Global Market Comments
June 21, 2016
Fiat Lux
Featured Trade:
(JULY 7 DUBROVNIK, CROATIA GLOBAL STRATEGY LUNCHEON),
(AMERICA?S NATIVE INDIAN ECONOMY)
?There?s a lot of performance anxiety out there right now. There?s nothing worse than sitting on cash watching a market go up double digits,? said Tom Lee, chief US equity strategist of JP Morgan.
Global Market Comments
June 20, 2015
Fiat Lux
Featured Trade:
(JUNE 29 DUBLIN, IRELAND GLOBAL STRATEGY LUNCHEON)
(ARE JUNK BONDS PEAKING?),
?(JNK), (HYG),
(A TOUCHDOWN FOR USC)
SPDR Barclays High Yield Bond ETF (JNK)
iShares iBoxx $ High Yield Corporate Bd (HYG)
There is no happier corner of the fixed income universe than junk bonds (JNK), (HYG), which have been soaring like a bat out of hell recently.
Average yields for the bond class most sensitive to the economy have collapsed from 18% to near an all-time low of 6.68%, a scant 483 basis points over ten year Treasury bonds (TLT).
If you look at the chart for (JNK) it virtually tracks the S&P 500 one for one, with less volatility, and therein lies the problem. When bonds act like stocks, what happens to bonds when stocks go down?
That is a particularly pertinent question these days as stocks have more than doubled from the bottom, and are approaching grotesquely overbought levels. After a move in the S&P 500 Index?s average multiple from 9 to 19, with 20 a possible top, are junk bonds peaking out here as well?
?A 483 basis point premium does not sound like much compared to the historical range. It is pricing in the near absence of risk in this paper, as if they will live forever? When did I last see this movie? 2006? 2007? Alas, how short memories have become.
It might be worth taking some money off the table here, and taking the hit in the cash flow in your portfolio.
Lowering your beta is prudent, especially if we are about to move from a 'RISK ON' to a 'RISK OFF' world for more than a day.
Do you really want to wait for the music to stop playing before you grab a chair?
Time to Grab a Chair Before the Music Stops Playing?
One of my many alma maters, the University of Southern California announced that they had received their largest private donation in history.
As a third generation alumni of this fanatical football factory (I went to school with Mark Harmon, Lynn Swan, and, oops, OJ Simpson), I still receive their alumni newsletter, where I learned the good news.
David and Dana Dornsife gave $200 million to the downtown Los Angeles home of the Trojans. The money will be used to fund the College of Letters, Arts, and Sciences, which will be renamed after them.
Dornsife made his fortune as the owner of Herrick Corp., a Stockton based maker of the prefabricated steel that was used to build many of the skyscrapers in the center of Los Angeles.
The gift tops the university's previous largest gift from George Lucas, of Star Wars fame, who in 2006 contributed $175 million to USC's film school, which he once attended with film legend, Steven Spielberg.
For the record, the largest charitable contribution to a university in history was the $600 million that Gordon Moore, of Moore's Law fame and a founder of Intel (INCT),? gave Caltech in nearby Pasadena. As a teenager, I used to sit in on the math classes. Notice that all of these big donations to education are happening in California.
Tommy Trojan will no doubt be happy, provided that a Bruin from UCLA has not stolen his sword again, or painted him blue. And don?t ask me about ?Old Tire Biter.?
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?The stock market is one of those things that looks better the more expensive it gets,? said Barbara Marcin, portfolio manager of the Gabelli Dividend Growth Fund.
Global Market Comments
June 17, 2016
Fiat Lux
Featured Trade:
(JULY 22 ZERMATT, SWITZERLAND GLOBAL STRATEGY SEMINAR),
(DIAMONDS ARE STILL AN INVESTOR?S BEST FRIEND),
(SO YOU THINK THEY?RE NOT WATCHING YOUR PC?)
Hey! You there, staring at this monitor. This is your PC talking to you. No, not you over there standing in the background. I?m talking to the guy sitting in front of me poking at my keys. Ouch! That one hurt!
So you thought no one was watching, did you? Let me set you straight. About a month ago you clicked on a certain website and I installed myself as a cookie on your computer, which is an innocuous little text file that you can?t see.
Since then, I have been tracking your every move, recording websites you clicked on, the pages you visited and the stuff you ordered. I then used this handy little algorithm to build a profile of exactly who you are. I now know you better than your own mother. In fact, I know you better than you know yourself.
For example, I am aware that you make more than $250,000 a year, live in a posh zip code in San Francisco, belong to a fancy country club and drive a Mercedes. You donate to Republican political causes, send your kids to a prestigious private school and bill it all to an American Express Platinum Card. Did I leave anything out?
Because I know every detail of your life, down to your inside leg measurement, I am able to harness the power of this machine to more precisely service your every need. That includes directing advertising to you, which you have a high probability of clicking on.
The more you click on my ads, the higher prices I can realize for those ads. The ad campaigns you now see are unique to your own personal computer because they are tied to your IP address. My program, called ?behavioral targeting?, is the next ?big thing? in online advertising. It?s all part of the brave new world.
I see you have been shopping for a new car. Check out the new Hyundai at http://www.hyundaiusa.com/, which offers the same quality as your existing ride, at half the price.
Your clicks this morning suggest you?re taking your ?significant other? out to dinner tonight. Might I suggest Gary Danko?s on Bay Street at http://www.garydanko.com/site/bio.html ? The rack of lamb is to die for there.
Your visits to Travelocity and Expedia tell me you?re planning a vacation. I bet you didn?t know you can find incredible deals in Las Vegas at http://www.visitlasvegas.com/vegas/index.jsp . Thinking about buying a condo there? They?ll even pay for the trip if you promise to check one out while you?re there.
Since we?re chatting here mano a mano, I noticed that that last pair of jeans you ordered from http://us.levi.com/home/index.jsp had a 42-inch waist, up from the 40?s in your last order. Better lay off those cheeseburgers. Pretty soon, they?ll be calling you ?tubby? or ?fatso?. Better visit http://www.weightwatchers.com/Index.aspx soon, or the legs on that chair might buckle out from under you.
Worried about privacy? Privacy, shmivacy. There hasn?t been privacy in this country since the first social security number was handed out in 1936. And don?t expect any relief from Congress. I doubt half those dummies even know how to turn on their own PC?s.
Don?t even think about trying to delete me. I?m a ?flash cookie?, an insidious little piece of code that reinstalls every time you try that. Think of me as a toenail fungus. Once you catch me, I?m almost impossible to get rid of.
I hope you don?t mind, but I?ve been passing your personal details around to some of my buddies at other websites. That?s why when you clicked on http://www.nfl.com/ you got deluged with product offers from your local team, the San Francisco 49ers.
I?ve got friends at Google, Facebook, MySpace, and pretty much everywhere. Can I help it if I?m a popular guy? I bet the view from those 50-yard seats is great, isn?t it?
I noticed that your spending habits don?t exactly match with the income you reported on your last tax return. Do you think the IRS would like to know about that? I bet you didn?t know the agency offers a 10% reward for turning in tax cheats.
How about those triple XXX DVD?s you bought last week? Whoa! Hot, hot, hot! I hope your employer never finds out about those. It might not go down too well at your next performance review.
I thought it was lovely that you bought your spouse a two carat, yellow, vvs1, round cut diamond ring for $26,000 from http://www.bluenile.com/ for your 30th wedding anniversary.
But who is Lolita, the Argentine firecracker, in Miami Beach? Does the old wifey know you sent her a $2,000 pair of diamond stud earrings? What?s it worth to you for me to keep mum on this? Maybe you should take a quick peek at 3StepDivorce.com, http://www.3stepdivorce.com, and see what you?re in for?
Naw, I?m just pulling your leg. This is all just between friends, right? Think of it as a doctor/patient relationship. I?ll tell you what. See that leaderboard ad at the top of the page? Just click on that and we?ll call it even. Oooh that felt good! Click it again. Oh, baby! Not too many times. You?ll trigger my anti click fraud program.
Now you see that wide skyscraper add over on the right? Click on that too. Oh baby! Click it again! And there?s a little button ad at the bottom of the page. No, not that one. A little lower. What was that little cutie?s name in Miami again? Aaaaah.
?We are still in the gravitational pull of the Great Recession. I would have to put the likelihood of a double dip recession now up to 50%,? said my old UC Berkeley economics professor, Robert Reich.
Global Market Comments
June 16, 2016
Fiat Lux
Featured Trade:
(LAST CHANCE TO ATTEND THE JUNE 20 LONDON STRATEGY LUNCHEON),
(BE CAREFUL WHO YOU SNITCH ON),
(COULD YOU QUALIFY TO BECOME A US CITIZEN?)