21 Trading Days Left
Posted by Eddy Elfenbein on December 1st, 2014 at 10:19 pm

Our Buy List suddenly decided to wake up!

There are only 21 trading days left this year, but our Buy List has narrowed its deficit considerably against the rest of the market. I doubt will be able to catch the market before the end of year, but it could be close. This year will most likely break our streak of beating the market for seven straight years. The last two days have been especially good for our relative performance since we don’t have any energy stocks.

Through Monday, our Buy List is up 9.67% on the year compared with a gain of 11.10% for the S&P 500. That’s a deficit of 1.43%. In late-September, the deficit was 5.20%, so you can see how much we’ve closed the gap. Take a look at this chart. This assumes that the Buy List is a $1 million portfolio (red line) starting on January 1.

If you include dividends, our Buy List is up 11.14% while the S&P 500 is up 13.20%.

Federal Debt Appears to be Stabilizing
Posted by Eddy Elfenbein on December 1st, 2014 at 10:41 am

These kinds of posts always seem to upset some people so I’ll add a number of qualifiers.

The latest data suggests that U.S. federal debt appears to be stabilizing. By U.S. debt, I mean federal government debt held by the public as a percent of GDP.

The figure for Q3 was 72.8% of GDP which is down from 74.0% for Q1. It’s also 0.6% above the number for Q1 of 2013.

The measure of debt basically doubled in five years, so some leveling off is good to see. According to the projections by the CBO, debt held by the public should stabilize around 70% to 75% of GDP. So far, the data suggests that this forecast is largely accurate.

The problem is that it won’t last long. Within 10 years, the debt is projected to grow again. CBO projections aren’t always accurate but that’s because we’re able to take actions now to prevent good or bad news in the future.

I want to see more data before I’m ready to say this with more certainty, but it appears that our debt is no longer growing.

November ISM = 58.7
Posted by Eddy Elfenbein on December 1st, 2014 at 10:14 am

The November ISM report fell slightly to 58.7 from 59.0. in October. ISM has been 49.5 or better for 65 straight months.

OPECalypse
Posted by Eddy Elfenbein on December 1st, 2014 at 10:09 am

Welcome back. I hope everyone had a nice Thanksgiving.

We’re now in December which is traditionally the best month for the market. The S&P 500 has gained ground during the last six Decembers.

Friday was one of the more unusual days in recent market history. The reason was that the price for oil crashed. West Texas crude dropped from $73.47 per barrel to $65.99 in one day. Remember that oil was going for $107 in June. Oil is down again today.

Oil and other energy stocks dropped as well. Other commodities such as silver, copper and natural gas were also down sharply. Last week, OPEC decided against slowing production to halt oil’s slide. That’s a big deal. There’s a lot of speculation that OPEC doesn’t mind seeing oil drop for the time being since it will hurt U.S. shale production. The question is, how long will OPEC stand by and watch this? Some of the OPEC are certainly not happy.

Morning News: December 1, 2014
Posted by Eddy Elfenbein on December 1st, 2014 at 6:04 am

Irish Manufacturing Bucks Dismal Trend Across Europe

Moody’s Cuts Japan’s Rating in Blow to Abe Ahead of Election

Schroders Sees Comfort in History as Saudi Arabian Stocks Plunge

Oil Slide Deepens, Ruble Crumbles

Swiss Voters Reject Measure Forcing SNB to Acquire More Gold

FAA to Introduce New Rules on Drones

Black Friday Fizzles With Consumers as Sales Tumble 11%

Cyber Monday Ready to Extend Long Shopping Weekend

Amazon’s New Robot Army Is Ready to Ship

Samsung Keeps Its Mobile Chief Despite Plummeting Smartphone Sales

Online Sales for Girl Scout Cookies Are Approved

Lufthansa Cancels Almost Half of Flights Due to Strike

Glaxo Is Said Close to Announcing Reorganization, U.S. Job Cuts

Jeff Miller: Weighing the Week Ahead: Time to Digest?

Roger Nusbaum: Why All the Hippie Nonsense?

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My Post-Thanksgiving Post
Posted by Eddy Elfenbein on November 28th, 2014 at 1:27 pm

I hope everyone had a lovely Thanksgiving. I’m spending the holiday with my family in Palm Springs, CA.

Just a reminder that there’s no newsletter today, but it will return next week.

The stock market is open today but will close early. This is usually the slowest day for trading all year.

Morning News: November 28, 2014
Posted by Eddy Elfenbein on November 28th, 2014 at 7:03 am

Euro-Area Inflation Slows as Draghi Tees Up QE Debate

Brazil Recovers From Recession at Slower-Than-Forecast Pace

Oil Seen in New Era as OPEC Won’t Yield to U.S. Shale

OPEC Decision Spells Trouble for Russia

OPEC Decision Eases Pain for Japanese Airlines and Importers as Oil Prices Drop

Malaysian Airline System Third-Quarter Loss Widens

Swiss to Vote on Massive Gold-Buying Plan

Canada’s Expansion Tops Forecasts as Exports Lead Growth

U.S. Lodges New Appeal at WTO in Meat Labeling Dipute

Shoppers Line Up for Black Friday Deals

On Black Friday, Americans Confront the Walmart 1 Percent: Pay Employees a Living Wage

5 Things NOT To Buy on Cyber Monday

Shopping on a Phone Is Still Uncommon but Growing Fast

Ben Carlson: 7 Simple Things Most Investors Don’t Do

Joshua Brown: The American Winship Goes On and On

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Morning News: November 27, 2014
Posted by Eddy Elfenbein on November 27th, 2014 at 7:45 am

ECB Could Start Buying Government Bonds in 1Q 2015, Top Official Says

German Jobless Rate at Record Low as Confidence Improves

Philippines Economy Slows Sharply in Third Quarter

As OPEC Members Meet, Outcome Remains Unclear

Lackluster Consumer Income and Spending Point to a Slowing Economy

GoPro to Release Consumer Drones Next Year, Report Says

Alibaba Chief Jack Ma Ready For Bigger Play in India’s e-Commerce

The Coca-Cola Company, SABMiller and Coca-Cola Sabco to form Coca-Cola Beverages Africa

Sizing up What Apple’s $700 Billion Market Cap Could Buy

Hormel Foods Sales Rise 9.5%

China Pain Hits Remy Cointreau’s First-Half Profit

Cullen Roche: The 1970s Are Not a Good Proxy For a Bond Bear Market

The Epicurean Dealmaker: His Dark Materials

Cullen Roche: When Gurus Say Strange Things

Joshua Brown: The Death of the A Share (and nobody cares)

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Morning News: November 26, 2014
Posted by Eddy Elfenbein on November 26th, 2014 at 7:16 am

ECB To Decide On QE In First Quarter

EU Unveils Giant $392 Billion Jobs Plan

Merkel Said to Reject Ukraine’s NATO Bid Over Rousing Tension

Saudis Signal No Push For Oil Cut As Market to ‘Stabilize Itself’

What’s Wrong With Oil Transport by Rail

US Economy Posts Even Stronger Growth in Q3

Opening Stores on Thanksgiving Doesn’t Boost Sales

Black Friday, Cyber Monday Sales Data Mislead Investors

Microsoft Hit With $140 Million Tax Evasion Bill in China

Deere 2015 Outlook Misses Estimates as Tractor Sales Fall

Rich Americans Come to Tiffany’s Rescue

Joshua Brown: The New Skyline

Cullen Roche: The NY Fed Declares the End of the Deleveraging

Cullen Roche: When Gurus Say Strange Things

Joshua Brown: The Death of the A Share (and nobody cares)

Be sure to follow me on Twitter.

Q3 GDP Growth Revised to +3.9%
Posted by Eddy Elfenbein on November 25th, 2014 at 12:05 pm

This morning, the government revised higher its report for Q3 economic growth. They now say the economy expanded by 3.9%, after inflation, for the third quarter. Economists were expecting a downward revision.

For the last two quarters, the economy has grown by 4.2% annualized. That’s the strongest two-quarter growth rate since 2003.