• Predicting Disaster Is a Great Business
    Posted by on February 4th, 2013 at 12:25 pm

    One of my constant complaints about market commentary is that predictions of doom and gloom are rarely held accountable. Bearish news sells and the scarier the better.

    I don’t mind people saying bad things will happen, but I do mind the way that certain (not all) perma-bears are allowed to move the goal posts with their predictions. They key, it seems, is to never give a time horizon for the Apocalypse. That way, you’re never wrong, just a little early.

    There’s a mini-industry of folks who predict the most outrageous events, and then when something bad comes along, they claim credit for predicting it.

    Sixteen months ago, the BBC had Alessio Rastani on as a guest. I’m still not exactly sure who this clown is, but he said that the market was about to collapse, and he got a huge amount of attention.

    Since then, the Dow has gained 3,000 points and no one seems to care how badly Rastani was off the mark. Note that the embedded video has more than 2.2 million views, and likes outnumber dislikes by 14-to-1.

  • “We Are Way Overdue for Some Sort of Bullshit Crisis”
    Posted by on February 4th, 2013 at 11:18 am

    In the WSJ, Scott Adams makes the case to “buy, buy, buy“:

    Should you dive into the stock market? Absolutely. And if you have no money to invest, I recommend getting cash advances against your credit cards. And stop eating, entertaining, and saving for your kids’ educations. Sell your blood if you need to. Put all of that extra money in the stock market. My reasoning is simple: I own stocks and I want you to drive up their prices.

    I have a feeling that the smart money is already in the market and those folks are crouching like sprinters, waiting for any sign of bad news. Meanwhile, we are way overdue for some sort of bullshit crisis like the Year 2000 bug, or California going into a death spiral, or an artificial debt limit, or North Korea testing a satellite-based death-ray. When the new fake crisis happens, sometime within the next month, the market will pull back 10%. That’s when I expect to go into a panic and start selling my stocks at a loss.

    What the stock market needs – and what I need – is for lots of people who know absolutely nothing about investing to pile into the market and buy broad market ETFs. Then I need those people to poke out their own eyes and caulk their ear holes so they don’t accidentally encounter any news. I don’t think that is too much to ask.

  • Factory Orders Weigh on Market
    Posted by on February 4th, 2013 at 11:06 am

    The stock market is backing off the five-year highs it made on Friday. The S&P 500 is currently down 10 points or about 0.7%.

    The Commerce Department said that factory orders rose by 1.8% in December which was below the 2.3% Wall Street was expecting. The number for November was revised down to a 0.3% drop.

    A fourth-quarter pickup in consumer spending is spurring companies including automakers such as Chrysler Group LLC and Ford Motor Co. (F), reviving a manufacturing industry that cooled in the second half of 2012. The acceleration extended into January, according to a gauge last week that showed factories expanded at the strongest pace in nine months.

    “Manufacturing’s fine,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who projected a 1.9 percent gain in orders. “The economy continues to improve.”

    The bright spot in today’s report is that demand for durable goods rose by 4.3%. That increase was helped by a 12.2% increase in construction equipment and a 6.4% rise for computers.

    On our Buy List, Oracle ($ORCL) is buying Acme Packet for $2.1 billion.

    The deal is Oracle’s biggest since it bought Sun Microsystems in 2010 for about $7 billion. The company bought nearly a dozen companies in 2012, including Eloqua Inc for $810 million in December.

    Telecom carriers have been dumping wireline and other legacy services as people increasingly use a newer breed of devices to access Internet and businesses shift to IP (internet protocol) networks, an area where Acme Packet specializes.

    “Users are increasingly connected and expect to communicate anytime and anywhere using their application, device, and network of choice,” Oracle said in a statement.

    Oracle Chief Executive Larry Ellison, who has used acquisitions to boost the company’s revenue dramatically over the past decade, had said in October he would not rule out a big deal “down the road”.

    Oracle has rallied almost non-stop since the middle of November. From the November 14th low to last Friday’s high, Oracle has gained 23%.

  • Morning News: February 4, 2013
    Posted by on February 4th, 2013 at 6:18 am

    Cameron Demands Risk U.K. Becoming Hedge Fund Island for Merkel

    Dangers Ahead for the E.C.B.

    Spanish, Italian Bonds Plunge Amid Signs of Politcal Risk

    Japan Finance Minister Models Policy After 1930s Stimulus

    Too-Big-to-Fail Too Hard to Fix Amid Calls to Curb Banks

    Small Lenders Ride U.S. Mortgage Wave As Big Banks Cut Back

    Land Battles Rise as U.S. Eyes 450,000 Miles of New Pipe

    Strikes Force Amplats Into Loss

    Japan Air Raises Profit Forecast as Travel Demand Rebounds

    Japan’s Hitachi cuts full-year operating profit forecast

    Swatch Rises to Record as Profit Growth Accelerates

    China Startup Dodges IPO Ban, Floats On Shopping Website

    New Details Suggest a Defense in SAC Case

    Phil Pearlman: Update: Recent Research Supporting the Value of Technical Analysis

    Jeff Miller: Weighing the Week Ahead: Market Correction Coming?

    Be sure to follow me on Twitter.

  • “Nearer My God to Thee” Mississippi John Hurt
    Posted by on February 2nd, 2013 at 7:55 pm

  • Sesame Street: Upside Downton Abbey
    Posted by on February 1st, 2013 at 6:54 pm

  • January ISM = 53.1
    Posted by on February 1st, 2013 at 10:20 am

    The ISM Index for January came in at 53.1. That’s the best reading since April. Last year, the ISM dropped below 50 for three months in a row and for four out of six months. The January ISM is a big increase from the 50.7 we had in December.

    The ISM report is a good indicator of where we are in the business cycle. Since 1948, the ISM has been between 52.0 and 54.0 a total of 95 times; only two times have come during recessions.

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  • Dow Breaks 14,000
    Posted by on February 1st, 2013 at 10:10 am

    Very, very briefly.

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  • Ford Sales Rose 22% in January
    Posted by on February 1st, 2013 at 9:54 am

    USA Today:

    Ford says sales grew 22% last month, leading to its best January sales performance since 2006.

    Best of all, the automakers saw a big increse sales to individual customers, instead of fleets. They were up 24%. Those so-called retail sales are an automakers most profitable because automakers don’t have to offer volume discounts.

    Powering Ford’s increase was a 65% increase in sales of its Fusion sedan, one of its most important models because it compete in the crucial midsize sedan segment. Ford’s small car sales were up 29% in January. Ford’s says it was the best January for small car sales since 2000, although it has many more offerings now than it did then.

    “Ford is off to a strong start this year, with Fusion and Escape delivering January sales records and F-Series seeing a particularly strong reception this early in the year,” said Ken Czubay, a Ford vice president. “Our investment in fuel-efficient new vehicles – including EcoBoost (turbocharged) engines and hybrid technology – continues to pay off.”

    The Escape crossover also set a January record and Explorer, its larger crossover, saw a 46% sales increase. It was its best January since 2005.

  • January NFP = +157,000; 7.9% Unemployment
    Posted by on February 1st, 2013 at 9:23 am

    The big jobs report this morning showed that the U.S. economy created 157,000 jobs last month and the unemployment rate ticked up to 7.9%. Both November and December’s jobs gains were revised higher.

    The Labor Department today also issued its annual benchmark update, which aligned employment data spanning from April 2011 to March 2012 with corporate tax records. The revision showed payrolls grew by an additional 424,000 workers, on an unadjusted basis, in that period.

    The economy has recovered 5.51 million of the 8.74 million jobs that were lost as a result of the last recession.

    Additionally, the Labor Department incorporated new Census Bureau population estimates into the household survey it uses to calculate the jobless rate. The adjustment boosted the estimated size of the labor force by 136,000. It also updated how it adjusts payroll figures for seasonal swings, affecting data back to January 2008.

    Private payrolls, which don’t include jobs at government agencies, rose 166,000 in January following a revised jump of 202,000 the previous month. Economists forecast they would grow 168,000 for a second month.

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