 12,000 level "not holding." Give it another day or two to either bounce back or to see a more substantial pullback.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">A couple more decent economic reports could do the trick.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">But, ultimately, it is the longer-term economic outlook for the next several quarters of 2012 that will drive the larger stock market trend.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3436530972399763173?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-59299376708607634632011-12-13T20:09:00.001-05:002011-12-13T20:09:52.635-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>It is still not out of the question for the recent stock market rally to show some life going into the end of the year, but the way the market started with a nice gain and then fell apart to close with a moderate loss today is certainly disheartening. So, the recent rally is now officially on the disabled list, and only extraordinary effort will get it back on track.</DIV> <DIV>&nbsp;</DIV> <DIV>That said, today was quite typical of the kind of activity one would expect to see when traders and short-term speculators are "testing" a significant rally. After a weak day on Monday, some traders and short-term speculators saw an opportunity to engineer a short squeeze at the open today. Yes, they succeeded, but a lot of people were wise to that move and sold into that early rally, erasing a lot of the early gain.</DIV> <DIV>&nbsp;</DIV> <DIV>Today was also a Federal Reserve FOMC meeting day, which are notoriously volatile. It can take three or more trading sessions for the market to rediscover equilibrium after an FOMC meeting as traders and short-term speculators overreact to virtually every news item or economic indicator that crosses the wire, for at least a couple of days.</DIV> <DIV>&nbsp;</DIV> <DIV>In short, today's market action doesn't tell us much at all about the durability of the recent rally, but it at least tells us that a Santa Claus rally is not an absolute slam dunk.</DIV> <DIV>&nbsp;</DIV> <DIV>Traders and short-term speculators will continue to "test" the market in the coming days</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-5929937670860763463?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-55497245556516100482011-12-13T10:29:00.001-05:002011-12-13T10:29:54.278-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Sure, the stock market may seem very "confused", diving one day and popping up the next, but there actually is a method to its madness. It is called "price discovery" and "testing." Some people do believe that they can calculate the fair and "proper" value for securities mathematically, but the stock market is designed to "find" the equilibrium price for stocks "the old-fashioned way", by "trial and error." Sure, maybe it does seem&nbsp; kind of like a drunk or sleepy-head stumbling around in the dark (because it is!), but the magic of it all is that it works. Eventually, or at least on average over time, the market "approximates" the price of stocks based on the actions of all market participants. In practice, this simply means that stock prices move too far one direction and then too far the other direction, rinse and repeat, but if you draw a line through the middle of all of that "action" you will see the equilibrium price over time. So, the decline yesterday was simply the market "testing" if the recent rally moved up "too far too fast", and the rise early today was the market "testing" whether market participants really thought the equilibrium price was somewhere in the middle.</DIV> <DIV>&nbsp;</DIV> <DIV>Now, the rise today may peter out and maybe even turn into an outright decline, or maybe turn into another "leg up" for the recent rally, but the testing process will continue as market participants incrementally "find" the equilibrium price for stocks, which of course is constantly changing as the real economy is constantly changing.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Meanwhile, during all of this volatility, true, long-term investors with money in quality, dividend-paying stocks get to enjoy nice gains simply as payment for tolerating the volatility.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-5549724555651610048?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-76931359429806663002011-12-12T16:36:00.001-05:002011-12-12T16:36:41.129-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>It is always fascinating to see days where the market opens down sharply but ends the day with only a very modest decline below that opening level. NASDAQ closed only 5.06 points below the opening level which was 29.53 points below the previous close. NASDAQ had been as low as another 20.84 points below that closing level as day traders were likely "testing" the market to see if it was ready for a more dramatic correction, but it wasn't, so the market recovered a fair amount of that intra-day loss.</DIV> <DIV>&nbsp;</DIV> <DIV>Traders made yet another valiant attempt to push the Dow below the 12,000 psychological level, and even managed to push the Dow down to 11,940.86, but there wasn't any real interest in that level of pessimism, so the Dow also bounced back, closing 80.53 points above that intra-day low and a mere 46.09 points below the level shortly after the open. A loss of 163 points for the day is certainly disappointing, but the failure of the "risk off" gang to build substantially on the initial losses was good news.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">I'm sure traders and short-term speculators intend to "test" the market further in the coming days, which will give us a lot of volatility as they continue to probe for weakness, and to determine whether the market really is ready to sustain another "leg up" or may be so exhausted that trading back down in the trading range may be warranted.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-7693135942980666300?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-22409844057871907442011-12-12T15:50:00.001-05:002011-12-12T15:50:47.283-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV style="FONT-STYLE: normal; DISPLAY: inline; FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: small; FONT-WEIGHT: normal; TEXT-DECORATION: none"> <DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>I missed it Friday, but <A href="http://www.macroadvisers.com/csx3/csxPage.asp?APPNAME=Macroecon&amp;LABEL=CSXGETPAGE&amp;CLASS=Macroecon.pclsMain&amp;METHOD=pageMain">Macroeconomic Advisers (MA)</A> is now forecasting Q4 annualized real GDP growth of +3.7% as of 12/9, up from their most recent forecast of +3.0% on 12/5. This is great news, but still doesn't clue us in as to how the economy might do in 2012 since there is significant volatility in GDP from quarter to quarter so that no quarter gives you a clue as to the next or any future quarter, even in the best of economic times.</DIV> <DIV>&nbsp;</DIV> <DIV>They will likely update their forecast a few more times before the official GDP report is issued in late January. Their last forecast before the official report is usually fairly accurate (+/- 0.3.)</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-2240984405787190744?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-51464388008312171362011-12-12T08:59:00.001-05:002011-12-12T08:59:58.900-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Futures suggest that traders and short-term speculators are trying to engineer a correction in the stock market today. Lower futures are not necessarily a bet that the market will close lower today, but merely a bet that the market will open lower. Sometimes a lower open does in fact lead to a lower close, but very commonly the selling at the open quickly runs out of steam and reaches "selling exhaustion", at which point traders and short-term speculators cover their bets and reverse their bets back to "risk on."</DIV> <DIV>&nbsp;</DIV> <DIV>This is part of the "testing" process. The theory is that if the recent rally really is exhausted, a weak open will be enough for short-term speculators to "throw in the towel" and lead to a decline and full-blown correction, but if instead speculators and even true investors are in fact "buying on the dip", any weak open will quickly blow up in traders faces, and lead to yet another "leg up" for the rally.</DIV> <DIV>&nbsp;</DIV> <DIV>It is also possible to have a combination of the two, so that a weak open is followed by a mini-rally that also quickly runs out of steam and hits "buying exhaustion", which is a strong signal that the recent rally really is "over" and ready for a more significant correction.</DIV> <DIV>&nbsp;</DIV> <DIV>I'm not betting on a particular outcome, but volatile trading with a mediocre close (a little up or a little down) is roughly as likely as a moderate rally, with a moderate correction being a slightly less likely outcome. In any case, all of those outcomes are still compatible with an overall upwards trend. Corrections are an important part of any significant bull market, or even a trading range.</DIV> <DIV>&nbsp;</DIV> <DIV>Although Europe continues to hang over the markets, holiday retail shopping enthusiasm could easily compensate for any dark clouds still looming over the horizon. The stock market has an annoying ability to rapidly bounce between worrying about the short, medium, and longer term outlooks. Traders and short-term speculators, intermediate-term speculators, and longer-term investors can rapidly swap roles as to who is leading and who is following. It is all a matter of how much money any given group is adding or removing from the market on any given day, week, month, or year, or even any hour, minute, second, or millisecond (with high frequency trading.) There can be rallies and corrections at all of these time scales, with significant volatility at time scales shorter than any particular time scale that a particular trader, speculator, or investor may be interested in. Different people (or computers or organizations) can have different tolerances for both degree of volatility and duration of volatility.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-5146438800831217136?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-38661528545990955732011-12-11T14:28:00.001-05:002011-12-11T14:28:20.488-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>It is truly wonderful that the recent rally has held up as well as it has, but the future of this rally is still a big open question. Sure, we could have a "nice" little "Santa Claus rally" through the end of the year (and maybe even some traditional "window dressing"), but then what? Europe remains a drag, but is still more of a sideshow than a primary determinant of the market trend. There will probably be some trader and short-term speculator interest in how retail sales are progressing during this holiday shopping season, but that's a short-term issue and not an indicator of how 2012 will unfold. The outlook for 2012 is indeed murky and will to some extent be a drag on the market, but as long as the outlook does not worsen appreciably, we can depend on the fact that "a bull market climbs a wall of worry." But if the outlook worsens, that is another matter.</DIV> <DIV>&nbsp;</DIV> <DIV>Maybe the real bottom line is that as nice as the rally has been, it still has only really been simply a recovery of the losses since the October 28th Dow peak of 12,231. For the rally to really "have legs", it will need to handily hop over that peak (only 50 points away) and then put another couple hundred points and couple of weeks behind it. That is all doable, but any rally built on short-term sentiment rather than the longer-term economic outlook has a very short shelf-life, and is very susceptible to traders and short-term speculators losing patience and flipping over to try o ride the market back down in its trading range.</DIV> <DIV>&nbsp;</DIV> <DIV>Even if the Dow manages to reclaim the 12,250 psychological level, sustaining the rally much beyond that will depend on some brightening of the longer-term outlook. Surmounting the 12,500 and 12,750 levels will be daunting indeed, but still within the realm of reason.</DIV> <DIV>&nbsp;</DIV> <DIV>There is still the very real possibility of a significant economic slowdown if not an outright recession in 2012, so it will be interesting to see market participants struggle as they try to resolve all of the various competing narratives about the economic outlook. I personally acknowledge that the potential for a recession (or at least a near-recession) is quite real, but I still feel that a recession does not seem to be imminent.</DIV> <DIV>&nbsp;</DIV> <DIV>And even if the outlook does hold up or even improve, traders and short-term speculators will insist on periodically "testing" the market, engaging in a little "profit-tanking", and occasionally even some breathtaking mini-corrections, so be prepared for lots of volatility.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3866152854599095573?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-6729891873950519732011-12-09T12:05:00.000-05:002011-12-09T12:06:07.314-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The <A href="http://www.businesscycle.com/news_events/news_details/3106">ECRI Weekly Leading Index (WLI)</A> rose sharply today, more than recovering from its sharp decline last week, although the smoothed growth rate of the index did not recover all of its decline from last week. Unfortunately, that is too much volatility in too short a period to sense the true trend, but that's the nature of the period we are in. The WLI level is really only modestly above its recent low for the past year which it hit for a second time three weeks ago and its smoothed growth rate is moderately negative, so the bottom line is that this "short leading indicator" is suggesting that the economy will be rather weak in the relatively near future (next month or two or three). The WLI itself does not appear to be solidly forecasting a recession yet, but ECRI reminds us that the WLI is a "short" leading indicator, not suitable for forecasting very far in the future.</DIV> <DIV>&nbsp;</DIV> <DIV>I watched the <A href="http://www.businesscycle.com/news_events/news_details/3105">Bloomberg interview of Lakshman Achuthan of ECRI</A> yesterday and he insists that ECRI's "call" from late September that the U.S. economy is "tipping into recession" is still "intact." ECRI makes the point that the WLI is a "short leading indicator" while their recession call is based on a variety of "long leading indicators."</DIV> <DIV>&nbsp;</DIV> <DIV>Although we may not be directly experiencing a recession right now in terms of the latest economic reports, ECRI points out that a lot of the economic measures have "decelerated" since the beginning of the year, which is not a very good sign for the future of the economy in the coming periods.</DIV> <DIV>&nbsp;</DIV> <DIV>They also point out that the U.S. economy doesn't have a history of being able to muddle along at low levels of economic activity for very long without actually dipping into recession, so they assert that if we continue to muddle, then recession is inevitable.</DIV> <DIV>&nbsp;</DIV> <DIV>They concede that a recession did not likely start in Q3, and would only say that their call was wrong if the economy did not dip into recession by the end of the second quarter of 2012. In any case, they say that it will be a full year before anybody can definitively say they are wrong with their call because it takes a number of months of data revisions until we have a clear view on what happened in a given period.</DIV> <DIV>&nbsp;</DIV> <DIV>So, the bottom line appears to be that ECRI is forecasting a recession that may or may not start in Q4 (current quarter) but certainly will start before the end of Q2. Once again they refrained from forecasting the length or depth of the potential recession.</DIV> <DIV>&nbsp;</DIV> <DIV>I will continue to defer to ECRI since they are the experts on recession calls, so far, but I have to admit that this time around I am more than a little skeptical about the absolute certainty of recession. Sure, there is clearly an elevated risk of recession, but that's as far as I'll go at this time.</DIV> <DIV>&nbsp;</DIV> <DIV>The thing to focus on in the near term is signs of further deceleration rather than outright decline in level of economic activity.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-672989187395051973?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-90376636543979640772011-12-09T08:57:00.001-05:002011-12-09T08:57:48.172-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Although there is some preliminary relief after some agreement was reached at the EU summit, this is not the end of the story, but merely the latest episode in a long and slowly-unfolding drama. Now they (we) move on to the next step in the process, whatever it might be. It's not that they don't know what needs to be done, but it is mostly a political issue rather than simply a technical finance issue. The politics in Europe are rather complex and can be rather slow-moving. Whether the market will be truly placated by this latest move or whether markets will react negatively that a more complete packaged solution has not been put in place remains to be seen.</DIV> <DIV>&nbsp;</DIV> <DIV>There is a fair chance that we might see an initial pop, but with a lot of "sell into any rally" sentiment that turns it into another decline. OTOH, there may have been an excess of selling yesterday in expectation or worry of an even worse EU summit outcome, so we could see a relief rally from that, especially if there were an excess of short selling as the Dow breached the psychological 12,000 level right near the close yesterday, which could fuel a modest-sized short-squeeze rally.</DIV> <DIV>&nbsp;</DIV> <DIV>But as important as Europe is to the U.S., people will ultimately still be placing bets as to what they perceive the economic outlook to be in 2012. Europe will likely be a drag, but Europe is not everything. Besides the U.S. has been getting quite a boost from foreign tourism, especially here in New York City.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-9037663654397964077?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-85663618055373240102011-12-08T16:47:00.000-05:002011-12-08T16:48:03.144-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Some may blame the market decline on news or lack of news from Europe, but the simply truth is that traders and short-term speculators were itching to incite a little profit-taking after the big rally last week. After moving sideways for a few days, there were only two directions to go and there wasn't a lot of incentive to go up, so traders and short-term speculators took advantage of anxiety over Europe as their trigger excuse. The real killer was probably the combination of an exhausted rally, a mind-numbing two-day summit in Europe, and the impending weekend. A decline was "the path of least resistance."</DIV> <DIV>&nbsp;</DIV> <DIV>Technically, the psychological resistance level of 12,000 for the Dow was breached, but only by a hair (11,998), and right at the close, so the Dow is now right on the razor's edge. Technically, a further decline might be obvious, but if too many people think it is that obvious, then the best trade is to bet against the crowd.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-8566361805537324010?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-86701227065054176752011-12-08T13:31:00.001-05:002011-12-08T13:31:22.041-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Traders and short-term speculators would love to push the Dow below its 12,000 psychological "support", but they may not have the "juice" to do it today. It's still possible, but unless they are able to do it, the market could rally as the shorts flip and try to engineer another short squeeze.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-8670122706505417675?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-53838166680970155672011-12-08T10:07:00.001-05:002011-12-08T10:07:34.795-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The <A href="http://www.workforcesecurity.doleta.gov/press/2011/120811.asp">weekly unemployment insurance claims report</A> was yet another welcome positive economic data point. The headline initial claims number was down "sharply" (-23K to 381K), although still a little too close to the traditional 400,000 recession threshold for much comfort. Continuing claims were down by a healthy amount, but we can't tell how much of that is simply due to people exhausting their benefits. Still, these were positive numbers. It is also worth noting that claims are well below the level of a year ago, so we are making real progress.</DIV> <DIV>&nbsp;</DIV> <DIV>I wouldn't get too excited by these numbers since the seasonal adjustment is significant at this time of year. For example, actual, unadjusted initial claims were way up at 523K, although that is still well below the 585K level of a year ago. And continuing claims rose by 513K, although once again the level is well below that of a year ago.</DIV> <DIV>&nbsp;</DIV> <DIV>Finally, although improvement in unemployment insurance claims is a very good thing, it actually doesn't tell us a lot about what is happening on the hiring front. Still, elevated unemployment claims have been a significant drag on the economy over the past couple of years, so improvement will be a positive factor for the economic outlook.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-5383816668097015567?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-71198610357044339222011-12-07T17:26:00.001-05:002011-12-07T17:26:18.895-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Although the Dow has inched up in the past two days, the overall market is still drifting sideways, with some selected stocks continuing to rise while some of the hotter momentum plays are seeing a little profit-taking. People are basically waiting for the market to "resolve itself", and either start another decisive leg up or roll over and start trading down in its trading range. The upcoming EU summit is a convenient excuse, but just that, an excuse, not a definitive cause for the sideways "consolidation" of the market.</DIV> <DIV>&nbsp;</DIV> <DIV>Thursday will give us another snapshot on the job market. Traders and short-term speculators can sometimes get overly excited by the weekly unemployment insurance initial claims number, but it is more important to watch the 4-week moving average of initial claims. It is currently hovering slightly below the traditional recession threshold of 400,000, but with no clear trend, although it almost appears to be drifting lower, a little, sometimes. But at least so far, it hasn't been spiking up in a way that would suggest "tipping into a recession."</DIV> <DIV>&nbsp;</DIV> <DIV>Speaking of "tipping into a recession",&nbsp; Lakshman Achuthan of ECRI is scheduled to talk with Tom Keene on Bloomberg TV&nbsp; sometime shortly after noon hour on Thursday about ECRI's recession call. Back at the end of September ECRI "made the call" that the U.S. economy is "tipping into recession." More than two months later and with quite a number of semi-decent economic reports passing by, people are wondering where that recession is or went or when it really will start to show up. ECRI does have a very respectable record with its recession calls, but this time even I am wondering why we aren't seeing at least some evidence that a recession is unfolding. Maybe it won't happen until January or later in Q1 or the remainder of 2012; ECRI hasn't been clear as to when the decline of the recession will really commence.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-7119861035704433922?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-29610462143745531852011-12-07T10:01:00.001-05:002011-12-07T10:01:41.629-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>During a recession the idea of economic stimulus such as a payroll tax cut makes sense, but in truth it is more of a political salve to show that politicians are "doing something" even though the actual, real, practical effect of the alleged stimulus may be quite meager at best. Right now, I am ambivalent about the economic value of the payroll tax cut. If it happens, fine, I'm okay with it, but if it doesn't happen this time around I'm okay with that too. Either way, I won't lose any sleep, nor will I jump with joy.</DIV> <DIV>&nbsp;</DIV> <DIV>The U.S. economic outlook is weak enough that the payroll tax cut may make a (barely) noticeable difference in 2012, but I can't say that I am fully convinced of its efficacy. I think I would rather see a narrowing of the budget deficit and a strengthening of Social Security than a meager, one-time only gain in GDP.</DIV> <DIV>&nbsp;</DIV> <DIV>The political value of the payroll tax cut is much more significant. Democrats want it so they can claim that they are "helping the middle class." On the flip side, Democrats would also like to see passage of the payroll tax cut fail so that they can use it as a club to convince the electorate how "mean-spirited" and "out of touch" Republicans are.</DIV> <DIV>&nbsp;</DIV> <DIV>Republicans are lukewarm about the payroll tax cut. Many of them do see political value with being seen as "helping the middle class", but a significant fraction of them see greater value with being "fiscally responsible."</DIV> <DIV>&nbsp;</DIV> <DIV>In short, Republicans could go along with a payroll tax cut deal that both costs them little and even gives them something in return, but since they gain political bonus points for being fiscally responsible (which includes refraining from excessive taxation) they stand to gain from failure to reach a deal.</DIV> <DIV>&nbsp;</DIV> <DIV>So, ultimately, it comes down to how badly the Democrats want the payroll tax cut. They can have it if they want to pay for it politically, but they may decide that it simply isn't worth the price and that the economy will limp along well enough and that the "club" value of Republican "obstinacy" is worth its cost in terms of failing to "help the middle class."</DIV> <DIV>&nbsp;</DIV> <DIV>Me? Right now, I'd prefer to see the "gimmick" of a payroll tax cut go away. If anything, I would rather see both an increase in the payroll tax rate and an increase in Social Security benefits. I think the latter would provide an economic stimulus as well as being "good for society."</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-2961046214374553185?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-6702883747897179382011-12-07T09:33:00.001-05:002011-12-07T09:33:41.119-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The market continues to struggle with the question of whether the recent rally is ready for "the next leg up" or has "run out of steam" and is getting ready to "roll over" and trade back down in its trading range. Flip a coin, literally. The latest rumors out of Europe are simply background noise and at best merely "excuses" for traders and short-term speculators to justify their attempts to manipulate the market. Ultimately, it depends on "real investment" money flows; even if the recent rally was due to substantial inflows of "real investment" money, the open question is whether such money will continue to flow into the market or not. And those potential flows depend critically on what outlook investors are betting on for 2012.</DIV> <DIV>&nbsp;</DIV> <DIV>As has been usual lately, the equal probability outcomes for the market are: 1) weakness and indecisiveness all day long, with no big change, 2) a modest rally that turns into a "sell into any rally" decline, possibly quite steep, and 3) weakness or a mini-correction that turns into a short-squeeze and a healthy gain for the day.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-670288374789717938?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-39048138742567552492011-12-06T20:15:00.001-05:002011-12-06T20:15:21.719-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The stock market was rather indecisive today. The Dow was up a little, but NASDAQ was down a little. Some stocks were up, while others were down. Some of the uneven action was due to some of the less-hot issues catching up, coupled with some of the hotter issues being hit by a little profit-taking as antsy traders and short-term speculators lost patience with the slowed pace of the rally. The market remains in a elongated "moment of truth", as market participants try to discern whether to maintain "risk on" or flip to "risk off."</DIV> <DIV>&nbsp;</DIV> <DIV>Some of this bated-breath&nbsp; indecisiveness is people waiting to find out the outcome of the upcoming EU summit on Thursday and Friday. It's difficult to say whether the market will "rally in relief" if the summit is successful or "correct in disappointment" that the summit didn't meet the more wildly misguided expectations of some euro critics. We could see some defensive profit-taking before the meeting. And we could some some volatile trading after the meeting on Friday. Plus we have the usual issue of speculators closing positions in advance of a weekend. In this case, speculators may choose to close positions before the EU summit and weekend combined.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3904813874256755249?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-22200928845185104432011-12-06T15:53:00.001-05:002011-12-06T15:57:24.633-05:00<div dir="ltr"><div style="color: black; font-family: 'Calibri'; font-size: 12pt;"><div>It was amusing to see the market pop when <em>The Financial Times</em> posted <a href="http://www.ft.com/intl/cms/s/0/839e6eac-202e-11e1-9878-00144feabdc0.html#axzz1fh6Tg4SB">a report that the EU is having "talks" to increase the size of the "rescue funds."</a> This really wasn't significant new news in that it is already "baked into the cake" that the EU will make whatever moves need to be made to address their debt situation, and there have been many rumors and leaked proposals in recent months, so this so-called "news" was not a major disclosure. That said, I'm sure that there will be no shortage of traders, short-term speculators, and cynical journalists and pundits who will continue to act "shocked" that the EU actually makes progress.</div><div style="color: black; font-family: 'Calibri'; font-size: 12pt;"><br />-- <a href="mailto:Jack@Finaxyz.com">Jack Krupansky</a></div></div></div><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-2220092884518510443?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-11065323907194976142011-12-06T15:44:00.000-05:002011-12-06T15:45:21.247-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>I missed it yesterday, but <A href="http://www.macroadvisers.com/csx3/csxPage.asp?APPNAME=Macroecon&amp;LABEL=CSXGETPAGE&amp;CLASS=Macroecon.pclsMain&amp;METHOD=pageMain">Macroeconomic Advisers (MA)</A> is now forecasting Q4 annualized real GDP growth of +3.0% as of 12/5, up from their most recent forecast of +2.8% (which earlier in November (11/17) had been +3.2%.) This is good news, but doesn't clue us in as to how the economy might do in 2012 since there is significant volatility in GDP from quarter to quarter so that no quarter gives you a clue as to the next or any future quarter, even in the best of economic times.</DIV> <DIV>&nbsp;</DIV> <DIV>They will likely update their forecast a few more times before the official GDP report is issued in late January. Their last forecast before the official report is usually fairly accurate (+/- 0.3.)</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1106532390719497614?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-262157330312099762011-12-06T09:03:00.001-05:002011-12-06T09:03:52.478-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Right now market participants have to make the difficult decision as to whether the recent rally has "run its course" and may be poised to reverse and trade down in its trading range or "break out" for another "leg up." The market may spend the day "fluttering", undecided between taking a dive and rallying further.</DIV> <DIV>&nbsp;</DIV> <DIV>Traders and short-term speculators will be trying to judge whether "this market" has the "juice" to break&nbsp; out above the recent peaks of the Dow, at 12,170 and 12,231, and the summer peaks around 12,725, with the intervening psychological levels at 12,100, 12,250, and 12,500. It would appear to be unlikely that there is that much enthusiasm for such a substantial rally, but you never know, and that's what these guys have to judge. The short-term guys may indeed take a negative bias ("risk off") and simply wait for the market to prove them wrong.</DIV> <DIV>&nbsp;</DIV> <DIV>Meanwhile, traders and speculators with a longer view are trying to decide whether there may be some light at the end of the tunnel six to nine to twelve months down the road, and if so then now may be a decent entry point, or at least "buying on weakness" as the rally wavers but doesn't completely fall apart.</DIV> <DIV>&nbsp;</DIV> <DIV>Cynics may passionately believe that Europe and the euro are "doomed to fail", but just because they want that outcome doesn't mean it will occur. A lot of the difficulty in Europe right now is more political and even personal (big egos and face) rather than strictly technical or economic in nature. There are a number of paths they can pursue to "dodge the bullet" and it is simply a matter of letting the drama and theater of the personal politics play out before letting the pieces of the puzzle fall into place, not for some grand, ultimate solution, but simply "good enough" to muddle through to the next stage.</DIV> <DIV>&nbsp;</DIV> <DIV>In short, we could see either a correction or another leg up, and with roughly equal probability due to the murkiness of the economic outlook for 2012. In truth, in theory (Dow Theory), the market itself is supposed to be the primary "barometer" for where the economy is headed nine months from now.</DIV> <DIV>&nbsp;</DIV> <DIV>From a practical perspective, the two main daily market scenarios are: 1) start the day with a pop but see it fizzle and turn into a decline due to "sell into any rally" sentiment, and 2) start the day with a modest pullback, but see that negative sentiment quickly run its course and reverse into a rally for the day due to short covering. But if sentiment really does flip to "risk off" or a stronger sense of "risk on", then we would see stronger moves down or up.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-26215733031209976?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-15985457358822514142011-12-05T18:46:00.001-05:002011-12-05T18:46:11.920-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>S&amp;P issued <A href="http://www.standardandpoors.com/ratings/articles/en/us/?articleType=HTML&amp;assetID=1245325249443">its rumored report</A> which warned of downgrading European sovereign debt after the market closed. Technically it didn't "downgrade" European sovereign debt yet, but put it "on CreditWatch with negative implications", meaning that they estimate that there is greater than a 50% chance that any of the sovereign debt countries will be downgraded within 90 days. Specifically they said:</DIV> <BLOCKQUOTE style="MARGIN-RIGHT: 0px" dir=ltr> <DIV><EM>Standard &amp; Poor's Ratings Services today placed its long-term sovereign ratings on 15 members of the European Economic and Monetary Union (EMU or eurozone) on CreditWatch with negative implications.</EM></DIV></BLOCKQUOTE> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">As I said earlier, no significant new news here. Europe has problems that they need to address in reasonably short order.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">S&amp;P will make a decision as to doing any actual downgrading after they complete a review "<EM>as soon as possible following the EU summit scheduled for Dec. 8 and 9, 2011</EM>."</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">How likely is a downgrade? S&amp;P's methodology says: "<EM>Standard &amp; Poor's will place a rating on CreditWatch if we determine that there is at least a one-in-two likelihood of a rating change within 90 days.</EM>" So, at least a flip-a-coin chance.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1598545735882251414?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-13079892191708341712011-12-05T15:46:00.001-05:002011-12-05T15:46:53.637-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>S&amp;P hasn't actually made a public announcement, but the <A href="http://www.ft.com/intl/cms/s/0/7cf2e0ae-1f63-11e1-9916-00144feabdc0.html#axzz1fh6Tg4SB">article in The Financial Times</A><EM></EM> based on a leaked copy of a purported imminent S&amp;P report concerning downgrades of sovereign debt of the major European countries is actually not really much in the way of new news at all. Sure, it is negative and therefore fits the bill for traders and short-term speculators looking for negative "news" to trade off of and an excuse for "profit-taking", but I think just about everybody is already wary of the sovereign debt crisis in Europe, including its potential ramifications for even France and Germany. If anything, this may only reaffirm how out of touch the ratings agencies really are.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">In short, the story/report doesn't really tell us anything of substance about Europe that we didn't already know.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1307989219170834171?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-90053087486264292532011-12-05T09:01:00.001-05:002011-12-05T09:01:55.356-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Even if the intermediate-term market trend is indeed upwards ("risk on"), we could see occasional "correction" days where the trend seemingly reverses and rapidly goes the other way, but then within a day or two or three just as quickly makes up for any lost ground and then some. Traders and short-term speculators will continue to be mindful of seeking to "fill the gap" for the gains of Monday and Wednesday last week", in a process they refer to as "testing." That's normal even during a strong rally. As they say, "the market doesn't move in a straight line."</DIV> <DIV>&nbsp;</DIV> <DIV>The equal probability paths for most days in the near-term are: 1) a pop at the open with some initial buoyant enthusiasm that flips to an evaporation of that enthusiasm into a decline through the day, 2) a decline at the open followed by a "throw in the towel" day of profit-taking, 3) ambivalent weakness at the open with a semi-volatile seesaw up and down but gradually evolving into a rise for the day, or 4) enough strength at the open that bearish traders and short-term speculators throw in the towel and go along with "the trend is your friend", at least for the day. I would vote for a volatile seesaw market, but the overall direction for the day is uncertain, even if the intermediate trend in up.</DIV> <DIV>&nbsp;</DIV> <DIV>Negative or positive news can certainly bias the open, but not necessarily "rule" the entire day. Europe will continue to oscillate between "good" days and "bad" days in a seemingly random manner. Ditto for the U.S. economic outlook, with traders and short-term speculators (as well as the media) seemingly randomly flipping between optimism over the near-term Q4 outlook and the outlook for various points in 2012.</DIV> <DIV>&nbsp;</DIV> <DIV>Today is another checkpoint for validating whether the rally from last week is "durable" and the gains can be held. Even so, the bulk of the rally was simply recovering the losses from the preceding seven trading sessions, so it does remain to be seen if this mini-rally is a true "risk on" trend or just short-term range trading.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-9005308748626429253?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-72848479580425801352011-12-04T14:12:00.001-05:002011-12-04T14:12:11.467-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The <A href="http://www.businesscycle.com/">ECRI Weekly Leading Index (WLI)</A> fell sharply this week, erasing almost five weeks of gains, and its smoothed growth rate declined modestly for the first time in six weeks. One data point in a series does not indicate a definite trend change, but it certainly is a disappointment. The real bottom line is that the WLI level remains hovering only modestly above its low of the year, which is more an indication of economic weakness than of strength. Unemployment insurance initial claims were up a little this week and mortgage applications were down sharply. The Thanksgiving holiday and Black Friday retail frenzy may have skewed the week measured by these numbers.</DIV> <DIV>&nbsp;</DIV> <DIV>ECRI is scheduled to talk with Tom Keene on Bloomberg on Thursday, December 8 to discuss ECRI's recession call that they made in September. I don't expect any startling revelations relative to past interviews, but hopefully they will try to pin down ECRI as to when the purported recession is supposed to start, whether it is right now, before the end of the year, Q1, by mid 2012, late 2012, or whenever.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">The bottom line is that ECRI is still standing by their recession call, namely that the U.S. economy is "tipping into a recession", but with no specificity as to when such a recession might start, how long it might last, or how severe it might be.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Q4 may well turn out to be a decent quarter (+2.8% GDP growth according to Macroeconomic Advisors), but the outlook for Q1 of 2012 and beyond is murky indeed. About the only certainty is that the Federal Reserve will continue to pump money into the economy, which is a very positive factor even if it does not absolutely assure economic growth. Congress will likely pass a renewal of unemployment insurance extension and the payroll tax holiday, but it is unclear how much of an economic boost that really provides. Obama's "Jobs" bill remains DOA where it always has been.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-7284847958042580135?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-85070528084495177992011-12-02T20:40:00.001-05:002011-12-02T20:40:17.366-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>I have been using <A href="http://www.smartypig.com/">SmartyPig.com</A> as a third choice for my cash, with their current interest rate at 1.10% APY, but as of next Friday they are dropping that rate to 0.70% APY. Ouch. I may not move my cash immediately, but I'll certainly start looking around. OTOH, a lot of my cash in that account is reserved for my January estimated income taxes, my 2011 retirement contributions, and my monthly expenses for the next few months while I'm looking for new work, it may not make much sense for me to shuffle that cash anyway.</DIV> <DIV>&nbsp;</DIV> <DIV>My main two choices for cash, where I keep my main Rainy Day fund, are a bank in Texas that pays 2.27% APY and a bank in Ohio that pays 2.01% APY. I found those two using <A href="https://www.checkingfinder.com/">CheckingFinder.com</A>. Currently, for my zip code, CheckingFinder.com lists a bank in Binghamton, NY paying 1.50% APY and a bank in Toledo, IA paying 1.51% APY. Unfortunately, you need to use the debit card 10 to 15 times every monthly statement cycle to get these rates, so adding a third bank is a little inconvenient for me.</DIV> <DIV>&nbsp;</DIV> <DIV>Another choice for me is Ally Bank, which is currently paying 0.89% APY for savings. I already have an account, but with other a minimal amount since it is currently my fourth best rate. I suspect that I'll start using this account more after SmartyPig.com drops its rate. You can get a 2-year CD from Ally that pays 1.18%, but my needs are for cash that I may need to use over the next three to twelve months, so a CD is not appropriate.</DIV> <DIV>&nbsp;</DIV> <DIV>At these low rates, it isn't really worth a lot of my time to be doing much shuffling of cash between accounts. I suspect that a year from now I may not bother if rates ratchet down at the pace that they have been over the past eighteen months.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-8507052808449517799?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-71865279913296630882011-12-02T18:03:00.001-05:002011-12-02T18:03:43.496-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>For all the hoopla, the market managed to "claw back" in five days roughly what it had lost in the preceding seven trading days. That was a lot of work for a net gain of... nothing. Unless you were a brokerage firm and collected the commissions for all those trades. Still, it was good to see that the market was able to score and keep a significant gain for the week. Maybe, just maybe, the stock market and the economy are not in as bad shape as many of the cynics complain.</DIV> <DIV>&nbsp;</DIV> <DIV>Friday played out roughly as expected, with a pop at the pop due to the semi-decent employment report, followed by a slow bleed of those gains through the day, as short-term speculators took profits ahead of the weekend when anything can happen. The good news was that the market managed to end flat for the day rather than with a heavy loss.</DIV> <DIV>&nbsp;</DIV> <DIV>Friday was just the first major checkpoint, holding the gain from Monday and Wednesday. What I really want to see is if the market can hold these gains on Monday, in a fresh week when everybody has a fresh perspective after the weekend, and the cynics have a whole week of trading ahead of them to try to manipulate the market.</DIV> <DIV>&nbsp;</DIV> <DIV>We could see a few more tentative, "consolidation" trading sessions this coming week as traders and short-term speculators wait (im)patiently for either "the next leg up" or for the rally to "run out of steam", reverse, and head back down towards the lower end of the trading range.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-7186527991329663088?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-40539695254632005992011-12-02T08:57:00.001-05:002011-12-02T08:57:40.992-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>We're clearly not back to "happy days are here again" yet, but today's monthly <A href="http://stats.bls.gov/news.release/empsit.nr0.htm">employment report</A> for November showed a semi-decent rise in payroll employment and a modest decline in the unemployment rate. We still have a long way to go to get back to full employment and a fully healthy economy, but we aren't facing an imminent recession, yet.</DIV> <DIV>&nbsp;</DIV> <DIV>It's a Friday after a week of big gains with a lot of uncertainty out there, so it would be natural for traders and short-term speculators to do some profit-taking ahead of a weekend when anything can happen. That said, if the bias is now really "risk on", we could see more of those lingering bears get caught up in another short squeeze and forced to buy to close out at least some of their remaining short positions.</DIV> <DIV>&nbsp;</DIV> <DIV>So, we are back to roughly equal probability of two scenarios: 1) a pop at the open that hits the wall of "sell into any rally" and dwindles as the day goes on, or 2) a gradual building on gains as the day progresses. In both cases trendless volatility could be prevalent throughout the day, although that would be moderated if in fact "risk off" is the new trading bias among a majority of traders and short-term speculators.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-4053969525463200599?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-31365922993805833692011-12-01T16:50:00.001-05:002011-12-01T16:50:24.575-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>As expected, today was basically a consolidation day for the stock market. With a modest amount of volatility, the market was sometimes up and sometimes down, leaving the Dow closing down a little and NASDAQ closing up a little. No clear sense of direction. Traders were taking advantage of the volatility. Meanwhile, short-term speculators were not quite willing to add to their "risk" , but not quite willing to take too much out of the market as well.</DIV> <DIV>&nbsp;</DIV> <DIV>The good news is that the bulk of the gains from earlier in the week have held up. The bad news is that traders and speculators get antsy when the market goes "sideways" as it did today, and their limited patience will eventually lead them to take bigger profits or even reverse their bias to "risk off" unless some major players step into the market.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3136592299380583369?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-17880180597796621952011-12-01T11:04:00.000-05:002011-12-01T11:05:52.543-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The <A href="http://www.ism.ws/ISMReport/MfgROB.cfm">ISM Manufacturing report</A> for November was reasonably decent, with the PMI, New Orders, and Production all up and "growing faster." Employment continues to grow, but at a slower pace. The backlog of orders continues to contract and at a faster pace. This report indicates that both the manufacturing sector and the overall U.S. economy are "growing faster" than in October (except employment in manufacturing which is growing but at a slower pace.)</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1788018059779662195?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-54721261706774183102011-12-01T09:11:00.000-05:002011-12-01T09:12:00.573-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Today will likely be another consolidation day for the market after the big gain yesterday. The two likely scenarios are either a weak open followed by a modest to moderate decline through the day or a weak open with some initial decline but with recovery and modest strength later in the day. After the big gain yesterday it would not be surprising to see some significant profit-taking, but we could just as well see further gains on a more moderate scale.</DIV> <DIV>&nbsp;</DIV> <DIV>The unemployment insurance initial claims report was a modest disappointment, but was actually quite decent with only a modest rise within the range of volatility for this data series while the 4-week moving average remains under the 400K recession threshold. That is good economic news. Traders may treat the report as negative as an excuse to try to fabricate a "risk off" bias in the market, and may be successful, for a little while, but ultimately this was not a truly "bad" report or an indicator of bad-ness to come.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Europe is roughly as it has been, an ongoing saga, but it is worth nothing that demand for an auction of 5-year notes of Spain was double the amount offered, which is actually quite good news.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-5472126170677418310?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-40803431367634582822011-11-30T18:33:00.001-05:002011-11-30T18:33:25.183-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Another bright spot on the economic front was the <A href="https://www.ism-chicago.org/chapters/ism-ismchicago/files/ISM-C_2011-11.pdf">Chicago PMI report for November</A> which showed the Chicago Business Barometer rebounding to a 7-month high, production strengthened, new orders surged to a 6-month high, and order backlogs rose to the highest level since July. And all of these readings are above the 50 breakeven level, with new orders up at the 70.2 level. Granted, you can't magically apply this one report to the entire country, but it does go a fair distance towards disproving the notion that "the economy is in the toilet."</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-4080343136763458282?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-15539272671816142542011-11-30T18:09:00.001-05:002011-11-30T18:09:12.445-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The monthly <A href="http://www.challengergray.com/press/PressRelease.aspx?PressUid=201">Challenger, Gray &amp; Christmas, Inc. Job Cuts report</A> showed a slight decline in job cuts in November from October, but the number of job cuts was down –13% from a year ago. That's good news. This includes government job cuts. Overall, Challenger reports more announced job cuts to-date than in all of last year. These are "announced" cuts, so it is always uncertain when those people may actually lose their jobs or in some cases the cuts can take effect through retirement and attrition.</DIV> <DIV>&nbsp;</DIV> <DIV>Job cuts at the state and local level have been significant, but appear to be showing. Instead, Challenger now expects increased cutting by the federal government, including the postal service. The U.S. Air Force announced 13,500 job cuts last month. The winding down of the wars in Iraq and Afghanistan will also likely result in further cuts. Federal budget spending cuts will only increase cuts at the federal level. The financial sector could also continue to see job cuts due to the financial turmoil in Europe.</DIV> <DIV>&nbsp;</DIV> <DIV>Challenger also expects higher retail hiring due to better-than-expected Black Friday and Cyber Monday retail sales.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1553927267181614254?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-46575575994410707582011-11-30T17:43:00.001-05:002011-11-30T17:43:16.605-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>It was quite impressive to see the early stock market gains hold up through the day and then even see a further gain right into the close, with the Dow Industrials now back above the psychological 12,000 level. I still believe that much of the early gains were due to short covering, but the durability of the rally suggests that indeed a majority of market participants have now adopted a "risk on" bias. This is indeed what one would expect to see in a trading range after a significant decline had left the market in an "oversold" position and the bias reverses. I suspect that this time the rally on the bias reversal was probably more extreme since there were probably a lot more short positions out there due to the seriousness of the concerns about both the uncertainty of the U.S. economic outlook for next year and the European debt situation. The rally also got a boost from some decent economic news.</DIV> <DIV>&nbsp;</DIV> <DIV>All of that said, how long this rally continues is a big open question due to ongoing uncertainties. The first main checkpoint will be the close of the week on Friday as well as how much of the gains remain after the close on Monday. That will tell us a bit more about the depth of this rally. Maybe it will continue through the end of the year or into January, but unless the economic outlook for next year brightens considerably we will likely be stuck in a trading range, with the 12,250, 12,500, and the 12,750 levels of the Dow providing "convenient" turning points for traders and short-term speculators looking for excuses for "taking profits" and bouncing around the trading range for another lap.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-4657557599441070758?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-68415061877774386632011-11-30T09:35:00.001-05:002011-11-30T09:35:34.820-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Oh, yeah, and I forgot to mention the obvious (to me): A huge chunk of any initial pop at the stock market open will be short covering. Although Monday's gain may have frightened off a lot of the weaker shorts, adventurous traders and short-term speculators may be trying to engineer a "short squeeze" to force a lot of the harder-core shorts to throw in the towel and buy to close their short positions before they lose too much more money.</DIV> <DIV>&nbsp;</DIV> <DIV>That said, it will remain unclear whether those guys will indeed flip their bias from "risk off" to "risk on" or simply wait a few minutes or hours (or days) for the pop to hit "buying exhaustion" and then re-open their short positions. Or, they may decide to "read the writing on the wall" and go "risk on" at least to ride the wave for a little while and then flip back to "risk off" after the current rally runs out of steam.</DIV> <DIV>&nbsp;</DIV> <DIV>There really is a chance that we could be on an upswing of this trading range, but sometimes that can be an illusion.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-6841506187777438663?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-6665264011321757222011-11-30T09:14:00.001-05:002011-11-30T09:14:30.965-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>A decent ADP employment report (yes, the private sector is still hiring) as well as news of a global central bank move to boost bank liquidity should cause the stock market to pop on the open, but I'm not so sure what will happen after that. It will be completely dependent on whether the traders and short-term speculators take a "risk on" or "risk off" bias (bullish vs. bearish.) They could go either way, building on the initial rally and gains from Monday and Tuesday, or selling into the rally. In truth, some will do one and some will do the other, so it will be a matter of which side has the greater numbers and how it nets out. There could be some volatility as the two groups battle it out, pushing the market up and then down several times before the majority net bias is "discovered" by the market.</DIV> <DIV>&nbsp;</DIV> <DIV>The ADP employment report is a positive economic report. ADP says that the "<EM>increase in November was the largest monthly gain since last December and nearly twice the average monthly gain since May when employment decelerated sharply.</EM>"</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">The "<EM>globally coordinated central-bank response</EM>" is simply yet another small step in the drawn-out process of resolving the European debt crisis. It is a good step, but not definitive per se. I still believe that "the fix is in" and that it is more a matter of letting all of the political drama and theater play out before the pieces gradually get put into place. In some cases sovereign debt holders (including banks) will have to accept a "haircut" and in other cases the ECB may simply buy up a hefty chunk of sovereign debt. In all cases a hefty dose of "austerity" is required, which may mean recession, but that would simply be a side effect of cleaning up enough of the debt mess to move forward. None of this will satisfy the critics, but satisfying critics need never be the goal anyway. There will be no "grand" or "ultimate" resolution of European debt, simply enough of a fix to enable Europe to muddle on, as it always has and always will.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-666526401132175722?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-37301111540178711372011-11-29T19:39:00.001-05:002011-11-29T19:39:33.166-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The good news is that there was not a huge amount of profit-taking in the stock market today after the big gains on Monday. That is good news, sort of, but doesn't assure us that we won't see significant profit-taking in the days to come. The Dow was up nicely a few times during the day, but there was clearly a fair amount of "sell into any rally" sentiment to bring the market back down to earth. NASDAQ actually saw a modest decline on profit-taking in the hot technology names that are also hot candidates for short-sellers. In other words, there is a lot of hot money in the hands of traders and short-term speculators who did not interpret the gain on Monday as "happy days are here again" – or maybe they did, but in a negative sense.</DIV> <DIV>&nbsp;</DIV> <DIV>I expect that the consolidation phase after Monday's gain will last at least a couple more days.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3730111154017871137?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-85396503772859829482011-11-29T19:20:00.001-05:002011-11-29T19:20:45.061-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>I just made my 23rd monthly payment to pay down the public debt of the U.S. government. It wasn't a large payment, just another $25, but it is a matter of principle, albeit mostly symbolic. It may take me another 51 billion years to pay it all down all by myself at this rate (and assuming the deficit went to zero immediately), but, as I said, it is a matter of principle and a sense of personal responsibility. It is our debt, not somebody else's.</DIV> <DIV>&nbsp;</DIV> <DIV>According to the <A href="http://www.treasurydirect.gov/NP/BPDLogin?application=np">U.S. Treasury web site</A>, the total public debt outstanding was $15,051,673,595,197.90, as of November 28, 2011, an increase of about $111 billion over 39 days or $2.9 billion a day. This is an annualized run rate of $1.042 trillion, our effective annual deficit at this point.</DIV> <DIV>&nbsp;</DIV> <DIV>Here is what I wrote back in January 2010 when I made my first donation/gift/contribution/payment:</DIV> <BLOCKQUOTE style="MARGIN-RIGHT: 0px" dir=ltr> <DIV><EM>Everybody is whining and complaining about the ballooning debt of the U.S. government, but who is actually doing anything about it? Well, for starters, ME! Yes, that's right, I, Jack Krupansky, just did something to reduce the U.S. government debt. Really. No kidding. I actually paid down a small slice of this debt. Granted, it was a rather small slice, but a slice nonetheless. Okay, sure, it was only $20, but the point is that at least I am one of the very few people willing to stand up and DO something about the problem, rather than be one of the whiners and complainers who refuse to acknowledge that it is their debt and their problem, not just the fault of mindless politicians in Washington, D.C. After all, every politician ultimately answers to voters and most of the so-called wasteful spending of the U.S. government is simply politicians responding to the demands of their constituents (voters.) Maybe my one small contribution to paying down the debt won't really make any difference to any of those whiners and complainers, but for me it is a matter of principle. I consciously choose action rather than the inaction and lack of responsibility of the whiners and complainers.</EM></DIV></BLOCKQUOTE> <DIV>If you have any sense of principle, you too can pay down a slice of the U.S. government debt yourself at <A href="https://www.pay.gov/paygov/forms/formInstance.html?agencyFormId=23779454">Pay.gov</A>. You can pay via credit card or debit transfer from a bank account.</DIV> <DIV>&nbsp;</DIV> <DIV>So do the right thing and show all those whiners and complainers (including so-called "tax protesters") how mindless and spineless they really are. PAY DOWN THE DEBT! And that has to start at the grass roots with us individuals before politicians will ever pick up the lead.</DIV> <DIV>&nbsp;</DIV> <DIV>For the record, the only real way out of the deficit is not to merely cut expenditures or raise taxes or some combination of the two, but through economic growth, which includes a healthy amount of immigration in addition to unemployed workers going back to work and young people entering the work force. Sure, we need to manage the federal budget more carefully as well and make difficult choices about the size of government and tax rates, but the big focus has to be on achieving sustainable economic growth. In truth, nobody, including all of the Nobel laureate economists, knows what that sustainable rate really is or how to get there. We'll stumble our way in that general direction. That's the way we do things in America.</DIV> <DIV>&nbsp;</DIV> <DIV>Another note: A significant part of the deficit is businesses writing off losses from the financial crisis and recession as tax deductions. That may continue for awhile longer, but will gradually wind down and tax receipts from businesses will begin to pick up in the coming years.</DIV> <DIV>&nbsp;</DIV> <DIV>A final note: I may suspend my payment program next month since my current contract work ended six weeks ago. I do have the cash to continue my payment program, but technically, on principle, the loss of primary income is supposed to mean that a person should cut all inessential expenses until there has been a resumption of their primary income. In any case, my public debt payment program will continue in any month that I have enough primary income to pay my rent and basic living expenses. But, I don't expect that to be the case in December, and I expect to be living off savings for some number of months, so my U.S. public debt payment program is now effectively suspended until I line up new work.</DIV> <DIV>&nbsp;</DIV> <DIV>-- <A href="mailto:Jack@Opixia.com">Jack Krupansky</A></DIV> <DIV>&nbsp;</DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-8539650377285982948?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-34477975473940934362011-11-29T09:25:00.001-05:002011-11-29T09:25:16.151-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>After the big gain yesterday, the big question for today is whether the market might open with a little pop but then quickly reverse into "profit-taking" as traders and short-term speculators "sell into any rally" for a loss for the day, or whether the market will open weakly or with a modest gain and then gradually build into another gain for the day.</DIV> <DIV>&nbsp;</DIV> <DIV>Another factor to watch for is that whenever the market opens with a "gap" or big jump up (or down) as we saw on Monday, the "pros" say that eventually the market must "fill the gap" or decline back to near the bottom of that gap before a healthy advance higher can be sustained. That is not some law of physics or anything sensible, but it is a guide for how a lot of traders behave. It is one of their rituals, something to do when the market itself is not forcing a trend on their trading.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Ultimately, what happens today in the stock market is far less significant for true long-term investors than how the market sits a week from now after the short-term folks have pushed and shoved the market back and forth in unsustainable moves and then we will see where the net longer term money flows point the real trend, although even that will only be an intermediate trend and not necessarily a true long-term trend.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">News about Italy and American Airlines are sideshows that shouldn't impact the overall market in a significant manner although any news can be used as an excuse by traders to add some momentum to their bias.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3447797547394093436?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-57079167025590204762011-11-29T00:20:00.000-05:002011-11-29T00:21:00.910-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Although ratings agency <A href="http://www.fitchratings.com/creditdesk/press_releases/detail.cfm?pr_id=734693">Fitch lowered its long-term outlook rating for U.S. sovereign debt to Negative from Stable</A>, there's really no surprise there. Basically this was in response to the failure of the joint congressional deficit committee to come to a deficit reduction deal. In other words, because the U.S. still does not have a credible plan for deficit reduction. For the short-term, Fitch did reaffirm the U.S. Treasury security rating of AAA, but Fitch explicitly indicated that a downgrade was slightly more likely than not over the next two years ("<EM>The Negative Outlook indicates a slightly greater than 50% chance of a downgrade over a two-year horizon.</EM>") Fitch says they will update their outlook and ratings in 2012, but does not expect any resolution of the deficit issue until late 2013.</DIV> <DIV>&nbsp;</DIV> <DIV>Meanwhile, for investors, this is more of a sideshow than an urgent current concern.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">I would note that the release from Fitch failed to mention to impact of the expiration of the Bush tax cuts at the end of 2012. That really is quite a big deal, so I am baffled why they did not include it. As things stand, unless either party gets overwhelming control of Congress next year (which is unlikely), the cuts will automatically expire and lead to a sharp increase in tax revenue in 2013, for a total estimated impact of $4.7 trillion over ten years, on top of the automatic across the board $1.2 million spending cuts over ten years that start in 2013. Combined, that really does put a substantial dent in the deficit, which is why I say that investors need not worry about this "sideshow."</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-5707916702559020476?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-15833396428999807722011-11-28T16:54:00.001-05:002011-11-28T16:54:40.456-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The stock market managed to hold on to all of its early gains, which is a lot better than losing them, but it is disappointing that the market did not manage to build on those early gains. The bulk of the gains had occurred when the initial trades had executed by 9:34 AM. The market was a little higher late in the morning, but then drifted down into the afternoon as cynics took that early selling exhaustion as an excuse to sell into the rally. Although the Dow was off the morning peak by 110 points just 14 minutes before the close, it managed to regain 70 of those points by the close. This suggests that the intraday decline was probably short-selling by day-traders who were forced to close out their shorts near the close as the bulk of the market gains held up throughout the day.</DIV> <DIV>&nbsp;</DIV> <DIV>I still think a lot of the initial pop was due to short-covering, but that is common when the market turns up after a significant decline.</DIV> <DIV>&nbsp;</DIV> <DIV>The key issue is to see how the market closes a week from today, after all the initial retail sales hype has burned off and market participants get back to trying to forecast where the economy and businesses will be in nine months, not simply reacting to the news du jour.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1583339642899980772?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-82848552924442024322011-11-28T11:46:00.001-05:002011-11-28T11:46:12.032-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>That was a nice pop at the open for the stock market, fueled by optimism for retail sales after Black Friday and some optimistic chatter from Europe, and has been sustained through the morning, but most of it was probably nothing more than short-covering. The open question is whether traders and short-term speculators are simply biding their time and waiting for "buying exhaustion" to hit before re-opening their short positions, or whether a majority of them have indeed reversed their bias from "risk off" to "risk on" and are now in the process of swinging the trading range back up after its recent descent. Flip a coin on that one.</DIV> <DIV>&nbsp;</DIV> <DIV>Overall, the market is still in a lazy trading range, with significant economic uncertainty beyond the next few months.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Despite the decent retail sales news, Monday may still qualify for a "dead-cat bounce" since the market really was in a short-term oversold condition in which such bounces are common. We'll have to see how much of the morning's gains are still with us in a week.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-8284855292444202432?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-70081586300397477232011-11-27T23:08:00.001-05:002011-11-27T23:08:53.953-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>After such a long, unbroken series of daily declines, the stock market is overdue for at least the proverbial "dead-cat bounce", not to mention that the decent retail sales numbers from Black Friday could actually give the market a sound economic fundamental reason for bouncing. So, a bounce of some sort looks reasonably likely. The open question is how much "sell into any rally" sentiment is still out there. So, after any opening bounce we will have to see how that tapers off and either turns into a decline or becomes the foundation for a rise throughout the day. Whether a one-day rally can be turned into something more durable remains to be seen.</DIV> <DIV>&nbsp;</DIV> <DIV>One good piece of economic news is not sufficient to build a sustainable, long-term market rally, but it is a start, a good start, and a necessary start.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Regardless of what the market does in the near term, the retail sales data does at least confirm that the economy really is a long stronger than a lot of the critics complain.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-7008158630039747723?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-69189097878922535542011-11-25T10:35:00.001-05:002011-11-25T10:35:19.497-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>I'm not sure why they bother to keep the stock market open on a Friday after a holiday. Most of the major players take the whole long weekend off anyway, if not the entire week, so whatever happens in the markets on such a Friday doesn't really reflect the true market anyway. Still, it is good to have a slow day once in a while to let people catch up without all the mad frenzy that frequently fills the markets.</DIV> <DIV>&nbsp;</DIV> <DIV>People are busy trying to judge how well Holiday spending will be going, but with too little data to come to a reliable conclusion. By Monday we'll have a "read" on how retail shopping is going today (and last night) and tomorrow. I saw a very long line (hundreds) for Toys"R"Us in Times Square last night (Thanksgiving Day) around 9 PM. There was a line at BestBuy at the same time.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">To me, the critical issue is not holiday shopping per se, but the underlying economic and business fundamentals in the retail sector that are supporting this short retail shopping period, such as number of temporary jobs created, for how long, for what compensation and benefits, as well as any net change in non-seasonal retail jobs. And most significantly, how robust a "tail" is left on the retail sector going into the new year. In other words, do we just have a sharp binge and then the retail contracts dramatically, or will the retail sector actually show some ongoing life through the winter and into the spring. That will be a key factor in whether we lapse back into a new recession.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-6918909787892253554?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-31436883594534144552011-11-23T15:48:00.000-05:002011-11-23T15:49:50.975-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Although the economic data today was reasonably decent (relative to concerns of a possible recession), it still wasn't as strong as a normal healthy quarter. In fact, <A href="http://www.macroadvisers.com/csx3/csxPage.asp?APPNAME=Macroecon&amp;LABEL=CSXGETPAGE&amp;CLASS=Macroecon.pclsMain&amp;METHOD=pageMain">Macroeconomic Advisers (MA)</A> just adjusted their Q4 GDP forecast to be annualized real growth of only +2.8% compared to their recent forecast of +3.2%. GDP growth of 2.8% is at the lower bound of the "healthy" range for a growing economy. That's not a bad thing, but not great and does leave the U.S. economy vulnerable should any significant economic shock occur (like a big meltdown of Europe.)</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3143688359453414455?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-47938799956301880092011-11-23T11:14:00.003-05:002011-11-23T11:17:50.656-05:00<div dir="ltr"> <div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <div>The economic news was fairly decent this morning.</div> <div> </div> <div><br /></div><div>Unemployment initial claims were up slightly but still holding below the 400K recession threshold. Continuing claims rose, which is not good news.</div> <div> </div> <div><br /></div><div>Personal incoming and spending continued to rise, even after discounted by inflation, although the spending increase was rather modest.</div> <div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> </div> <div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><br /></div><div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Orders for durable goods declined moderately, but were up moderately separate from transportation goods.</div> <div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> </div> <div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><br /></div><div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Consumer sentiment rose as well.</div> <div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> </div> <div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><br /></div><div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">So, there is still no sign of any impending recession.</div> <div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> </div> <div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><br /></div><div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Still, a lot of this data tells us where we were and not so much where we will be going over the next year, which is what the stock market is supposed to be "predicting."</div> <div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> </div> <div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><br /></div><div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">That said, the U.S. economy is clearly currently much stronger than a lot of critics are claiming. Yes, there is still a lot of underlying weakness and anxieties about debt, but this is still all "par for the course" in America which never has been and likely never will be the kind of finely-tuned watch that critics assert that is has to be.</div> <div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><br /></div><div style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">-- <a href="mailto:Jack@Finaxyz.com">Jack Krupansky</a></div></div></div><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-4793879995630188009?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-66706980095333363622011-11-22T15:44:00.001-05:002011-11-22T15:44:41.707-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>It may take a little more agonizing about the economic outlook before the stock market is ready for a healthy bounce. The holiday-shortened week also limits any major market moves to the upside as people wonder what bad things may transpire over the long weekend.</DIV> <DIV>&nbsp;</DIV> <DIV>The Market will be open on Friday, but a lot of market participants simply skip it and take off an extra day or two or even all week.</DIV> <DIV>&nbsp;</DIV> <DIV>The decline on Monday may have been due in part to people dumping short-term long positions simply so they could take the rest of the week and weekend off without worrying about how any market moves may affect them.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-6670698009533336362?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-23054161037863031962011-11-22T09:07:00.001-05:002011-11-22T09:07:16.717-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The revision of Q3 GDP down to +2.0% from +2.5% isn't going to go over well with traders, but this is the view in the rearview mirror and says nothing about the current quarter (Q4) or beyond. Macroeconomic Advisers (MA) is still forecasting GDP growth of +3.2% in Q4. For the record, they had been forecasting +2.2% of Q3 GDP, which isn't that far off from the official number we got today.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-2305416103786303196?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-12286210810530116052011-11-22T07:40:00.000-05:002011-11-22T07:41:00.830-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>It is certainly possible that we could see a bounce in the stock market after Monday's sell-off, but it is also very possible that any initial bounce could be short-lived and evaporate as quickly as it appears. The basic question is whether or when we reach "selling exhaustion", the point where everybody who was going to sell in the short-term has already done so. Plus you have nervous short sellers who see the downward momentum evaporate and then begin to close out their short positions to lock in their profits, causing the bounce to accelerate. That's when you see upward momentum build for a bounce as the short-term trading bias reverses to "risk on", at least for a little while.</DIV> <DIV>&nbsp;</DIV> <DIV>In any case, the stock market is still locked within a sloppy trading range with both limited upside and limited downside until the economic and fiscal outlooks become a little more clear.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1228621081053011605?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-2278484013274601892011-11-21T23:59:00.000-05:002011-11-22T00:00:38.577-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>As widely expected, the joint congressional deficit supercommittee threw in the towel and admitted that they could not reach a deal, opening the door to the automatic across the board $1.2 trillion in spending cuts starting in 2013. That's fine with me and will be a much-needed strong dose of medicine for what ails the federal budget. There will be plenty or more work to do on the federal budget in the coming months and years, but these automatic cuts are a great next step.</DIV> <DIV>&nbsp;</DIV> <DIV>Although there is some chatter about reducing or redirecting some or all of the automatic cuts, there simply aren't the votes for such actions. In fact, President Obama has now publically stated that he will veto any such attempts to prevent the automatic cuts.</DIV> <DIV>&nbsp;</DIV> <DIV>Some are criticizing Obama for not being involved in the supercommittee negotiations, but I would suggest that it was not his job and that he already did his job during the negotiations that set up the supercommittee back at the end of July.</DIV> <DIV>&nbsp;</DIV> <DIV>Besides, I think Obama is making the wise political decision to distance himself a little from Congress to focus on his own reelection. It is now up to the American people to decide how to vote for Congress next year to refocus them as voters see fit.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-227848401327460189?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-27519955191654318512011-11-21T15:52:00.001-05:002011-11-21T15:52:08.473-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Yes, the proximate "cause" of the market decline is the impending and presumed failure of the joint congressional deficit super-committee, but that's simply the superficial excuse for traders and short-term speculators to take advantage of the profit potential of a wider trading range. This could be a one-day event, or maybe not, but the $1.2 trillion automatic spending cuts that will be triggering if there is no deal will more than make up for any spending and tax accord that the Democrats and Republicans were likely to come up with anyway.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">For long-term investors today is nothing more than a buying opportunity.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-2751995519165431851?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-71123540613566141292011-11-20T23:46:00.001-05:002011-11-20T23:46:50.955-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>AFAICT, it looks as if the failure to reach a deal on how to cut the federal deficit will be mostly a moot point for the markets. Sure, there are probably traders and speculators more than willing to use any negative news as an excuse to push the market down, but <A href="http://www.bloomberg.com/news/2011-11-20/expectations-dim-for-a-u-s-debt-supercommittee-agreement-over-tax-divide.html">according to Bloomberg, Moody's Analytics' economist Mark Zandi said</A> "<EM>I don't think there'd be much of a reaction</EM>" by markets to a supercommittee failure to agree on a plan. He said "<EM>It's all relative to expectations</EM>" and investor expectations with regard to the committee "<EM>have been and are still very, very low</EM>."</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">We could even see a modest rally in relief that the uncertainty of the outcome of the supercommittee's deliberations is finally resolved.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">OTOH, lingering uncertainty about any contagion from the European debt crisis and uncertinty about the economic outlook in the U.S. could be a continuing drag on the stock market, although one would think that much of that uncertainty should already have been priced into the market.</DIV> <DIV>&nbsp;</DIV> <DIV>One other lingering uncertainty for 2012 is whether certain existing tax cuts, unemployment aid, and the payroll tax cut will simply expire at the end of this year or whether Congress may agree to extend them again for 2012. If not extended, the economy could take a hit of some degree for 2012. These are different from the Bush tax cuts which automatically expire at the end of next year (end of 2012.)</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-7112354061356614129?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-44145107978791984392011-11-20T14:25:00.001-05:002011-11-20T14:25:56.344-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Even if the joint congressional debt/deficit super-committee fails to arrive at some grand deal by tomorrow, as now seems likely, this is still a "win" for everybody but Congress and the two political parties since we will still automatically see $1.2 trillion in across the board spending cuts in 2013.</DIV> <DIV>&nbsp;</DIV> <DIV>And, the Bush tax cuts automatically expire at the end of 2012 within any "action" required by Congress, equivalent to another $800 billion over ten years. Between the two, plus incremental economic growth as the recession recovery gradually build steam, plus winding down of Iraq and Afghanistan, plus winding down of corporate tax deductions for losses during the financial crisis, and the result is that two years from now the federal budget deficit won't look anywhere near as bad as it does today in hindsight.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-4414510797879198439?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-8077470465409780532011-11-19T07:23:00.001-05:002011-11-19T07:23:29.766-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>I'm still not sure exactly what's going on with the price of crude oil vs. the price of gasoline. Crude marched strongly up above $100, although it finally took a breather at the end of the week. Meanwhile, gasoline has been in free fall, now down to $3.37, ten cents below a month ago. Usually higher crude drives gasoline higher. Who knows, maybe final, actual demand really is down and falling, but I am suspicious. There is some chatter about an over-supply of crude at the Cushing terminal and reversing a pipeline to feed more to refiners, but all of that would simply point to the "march" of crude up towards $100 being misguided speculation or outright market manipulation rather than any "real" demand for barrels of physical oil sitting in tanks or pipelines here in the U.S.</DIV> <DIV>&nbsp;</DIV> <DIV>In any case, the good news is that lower gasoline prices "at the pump" are a positive "stimulus" to the economy, leaving more cash in the pockets of consumers and even businesses, although diesel fuel prices have been trending higher, suggesting that demand for business transportation may be stronger and driving some nascent economic strength even if consumers are a little skittish. Or maybe consumers are finally taking charge and "just saying no" when they feel that gasoline is too expensive.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-807747046540978053?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-69326913619081482182011-11-18T14:51:00.001-05:002011-11-18T14:51:51.768-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV><A href="http://www.conference-board.org/data/bcicountry.cfm?cid=1">The Conference Board Leading Economic Indicators</A> (LEI, but actually they call it Leading Economic Index) rose by 0.9% in October. That' good news and a positive indicator for the next couple of months. Their economist says that "<EM>The LEI is pointing to continued growth this winter, possibly even gaining a little momentum by spring.</EM>"</DIV> <DIV>&nbsp;</DIV> <DIV>Yes, Europe is still hanging, twisting slowly in the wind out there, but it has been for a while, so it's nothing new and likely mostly factored into most planning already, and likely factored into the economic activity that the LEI measures. In fact, probably overly-factored into most plans.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-6932691361908148218?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-69726243851152202902011-11-18T12:46:00.001-05:002011-11-18T12:46:07.640-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>In addition to Macroeconomic Advisers (MA), which <A href="http://finaxyz.blogspot.com/2011/11/macroeconomic-advisers-ups-its-q4-gdp.html">I mentioned yesterday</A>, several additional economic analysts have also <A href="http://www.bloomberg.com/news/2011-11-18/economy-growing-at-fastest-pace-of-11-in-fourth-quarter-in-u-s-forecasts.html">raised estimates for Q4 GDP growth</A>. JPMorgan &amp; Chase is forecasting +3%. Morgan Stanley is forecasting +3.5%. State Street Global Markets is forecasting +3.3%. Deutsche Bank Securities is forecasting +3%, but says they wouldn't be surprised if Q4 GDP comes in at +4%.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-6972624385115220290?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-7148132758709385622011-11-17T18:29:00.001-05:002011-11-17T18:29:13.995-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Macroeconomic Advisers (MA) has upped its forecast for Q4 annualized real GDP growth to +3.2%. Just two days ago (11/15) they were forecasting +3.1% growth.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-714813275870938562?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-19218595067228510852011-11-17T15:38:00.001-05:002011-11-17T15:38:23.052-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The usual cast of characters are getting blamed for the market decline, but the simple truth is that stocks are merely drifting downwards aimlessly in a fairly wide trading range, which is what tends to happen when there is not a strong bias either up or down. Right now there is a weak downwards bias due to the various anxieties, primarily the uncertainty of the economic outlook for the next few months. At some point within the next few days we'll likely see a reversal and a bounce, typically after the gloomy talk has sucked in an excess of short-term short-sellers who are in for a fast buck but don't have a deep commitment to longer-term positions. In and out means down and up, which is a trading range.</DIV> <DIV>&nbsp;</DIV> <DIV>There is an additional short-term downwards bias due to some companies who saw some business weakness in Q3, over the summer and early fall. That short-term bad news psychologically affects short-term traders, but it will take a month or more for longer-term investors to either accept or reject that downwards bias.</DIV> <DIV>&nbsp;</DIV> <DIV>Despite the media attention, the November 23rd deadline for the joint congressional debt super-committee will essentially be a non-event since across-the-board cuts will go into effect even if they reach no agreement. The details of what of how or why the budget gets adjusted will be essentially moot. The fact that we have a deficit adjustment mechanism in place is all that really counts. OTOH, if the committee does agree to a "Go Big" deal, that could have a much more positive impact on the market, but even then there will not be a large impact on the economy over the next year, so once again it will be relatively moot. It's a great "talking point" for traders, but not such a big deal for investors (as long as something gets done.)</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1921859506722851085?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-70000931598683129572011-11-17T09:27:00.001-05:002011-11-17T09:27:53.821-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The good economic news this morning is that unemployment initial claims declined again, below the 400,000 recession threshold for a second week in a row. And, the 4-week moving average is now finally back below 400,000 as well, albeit barely. This continues the recent trend, but it remains to be seen whether the declines continue and strengthen. And, we need to see the moving average move well under the recession threshold, not just hovering near it. Also, just because the rate of unemployment growth slows does not automatically mean that employment growth will strengthen significantly any time soon. Still, this latest data is promising and doesn't hint at any emerging new recession.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-7000093159868312957?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-76552169351702141612011-11-17T01:00:00.001-05:002011-11-17T01:00:15.416-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Although the U.S. stock market was allegedly "spooked" by a report from Fitch, the report really wasn't that unusual and simply said that if the debt crisis in Europe were to spread to the non-PIIGS European countries, then U.S. banks could be impacted. That's kind of obvious, I think. This was simply yet another instance where traders and short-term speculators reach out and latch on to any piece of news that helps to justify their market bias, regardless of whether it is truly relevant or already priced-in.</DIV> <DIV></DIV> <DIV>&nbsp;</DIV> <DIV>Specifically, <A href="http://www.fitchratings.com/web/en/dynamic/fitch-home.jsp">Fitch said</A>:</DIV> <BLOCKQUOTE style="MARGIN-RIGHT: 0px" dir=ltr> <DIV><EM><STRONG>Eurozone Contagion Threatens Outlook for U.S. Banks</STRONG></EM></DIV> <DIV><EM></EM>&nbsp;</DIV> <DIV><EM>Though U.S. banks have manageable direct exposures to the stressed European markets (Greece, Ireland, Italy, Portugal and Spain), further contagion poses a serious risk, according to Fitch Ratings in a new report. Fitch believes that unless the Eurozone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the U.S. banking industry could worsen.</EM></DIV></BLOCKQUOTE> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">So, in short, no need to get excited. As I've said before, "the fix is in" even if the politicians need to play out an extended drama to satisfy their domestic (and international) critics.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-7655216935170214161?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-89822535120460666682011-11-16T15:44:00.001-05:002011-11-16T15:44:32.972-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Technically, there is nothing magical about the Dow Industrials 12,000 level, but to traders it is "psychologically" important. They will alternate between trying to break down below it or to break out above it. It's all simply a game, with nothing related to economic or business fundamentals at stake. And if one day the market struggles mightily to move an inch in one direction relative to a psychological level, just a day or two later traders can reverse and trivially turn that move back into a comparable if not larger move in the opposite direction.</DIV> <DIV>&nbsp;</DIV> <DIV>So, if the Dow closes below 12,000 it is ultimately not a big deal to long-term investors. It is all in the name of volatility and increased trading volume that earns Wall Street a hefty chunk of its profits on transaction fees.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-8982253512046066668?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-47811648390838251762011-11-16T13:18:00.001-05:002011-11-16T13:18:52.886-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The retail price of gasoline and the price of crude oil continue to diverge, with crude rising to $100 and gasoline down to $3.40. These two price trends have been diverging for almost a month now, suggesting that the rising price of oil is more of a speculative move than the result of actual demand for oil products.</DIV> <DIV>&nbsp;</DIV> <DIV>The open question is which will occur first: a) speculators exhaust the near-term upside for crude, or b) expensive crude eventually forces gasoline to become more expensive even if it happens to reduce demand for gasoline which will in turn reduce demand for crude.</DIV> <DIV>&nbsp;</DIV> <DIV>It will be interesting to see how supply and demand and price balance out through the coming Thanksgiving holiday travel period.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-4781164839083825176?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-46012491876866767172011-11-16T12:04:00.000-05:002011-11-16T12:05:06.275-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The economy data was reasonably decent this morning, with low inflation, a jump in industrial production, and a rise in the housing market index. Not bad.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-4601249187686676717?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-59704935478451425642011-11-16T08:23:00.001-05:002011-11-16T08:23:58.950-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Today seems like it will be mostly a slow day with a lot of the "same old same old" with traders twitching to and fro on each sound-bite from Europe. None of that will be a good indication of a durable trend for the long term.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">The industrial Production report might provide a little insight into how the economy is currently doing.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-5970493547845142564?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-92004459932245821332011-11-15T20:28:00.001-05:002011-11-15T20:28:12.123-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>As of today (11/15), <A href="http://www.macroadvisers.com/">Macroeconomic Advisers (MA)</A> is now forecasting annualized real GDP growth of +3.1% for Q4. Just a week ago they expected Q4 GDP growth of +2.6%. They are also forecasting revised Q3 GDP growth of 2.2%.</DIV> <DIV>&nbsp;</DIV> <DIV>GDP tends to be fairly volatile from quarter to quarter, so even a solid 3.1% growth in Q4 does not indicate what we could expect in Q1 of 2012 or beyond.</DIV> <DIV>&nbsp;</DIV> <DIV>Still, a forecast of 3.1% GDP growth in Q4 is a very good thing.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-9200445993224582133?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-78084541660614998962011-11-15T18:02:00.001-05:002011-11-15T18:02:52.076-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The stock market and other financial markets are still in a holding pattern or trading range, waiting for some indication that a trend (up or down) may or may not be about emerge as the debt and deficit issues in both Europe and the U.S. as well as the economic outlook in the U.S. continue to evolve with no great clarity. Until such a clear indication emerges, the markets will stay in a trading range, sometimes trending up or down over a relatively short period of time (days, weeks, or even a few months) and then eventually reversing and trending in the opposite direction. Rinse and repeat. Up and down in a relative narrow range, maybe up 5% to 10% and maybe down 5% to 10%, over a two to six month period.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-7808454166061499896?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-58760506521920242772011-11-15T13:29:00.001-05:002011-11-15T13:29:11.827-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>A lot of protesters, pundits, and progressive liberals are making a big stink about "The 1%" vs. "The 99%" or "The rich" and "The Rest of Us", but the simple truth is that we are a society of shades of gray rather than simple black and white. I see our socio-economic system broken down into "strata" of the rich, professionals, the middle class, the working class, the poor, unemployed youth, and "the rest."</DIV> <DIV>&nbsp;</DIV> <DIV>At the top of the heap we do have the "super rich" who either don't work or if they do work it is despite the fact that they don't need to work to survive and thrive perfectly well without income from work.</DIV> <DIV>&nbsp;</DIV> <DIV>Then we have the professionals, the elite workers who certainly take down hefty paychecks, but only because they work for it and have a significant investment in professional training. This includes executives, managers, doctors, lawyers, scientists, professors, accountants, engineers, elite sales people, etc. They commonly have a graduate degree of some sort, or at least a professionally-oriented undergraduate degree, although in rare cases exceptional individuals can do the "Horatio Alger" thing. Even today, we have college dropouts that created monster successes such as YouTube and FaceBook, not to mention Microsoft and Apple.</DIV> <DIV>&nbsp;</DIV> <DIV>Then we have the Middle Class. Technically many of the professionals are part of the middle class as well, at least from the perspective of raw income level, but the bulk of the Middle Class are the workers who have an undergraduate college degree but not necessarily one that is strictly professional in nature. They may have only a liberal arts degree or a degree from a community college. They have jobs that have some degree of complexity and frequently require creative problem solving or significant people skills. They are typically, but not necessarily white collar, office workers. This would include many teachers, supervisors, lab technicians, sales people, etc. Some teachers may have the advanced degrees or experience to qualify for the professional class, but that less typical.</DIV> <DIV>&nbsp;</DIV> <DIV>Then we have the Working Class. Although some may have college degrees, that would be atypical. More typical is a high school education, possibly some vocational training, possibly a degree from a community college. Their work tends to be more structured and well-defined and much lower in complexity or complex in a very narrow technical sense such as a mechanic or manufacturing worker. I would put most soldiers in the working class, although some (e.g., senior officers and pilots) qualify as professionals as well.</DIV> <DIV>&nbsp;</DIV> <DIV>In recent decades we have had a significant blurring of middle class and working class, if not a virtual merger of the two, but I think that was a mistake (distinction in education level, task complexity, and people skills) and accounts for a lot of the anxiety over the "decimation of the middle class." In particular, a lot of non-degreed manufacturing workers (among others) were considered middle class when in truth they were simply at the high-end of the working class. Now, especially over the past decade, we have seen that trend reverse so that we are getting a much cleaner delineation between the middle and working classes.</DIV> <DIV>&nbsp;</DIV> <DIV>Then we have the poor. They are "chronically unemployed", either never having a job or alternating between short spurts of temporary employment and longer periods of unemployment. Limited education is a factor, but social problems tend to be the underlying cause of their poverty. They may truly want jobs but simply aren't able to surmount their social problems. Their main "hope" for employment is to gain assistance and perseverance at dealing with those social problems.</DIV> <DIV>&nbsp;</DIV> <DIV style="FONT-FAMILY: ; COLOR: ">We also have a relatively new category of unemployed youth. They have the education, the degrees, to possibly even start out as entry-level professionals, but due to economic weakness and high unemployment they simply aren't "needed." Technically, one could assign each of them to the unemployed of the other relevant categories as if they could find work, but they are special in some sense, namely that they never had a chance and it is not for a lack of education or hard work or trying.</DIV> <DIV style="FONT-FAMILY: ; COLOR: ">&nbsp;</DIV> <DIV>Finally we have "the rest", people for whom employment is not an option, including those in prison or jails, those in mental institutions, the disabled, the mentally ill, etc.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">This is my overall model of our socio-economic system. I think it provides a more enlightening and productive framework than the 1% vs. 99% "model" which seems more focused on class warfare than enlightenment and productivity.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">I'll reserve a discussion of "inequality" for another post.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-5876050652192024277?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-14746551108987753282011-11-15T10:33:00.000-05:002011-11-15T10:34:00.072-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Now that they have been "evicted" from Zucotti Park, the Occupy Wall Street crowd are at a turning point and will have to decide what their new focus will be. I'm sure that they will not be "going away", but I doubt that they can succeed at "occupying" any other space in Manhattan. If they try occupying a public park in NYC they will quickly run afoul of the new "no smoking" ordinance, not to mention the camping prohibition. I'm sure they will have lots of "pop-up" protests in the coming weeks and months. My guess is that they will try to "shut down" street intersections or business locations on occasion. Social media will facilitate such "flash mobs", but also make it just as easy for the police to keep tabs on them. But New Yorkers are used to occasional disturbances and closures from street fairs and parades to conventions and fires and accidents, so it is hard to imagine what the protesters could do to "phase" New York. And they have the problem of finding something to do that will attract the sympathy and support of the vast majority of the general public without annoying them and turning them off in the process.</DIV> <DIV>&nbsp;</DIV> <DIV>If the "occupy" movement reverts to simply a "protest" movement, I'm not sure what they will accomplish. Sure, they will exercise their rights to peaceable assembly and free speech and make their grievances know, but is that really all they want, a permanent protest movement?</DIV> <DIV>&nbsp;</DIV> <DIV>So, the open question is whether the occupy movement is about to fizzle out or morph into something else that is not known at this time.</DIV> <DIV>&nbsp;</DIV> <DIV>I did walk by and through the "camp" on Saturday and it seemed to have less people than the previous Saturday, although it was now dark (5:30 PM) due to the time change, so maybe there is a natural waxing and waning of the camp size as the day progresses. Still, I would say that OWS was NOT "growing" in NYC. I think it had peaked and people were starting to lose some of their passion and commitment (and tolerance for the weather.) Not the hard-core who stayed until the police dragged them away earlier this morning, but the "hangers-on" and "tourist" protesters/activists and other "supporters" whose commitment was tentative at best. Sympathetic, yes, but deeply committed, not so much.</DIV> <DIV>&nbsp;</DIV> <DIV>To me, the critical issue was whether or not the movement was poised to attract participation from the vast majority of the general public, and it seemed to me that the answer was a fairly resounding "no." Sympathy, maybe, commitment, nope.</DIV> <DIV>&nbsp;</DIV> <DIV>That said, we will have to see how the movement decides to remake themselves in the coming days, simply as a protest movement or something else, and whether that something else draws in the participation of the vast majority of the general public. That's the essential question, whether to remain a "niche annoyance" or to "go mainstream." Personally, I don't think they have any chance of succeeding at the latter, but know knows what they may turn themselves into.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Meanwhile, back at The Mother Ship in Vancouver, BC, "Culture Jammers HQ", Adbusters.org, the puppet masters of the "Occupy" movement, have issued "<A href="http://www.adbusters.org/blogs/adbusters-blog/adbusters-tactical-briefing-18.html">Tactical Briefing #18</A>" to provide guidance and inspiration to the "Occupy" movement, but that was issued before Zucotti Park was "cleared." It will be interesting to read what the movement's puppet masters come up with next. Their "tactical briefing" advises us:</DIV> <BLOCKQUOTE style="MARGIN-RIGHT: 0px" dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><EM>We declare "victory" and throw a party... We dance like we've never danced before and invite the world to join us. Then we clean up, scale back and most of us go indoors while the die-hards hold the camps. We use the winter to brainstorm, network, build momentum so that we may emerge rejuvenated with fresh tactics, philosophies, and a myriad projects ready to rumble next Spring.</EM></DIV></BLOCKQUOTE> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1474655110898775328?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-18872179939934830852011-11-15T09:37:00.001-05:002011-11-15T09:37:30.826-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>A bit of positive economic news in an otherwise gloomy environment is that retail sales were up modestly in October, a good start to Q4. But, that is so-called "coincident" data that tells us where we are right now (technically, it is "lagging", but just by a little), and doesn't tell us anything about where the economy will be headed in three to six months or more in the future. Typically, the stock market is trying to guess where things are headed nine months from now, although if a slump is expected in the interim, it all gets complicated, confused, and quite volatile. Still, good news is good to have.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1887217993993483085?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-86353173065812453572011-11-14T23:45:00.001-05:002011-11-14T23:45:47.707-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Neither the Federal Reserve Board in Washington, nor any of the regional Federal Reserve banks is officially forecasting a recession any time in the next year, but an <A href="http://www.frbsf.org/publications/economics/letter/2011/el2011-35.html">economic research "letter" published by three Fed economists</A> (two from the San Francisco Fed and one from the Kansas City Fed) was published on Monday which in fact says that "<EM>forecasts suggest that the probability of a U.S. recession has remained elevated and may have increased over the past year</EM>", and in particular that "<EM>the odds are greater than 50% that we will experience a recession sometime early in 2012</EM>."</DIV> <DIV>&nbsp;</DIV> <DIV>My reading of their chart shows a peak of about 54% right at the beginning of the year and at or above 50% from about October 2011 through March 2012. That early recession risk is driven in large part by the international (European) risks. Based on only domestic risks their chart shows a peak risk of about 27% from February 2012 through August 2012.</DIV> <DIV>&nbsp;</DIV> <DIV>They do offer some good news, namely that "<EM>if we navigate the storm through the second half of 2012, it appears that danger will recede rapidly in 2013.</EM>"</DIV> <DIV>&nbsp;</DIV> <DIV>All in all, I would say that they are <EM>not</EM> "clearly" forecasting a recession, but simply giving people cover for saying that we have elevated risks for a recession. But, given the risk above 50%, their results indicate that a recession is more likely than not, assuming that contagion from Europe does in fact drag down the U.S. economy significantly.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-8635317306581245357?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-55280845164662609972011-11-14T15:15:00.000-05:002011-11-14T15:16:01.855-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Despite the euro chatter, Italy managed to auction 5-year notes today. Granted, the yield was a lofty 6.29%, but that is simply feedback from the market as to the risk in Italy until they get their fiscal deficit under better control. On the bright sight, the cover ratio was 1.47%, meaning there was no shortage of demand for even Italy's debt.</DIV> <DIV>&nbsp;</DIV> <DIV>The Italian/European debt "passion play" will remain full of drama for some time to come, but I am not persuaded that it is as bad as a lot of the diehard euro critics/skeptics are asserting.</DIV> <DIV>&nbsp;</DIV> <DIV>The European debt issue will continue to have some impact on the U.S., but is more of a sideshow relative to the U.S.'s own debt/deficit issue and the outlook for the U.S. domestic economy itself. Even if the U.S. financial markets were to completely ignore Europe, there would continue to be enough anxiety to keep the U.S. financial markets on edge and highly volatile.</DIV> <DIV>&nbsp;</DIV> <DIV>But for true, long-term investors like me (and Warren Buffett!), the anxiety and volatility is not enough to shake our long-term buy-and-hold mentality.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-5528084516466260997?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-31217837731414275922011-11-14T11:27:00.001-05:002011-11-14T11:27:38.281-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>As of this moment, the stock market is basically treading water and going nowhere (no major decline.) That's a good thing. Despite the reasonably good news about Italy, there is still a lot of uncertainty and general unease about "what happens next" – for Italy, Europe, and the U.S. economy as well. This is also good because it is "real" and not poisoned with a fantasy bias either up or down. Markets should be based on reality and not imagined hope or irrational fear.</DIV> <DIV>&nbsp;</DIV> <DIV>This is a typical market behavior – make a big move based mostly on psychology, adjust a little, and then wait for some real, hard data to guide further adjustment.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">The good news is that despite the anxiety over Europe the market is not continuing on a steep decline. That really says that people really do believe that "the fix is in" and the the EU will bail out its sovereign debt, albeit with appropriate haircuts.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3121783773141427592?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-35665985256384257182011-11-14T11:08:00.001-05:002011-11-14T11:08:18.984-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Despite a lot of the fear, anxiety, and gloom about European debt, the good news about higher yields on Italian sovereign debt is that now that debt is actually finally starting to trade like a real market where participants are actually pricing in perceived risk, whereas previously there was the "moral hazard" of an implied guarantee on 100% of the par value of that debt. Before the EU deal with Greece was arranged, people still assumed that the EU would guarantee all sovereign debt of EU members at 100% of face value, but now that the EU is essentially valuing Greek debt at a 50% discount, which was basically negotiated with the big European banks, the so-called "bond vigilantes" are jockeying to determine what "haircut" the EU will apply to Italy's sovereign debt. This is a really good thing. Properly pricing risk is essential to a healthy market and financial system.</DIV> <DIV>&nbsp;</DIV> <DIV>If there is one paramount lesson from the current European Debt episode it is that moral hazard is still a very real and significant concern and can be ignored only at the peril of all concerned.</DIV> <DIV>&nbsp;</DIV> <DIV>Personally, I don't see a 7% yield on Italy's debt to be outrageous or unwarranted or a true "crisis." Hey, if that's the value the market puts on it, so be it. If Italy doesn't like it, then they should stop issuing debt and buy it back. This is and should be all about the market providing an economic feedback signal to a debt issuer.</DIV> <DIV>&nbsp;</DIV> <DIV>The other pragmatic factor here is that a lot of the rise in yield is really due to European banks dumping Italian debt to clean up their books and balance sheet in anticipation of whatever haircut the EU might force on them. That's as it should be. Yes, it causes some significant anxiety, but that's as it should be. And that's a whole lot better than where we were in recent years where the moral hazard of 100% bailout was masking true economic signals. Economic signals are everything when it comes to finance.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-3566598525638425718?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-81184208956826412802011-11-13T22:01:00.001-05:002011-11-13T22:01:17.965-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>I was personally quite heartened to see seasoned economists put in charge of both Greece and Italy. Granted that is no guaranteed silver bullet solution, but at least it is a solid step in the right direction. Both countries, and Europe in general, still have lot of difficult decisions to make about their fiscal policies (and the EU's united monetary policy), but the willingness to give sane economic policies a shot is a very welcome development.</DIV> <DIV>&nbsp;</DIV> <DIV>Sure, euro critics/skeptics will continue to remind us that they consider this a mere band-aid that will buy the EU a few months or maybe even just a few weeks or even days and that the euro is doomed, but that's what we should expect them to say, no matter what positive developments occur.</DIV> <DIV>&nbsp;</DIV> <DIV>Now, whether the markets continue to respond positively as they did on Thursday remains an open question. It could easily go either way. Thursday's pop could already have discounted any amount of positive news, or maybe not. After the big decline on Wednesday, the partial recovery on Thursday may simply have been a classic "dead-cat bounce" and simply have been due to short-sellers locking in a profit ahead of a long weekend when anything can (and did) happen. Another risk is that a lot of professional speculators may still have a "sell into any rally" bias which weakens the market as it moves higher. That means that even if stock futures are higher, any initial pop at the open could be eroded as the day progresses. But if there is any true underlying bullish sentiment, the market could (maybe) move up through any superficial cynicism.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">I don't mean to be cynical about the market outlook for the coming week, but simply to highlight the downside risks despite any superficial good news. There is still plenty of room for excessive volatility.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">But getting back to the headline question, I do actually expect that the economists will save Greece and Italy, and Europe as well. Maybe not in a single week but over time.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-8118420895682641280?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-10276219329211968752011-11-13T15:31:00.000-05:002011-11-13T15:32:05.727-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>I want to start blogging more on <A href="http://finaxyz.blogspot.com/">my finance blog</A> and I am thinking that having a schedule might make sense in terms of reaching people who are paying attention to the financial markets during the day. Here's my tentative initial plan:</DIV> <OL> <LI>Late evening post (8 PM to 12 AM.) Not so much for the night birds, but to have something for the early birds the next day. A more thoughtful contemplation of what transpired during the day and response to late news. <LI>Early morning post (6 AM to 8:30 AM.) Not quite early enough for the hard-core early birds, but something early in the day for normal people. <LI>Late morning post (10:30 AM to noon.) Response to news of the morning. <LI>Mid-afternoon post (2 PM to 3:30 PM.) Response to news of the day. Before the stock market closes</LI></OL> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Whether I manage to do all of that remains to be seen, but at least I have a plan to work from.<BR></DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1027621932921196875?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-41874808491878848452011-11-13T14:22:00.000-05:002011-11-13T14:23:02.489-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Hmmmm... I'm not exactly sure what to make of this, but I noticed that <A href="http://gasbuddy.com/gb_retail_price_chart.aspx">gasoline prices</A> have recently been trending down even as the price of crude oil has been trending up. This has been happening for about a month now. Usually they trend in the same direction other than for a short intervals when the trend is changing. The rise in the price of crude is most likely due to anxiety over Iran and its over-touted "nuclear ambitions", while the decline in gasoline is either due to an actual decline in real, final demand or an excess in supply or due to speculators shifting their bullish bets to cash or elsewhere. I suppose it is also possible that the turmoil at MF Global is confusing the markets.</DIV> <DIV>&nbsp;</DIV> <DIV>In any case, the decline in the price of gasoline is good news for consumers and consumer spending going into the holiday season.</DIV> <DIV>&nbsp;</DIV> <DIV>The concern is whether the recent rise in the price of crude from $75 to almost $100 may ultimately show up as higher gasoline prices over the next month or whether it is just a short-term speculative pop that may reverse just as quickly as it appeared.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-4187480849187884845?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-20672890106616000772011-11-12T13:46:00.001-05:002011-11-12T13:46:23.077-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Here's the most recent list of the Top 10 largest banks in the U.S., as of June 30, 2011, courtesy of the <A href="http://www.federalreserve.gov/releases/lbr/current/default.htm">Federal Reserve</A>:</DIV> <UL> <LI>1. JPMorgan Chase &amp; Co (JPMORGAN CHASE BK NA/JPMORGAN CHASE &amp; CO, COLUMBUS, OH) <LI>2. Bank of America (BANK OF AMER NA/BANK OF AMER CORP, CHARLOTTE, NC) <LI>3. Citigroup (CITIBANK NA/CITIGROUP, LAS VEGAS, NV) <LI>4. Wells Fargo (WELLS FARGO BK NA/WELLS FARGO &amp; CO, SIOUX FALLS, SD) <LI>5. U.S. Bank (U S BK NA/U S BC, CINCINNATI, OH) <LI>6. PNC Bank (PNC BK NA/PNC FNCL SVC GROUP, WILMINGTON, DE) <LI>7. BNY Mellon (BANK OF NY MELLON/BANK OF NY MELLON CORP, NEW YORK, NY) <LI>8. HSBC Bank USA (HSBC BK USA NA/HSBC NORTH AMER HOLD, MCLEAN, VA) <LI>9. FIA Card Services (FIA CARD SVC NA/BANK OF AMER CORP, WILMINGTON, DE) <LI>10. State Street (STATE STREET B&amp;TC/STATE STREET CORP, BOSTON, MA)</LI></UL> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">I'm note sure why FIA is separated from Bank of America, but I suspect it may be their credit card operations.</DIV> <DIV>&nbsp;</DIV> <DIV>I am amused that Citigroup is listed as being in Las Vegas. Makes sense. Others may not be as amused as me.</DIV> <DIV>&nbsp;</DIV> <DIV>And here is the list of the next ten to round out the Top 20 Largest banks in the U.S.:</DIV> <UL> <LI>11. TD Bank (T D BK NA/TD US P &amp; C HOLD ULC, WILMINGTON, DE) <LI>12. SunTrust Bank (SUNTRUST BK/SUNTRUST BK, ATLANTA, GA) <LI>13. BB&amp;T (BRANCH BKG&amp;TC/BB&amp;T CORP, WINSTON-SALEM, NC) <LI>14. Capital One (CAPITAL ONE NA/CAPITAL ONE FC, MCLEAN, VA) <LI>15. Regions Bank (REGIONS BK/REGIONS FC, BIRMINGHAM, AL) <LI>16. Citibank SD (CITIBANK SD NA/CITIGROUP, SIOUX FALLS, SD) <LI>17. Chase Bank (CHASE BK USA NA/JPMORGAN CHASE &amp; CO, NEWARK, DE) <LI>18. Citizens Bank/RBS Citizens (RBS CITIZENS NA/CITIZENS FNCL GROUP, PROVIDENCE, RI) <LI>19. Fifth Third Bank (FIFTH THIRD BK/FIFTH THIRD BC, CINCINNATI, OH) <LI>20. Goldman Sachs (GOLDMAN SACHS BK USA/GOLDMAN SACHS GROUP THE, NEW YORK, NY)</LI></UL> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">I have no idea why Citibank SD is listed separately, but I suspect it may be their credit card operations. Ditto for Chase Bank.<BR></DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">TD Bank is actually a Canadian bank ("T" for Toronto, the "D" is for Dominion.) I have a local checking account with them. TD had bought CommerceBank which was based in New Jersey and with branches in New York where I opened an account.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Interesting that only two out of the Top 20 are based in New York and only one of the Top 10. And Wells Fargo is based in South Dakota. Yeah, right. These legal shenanigans are annoying.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">It's also a real pain trying to get the exact name of a bank. In most cases they publically use a trade name rather than their actual legal name. And with so many subsidiaries and parent and holding companies it is quite a... shell game. Again, lots of legal shenanigans.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Most of my money is in two smaller banks, one in Texas, and one in Ohio. I also have a fair amount of money in <A href="http://www.smartypig.com/">SmartyPig.com</A>, which is aactually held "on deposit" in Compass Bank or BBVA or BBVA Compass or BBVA Compass Bancshares ("<EM>BBVA Compass is a trade name of Compass Bank, a member of the BBVA Group.</EM>", according to <A href="http://www.bbvacompass.com/">their web site</A>) which is at #29 on the Federal Reserve list and based in Birmingham, AL. I hope they weren't holding too many of Jefferson County's bankrupt bonds. But, not to worry, as long as you have FDIC protection.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-2067289010661600077?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-16638283315391957032011-11-12T12:35:00.000-05:002011-11-12T12:36:10.221-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Isn't economics really just a lot of numbers and math? So, why can't economists agree on... just about anything? Ah, well, yes, maybe there is a lot of numbers and math, but there are also a lot of assumptions behind that math and a lot of interpretation of the numbers and the mathematical results and subjective values on those interpretations. In fact, it is all such a mess that economists refer to "<A href="http://en.wikipedia.org/wiki/Schools_of_economic_thought">schools of economic thought</A>", which basic means groups of people who can't with other groups of people. The Wikipedia gives us this list of 27 schools of economic thought (and more!):</DIV> <OL> <LI>Ancient economic thought <LI>Islamic economics <LI>Scholasticism <LI>Mercantilism <LI>Physiocrats <LI>Classical political economy <LI>American (National) School <LI>French liberal school <LI>German historical school <LI>English historical school <LI>French historical school <LI>Utopian economics <LI>Marxian economics <LI>State socialism <LI>Ricardian socialism <LI>Anarchist economics <LI>Distributism <LI>Institutional economics <LI>New institutional economics <LI>Neoclassical economics <LI>Lausanne school <LI>Austrian school <LI>Stockholm school <LI>Keynesian economics <LI>Chicago school <LI>Carnegie school <LI>Neo-Ricardianism <LI>Modern schools <LI>Current heterodox schools <LI>Other 20th century schools <LI>Viewpoints within mainstream economics <LI>Viewpoints outside economics</LI></OL> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Even to get agreement between the prominent Chicago, Austrian, and Keynesian schools&nbsp; would be difficult enough, but we have so many diverse views on so many of the factors that influence how the basic numbers and math of economics are interpreted. Even for seemingly simply issues such as the role of government in commerce.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1663828331539195703?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-72030598532934333252011-11-11T18:07:00.001-05:002011-11-11T18:07:24.093-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>Despite the fact that just this past Monday <A href="http://www.businesscycle.com/news_events/event_details/1492">ECRI was publically reiterating its late-September call that the U.S. economy is "tipping into recession"</A>, their Weekly Leading Index has inched higher, for the fourth week in a row, and their smoothed growth rate has also moved higher for the second week in a row. Granted, a month of improvement does not mark a reliable indication of a change in trend, but we can certainly say that a new recession is still not apparent. That said, I'll stick with my forecast that we will see some modest growth in the fall and maybe some weakness in the winter and spring, but by late summer we'll be back in the black. So, a recession is not here right now, may come in a few months, but will be short and shallow. That's my call, for now, subject to change, on a moment's notice. I'll continue to defer to ECRI, but I'm not going to bet the farm that there will be a steep recession over the next twelve months.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Meanwhile, we're waiting to see how Greece and Italy shake out in the coming months, not to mention the U.S. joint congressional debt super-committee which has a deadline 12 days away. Personally, I think all of these things will get worked out in some fashion, albeit with lots of drama and market volatility in the interim.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">Real investors should focus on long-term economic and business fundamentals, not the panicky pronouncements of short-term traders and speculators.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-7203059853293433325?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-24817473184524595012011-11-11T11:15:00.001-05:002011-11-11T11:15:26.820-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>I don't think anyone definitively knows the exact formula for the endgame of Italy's sovereign debt crisis, but I do think "the writing on the wall" is for a bailout of some sort by the European Commission (EC.) How much comes from the European Central Bank (ECB) or the European Financial Stability Facility (EFSF) or individual European countries or the IMF or China or the UK or even the U.S., and what haircut debtholders will be asked to "voluntarily" accept remains to be seen, but the bottom line is that "the fix is in"; some sort of bailout will be arranged. It may not be pretty, it may not be what people really want, and it definitely won't satisfy the "euro critics", but it will happen. Why will it happen? What is the guarantee that it will happen? It's simply the way they do things in Europe. It's the whole point of the European Union. There is simply no compelling reason for Europe not to do it.</DIV> <DIV>&nbsp;</DIV> <DIV>Is there a magical "window" when it has to happen and is that purported window "closing"? Not really. The Europeans will take their time and work things out at their own pace, regardless of what any "euro critics" think they have to say about the matter. The big benefit of stretching it out is that it helps to eliminate the "moral hazard" of bailouts. Sure, there is a moral hazard for bailouts, but if investors get the message that relief does not come quickly and without pain (e.g., the haircut), the moral hazard is minimized. Stretching out the process assures that everyone has had a full chance to be heard, that all options have been explored, and then as many people as possible are "on board" with the final approach. Yes, stretching the process out builds anxiety, but it also minimizes anxiety at the end.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">&nbsp;</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt">So, yes, Italy, et al will continue to quite a drama in the coming weeks and even months, but the ultimate outcome (some sort of bailout) should not be a matter of dispute, even if the details must be haggled over.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-2481747318452459501?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0tag:blogger.com,1999:blog-10930607.post-11011859322494629652011-11-11T08:38:00.001-05:002011-11-11T08:38:52.290-05:00<DIV dir=ltr> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"> <DIV>The <A href="http://www.workforcesecurity.doleta.gov/press/2011/111011.asp">weekly unemployment claims numbers</A> were fairly decent yesterday, at least relative to how bad people worry things might be. Initial claims have been hovering near the 400,000 level which is traditionally the threshold for a recession. In recent months initial claims have been modestly to moderately above 400K, but yesterday they came in modestly below 400K at 390K. And, more importantly, the 4-week moving average has finally come down to an even 400K. That's not a sign of a coming boom, but it is not indicating a coming bust either. We are at least moving in the right direction. Still, we really do need to move well below that 400K level for at least a couple of months before we can give an "all clear" signal, on the unemployment initial claims front, even if the unemployment level is still quite elevated.</DIV> <DIV>&nbsp;</DIV> <DIV>Just for the record, initial claims are 46K lower than a year ago when people thought the economy was doing fairly well (other than elevated unemployment.) And the 4-week moving average is 44K lower than a year ago. So, we are actually better off than a year ago, at least in terms of stabilizing the economy. How we are going to grow the economy to reduce unemployment is another matter, but mostly simply a matter of time.</DIV> <DIV style="FONT-FAMILY: 'Calibri'; COLOR: #000000; FONT-SIZE: 12pt"><BR>-- <A href="mailto:Jack@Finaxyz.com">Jack Krupansky</A></DIV></DIV></DIV><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/10930607-1101185932249462965?l=finaxyz.blogspot.com' alt='' /></div>Jack Krupanskyhttp://www.blogger.com/profile/17254264642831755180noreply@blogger.com0