Being away from markets provides a very different perspective from the short-term focus that some of you may have got accustomed to particularly with the election behind us and a fiscal cliff dead-ahead. I suspect that the fear about the fiscal cliff is another media binary just like the election was. They will compromise. Fundamentally speaking, poor GDP, stubborn unemployment and steadily deteriorating earnings trumps everything. Technically speaking, all those indicators have to be gamed by the programs already. Not even an attempt yesterday suggests more downside to me, probably one more big freak-out before positive seasonality asserts itself. Volatility will rule, the market will fluctuate said JP Morgan ages ago. I saw several stories calling for precious metals to rally, notwithstanding the severe reactions to the earnings of large-cap gold miner stocks (ABX, NEM, GOLD). GDX will pop much more than gold prices if that does ensue. I am glad I am not playing, leaves time for more interesting posts.
It has been a really busy and fruitful sabbatical period overseas for me. More on that later. My apologies to the few of you who have checked in occasionally and found no posts at all. Glad as I am to have some loyal readers, I would be remiss if I didn’t point out how the act of posting has helped to sharpen my thought process as a teacher and scholar. So, expect a new and improved blog after I do some housekeeping.
European Stocks are at 40-year lows relative to US stocks says BCA research, here). As so-called “extreme” contrarian signals are triggered, it doesn’t have to mean one must act at once. I did something like this with Japan a couple of years ago and am basically flat in that position too !!! Also have a long-term TBT position that is going nowhere.
Been a while since the last post. The usual problem with long silences is that one may not know which words to choose, or worse that there are few words to choose from. Fortunately, I have news on the financial market lab front. It appears that the College of Business has obtained preliminary funding and the lab will kick-off this Fall as I had anticipated. More later.
I couldn’ t resist. HERE is an infographic about the online retail business.
The mood at the CFA forecasting dinner last night was decidedly downbeat. Speakers talked about US global debt levels, government and consumer. Not consistent with markets at three-year highs. Probably because a portion of this cohort of money managers is short and keeps getting squeezed. Behaviorists would argue that this is anchoring bias. Once you have got your teeth around a thesis you don’t let go. Meanwhile, employment news comes out fairly positive. Just another day at the beach.
1. A Fortune story (here) aptly titled “Facebook already went public and you were not invited!”
2. Wonderfully apt comments on today’s mortgage settlement (here).
3. Dim Sum Bonds anyone? (here).
4. January short interest on the NYSE is the lowest in a while (here).
5. The Facebook registration statement (here). And Big Pictures’ take (here). It would be remiss of me not to mention that just before Google went public in 2004, there was a lot of chatter about how overvalued it was, about how the metrics used may not be reliable and so on. Back then I attributed some of the grumbling to the Dutch auction that Google used for the IPO rather than the typical underwriting route. This time around, I am much more inclined to agree with the grumbling. Regardless, FB will be a must-have in too many portfolios. The question is at what price though.
6. The Big Data Meme (here) is now in the public eye post Davos. One application of this is clearly HFT. Mish has this lovely GIF on its increasing role (here). You would benefit from an explanation of what the axes represent, but as you watch it is clear that HFT’s influence is growing.
7. Sadly, Reuters talks about the twilight of the Bond King (here). For one of the early coronation stories of the Bond King go (here). No matter who you are, you are only as good as your last trade. Stated differently, traders are never happy. Obviously not if you lost some money. Even if you made some money, you beat yourself for missing many other opportunities!