Friday, December 30, 2005

The Learning Curve 2005 Part 2

Part 2, June through December 2005!



Now, enough of this looking back. It's time to look forward!

The Learning Curve 2005 Part 1

Looking back at the archives, January-May 2005... (aka, Part 1!)

Clear the Deck!

Easy-Pleasey, Muck!

 

Clear the deck!  At least that's what folks seem to be doing in an attempt to avoid the "anticipated" January selling.  We're now about to have 4 weeks down in a row on the Nasdaq, as "January comes early."  Remember last January, the SP500 fell about 2% the first two trading days.  Most traders have the mentality that whatever has most recently happened, will continue to happen or will happen again.  This generally doesn't work, because once the crowd thinks they know the pattern, the pattern doesn't work again.  And we saw that this week with the Santa Claus rally everyone was expecting.  Maybe that happened in November, as folks were trying to get in before it happened.

The bears are loud and vocal, convinced that the Recession is Nigh.  You've heard their cries:  Bush sucks!  Worst econony since Hoover!  Rich are getting richer while the rest of us are in soup lines!  Of course, the bears think everyone is bullish.  But they're watching Bubblevision, where everyone is bullish 24x7x365.  I think you have to discount the permabulls and the permabears.

A few things I've noticed this morning:

  • Mark Hulbert notes that most newsletter writers are bullish on 2006, which could be a contrarian sign. 

  • The Equity-only put-call ratio is showing rising fear in the market, as we saw in October 2005.  I think this could lead to a quick rally, as we're getting quite oversold.

  • The Nasdaq is sitting at the 50dma, and plunged below it this morning.  It could bounce.

More later.  First bowl game kicking off!  I've got Minnesota -3!

Thursday, December 29, 2005

Month End Strength?

  • Month-end strength should hit tomorrow, with 401(k) plans buying.  Should last until a few days into the new year.

  • An update on the Million Dollar Homepage, where somebody is trying to make a million in advertising revenue.

That's it for now.  I think the Fun at the Fun Factory is highly overrated.  I'm going home!

 

Thursday's Quick Hits

Bulls make money. Bears make money. Pigs get slaughtered!

 
  • Another 2006 Bear is highlighted over at Smart MoneyDon't expect any significant gains next year, predicts Richard Bernstein. The stock market will be relatively flat over the next 12 months, he says, with the S&P 500 index ending 2006 at 1225 — not far from where it sits now. High-yielding online savings accounts, which offer modest returns without the risk, could prove a better play than equities.  According to Richard Bernstein from Merrill Lynch.  (Isn't about everyone bearish on 2006?)

  • If you missed the Michigan vs. Nebraska Alamo Bowl game last night, you missed a dandy.  I thought Big Blue was going to take it in there on their final drive, and didn't hold out too much hope on their version of the "California vs. Stanford" and The Band play.  But 8 laterals later, Michigan was finaly tackled at the Nebraska 10 yard line.  If it had been 9 laterals, Michigan might've won!  I had Blue -11.5, so chalk up another bowl loss for M'dog.

  • More and more identification, credit cards and now cash have RFID tags to identify them.  If you're concerned about someone using RFID to pry into your business, how about a Duct Tape Wallet?

  • Lunch?  Well, leftovers. I strayed from the vegetarian ways last night and had a Thai Chicken Wrap.  Well, half of one.  So if you're doing the math, that'd mean today's lunch features "the other half."  And some tangerine dreams.  Thai wrap!  (Sounds like something exotic that'd cost you a few bucks in the Red Light District in Bangkok!)

  • Boy, the Contrarian Angle on GM gets dicier and dicier, especially if companies have to put pension costs on their books!   If accounting rule makers proceed with a plan to compel companies to account for their pension plans on their balance sheets, GM might suffer more than any other firm. Such a change may even wipe out most or all of the auto maker's shareholder equity, which is another way of saying that when all of GM's liabilities are subtracted from its total assets, little or nothing may be left.

  • "When I grow up, I want to work on a click farm."  Paul Kedrosky on the click fraud issue.  (I wonder if the government subsidizes click farmers?)

  • Great. Marcus Camby needs surgery on his pinky.  He was my fantasy basketball stud.  Now I'm starting Zaza Pachulia.  Quite a drop off!

  • I heard somebody say that the German stock market was up 27% for the year.  But that if you had bought it back in January, converting your dollars to Euros, and then sold today and converted your Euros back to dollars, you'd be 10% up for the year.  Yeah, the dollar has rallied!  Remember back in early 2005 when everybody wanted to sell their dollars for Euros?

Fun With Banners!

2006 Fortune Cookie


Hmmm...

Inverted Yield Curve Obsession

A final note (for now) on the Inverted Yield Curve issue.  I was watching Bubblevision on the way out the door (to my beloved Fun Factory) this morning, and they had an on-screen graphic showing the 2yr vs. 10yr yields.  This graphic was refreshing every few seconds.  One second, the yield curve was inverted.  A few seconds later, not inverted.  A few seconds later, flat.  Inverted.  Flat. Not inverted.  Inverted. Flat.  Inverted.  Not inverted.  Etc.  At this point, I realized HECK!  This is Bubblevision!  If they're obsessing about it, then I suppose we don't have to worry about it.  (For now!)

Wednesday, December 28, 2005

The Inverted Yield Curve SAT Question

I read somewhere that recessions are preceded by inverted yield curves, but not all yield curves lead to recessions. Which sounds a little like an intro to an SAT question. Lets do it!

Q: Recessions are preceded by an inverted yield curve; however, not every inverted yield curve leads to a recession. What can we say about the current inverted yield curve?

A. Sally is taller than Jane.
B. Jane is taller than Sally.
C. Always yield to traffic when merging.
D. Inversion is good for lower back pain.
E. Jane and Sally are the same height.
F. Take the Wolverines and give the points to the Cornhuskers.

Invest wisely!

Inverted Yield Curve Links

More on the yield curve inversion...

  • Adam's Options on yield curve inversion.  I found the comment interesting that the yield curve has inverted 4 times since 1982, and the market reacted well in the interim, rallying in the next 6 month's post-inversion in each instance, and rallied 12-month's out in 3/4 occurences.

  • Adam's Options also points out that it's the responsibility of the "it's different this time" crowd to prove that yield curve inversion won't lead to a slowdown or recession.

  • Economist's View on inversion when inflation is low, as it is in our current environment.

  • The Big Picture's Barry Ritholz explains the significance of yield curve inversion, and potential economic and market implications.

  • Paul Kedrosky's Infectious Greed on Inverted Yield Curve Worries.  Maybe PK has a point on the media hype!  It does seem like this is all folks are talking about right now.

  • Stocks or Bonds on yield curve inversion, daring to sound like "it's different this time!"

  • The Asset Allocator wonders if we're jumping the gun from yesterday's smorgasbord.

  • Bill Cara blogs on the yield curve focus, and contemplates a 2006 recession.  Bill likes the yellow metal!

  • BlogginWallStreet's Mark Mahorney talks about the Inverted Yield Curve Myth:  They are NOT an indicator of recession.  And note his last comment, There's a lot of money to be made off of people misunderstanding the markets. I know of at least one hedge fund operator that likely would have appreciated my letting people go on believing that a yield curve inversion would lead to a recession.  Student body right, and run the counter!  (I'm watching so many bowl games it's ridiculous!)

  • On a quick bloglines refresh, I see Adam's Options has more on the inverted yield curve, linking to subscription based realmoney.com (Yeah, Cramer's site!).  Keep an eye on Adam's blog, as he's running with it today!

Sorry if I missed any out there.  If you know some out there, feel free to add them to the comments and I'll include them later in an update.  This is a MEDIA HEADLINE right now, and lots of folks are out there discussing what the inverted yield curve means, doesn't mean, implications, and non-implications.  Worries.  Fears.  Blood on the street!

It's fun to read and discuss.  And you'll be the hit of the New Year's Eve Party if you've done your research!


In Edit! Here are some additions:

Memoirs of a Rainy Day


 
  • On the markets, I heard someone say "January is happening now."  He was thinking that everyone on the planet is expecting a January selloff.  So folks want to "get out" before the correction happens, thus creating the pullback ahead of schedule.   That's kind of what I was thinking.  If so, those who want out to avoid the January selloff will already be out, and the only thing they can do at that point is buy back in.  Just thinking out loud.

  • Raining quite a bit here lately.

  • My coworker is reading the book Memoirs of a Geisha.  I asked her, "You know this is out in the theaters, right?"  But she likes to read a book before she sees it at the theaters.  "So you can be disappointed?" I asked.  She said usually, but she likes to know what's going to happen.  Uh, okay.

  • Of course, last week's rally (3 up days in a row) might've been folks trying to get in before the anticipated Santa Claus rally.  Those folks are losing money trying to front run this week's anticipated rally (which isn't happening).  Maybe those selling this week will also lose money trying to front run next month's selloff (which hopefully won't happen).

  • (Did I just mention hope?  EGADS!)

  • Yield Curve Inverts Again!  Nobody was mentioning or cared about this much in 2000.  Everybody believed in the "new economy."  Today, though I sense lots of fear.  Hey, more on Bulls vs. Bears later today.

  • I asked my coworker how she felt about Chinese actresses playing Japanese roles in movies, as if folks couldn't tell the difference.  She replied that being Hispanic, lots of folks think she's Asian.  "I get that all the time," she said.

  • Happy Wednesday! 

  • Who will win the battle for the HD DVD formats?  Pioneer is going to market a Blu-ray DVD player for PCs, competing against Toshiba's HD-DVD format.  Sony is rumored to be including a Blu-ray drive for the Playstation 3.

  • Two words:  Ziyi Zhang!  I liked her in the other movies she starred in.  Most recently, "House of Flying Daggers."  So, I'll probably see "Memoirs of a Geisha."

  • More later on Bulls vs. Bears.  Specifically, all the bears think everyone is bullish.  All the bulls think everyone is bearish.  Who's right?

  • I'm not going to be an early adopter on the HD DVD players.  I'll let somebody else pay that high price tag, and then let the dust settle to see which format becomes "the standard."  Know what I mean?

Tuesday, December 27, 2005

Tuesday Quick Hits

  • Now there's an old-fashioned sell-off!  Of course, the fear is not only the inverted yield curve between the 2yr and the 10yr, but that the market will repeat what it has done the previous two January-February periods, and sell-off.  Seems like everyone is front-running that anticipated event.

  • Stocks or Bonds blog responds to Muckdog and Random Roger on Yield Curve Inversion.

  • In the bulls corner, today's selling was on very light volume.
  • I watched Katie Holmes in "Pieces of April" over the weekend.  Quite the drama.  Not what I expected at all.

  • Imagine Free Wi-Fi for all!

  • By now, you may have already downloaded the Saturday Night Live Chronicles of Narnia rap song.  Or, should I say, Chronic-What!-cles of Narnia.  It's pretty darn good from SNL. 

  • I have so much to do here at the Fun Factory, that is completely unrelated to my new project.  I have a design due next week. Unfortunately, there is an implementation going on this weekend that has me scrambling around today.  Nobody else is around to figure anything out, so it's all a big (muck)dog pile.

Inverted Yield Curve


 
  • Have you seen the Wall Street Journal commercial, where they tout all these successful people who read The Journal?  "I'm retiring at 50," one guy say as he reaches in his golf bag for a driver.  "I started my own business," says another.

  • Bowl week!  Many have already come and gone, but the bulk of them happen over the next week!

  • So we have an inverted yield curve between the 2yr and the 10yr.  And folks are saying this forecasts an economic slowdown or recession.  I think the official definition is the 90-day vs. the 30-yr, but folks can agree to disagree.  It's pretty flat, though.  Bill Cara discusses it more here.

  • Barry Ritholz on the Four-Year Presidential Cycle.

  • Does reading the Wall Street Journal really influence you financial outcome?  Maybe that guy who is retiring at 50 is a public safety officer in California who received a 3% at 50 retirement package, and had a lot of free time during the work day to read the paper.  How do we know that this isn't the case?

  • More on the yield curve, comparing the 2-yr to the 10-yr, from CBS Marketwatch.  Despite what you'll hear about this "always predicting a crash," this article does point out that The yield curve briefly inverted in 1998 during the Asian financial crisis, the only time in the past 30 years that an inverted yield curve has not preceded a recession.

  • I won my Fantasy Football league!

  • 1998 was pretty choppy, though!  It also presented a great Four-Year Presidential cycle buying opportunity in the fall.

  • As you can see in some of the comments here, many are convinced that 2006 will be a bad year for stocks.  Maybe most folks are thinking it'll be a horrible year at this point.  But all anybody has to offer is opinions.  You can find any that you like out there for the taking.  Opinions are low-hanging fruit.

  • I subscribe to the Wall Street Journal online edition.  How will this impact my future, compared to those who subscribe to the hard copy?  Am I going to be able to retire at 50?  Am I going to be able to start my own business? 

Monday, December 26, 2005

Monday's Quick Hits

  • How the Dividend Tax Cut Increases Growth, from Dr. John Rutledge.  You won't hear much of this from the loyal opposition who are busy politicizing and spinning all economic data points.

  • The upside-down tomato plant over at Boston Gal's Open Wallet.  I agree with her comments.  It is pretty cool.  And here in Sacramento, tomatoes grow so well that often times they call this town Sacratomato.  (They do, not me!)

  • Prices and Energy Use over at Econobrowser.  Interesting chart up over there comparing 2004 to 2005 gasoline demand.  Falls off a cliff after August.

  • Quizno's has toasty bread bowls!  Hmm, look pretty good to me.
  • Interesting entry up over at The Internet Stock Blog on on-demand TV usage, and impacts to Netflix and Blockbuster.  Could it mean the end of DVDs?  I think that's where we're headed.  You want something?  Just click on it and it's yours.  (For a small fee, of course!)  And we're seeing this with the video ipod, too.  Point.  Click.  Download.

  • Conspiracy of the Jews II over at Jeff Mathews' site.  I'm not much into conspiracy stuff, to be honest. 

  • Paul Kedrosky reflects, A Tsunami Digression.  Hard to believe it's been a year.  The news has been playing the videos from the disaster.

Sushi Fest Monday

Not so crazy about the sushi fest, Muck ol' pal.

 
  • So, it's the day after.  Take those decorations down yet?

  • The market?  Doesn't seem to be moving much today.  OH!  IT'S CLOSED!  Well, lets see if Santa left a rally under the tree.

  • The the loyal opposition are saying how horrible the economy is, and many financial analysts are calling for a 2006 recession and/or stock crash.  Someone commented that "everything looks bright" at the end of the bull market.  But only if people recognize it.  Remember in 2000 how euphoric people were?  Even if the economic data is currently showing "moderate growth," people don't seem to recognize it.  This isn't the "wildly bullish" kind of sentiment we normally see at market tops.

  • I'm heading to a make yer own sushi feed in a little bit.  Should be fun.

Saturday, December 24, 2005

Christmas Eve's Quick Hits


 
  • Well, the fantasy football bowl continues...  I'm rooting against Rod Smith right now.  I have Mike Anderson going, who just went out with an ankle twist.  DRAT!

  • Over at the Indepundit,  the topic of Class Warfare is discussed.  Not the kind you think, but between private sector vs. public sector workers.  While the private sector is seeing employees face wage and benefit cuts, no such challenges face the public sector.

  • President Bush pardons two Moonshiners.

  • You've heard of Pimp My Ride?  How about Pimp my iPod?  Check out this fuzzy iPod cover called the Fluffpod!

  • It is the season for lists, and how about this one, The Top Reality Whores of 2005 from Reality Blurred!  The only story I'm familiar with there is Corey Clark...

  • The Actor's Studio interviews Jared from Subway.  Very funny bit from Wuzzadem.  It does not make me want to see Brokeback Mountain...

  • Kim Novak, on 100 Things About Women.  Of course, do real men even pay attention to these sorts of lists?  Hah!

  • Ugh.  It's going to be close in the Fantasy Football Bowl.  I was hoping to run away with it.

  • Market Week on gold, the little yellow God.  I agree, the herd is chasing this one right now.

From me and my cartoon friends, I'd like to wish all of you a very Merry Christmas!

Saturday's Views on the News

DOW's Gain Down to the Wire.  In the final week of 2005, the U.S. stock market will be banking on last-minute investments in retirement accounts and other equity funds, with traders hoping the infusion will help the Dow end the year in positive territory.

  • Just using our thinking caps here, we'll have a lighter-than-normal volume week next week, 401(k) contributions will hit late in the week, and then there are the unofficial month-end/quarter-end/year-end shennanigans by the Big Investors to jack up their performance numbers.  I know most folks are expecting 2006 to be the Return of the Bear Market, but maybe we'll see a nice bump this coming week.

Man Rescues Dog Frozen to Railroad Tracks.  He's missing a lot of hair, but a Siberian husky has a new name and a new life, thanks to a construction worker and police officer who rescued him from a railroad track minutes before a train arrived.
  • I saw this story on CNN, and I have to wonder how would a dog get frozen to railroad tracks?  I think the rescue story is great, but I'm wondering if the dog did it on a dare from some other dogs.  Kind of like kids urging one another to stick their tongue on a lamp post.  The dog was taken to the Chippewa County Humane Association, where workers named him "Ice Train."

Economy Stays in the Game.  Think of a boxer who takes wallop after wallop but won't stay down. That's the resilient U.S. economy. As we begin the 50th month of economic growth this new year, not too much has changed. You can expect 3% growth in 2006 to follow the 3.6% of 2005.
  • So, more of the same.  This is the kind of growth that really will frustrate the bears.  They'll get enough news and fear to suspect a bear market is around the corner, but the slow moderate growth will be good for the stock market.  It looks to be another not too hot and not too cold economy.

I only  fancy my girlfriend after a few drinksAfter several years, I recently noted that I only really fancy my girlfriend after I’ve had a few drinks. Is this relationship worth pursuing?
  • You know, I only fancy other people's girlfriends after a few drinks, too.  The Economist answers This Christmas, thousands of couples like you and your girlfriend will rediscover each other with the help of the Yuletide brandy.  HO HO HO!

Fantasy Football Superbowl!

  • Kind of tough to head out last-minute gift shopping with the Fantasy Football championship on the line.

  • The Bill Cara Rules for successful investing. Take risks, not chances! I think chances are best left to the casino. (How does that work out?)

  • I started Santana Moss today. That's working out nicely.

  • Federal Reserve Chairman George Costanza from Barry Ritholz. Should Ben Bernanke just do the opposite?

  • Have you tried those BBQ Kettle Chips?

  • A market comment on Christmas Eve? I think the market is going higher. Despite this comment about an inverted yield curve and that the market tanks when there is nothing but good news, I don't think he's right. The typical way to measure the yield curve is the 3 month and the 30 year. Plus, the perception is that the economy is horrible and that we're sliding into a recession. That's not the kind of euphoria we see at market tops. Remember 2000, when everybody was bullish about the New Economy? That's not the case now.

  • Investors believe in Santa Claus Rally, from CBS Marketwatch.

  • Uh oh, laptop batteries are waning.

  • My goodness I miss Seinfeld!

Friday, December 23, 2005

Friday's (More) Quick Hits

I bet I can beat the traffic home, Muck!

 
  • Why not do another blog entry?  The Fun Factory is not releasing us early today.  I've just made it through a banana and a sampler box of Whitman's chocolates.  Eh, life is good!

  • The market?  It barely budged today.  I did get a chance to listen to Cramer's podcast while I was out at lunch.  He really likes Altria.  He was saying 60% of China's male population smokes.  OK, well my take is that on one end, we can invest in cigarettes.  And on the other end, Big Pharma companies with cancer treatments in their pipelines.  I don't directly own any of the above.  Yet. 

  • The housing market has indeed cooled off.  One of my coworkers who recently started speculating is getting a bit nervous.  He's underwater a little now, and he has been letting his house sit vacant.  He thought he'd be in and out so fast, he didn't need to bother with a renter because the monthly expenses wouldn't amount to much compared to the HUGE real estate profits.  Well, now he's just hoping it goes up enough so that he can dump it to break even.  (Gee, sounds a lot like Cisco shareholders from 2000).

  • Hey, I wonder if Gold investors today will experience that sort of thiing?  Just wondering out loud.

  • The Whitman's sampler was a coworker gift.  It had one dark chocolate over coconut, one chocolate covered caramel, one pure chocolate, and something with a chocolate cream inside.

  • Whoa!  Jason says the neutral signal is on!  Hurry up and.... well... and.... uh... hmm.  Hey, I like Jason and am a daily reader.  And on a stock day like today, his neutral signal seemed to be right on the money!

  • Have you had chocolate chip cookies from The Chippery?  Oh.  My.  Goodness.  A coworker here at the Fun Factory has a kid who was doing a fundraiser, and selling these tubs of frozen cookie dough..   Awesome.   Just awesome.  They make outstanding cookies.

  • Ticker Sense has some interesting charts up regarding US Strategists' Historical Recommended Asset Allocations.  Looks like they have a little room to chase stocks higher, but check out the late 90's rush to hop on the mania bandwagon!  Same thing with the bond rally.  That silly crowd mentality again.

  • I think have to do a little more shopping, but I'm in the Fantasy Football championship game this weekend.  This league does it a week early because they're trying to avoid teams resting players. 

  • Well, I've hit too many roadblocks today.  No, not like the Amazing Race kind, you silly reality TV show fan!  Plus, I'm out of Whitman's samplers.  I do have an unopened box of See's here, but then what would I munch on next week?

Friday's Views on the News

Immigrants find opportunity in ruined New Orleans. While New Orleans residents are slow to return, the immigrants, most of them illegally in the United States, have swarmed in to do the hard work of cleaning up and rebuilding that others so far have shunned.

==> This is the kind of thing that makes me say “Hmm?” Many of the people affected by the damage in New Orleans were poor and unemployed people. People who are on Federal assistance. Why aren’t they working and helping New Orleans recover? I understand that some may have some disabilities, but certainly some of those folks who were complaining the loudest should be able to find employment down there.

Gold continues strong demand. Analysts remain bullish on the metal, which has gained about 12% this year amid physical demand from India and China, central-bank buying and inflation fears.

==> Gold has remained a poor “buy and hold” investment. In the early 1980’s gold was over $800 an ounce, and now it’s just over $500 an ounce. It didn’t pay any dividends along the way, either. No growth. No dividends. No thanks. The catalyst for gold would be rampant inflation. The core rate of inflation is around .2% in the most recent report, or under 3% annually. Energy and food prices are volatile, and are excluded from the core rate. If folks are expecting a 2006 recession, that wouldn’t be a catalyst for inflation, either. Again, no thanks! It’s worked out as a trade, so congratulations to those who got in near the bottom. That was exactly the opposite folks were doing, though. Remember countries trying to unload their gold reserves a few years ago with the metal in the $200s? File another one under “Crowd mentality!”

Why doesn’t the public realize how strong the economy is? How do we know the media has poisoned the public's view of the economy? It's really very simple. Opinion polls show basically that people believe overwhelming that they're doing well financially but the country isn't. And they know for sure their own economic condition. They experience it personally on a daily basis. On the other hand, what they know about the broader national economy comes largely from the media.

==> Surprised? Me neither. I often hear some of my left-leaning friends claim how bad the economy is. Oh, not for them. They’re doing fine. Just bought a new SUV and upgraded to a larger home. But everybody else is doing bad. Sure. File this under “Can’t see the forest through the trees.” I’m not saying that there aren’t folks who are struggling. There always have been. My friends will often say how great things were before George Bush took over, but remember Al Gore campaigning about folks who are making decisions between eating and prescriptions back in 2000? I think there are always poor people who are struggling, and we do have programs available to help them. But the vast majority of folks are doing not only fine, but better than fine.

Investing Hip Hop


 
  • I wonder how many folks got whiplashed on Albertson's stock?  Ouch!  Talk about a lump of coal in your Christmas stocking.  Heck, that might be a lump of something else.

  • Michigan sentiment up.  That's consumer sentiment; although, I'm sure their fired up over their Wolverines.  It is Bowl Season after all.

  • The Death of Bling?  Barry Ritholz discusses it over at The Big Picture.  You know, it's kind of funny how fashionable words evolve in this society.  Lately, much of the hip words come from the hip-hop community.  Whether Snoop or Eminem or whoever.  By the time 40-yr olds are catch wind of the popular slang, the trend is about over.  It's too late.  Maybe it's a lot like investing that way. 

  • How is Investing like Hip Hop slang?  By the time the crowd catches on, the trend is over!  Maybe Steven Levitt needs to put a chapter in Freakonomics II about it.

  • Albertsons has some nice new stores, though.  In Las Vegas, that CVS pharmacy on the strip sure was crowded.  Heck, I went there to pick up a few things.

  • The Fun Factory is over half vacant today.  Those who are here, are milling around eating pastries and holiday snacks.  Except for me.  Although I did manage to get a few candy canes and some chocolate Santas befure I hunkered down.

  • The market?  Heck, pedal to the metal.  Might as well hope for a Santa Claus rally.  It's tempting to cash in some gains from the October move. 

  • Emotionally, I'm being swayed by this Bear Argument that next year we're going to crash or have some sort of slowdown/recession.  And maybe there will be some hiccups over the change in the Fed. 

  • Then there's the election year trend which tends to produce a both a big sell-off and a big rally. 

  • Wall of worry.  Pedal to the metal.

  • Lunch today?  I'm thinking about hitting the stores for a longer-than-usual lunch.  Maybe pick up a few things.  Including a sandwich somewhere.  Maybe a toasty Quizno's sub.  How's that sound?

  • Regarding video game stocks?  I think they're in a lull because nobody wants to buy games for their "old" systems, the supplies of the XBOX 360 is limited, and the Sony Playstation 3 isn't out yet.  The first round of games for the XBOX 360 blew, as game makers haven't found that technology sweet spot.  They'll get there.   So, a little weakness in that area might present a good buying opportunity down the road.  Just thinking out loud.

  • Speaking of College Bowl Season, see Navy's wishbone confuse the heck out of Colorado State last night?  Hoo, that was just nasty.  The Rams were totally confused.  It's probably tough not seeing that kind of offense all year, and then face it after a few weeks off.

Thursday, December 22, 2005

Thursday's Views on the News

Mexico incensed by new US border fence plans. Few things unite Mexicans more than perceived U.S. insults and plans to build a high-tech fence to stop migrants crossing the border have incensed people here, regardless of their social class or political stripes.

==> Oh, boy. This one is a powderkeg. On one hand, I understand Americans who are tired of seeing tax dollars spent on illegal immigrants. I also understand the national security issues with having an open border. But it's obvious that with a Republican President in Washington DC, this will be categorized as a racist move. I think the only way to get this done, is to implement some worker Visa program that allows folks to come over to the US and work legally.

CBSMarketwatch's Mark Hulbert asks contrarian investors if you talk the talk, do you walk the walk? How many of you have stepped up to the plate recently and bought shares of General Motors?

==> Hell no. I'm a pussy. But this article makes you think about it. Good job, Mark.

Health care concessions at Ford and a deal is near at GM.

Ford: The UAW said 51 percent of members voted in favor of the deal reached last week. It has said the agreement will help Ford save $850 million annually in health care expenses.

GM: The healthcare deal would save the world's largest automaker $1 billion a year in healthcare costs.

==> Maybe that contrarian play could work out, eh? US car companies had to do something. Wouldn't it be nice if as a first step, they built cars that people wanted to buy? Wouldn't that resolve a lot of their money problems? It is true that management negotiated horrible contracts with the union, that have put the companies in a bind. Not like those managers who negotiated those deals care a whole bunch. Are many still around, or are they off on a remote island basking in the sunshine?

Last game of Monday Night Football on ABC. When the New York Jets and New England Patriots end their football game next Monday, the lights will go out on one of the great shows in the history of television.

==> It's just hopping to ESPN. Smaller viewership, but most sports nuts will still be watching.

Leading indicators post solid gains. The Index of Leading Indicators, which is supposed to forecast economic trends up to six months ahead, rose for the second straight month, climbing to 0.5 percent after rising a revised 1 percent in October, the Conference Board said.

==> Sorry, bears. Can't seem to find much bad news to stick in your Christmas stockings. I know everyone on the planet is predicting a Santa Claus rally. And everyone on the planet seems to be predicting a bad 2006 for stocks. The news coming out from this economy aren't too cold, aren't too hot, and seem to be just fine. Say, that reminds me of a fairy tale...

Santa Claus Rally

Don't make fun of the Santa Claus rally, Muck.

 
  • The market bouncing around a little today, but with the Nasdaq leading the way, I think it's good news for folks looking for a Santa Claus rally.   The Nasdaq tends to lead the way for the rest of the market.  Of course, isn't everybody on the planet expecting next week to be positive?

  • I'm still Christmas shopping.  I started out great with online buying, but I still find myself scrambling around afterhours trying to finish things up.

  • The NY transit strike is over.  I guess both sides agreed to end it, and return to the bargaining table.  The union wants to discuss pensions and healthcare.  You know, those two issues are going to be huge for the US down the road.  I think both private and public organizations have promised far more than they can deliver.

  • Microsoft faces $2.37 million a day in fines from the EU if they don't comply with the 2004 antitrust ruling.  Is this why the stock has been taking a beating?

  • Did you see the picture of the fish (trout) with two mouths?  Maybe this one was caught downstream from Monty Burns' nuclear power plant, eh Smithers?

  • I finaly saw the latest Harry Potter movie. It was okay.  A little less cutesy and charming than the others.  But Valdemont is back, and I suppose that'll set up the next movie.  I haven't read the books, so don't spoil it for me!

  • I'm so busy here at the Fun Factory.  Not a great time of year for that.  I'd rather be chatting and milling about.  But they decided to start a new project while we're implementing the previous one, and trying to deal with that fallout.  It's crazy.  I'm feeling a lot of pressure.

Wednesday, December 21, 2005

Wednesday's Views on the News

Cheney casts tie-breaking vote in Senate to pass budgetThe Republican-controlled Senate passed legislation to cut federal deficits by $39.7 billion on Wednesday by the narrowest of margins, 51-50, with Vice President Dick Cheney casting the deciding vote.

==> This is one of those smoke and mirror deals where "budget cuts" really mean slowing the rate of growth, not actual spending cuts.   Maybe we should try this approach at home.  Try this with your spouse next month "Honey, instead of spending $900 for that new set of golf clubs, I'm going to spend $700.  I figure that would cut our monthly budget by $200."

Drilling in ANWR failsA quarter-century long fight over the nation's most divisive environmental issue rages on after the Senate on Wednesday rejected opening an Alaska wildlife refuge to oil drilling.

==> This is the kind of news that is somewhat troubling.  The US burns over 20,000,000 barrels of oil a day.  12,000,000 of that is imported.  ANWR would bring upwards of 1,000,000 barrels of oil a day to market within 5 years.  Either we burn it, or sell it to Japan.   If we sell 1,000,000 barrels of oil a day from ANWR to Japan for $55 a barrel, that gives us $55,000,000 a day to buy oil from Canada/Mexico/wherever that we don't currently have today.  It would represent 5% of our total oil consumption needs on a daily basis.  In 5 years, we're going to need that oil from somewhere.  There isn't any widescale use of alternative energies to replace oil at this point. Everything talked about so far has minimal impact.

Wednesday's Quick Hits


 
  • I'm trying to get back into the flow of the markets.  I updated my Black Box last night, and it was frightening to see how right it has seemed to be regarding the sell signals I received earlier in the month.   I do remain long the market, but did sell my Microsoft.  I still am bullish on the markets, and wonder how deep the pullback will be.  If it gets deeper, I'll roll into more aggressive positions.

  • I don't like the new format of CNBC.  I have to squint to see the ticker numbers at the top of the screen.  I also have to scroll the width of the screen to see the numbers, instead of focus in the bottom right-hand corner.  Of course, as financial TV goes, they're the best game in the business.  Although maybe I'll flip to Bloomberg and see what their morning show is like.

  • So, where do you stand on the value vs. growth investment philosophies?  (Can you tell that I'm reading Jeremy Seigal's latest book?)

  • How'd I do in Las Vegas?  Well, the casinos have probably already sent their free room deals to my mailbox as I type.  Whatever they can do to get me back as soon as possible.  (That's how I did...)

  • (Chevy Chase's move Las Vegas Vacation is one of my favorites.)

  • This time of year, folks are generally feeling optimistic about the next year.  For some reason, I'm sensing some gloom.  I think folks believe we're heading into a recession, and that 2006 will be a bear market.

  • President Bush's approval numbers are going up.

Monday, December 19, 2005

Vacation Reading

I finished Freakonomics. Now reading The Future for Investors by Jeremy Siegel. More to follow on Freakonomics, and don't forget to check out their blog at freakonomics.com!

The 2006 Bear Market

As you know, most everyone on the planet is expecting a bear market in 2006, and it would appear as if everyone is trying to exit the market before it happens. I remain bullish, as I think the bears will be wrong yet again.

I'm again Treo blogging. I'm in Las Vegas, where there's a bear market everyday on the casino floor. That is, unless you're the House!

Christmas Week

Remember the two week break when we were in school? I've noticed that lots of folks (ADULTS) do this. I think that's great.

The markets might be volatile on lower volume, but I think we should see an upwards bias.

Blogging from my Treo!

Saturday, December 17, 2005

Saturday's Views on the News

==> I downloaded Firefox, and it's pretty quick compared to Internet Explorer. I like the tabbed browsing, and the ability to browse RSS feeds via the browser. (Sorry Bloglines).

Myths About Drilling in ANWR. Congress is currently deciding whether to add ANWR drilling to the defense appropriations bill. Given the continued high oil prices and political turmoil in many oil-producing nations, now might be the best chance to get ANWR done. But it will happen only if the ANWR myths are exposed.

==> We're a nation that runs on oil. Sure, it'd be wonderful if there were viable alternatives at this point. There are definitely some promising technologies we should utilize as much as possible. But the reality is that we need gasoline. We burn a lot of it. And whatever we can produce at home, we can lower our imports from hostile nations. Even if we sell Alaskan oil overseas, the money we'd gain would pay for oil we buy from someplace else. This is a no brainer. We should continue to drill for oil wherever we can, because we need the oil.

Jessica Simpson files for divorce.

==> Ah, c'mon. Did you expect a Hollywood romance to last? I always wonder if the sole purpose of Hollywood hook-ups is to grab the headlines. Somebody needs to get back in the spotlight, how about an affair, baby, or falling in love?

Bush approves Eavesdropping. President Bush said Saturday he has no intention of stopping his personal authorizations of a post-Sept. 11 secret eavesdropping program in the U.S., lashing out at those involved in revealing it while defending it as crucial to preventing future attacks.

==> I haven't checked the Liberal blogs, but my guess is that their panties are in a bunch over this. These folks were the first to Blame Bush for not acting to stop 9/11 based on their conspiracy theories on what he knew and when he knew it. Now that news comes out that Bush is actually trying to learn in advance of potential terrorist plots, the Liberals don't seem to like that, either. C'mon. You can't have it both ways. I don't like the idea of the government spying on people, either. But I don't like the idea of school busses exploding or planes flying into shopping malls. Which do you prefer?

Ashlee Simpson collapses after show. Ashlee Simpson collapsed following a performance in Tokyo and has been hospitalized. The 21-year-old singer on Thursday had just performed her single, "Boyfriend" for MTV Japan, when she told the audience she felt sick and said to them, "I love you guys," Us Weekly reported Friday. She then collapsed in an elevator and was rushed by ambulance to a hospital.

==> Wow.

Baby Boomers could erase longevity gains. A new government study shows deaths from heart disease, cancer and stroke continue to drop, but it also shows that half of Americans ages 55 to 64 -- including the oldest of the baby boomers -- have high blood pressure, and two in five are obese.

==> I think health care is the number one financial issue facing this country. Obesity is an epidemic in this land of plenty, and there are debilitating diseases associated with being overweight. You know the list, I don't have to tell you. Getting Americans more healthy will lessen the burden on our ability to provide health care. How about a New Year's resolution from all Americans that involves some portion control at the dining room table, and a realistic exercising schedule? It's the little things that compound over the days, weeks, month and year that make a long term difference. Hey, it's like investing that way!

Pudgy Penguins get workout to shed pounds. TOKYO, Japan (AP) -- It's wintertime and the king penguins at a zoo in northern Japan are putting on weight. But the keepers there have a solution: exercise.


==> There you go. See? Even penguins are trying to stay fit. Cute lil' buggers. I like the comment about them standing still during the winter months. If we translated that to human behavior, it'd be sitting on the sofa watching American Idol and NFL games. Same thing, not as cute...

Friday, December 16, 2005

Mushy Market


 
  • I have to start off with The Apprentice finale last night.  I have to say that Randall was the easy choice.  But Rebecca was pretty good.  I was wondering if Trump would offer them both a job at the end, and he almost did.  I thought Randall fell down there a little.  On one hand, there can be only one Apprentice, and I understand him wanting all the spoils.  On the otherhand, if there was all that respect and love between Randall and Rebecca, you think he'd have said "Mr. Trump, hire her, too."
  • The stock market was mushy all week.  It's almost as if the week didn't happen at all.  Unless you owned ABGX, of course.  That would've been a good week.  I owned it earlier this year, but bailed.  DRAT.  (The "DRAT" is for bailing at a loss.)  But who knows why Amgen bought 'em.  That's the puzzling part.
  • It's cold and foggy here.   Welcome to winters in Sacramento.   It'll be like this until a couple weeks after the Super Bowl.  It does clear up after rain storms for a bit.
  • Oh, yesterday's comment about the 10 consecutive quarters of GDP growth over 3%?  Turns out, it's not a Rovian lie after all.  Here's the chart!
  • Every year, we go through this "War on Christmas" stuff.  Everybody knows it's Christmas.  It is so ingrained in our culture, that we're unlikely to rid ourselves of it.  Couldn't even if we wanted to.
  • I think today was it for Howard Stern on free radio.  Now his show is for subscribers only, on satellite radio.  I wonder if droves of followers are hitting the stores buying their satellite receievers?  Or, are they waiting to see what their local AM station puts on in Stern's place?  This is kind of interesting.
  • I forgot about the Winter Olympics.  They start in February.   I like 'em.

Thursday, December 15, 2005

Thursday's Ramblings


 
  • Oracle's profits fall afterhours.  Uh, they have a nice database and all.  But are these guys a bellweather anymore?

  • It's been so hectic and busy here today at the Fun Factory, that my brain is done.  I can't think of anything to blog about.  I just want to go home, tune into the Apprentice finale.  Maybe find a hoops game on somewhere.  Oh, and microwave popcorn.  That sounds good.  Feeling kind of run down. 

  • I'm not sure why Chinese actresses are in Memoirs of a Geisha, either.  Ziyi Zhang, though.  Hoo.

  • Not only does the Christmas day game of Miami Heat vs. Los Angeles Lakers give us Shaq vs Kobe, but also Pat Riley vs. Phil Jackson. 

  • The San Francisco 49ers vs Houston Texans game on January 1 is being called "The Reggie Bush Bowl."  Those teams are the worst of the worst.  Poor Houston, though.  They've been in a few recently up until the closing minutes, and lose.  I'd almost think they're trying to finish last with the way things are going.

  • I haven't been to the stores or malls shopping for Christmas.  Did everything online.  I think I'll stop at a Starbucks and get my team some gift cards for the holidays.  That'll be the extent of my "shopping."

  • Today's CPI came in below estimates, due to falling energy prices.  Of course, the core rate remained around .2%.  Yeah, I don't think there's much inflation out there.  For more on the CPI, see BlogginWallStreet.  Sure does make those i-bonds and TIPs look like a good deal.
  • Is that an ipod in your pants, or are you just happy to see me?  Introducing the i-boxer!  I guess you better hope that nobody asks you if it's an ipod nano in your pants, huh?  "Got the small one, eh?" (This mania must be nearing the end, too.)

  • So, I'm long and strong heading into the final 2 weeks of the trading year.  I still think the big players have done whatever they're going to do ahead of the final two weeks.  Maybe that's why this month's options expiration week has been a little dull.  Next two weeks should be a dull tape, and volatility could rule.  I'd think we'd have an upwards bias.  We shall see.  Nothing is carved in stone about holiday trading.  Just thinking out loud.

  • Hey, I heard somebody say that we've had 10 consecutive quarters above 3% GDP growth.   The last time we've had such a sustained period of growth was 1986.  That's what they said, anyways.

  • With short-term rates moving up, we have ourselves a savings rate war!

  • Yeah.  Ziyi Zhang. 

  • Tax cuts for Christmas?  Well, I'm not holding my breath on that one, Larry.  It'd be nice to get the AMT resolved.  If we don't extend Bush's tax cuts, then the nation faces a large tax hike down the road.  Now there's the kind of thing that can wreak havoc on a consecutive quarter GDP spurt.

  • For another view on bonds and inflation, check out this from Bill Cara

  • This is a good one.  Demand Side Phenomenon.  A blogger notes the impact to his daily site hit counts when he links in a story about the University of Western Ontario stripper incident.  Yeah, he has links to the video, for those of you interested.  Bwah.

Wednesday, December 14, 2005

Rolling Out of Here

I can just tell we're going down from here, Muck!

 
  • 'Tis the season for best of this and the worst of that.  Fortune has their list of stocks and funds.  How'd you do?  I'll spill my performance beans at year end.

  • Oh, speaking of, I did roll out of my Microsoft and put more into the QQQQ.  Am I a glutton or what?  Despite my Black Box sell signals, I'm ignoring them because Santa Claus is coming to town.  (I've been a good kid, and put "higher market" on my Christmas list.)  Well, seriously, mostly for the reasons listed earlier today.  Not a recommendation, of course.  

  • More links?  How about the Negative Nellies over at Angry Bear?  Kash talks about the US running a trade deficit with just about everybody on the planet.  Well, a ton of that is oil.  We love oil.  I don't know what we import from Germany.  Maybe those are tailgaters up in Green Bay grillin' their Brats before the Packers games.  "Ron, just got the parcel from Germany.  Lets grab the barbeque and head to Lambeau Field."

  • As if you needed another reason to get up early tomorrow, the CPI data will be released at 8:30am EST.  You can read more preview info about this from Mark Mahorney over at BlogginWallStreet.  That'll be interesting for the markets. 
  • Blueprint for Financial Prosperity interviews The Millionaire Blog.  Kind of a religion and finances mix.

  • After watching The Amazing Race finale last night, I had a dream that I was in the Amazing Race!  Don't remember much, other than my teammate was up at the finish line urging me to run faster so that we could be #1, and of course I was running really slow (as one normally does in dreams).  The race ended up in tie, so the show went to an audience poll on who should win.  Obviously, my brain can't keep these reality show formats straight.  Must've had American Idol on the mind!

  • Just thinking to myself here, but if the Fed is done or near done with rate hikes, how about that Annaly Mortgage?  NLY.  Hmm.  The yield curve is killing them now I think, but is the worst priced in?  More. Research.  Needed.

  • I just tried one of those low carb high protein energy bars.  YUCK!   It said it was "Smores flavor."  Yeah, smores from a camping nightmare.  No need to hide your food from the bears in that scenario, either.

  • My thoughts on Sirius Satellite Radio?  Well, Howard Stern is popular, but what is his listening demographic?  If folks are listening to him over the open airwaves today, will they pay to listen to him?  And where do folks listen to him, from work?  Can you pick up Sirius Satellite Radio at work?  How are the books at Sirius?  Revenues vs expenditures?  Just thinking to myself on this one.  I don't know.

Quick Hits

  • Checked out Jason at The Trend yet?

  • More thoughts on the last half of December?  Well, the Big Money folks who are expecting the market to tank after the first of the year have probably already positioned their portfolios.  Why would they wait for lower volume the last two weeks of the year to dump big blocks of shares?  So does this mean that there won't be many sellers out there?  Just thinking out loud.

  • I have bundled cable TV and cable internet service.  But the prices are high, and I get blasted almost daily with specials on satellite TV and DSL internet.  These specials normally require a one-year contract commitment.  They have a low initial teaser rates that last up to 6 months, and the TV specials usually include a few free months of premium channels.  Why wouldn't I just switch back and forth year after year between different providers to take advantage of these offers?   (That's what I've been asking myself, anyways).

  • So, are the Diebold voting machines plugged in and ready to go for the Iraqi election?  Just curious.

  • Folks are saying King Kong will be a mega blockbuster.  I think it will be, but I'm less excited about seeing that than I am The Chronicles of Narnia.  Maybe because I've already seen two versions of King Kong, plus King Kong vs. Godzilla.  I've read the Narnia books, and am looking forward to see the first book on the big screen.

  • Even though Halloween is long gone, the leftover candy lasted until about last week.  Now I'm wanting more candy.

More on the Economy

Huh, Barry?

 

Barry Ritholz on why this isn't a Goldilocks economy.  He thinks so, because of weak jobs creation, Retail Sales, Inflation, GDP, Retail Sales, Bankruptcy, Real Estate, Savings Rates, Yield Curve, Account Balances, etc.

==> I love BR's blog, but I disagree with him on most of these things.  We often hear the Democrats claim that job growth is weak.  But remember, the late 1990's were a once-in-a-generation bubble.  Things were extended.  Wage growth was huge.  Remember when everybody wanted to quit their jobs to be $250/hr web programmers?  Those days are gone, as are the days of bidding wars for employees.  The 2001 recession was relatively mild, and now that we're in an economic expansion, the unemployment rate has fallen to 5%.  Historically, many have cited 5% unemployment as "full employment."  If we're at full employment, can we expect new job growth to exceed population growth?  I doubt it, unless the economy starts to overheat.

Don't get me started on inflation.  Inflation is very mild.   Core rates have barely a pulse.  Notice the "massive" discounting at retail stores for holidays, as they try to move inventory.  Also, did you catch one of the reasons for the weakness in yesterday's retail numbers?  Falling prices at the gas pumps!

While sales were not as strong as some had hoped, much of the weakness was due to a 5.9 percent drop in sales at gasoline stations in November -- a direct result of the decline in gas prices last month and hardly bad news for consumers.

We know GDP is clocking along over 4%, so I'm not sure why BR thinks this demonstrates a weak economy.  The yield curve is pretty flat, but we don't have inversion and the long-term bond shows nothing with regards to inflationary pressures. 

Just some thoughts on BR's comments.  I hope you have his blog feed wrapped up in your news aggregator!  He'll be on Larry Kudlow's CNBC show tonight, so make sure to catch it live or on your Tivo (or Media Center PC)!