Saturday, December 31, 2011

Happy New Year 2012


All American Investor



@AllAmerInvest, The Dumbest Idea, Rogue Hedge Funds, Get Bullish, B of A a Laggard


The Dumbest Idea In The World: Maximizing Shareholder Value


Read More

SEC Ups Its Game to Identify Rogue Firms
It is the Securities and Exchange Commission's new "most-wanted" list: a chart covered with handwritten notes, yellow highlighter and the names of about 100 hedge funds.

Thursday, December 29, 2011

The Moring Call A look at the charts


The Morning Call
12/29/11

The Market

Technical


The S&P (1249) hit the neckline of the reverse head and shoulders (1266) and retreated. It also fell below its 200 day moving average (1259) and the very short term down trend off the October highs (1254). That puts it back into a developing pennant formation marked by 1211-1254. This pin action suggests additional down side.

Wednesday, December 28, 2011

Wonkbook: In 2011, Congress worried about deficits and mostly ignored jobs


Wonkbook: In 2011, Congress worried about deficits and mostly ignored jobs

Lori Montgomery has a terrific piece on how little deficit reduction actually got done this year. But perhaps that shouldn't be surprising. The pressure for deficit reduction comes from interest rates. Interest rates, as noted in yesterday's Wonkbook, haven't been this low since 1995. So though there's a lot of talk about the deficit, there's not actually a lot of economic pressure to do anything about it. But the same can't be said for another neglected category of policymaking: jobs.

Read More

All American Investor

Sunday, December 25, 2011

Merry Christmas



Original content Bob DeMarco, the Alzheimer's Reading Room

Friday, December 23, 2011

Subscriber Alert & Merry Xmas


The indices (DJIA 12294, S&P 1265) had another good day, both closing within their intermediate term trading range. The S&P now confirms the break above 1230 and its 50 day moving average and puts it back in sync with the DJIA. In addition, (1) both of the Averages are now above their 200 moving average, though our time and distance discipline now holds for the S&P and (2) the DJIA broke the neckline of its reverse head and shoulders although the S&P did not; it is, however, a short hair away (circa 1266).

If I thought that there was a reasonable chance of the indices breaking above the upper boundary of their intermediate term trading range, I would be tempted to start nibbling. However, since I don’t, I won’t. I am going to re-establish a small trading position in VIG in the Aggressive Growth Portfolio.

You will recall that some time ago I noted that (1) Universal Corp (UVV) failed to meet the criteria to remain in the High Yield Universe, but (2) I intended to wait for better prices to make the Sale. That time and price has come. Tuesday UVV is being Sold from the High Yield Portfolio.

The stock price of Emerson Electric (EMR) traded through a significant support level. The High Yield and Dividend Growth Portfolios will reduce this to a one half position.

The stock price of Oracle (ORCL) also traded through a significant support level, but did so on a gap down. That put it back into its Buy Value Range. So it is being returned to the Aggressive Growth Buy List; however, no new shares are being Bought at this time.



Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.

The Morning Call Stay on the sidelines, at least today



The Market
Technical


The indices (DJIA 12169, S&P 1254) continue to follow through to the upside. They remain within their intermediate term trading ranges (10725-12919, 1101-1372). The S&P has now closed three days in a row above the 1230 resistance/support level and its 50 day moving average. Another day and both breaks will be confirmed. Recall that the DJIA never traded below its 1230 comparable level (11741) and closed only one day below its 50 day moving average. So we are also one day from the Averages being back in sync.


Thursday, December 22, 2011

@AllAmerInvest Shanghai Doink, Tax Cut Doink, GE Buy, Fitch Doink


A Chinese Chart We'll Be Watching In 2012


Read more

Failure to extend tax cut will slow recovery
The economy remains on shaky legs, and the combined impact of an increase in payroll taxes, a reduction in unemployment benefits, and the coming austerity measures as we begin dealing with the long-term debt issue could put a substantial drag on the already too slow recovery.

All American Investor

The latest from Marc Faber





Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.

Wednesday, December 21, 2011

World's Best Performing Stock Markets



Source: 10 best global stock markets of 2011

@AllAmerInvest Gold 2011, Gold Chart


Gold Prices to end 2011 Below $1,800: You Said It

Gold had a wild year, starting the year at $1,412 an ounce, hitting a low right out of the gate of $1,314 and then rallying to an intra-day high of $1,923 an ounce.

The past few months have not been kind for gold. Gold tanked 13% in September and 8% in just three days last week as a strong dollar hammered prices. Now gold is floating around $1,600 an ounce as volume thins out.

Read More

All American Investor

The Morning Call What happened yesterday


The Market
Technical


The indices (DJIA 12103, S&P 1241) did a Titan III maneuver yesterday, potentially negating a number of the negative technical factors weighing on the S&P.

Our time and distance discipline is now operative; so barring another spectacular move up fulfilling the distance element, I will wait for the time element to play itself out. Here is where the Averages would stand as I see it, assuming this move up is confirmed:


Tuesday, December 20, 2011

@AllAmerInvest Housing Starts Soar, Apple Wins, Crazy Buys Last Week


Housing Starts Blow Through Expectations

Housing starts surged 9.3% in November to a 685,000-unit annualized pace, the Commerce Department said, way above the 630,000 or so economists expected. It’s also the highest pace of starts since April 2010.
Read More

5 Stocks Investors Bought Like Crazy Last Week

Monday, December 19, 2011

China's Real Estate Bubble May Have Just Popped


The biggest unanswered question is whether existing investors -- the people holding all those sold but empty "ghost" condos and villas -- will join in the sell-off, which could turn the market's retreat into a rout.

For years analysts have warned of a looming real estate bubble in China, but the predicted downturn, the bursting of that bubble, never occurred -- that is, until now. In a telling scene two months ago, Shanghai property developers started slashing prices on their latest luxury condos by up to one-third. Crowds of owners who had recently bought apartments at full price converged on sales offices throughout the city, demanding refunds. Some angry investors went on a rampage, breaking windows and smashing showrooms.


All American Investor

@AllAmerInvest Uh Oh Here Comes the FBI, Go Twitter, MF Global the Inside, Alzheimer's


SEC charges former Fannie Mae, Freddie Mac executives with fraud

The SEC charged six former executives of Fannie Mae and Freddie Mac with securities fraud Friday, saying they misled the public about the companies’ exposure to subprime loans during the mortgage meltdown.
Read More

Twitter Wins $300 Million Alwaleed Investment Amid Site Revamp
Twitter Inc., the microblogging service with more than 100 million users, won a $300 million investment from Saudi investor Prince Alwaleed bin Talal as it pushes through a redesign of its site to attract advertisers.

All American Investor

Saturday, December 17, 2011

The Closing Bell Endless, Inadequate 'New' Plans


Our grandson arrives this afternoon and that starts an influx of family that lasts through the new year. So this is the last scheduled post for 2011. As always I will be monitoring the Markets and if action is called for, will be in touch via Subscriber Alerts. My best for a Happy Holiday season.

Statistical Summary

Current Economic Forecast

2011

Real Growth in Gross Domestic Product: +1.5- +2.5%
Inflation: 2-3 %
Growth in Corporate Profits: 7-12%

2012

Real Growth in Gross Domestic Product (revised): +1.0- +2.0%
Inflation (revised): 2.5-3.5 %
Growth in Corporate Profits (revised): 5-10%


Friday, December 16, 2011

Thoughts on Investing from Jonathon Hoenig


There's something tauntingly accessible about "The Seven Habits of Highly Effective People," the 1989 Stephen Covey self-help book that's sold more than 15 million copies worldwide. Not surprisingly, the prospect of making meaningful improvements to one's life in just a few easy steps holds universal appeal.

Given their inherently unpredictable nature, the markets, alas, can't be so easily mastered. But while thinking about what makes an effective trader, I considered the attributes of successful investors I've known along with historical financial figures. And while there is no simple checklist of criteria for market success, there are certain qualities many accomplished investors tend to share.


Morning Journal-The latest from Nouriel Roubini


Economics

This Week’s Data


November industrial production was down 0.2% versus expectations of +0.2%; capacity utilization came in at 77.8, in line with forecasts.
http://www.calculatedriskblog.com/2011/12/industrial-production-decreased-02-in.html

The December Philadelphia Fed general business survey was reported at 10.3 versus estimates of 6.0 and November’s reading of 3.6.

The November consumer price index came in unchanged, in line with forecasts; core CPI was up 0.2% versus an anticipated rise of 0.1%.
http://www.calculatedriskblog.com/2011/12/bls-cpi-unchanged-in-november.html


The Morning Call--How much bad news is beng discounted?


We received three dynamite economic numbers yesterday--weekly jobless claims (lowest in three years) as well as the both the New York and Philadelphia Fed business surveys. However, all was not rosy. December industrial production was disappointing and the PPI data was mixed. As I am sure you appreciate, employment has become one of the most significant stats of late; so yesterday’s strong report was investors’ initial focus. As a result, stocks began the day on a positive note.

And I will add, for good reason. Our economy may be recovering at a below average rate; but it is recovering. Reviewed from the perspective of what the rest of the world is doing, it is once again proving its capacity for resilience. I am not getting all jiggy here; but economic conditions appear to be forging ahead in spite of our incompetent political class, the inability of the EU to properly address their crisis and slowing activity in the emerging markets.


Technical Take-Do nothing till the indices are in sync


The indices (DJIA 11868, S&P 1215) rallied feebly yesterday, but finished the day well within their intermediate term trading ranges (10725-12919, 1101-1372). Barring a strong advance, today the S&P will confirm the break below the 1230 support level and its 50 day moving average (also 1230). In addition, further downside will negate the developing reverse head and shoulders formation. Next visible support is circa 1158.

The DJIA remains above its comparable 1230 support level (11741) as well as its 50 day moving average. As long as the Averages are out of sync (S&P below 1230, DJIA above 11741), even the short term trend is not discernable--making it an occasion to do nothing.


Thursday, December 15, 2011

Americans fear big government more than big business


WASHINGTON, D.C. -- Americans' concerns about the threat of big government continue to dwarf those about big business and big labor, and by an even larger margin now than in March 2009. The 64% of Americans who say big government will be the biggest threat to the country is just one percentage point shy of the record high, while the 26% who say big business is down from the 32% recorded during the recession. Relatively few name big labor as the greatest threat.

In your opinion, which of the following will be the biggest threat to the country in the future -- big business, big labor, or big government?


AllAmerInvest S&P 500 is Vunerable to the Downside, Chart


All American Investor

The S&P 500 is now hovering around the critical 1222 area. Continued closes below this price will likely send the S&P 500 back into the trading range bounded by 1068 at the low (bottom red line), and 1222 on the high (see chart below).

The single most important thing to watch is the 40 day moving average (red line) and the slope of the line (the slope of the 40 day moving average).


Morning Journal Don't let the Fed kid you, QE3 is coming


Economics
This Week’s Data


Weekly jobless claims fell 15,000 versus expectations of a 9,000 increase.
http://www.calculatedriskblog.com/2011/12/weekly-initial-unemployment-claims_15.html

The October producer price index rose 0.3% versus estimates of an advance of 0.1%; core PPI was up 0.1% versus forecasts of up 0.2%.

The December New York Fed manufacturing survey came in at 9.5 versus an anticipated reading of 4.5 and 0.61 recorded in November.

The third quarter current account deficit was $110 billion versus expectations of $118 billion.


The Morning Call Is the worse case already priced in?


The only economic news we received yesterday was weekly mortgage applications to which no one paid any attention because they were too busy focusing on the EU and the myriad reasons for anticipating a disaster scenario: the lack of workability of the ‘new’ EU solvency plan, the falling euro, the slowing in the EU economies, rising euro rates, falling euro bourses, the gargantuan funding needs in 2012 and a leadership that is AWOL.

As long as none of this changes, the negative psychology will likely continue.


Technical Take GLD just keeps getting worse


The down draft in the indices (DJIA 11823, S&P 1211) continued yesterday, but still closed well within their intermediate term trading ranges (10725-12919, 1101-1372).

The S&P is now two days or five points away (which ever comes first) from confirming its break of 1230. If that occurs, the next visible support is circa 1158.

Further, it is also trading below the left shoulder of a developing reverse head and shoulders formation. That doesn’t necessarily negate the pattern; but another big down day and it will. Finally, after being unable to penetrate its 200 day moving average to the upside, the S&P fell through its 50 day moving average yesterday.

Meanwhile, the DJIA still hasn’t broken 11741 (its equivalent of S&P 1230). That leaves the Averages out of sync; and as you know, I generally don’t like any trading activity as long as the condition persists. On the other hand, it did close below its 200 day moving average.

Wednesday, December 14, 2011

Morning Journal 'You're in Your Own' economics


Economics
This Week’s Data


The International Council of Shopping Centers reported weekly sales of major retailers down 0.1% versus the prior week but up 2.9% versus the comparable period last year; Redbook Research reported month to date retail chain store sales down 2.9% versus the similar time frame last month but up 2.9% on a year over year basis.

October business inventories rose 0.8% versus expectations of a 0.9% increase; business sales were up 0.7%.

Weekly mortgage applications advanced 4.1% but purchase applications fell 8.2%.


@AllAmerInvest China Lets Housing Sink Along with Stocks, Who Wins Wind or Solar?


China Prepared to Let Housing Prices Sink in Spite of Economic Slowdown; Transition to New Regime Underway; Decoupling in Reverse

If you are looking for the reason the Shanghai stock market has been one of the weakest globally, then look no further than China Affirms Property Curbs Even With ‘Grim’ Outlook.

Many thought China would "decouple" from the global economy and the Chinese stock market would follow.

Well, I have to say the decoupling theory was correct, except in reverse. The $SSEC Shanghai stock index is down about 60 percent from the 2008 high and has shown no propensity to bounce since summer of 2009, precisely when the US recession ended.
Read More

The Morning Call Clowns to the left of me, jokers to the right


Investors continued to demonstrate their disappointment in the new EU plan to solve its liquidity/solvency problems.

Their primary concerns being recession in Europe and spreading globally and creating deflation/disinflation pressures. In practical terms that means (1) the dollar strengthens as it becomes the safest refuge in a world filled with less safe alternatives and (2) slower growth/lower corporate earnings.


Technical Take GLD break confirmed, I am Selling GLD


The indices (DJIA 11954, S&P 1225) weakened further yesterday; though they still closed within their intermediate term trading ranges (10725-12919, 1101-1372).

The S&P broke the 1230 support level though the DJIA remains above its comparable level (11741). Our time and distance discipline now goes into effect for the S&P. Should the break be confirmed (1) it halts the completion of the developing reverse head and shoulders formation and (2) the next visible support level is circa 1158.

The Errors in Hurricane Forecasting


Two hurricane forecasters admit that while their models fit beautifully in hindsight, they were incapable of predicting the future (HT: John Hiller):

Two top U.S. hurricane forecasters, revered like rock stars in Deep South hurricane country, are quitting the practice because it doesn’t work.


Tuesday, December 13, 2011

The New and Improved 'Poverty Line'


How is New Poverty like New Coke? Richard Bavier, a respected policy analyst with the OMB for many years, reams the Obama administration’s new bait-and-switch poverty line. … Bavier argues the new line is “carefully designed so that the public will think it is one thing when it is really something else.”


Today's FOMC statement-12/13/11


FOMC Statement:

Information received since the Federal Open Market Committee met in November suggests that the economy has been expanding moderately, notwithstanding some apparent slowing in global growth.

While indicators point to some improvement in overall labor market conditions, the unemployment rate remains elevated.

Household spending has continued to advance, but business fixed investment appears to be increasing less rapidly and the housing sector remains depressed.

Inflation has moderated since earlier in the year, and longer-term inflation expectations have remained stable.


Subscriber Alert-Trimming GLD position


SUBSCRIBER ALERT
12/13/11

GLD is weakening, trading below the initial support level.. Our Portfolios are reducing their holding by one third.

To be clear, I continue to believe in the long term inflation story; so this may be nothing more than a short term trading move. However right now Mr. Market is does not like GLD and I don’t want to stand in the way, given the large size of our Portfolios’ positions.

@AllAmerInvest Neuroeconomics Revolution, Credit Derivative End Users, Social Activists Go Digital, Meat that Glows in the Dark


The Neuroeconomics Revolution

Economics is at the start of a revolution that is traceable to an unexpected source: medical schools and their research facilities. Neuroscience – the science of how the brain, that physical organ inside one’s head, really works – is beginning to change the way we think about how people make decisions.

These findings will inevitably change the way we think about how economies function. In short, we are at the dawn of “neuroeconomics.” -- Robert Shiller
Read More

All American Investor

Meet the credit derivative “end-users”
It’s a well understood fact that credit derivatives markets are primarily dealer-to-dealer. We do, however, hear that there are clients, or “end-users”, hiding somewhere. The Bank of International Settlements’ Quarterly Review, out on Monday, invites us to take a closer look.

Morning Journal How jobs get created


Economics
This Week’s Data


November retail sales advanced 0.2% versus expectations of a 0.5% increase; ex autos, sales were also up 0.2% versus estimates of up 0.5%.

Other

Manufacturing profits remained strong in third quarter (short):
http://mjperry.blogspot.com/2011/12/american-manufacturing-profits-remain.html

This is a great article on how jobs get created and who benefits (medium):
http://pragcap.com/the-role-of-the-entrepreneur-in-a-capitalist-economy

The latest WSJ-Economists poll for 2012 (medium):
http://advisorperspectives.com/dshort/commentaries/WSJ-Economist-Survey-on-GDP-Dec-2011.php

Federal finances update (short):
http://scottgrannis.blogspot.com/2011/12/federal-finances-update.html

Small business optimism increases in November (short):
http://www.calculatedriskblog.com/2011/12/nfib-small-business-optimism-index.html


The Morning Call Second thoughts


Not much on which to comment. There were no economic stats reported; and there was little from the either the EU or US political classes. There were comments out of Europe on the schedule for changes in the fiscal union; but that was it. I think most of the pin action was a function of buyer’s remorse from the run up in stock prices Friday.

Bottom line: my opinion on the ‘new’ EU plan for solving its liquidity and solvency problems hasn’t changed--it is a weak ‘muddle through’ strategy and likely to be challenged by the bond vigilantes in the not too distance future.


Technical Take GLD suffers serious whackage


The indices (DJIA 12021, S&P 1236) had another volatile day, but closed within their intermediate term trading ranges (10725-12919, 1101-1372).

The S&P (1) decided not to contest its 200 day moving average and instead challenged the 1230 support, (2) that test held which is a positive in itself but also keeps the developing reverse head and shoulders in tact. This all leaves the S&P short term in a tight range bounded by the 1230 support level and the 200 day moving average (1262).

Further, a look at the charts of the stocks in our Universe shows virtually no technical damage and little prospect of such without a much bigger hit to prices. In other words, I don’t see any sign in our stocks that this Market could be heading down.


Monday, December 12, 2011

@AllAmerInvest Stocks Slipping, China Stealing, Confidence Lacking, Gold, EL Erian


Stock futures slip on euro zone deal doubts

8:30 AM

All American Investor

Euro zone fiscal pact fails to restore confidence
The euro fell, stocks slid and borrowing costs for Italy and Spain rose as investors weighed the outcome of last week's summit that split the European Union, with Britain blocking treaty change and forcing euro zone countries to negotiate a fiscal accord outside the Union.

The Morning Call Monday Morning Chartology 12/12/11



The Market
Technical

Monday Morning Chartology


The S&P clearly bounced off the down trend off the October highs (a positive) as well as the 1230 support level (a positive) and continued the development of the reverse head and shoulders (a positive). Let’s see how it again tries to challenge its 200 day moving average (wiggly red line).





Sunday, December 11, 2011

@AllAmerInvest Three Social Thunderstorms , Does Anybody Care, Reinforcement


Arguing Over A Tax Cut Few People Notice

Congress and the White House continue to debate the future of a 2-percent payroll tax cut that expires at the end of the year. While both Republicans and Democrats appear interested in extending the break, party leaders have been squabbling over details.
Read More

All American Investor


Click here for more charts and source information

Stephen Marglin Heterodox Economics


All American Investor

Tip of the hat to GREG MANKIW'S BLOG.

This is a talk from a few days ago, as part of the "Occupy Harvard" movement. Steve says a lot of interesting things here, and I agree with more than many in the audience might suppose. A main disagreement I have with Steve is pedagogical. -- Greg Mankiw

Saturday, December 10, 2011

Thoughts on Investing from Curtis Hammering


Can you really boost your long-term dividend rate by 25 - 500% without engaging in ridiculously high-risk tactics? 

A recent SeekingAlpha article (How to Get Sustainable 7% Dividends in a Market Crash) says, yes you can! *(but maybe not 500% unless you are lucky)

The article outlined the following strategy: buy quality dividend-paying stocks when market sell-offs temporarily generate high yields. The mechanics of such a strategy are simple and plainly outlined in the linked article in the above paragraph.

The rationale for this strategy is two-fold:


The Closing Bell- Close but no cigar



Statistical Summary
Current Economic Forecast


2011
Real Growth in Gross Domestic Product: +1.5- +2.5%
Inflation: 2-3 %
Growth in Corporate Profits: 7-12%

2012
Real Growth in Gross Domestic Product (revised): +1.0- +2.0%
Inflation (revised): 2.5-3.5 %
Growth in Corporate Profits (revised): 5-10%


Proctor & Gamble (PG) 2011 Review


Proctor and Gamble (PG) is a major household products and cosmetics company marketing products in over 180 countries with three divisions:

(1) Beauty and Health products: Cover Girl, Max Factor, Olay, Old Spice, Clariol Nice ‘n Easy, Pantene, Head and Shoulders, Wella, Pert, Ivory, Safeguard, Zest, Secret, Right Guard, Always, Whisper, Tampax, Actonel, Prilosec OTC, Vicks, Scope, Pepto-Bismol, Therm-Care, Metamucil, NyQuil and Oral B,

(2) Household Care: Tide, Gain, Dash, Ariel, Downy, Frebreeze, Dial, Joy, Cascade, Swiffer, Mr. Clean, Crest, Iams, Eukanuba, Pampers, Luvs, Charmin, Bounty, Puffs, Pringles, Folgers, and Sunny Delight,

(3) Gillette: Gillette, Mach 3, Venus, Braun, Duracell.


Friday, December 09, 2011

TJ Maxx (TJX) 2011 Review


TJX is rated A+ by Value Line, has a 22% debt to equity ratio and its stock yields 1.3%.

TJX Companies are a leading off-price retailer of clothing, accessories and home fashions primarily under the TJ Maxx and Marshall’s brands.

The company has grown profits and dividends at a 13-20% pace over the past ten years earning a 30%+ return on equity. TJX should continue this performance because:

(1) the company’s business model provides flexibility, improving both sales and margins,

(a) it can alter its product offerings more frequently than traditional retailers, allowing it to stay very close to current market trends,

(b) its opportunistic buying strategy enables it to take advantage price bargains in the marketplace.

Morning Journal Demographics of the 1%


Economics
This Week’s Data


October wholesale inventories jumped up 1.6% versus expectations of a 0.5% increase; wholesale sales were also strong (up 0.9%) but less than inventories.
http://scottgrannis.blogspot.com/2011/12/inventories-continue-to-rise.html

The October US trade deficit came in at $43.5 billion, very slightly better than anticipated ($44 billion).

Other

The demographics of the 1% (medium):
http://www.gallup.com/poll/151310/U.S.-Republican-Not-Conservative.aspx

George Will on the cost of regulation (medium):
http://www.jewishworldreview.com/cols/will120511.php3

Update on household balance sheets (short):
http://scottgrannis.blogspot.com/2011/12/household-balance-sheet-update.html


The Morning Call I am underwhelmed + Subscriber Alert


The Market
Technical


Volatility returned yesterday with the indices (DJIA 11997, 1234) down big, challenging

(1) the down trend off the October highs [intersect 12006, 1233]. I noted yesterday that the S&P had confirmed a break above this trend line while the DJIA had one more day to go. Yesterday’s pin action left both index below that trend line. I am not ready to re-establish the October to present down trend; but if stocks don’t bounce today or Monday, then I will.

(2) the 11741, 1230 resistance, turned support, turned resistance, now support level--if these can’t be held, the next stop in 11257, 1158. Perhaps more important, the Averages have been forming a reverse head and shoulders and the 11741, 1230 represent the right shoulder. A bounce would move the pattern further toward completion, which if it happens would be a positive for stocks.

Unfortunately, once again, the S&P clearly couldn’t surmount its 200 day moving average. Every time it can’t get through this resistance, the more significant it becomes.


@AllAmerInvest Household Wealth Takes Big Hit, Shadow Banking, EU, Won't Work, S&P Chart


Household wealth takes biggest hit since '08

The Federal Reserve said the net worth of households fell by $2.2 trillion, or 4.1%, to end at $57.4 trillion. The decline comes to about $7,800 for every U.S. resident.
Read More

All American Investor

Shadow banking and the seven collateral miners
Collateral mining: one of the most overlooked and least understood bank funding sources in the financial system.

The concept stems from the latest IMF working paper, entitled ‘The non-bank-bank nexus and the shadow banking system‘, by Zoltan Pozsar and Manmohan Singh, in which they describe how asset managers have come to replace traditional creditors — primarily households — as the key financiers to the banking system.

Thursday, December 08, 2011

Morning Journal Obama and Teddy Roosevelt


Economics
This Week’s Data


October consumer credit rose by $7.6 billion versus expectations of a decline of $6.5 billion.

Weekly jobless claims fell 19,000 versus estimates of a 7,000 drop.
http://www.calculatedriskblog.com/2011/12/weekly-initial-unemployment-claims_08.html

Other

The economy is transitioning, but into what? (short):
http://www.capitalspectator.com/archives/2011/12/the_markets_imp.html#more

More on banks and an inefficient capital allocation system (medium):
http://www.nytimes.com/2011/12/11/magazine/adam-davidson-wild-west-of-finance.html?_r=1


The Morning Call Are We There Yet? + Subscriber Alert


The Market
Technical


The indices (DJIA 12196, S&P 1261) had another quietly up day, closing within their intermediate term trading ranges (10725-12919, 1101-1372). The S&P confirmed its break above the down trend off the October highs; one more day and the DJIA will follow suit.

Initial upside resistance exists at 12293, 1292 (the October highs) and initial support at 11741, 1230. The S&P closed right on its 200 day moving average (circa 1261); the DJIA has already moved above its 200 day moving average.

Volume rose a bit; breadth was mixed though the flow of funds indicator remains strong. The VIX closed up for the fourth day in a row. While it is still below the upper zone of its current trading range, the rather steady move back towards this area is bit concerning.


@AllAmerInvest Equites Cheap, Corzine Dumb, Mortgage Debt Worries, China Doink, Rates Cut


3 Reasons Why Equities Are The New Safe Haven

It is almost a certainty that this is the most "under-invested" U.S. consumers (ordinary average people on the street) have been in the stock market since at least the early 1990s. And it wouldn't surprise me in the slightest that this is the most under-invested they have been since the early 1980s, perhaps even going way back to the mid 1960s.
Read More

Corzine: 'I don't know where the money is'
"I simply do not know where the money is, or why the accounts have not been reconciled to date," said Corzine, in prepared testimony to the House Agriculture Committee on Thursday.

All American Investor

Falling U.S. Mortgage Debt Erodes Consumer Spending as Wealth Effect Fades
U.S. mortgage debt, a driver of consumer spending during the real estate boom, may be about to enter its fourth year of decline as foreclosures wipe out home loans and housing purchases fall.


Wednesday, December 07, 2011

Staples (SPLS) 2011 Review


Staples (SPLS) is one of the largest office supply superstore chains in the US, Europe, Asia and South America (1900+ stores).

SPLS also sells its branded products in over 2400 grocery stores in the US. In the past five years, the company has grown profits at a 5% pace, earning a return of equity in the 12-18% area. In 2004, it initiated a dividend and has since more than tripled it (27% AR). While SPLS did not escape the impact of the recent economic down turn, it should resume its long term growth as a result of:

(1) as an industry leader, it is positioned to sustain above average growth due to better margins and its effective merchandizing skills,

(2) new products,

(3) new store expansion,

(4) improving same store sales by expanding its business technology and copy and print services,


@AllAmerInvest Bloomberg vs Bernanke, Pearl Harbor Buff, Euro Swap, Stocks Dropping Now


Bloomberg vs Bernanke

Read It

Bloomberg News Responds to Bernanke Criticism

Federal Reserve Chairman Ben S. Bernanke said in a letter to four senior lawmakers today that recent news articles about the central bank’s emergency lending programs contained “egregious errors.”

Bloomberg News has published a series of articles this year examining the bailout. The latest, “Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress,” appeared Nov. 28.
Read More
Read Bernanke's letter to Congress -- There Was No 'Secret' Bank Bailout


Morning Journal Out of Control Deficits


Economics
This Week’s Data


The International Council of Shopping Centers reported weekly sales of major retailers down 2.3% versus the prior week but up 3.8% versus the comparable period a year ago--the poor weekly number is related to seasonal (Black Friday) factors; Redbook Research reported month to date retail chain store sales were up 3.2% on a year over year basis.

In the week following Thanksgiving, weekly mortgage applications bounced back, up 12.8% while purchase applications rose 8.3%.


The Morning Call I think I can, I think I can


The Market
Technical


The indices (DJIA 12150, S&P 1258) had a relatively quiet but nonetheless up day, finishing within their respective intermediate term trading ranges (10725-12919, 1101-1372). They also closed above the down trend off the October highs (intersect at 12024, 1236)--the DJIA for the second day, the S&P for the third. Another day and our time and distance discipline will confirm the break. As positive as that is, the S&P is still struggling with its 200 day moving average (circa 1264)--it actually touched it intraday and then backed off. This moving average has been acting as a barrier for some time, so clearly busting through it is a key to moving higher.

Volume was flat; breadth mixed. The VIX was up slightly but has now traded below the upper zone of its current trading range for the fifth day--a positive for stocks.


Tuesday, December 06, 2011

30-Year Conventional Mortgage Rate (Chart, 1206)





Bernanke Letter to Congress, There Was No 'Secret' Bank Bailout


There Was No 'Secret' Bank Bailout, And It Was Only $1.5 Trillion

All American Investor


Will You Live Forever—or until Your Next Software Release—by Uploading Your Brain into a Computer?


Ray Kurzweil and other so-called transhumanists have promised that in coming decades we will be able to transfer a digital copy of the trillions of connections among nerve cells in our brains into a computer. We would essentially reincarnate ourselves as non-biological beings that persist for eternity inside a laptop, on the endless links of the Internet or as avatars inside a television set. After achieving the ultimate copy and paste, we would wave goodbye to death as we know it.

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Morning Journal Our Education Crisis


News on Stocks in Our Portfolios

05:26 PM Qualcomm (QCOM) is forming a subsidiary that will develop wireless communications products for healthcare applications, as well as contain a $100M fund that will make investments in related companies. The subsidiary, called Qualcomm Life, is simultaneously announcing its first product, a solution for allowing medical device users to wirelessly access biometric data. Comment!

03:52 PM S&P downgrades Ecolab (ECL -1.5%) two grades after evaluating its deal to acquire Nalco. The ratings agency said its outlook remains stable. Comment!


The Morning Call They are Trying, sort of


The Market
Technical


The indices (DJIA 12097, S&P 1257) had a good day (1) closing noticeably above the very short term down trend off their October highs [12036, 1239] and (2) within their intermediate term trading ranges [10725-12919, 1101-1372]. For this up move to continue, the S&P must successfully challenge its 200 day moving average (circa 1264).

Volume was unchanged; breadth improved. The VIX was up fractionally but finished its fourth day below the upper zone of its trading range--a positive for stocks.

GLD price fell but remains within its intermediate term up trend.


@AllAmerInvest World Doink, Lifetime Returns, OIL Freak Out, Weird Cain, Euro, Packers Sell Stock


S&P WILL PUT ALL 17 EUROZONE COUNTRIES ON CREDIT WATCH NEGATIVE

Bloomberg reports that all 17 eurozone countries will be put on downgrade watch today.

S&P will allegedly release a statement on the move after the New York closing bell at 4 PM ET

Read More

4 Out Of These 5 Dividend Stocks Gave Me Double Digit Lifetime Returns

All American Investor

Monday, December 05, 2011

Honey, I Shrunk the Doctor!


You might want to pay attention to this and incorporate this into your investment thinking and portfolio.

All American Investor

Researchers have found a way to shrink the size of the medical lab to the size of a microchip, using advances from nanotechnology to pave the way for radically new approaches to medical treatment and diagnosis.

Medical labs the size of microchips, which reduce all the components of a typical lab operation – from pipettes to beakers to test tubes – to the size of a microchip-sized wafer of glass or plastic, make it possible to perform rapid, accurate diagnostic tests with almost impossibly small test samples. In many cases, all it takes is a single drop of blood.

Instead of outsourcing this blood work to a lab, you will be able to do it on the spot in just a matter of a few minutes. In a best case scenario, researchers will be able to detect cancer earlier than ever before -- as well as recreate and then model human physiological processes at the microchip level.

Continue Reading

Morning Journal Upcoming changes in the Fed


News on Stocks in Our Portfolios

04:47 PM Altria Group (MO) lowers FY11 EPS guidance to between $1.58-$1.64 from $1.60-$1.66 due to charges of $110M, $0.04 per share, related to its Williams and Bullock legal cases. Comment!

03:19 PM Lowe's (LOW +1.6%) gets a boost from an upgrade to Buy at Goldman, citing management's efforts to improve store presentation, upgrade technology and overhaul and enhance marketing strategies. Additionally, for those who might be a bit gun-shy or risk averse in this volatile market, Goldman suggests possibly hedging your long position in Lowes against a short position in Home Depot (HD +1.8%). Comment!


The Morning Call Monday Morning Chartology 12/5/11


The Market
Technical

Monday Morning Chartology


The S&P remains within its intermediate term trading range. I have added a short term trading range marked by the late November lows and the late October highs. As you can also see, the S&P is trading ever so slightly above the down trend off those October highs.


Nanoparticle electrode for batteries could make large-scale power storage on the energy grid feasible, say Stanford researchers


Stanford researchers have developed part of that dream battery, a new electrode that employs crystalline nanoparticles of a copper compound.

In laboratory tests, the electrode survived 40,000 cycles of charging and discharging, after which it could still be charged to more than 80 percent of its original charge capacity. For comparison, the average lithium ion battery can handle about 400 charge/discharge cycles before it deteriorates too much to be of practical use.

Read More

All American Investor

@AllAmerInvest Charts, Stocks UP, Gold Down


Confidence that European leaders will come up with a credible plan to lead the region out of its debt crisis at a crucial summit this week lifted world stocks.

All American Investor

8 AM 1,258.75 +15.25 (+1.23%)

Caution as the S and P is once again above the 200 day average (red line). The slope of the 200 day continues to remain neutral.


Sunday, December 04, 2011

Unemployment Rate Graph December Release


The unemployment rate fell by 0.4 percentage point to 8.6 percent in November, and nonfarm payroll employment rose by 120,000, the U.S. Bureau of Labor Statistics reported today.

All American Investor

Saturday, December 03, 2011

The Closing Bell, Much more needs to be done



Statistical Summary
Current Economic Forecast


2011

Real Growth in Gross Domestic Product: +1.5- +2.5%
Inflation: 2-3 %
Growth in Corporate Profits: 7-12%

2012

Real Growth in Gross Domestic Product (revised): +1.0- +2.0%
Inflation (revised): 2.5-3.5 %
Growth in Corporate Profits (revised): 5-10%


Canon (CAJ) 2011 Review


Canon (CAJ)  is one of the world’s leading designers, manufacturers and marketers of office equipment (office, personal and full color copying machines, office and network digital multifunction devices, laser and inkjet printers, scanners), cameras (digital and film cameras, digital video camcorders and camera accessories) and optical products (semiconductor production equipment, broadcasting lenses, medical equipment and electronic components). 

The company has grown profits and dividends at a 10-20% rate over the last ten years earning a 9-15% return on equity. The company suffered from weak demand and competitive pricing pressures in the 2009 slowdown, but management’s ongoing effort to achieve the number one position in each of its core businesses should lead to profit improve as a result of:

(1) rising demand for network digital multifunctional devices as well as its consumer products,

(2) aggressive cost cutting,

(3) expansion into emerging markets,

Negatives:

(1) the persistent rise of the yen negatively impact profits,

(2) the company is still recovering form the supply chain disruptions related to the Japanese tsunami.

Canon is rated A by Value Line, has a solid balance sheet (1% debt), and its stock yields 2.9%.

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2001
CAJ 2.9% 5% 45% 10
IND 1.3 5 30 NA


Debt/Equity ROE EPS Down Since 2001 Net Margin Value Line Rating
CAJ 1% 11% 3 8% A
IND 18 6 NA 3 NA

Chart

Note: CAJ stock made good initial progress off its March 2009 low though it took considerable time for it to surpass the down trend off its June 2007 high (red line) and the November 2008 trading high (green line).

The stock is in a long term trading range (straight blue line is the lower boundary). In early 2011, the stock broke the uptrend off the March 2009 low and re-set to an intermediate term trading range (purple lines). The wiggly blue lines are Bollinger Bands.

The Dividend Growth Portfolio doesn’t own a position in CAJ as a result of a recent trading sale ($42)--not one of my best trading decisions. The stock would be bought back on a trading basis at $37. The lower boundary of its Sell Half Range is $57.





http://finance.yahoo.com/q?s=CAJ


Friday, December 02, 2011

Thoughts on Investing from Crosshairs Trader


Thoughts on Investing--from the Crosshairs Trader

A young lady confidently walked around the room with a raised glass of water while leading and explaining stress management to an audience. Everyone just knew she was going to ask the oft repeated question, ‘half empty or half full?’ But she fooled them all…

“How heavy is this glass of water?” she inquired with a smile.

Answers called out ranged from 8 oz. to 20 oz.

THE EMPLOYMENT SITUATION -- NOVEMBER 2011


The unemployment rate fell by 0.4 percentage point to 8.6 percent in November, and nonfarm payroll employment rose by 120,000, the U.S. Bureau of Labor Statistics reported today.

Employment continued to trend up in retail trade, leisure and hospitality, professional and business services, and health care. Government employment continued to trend down.

All American Investor

Morning Journal the ECRI index is not the only negative indicator


Economics
This Week’s Data


The November Institute for Supply Management’s manufacturing index was reported at 52.7 versus expectations of 52.0 and October’s reading of 50.8.

October construction spending rose 0.8% versus estimates of a 0.3% increase.

October auto sales were slightly above forecasts.
http://www.zerohedge.com/news/gm-channel-stuffing-surges-all-time-record

November retail same store year over years sales grew 2.5%, slightly less than anticipated.


@AllAmerInvest Crowding Out, Heineken, Debt Crisis, CNBC, Thank China


Banks Vie With Nations to Sate $2T Funding Need

Europe’s banks will compete with their governments to borrow $2 trillion next year as the two groups refinance maturing bonds and bills.

Euro-area governments have to repay more than 1.1 trillion euros ($1.5 trillion) of long- and short-term debt in 2012, with about 519 billion euros of Italian, French and German debt maturing in the first half alone, data compiled by Bloomberg show. European banks have about $665 billion of debt coming due in the first six months, with a further $370 billion by the end of the year, according to Citigroup Inc., based on Dealogic data.
Read More

Heineken Just Bought 918 British Pubs, To Become Biggest Pub Owner In UK
Dutch brewer NV says it has purchased Galaxy Pub Estate, owner of 918 pubs in Britain, from Royal Bank of Scotland PLC for 412 million pounds ($646 million) in cash.

All American Investor

CNBC Portfolio Challenge Bonus Bucks Answers for Friday, December 2

The Morning Call A respite before more upside?


The Market
Technical


The indices (DJIA 12020, S&P 1244) finished the day basically flat after Wednesday’s moon shot and well within their intermediate term trading ranges (10725-12919, 1101-1372). Near term, on the upside, I am watching the intersects of their down trends off the late October highs (12054, 1244) and the S&P 200 day moving average (circa 1265); and to the downside the 11741, 1230 support levels.

Both volume and breadth declined--not surprising after a huge up day; the VIX fell slightly, making it the second day that it has closed below the upper zone of its current trading range.

GLD was off fractionally, leaving within its intermediate term up trend.


Thursday, December 01, 2011

CNBC Portfolio Challenge Bonus Bucks Answers for Friday, December 2


1. According to Ilian Mihov, a professor of Economics at the INSEAD business school, Italy will have to refinance what percentage of its total debt in 2012.

ANSWER: 20%

2. What major government official told a news conference on Thursday that the United Kingdom is preparing itself for a wide range of European financial crises?

ANSWER: Bank of England Governor Mervyn King

3. According to a new report, how many days delinquent is the average housing loan in foreclosure?

Answer: 631 days

According to Ilian Mihov, a professor of Economics at the INSEAD business school, Italy will have to refinance what percentage of its total debt in 2012


1. According to Ilian Mihov, a professor of Economics at the INSEAD business school, Italy will have to refinance what percentage of its total debt in 2012.
ANSWER: 20%

The latest from Marc Faber


AllAmerInvest Cooperman, Obama Fear, China Doink, CNBC, Better Yet?, Let em Fail


LEON COOPERMAN: Here's 9 Ways To Fix The US Economy

#2: Create a peace-time Works Progress Administration to channel a portion of savings into the US infrastructure.

Read more

Obama’s morbid fear of EU meltdown
But behind the scenes, within both the administration and Mr Obama’s campaign team in Chicago, there is a morbid fear about a eurozone meltdown and its flow-on impact on the US economy and the president’s re-election chances.

All American Investor

CNBC Portfolio Challenge Bonus Bucks Answers for Thursday, December 1


Morning Journal-China vows to defend Iran even if it leads to WWIII


News on Stocks in Our Portfolios

03:58 PM It's a happy marriage for Ecolab (ECL +2.5%) and Nalco (NLC +1.5%) after shareholders with both companies approve a $5.4B merger of the two firms that service the water, hygiene, and energy industries. The final price tag for the deal will be ~$8.3B, including the offer value of $5.6B for Nalco's shares and $2.7B for the assumption of Nalco's net debt. Comment!

03:58 PM Emerson Electric (EMR +6.4%) says it has submitted a bid to win an automated systems contract at Iraq's giant Zubair oil field. Emerson - a specialist in oil and gas, refining and power automation - submitted the bid to a consortium led by Italy's Eni (E +5.6%), Zubair's operator. The field holds ~8B barrels of oil reserves. Comment!


The Morning Call Not a game changer + Subscriber Alert


The Market
Technical


The indices (DJIA 12045, S&P 1246) exploded upward yesterday, remaining within their intermediate trading ranges (10725-12919, 1101-1372)--so much for the 50 day moving average and the S&P looking technically weak. Although to be fair, the fundamentals clearly trumped everything yesterday (see below).

As far as levels to watch now: (1) the late November lows now become a support level [11257, 1158], the 11741, 1230 resistance turned support turned resistance are now support levels again, (3) the very short term down trends off the late October highs now intersect at 12065, 1245--a move through this resistance would be positive, (4) the S&P 200 day moving average now intersects at approximately 1265.