Since you asked for our thoughts, here is my 2C worth. AAPL is ripe for a major slap down by Mr Market. The analyst community has drooled over this one since the iPhone appeared just a few short years ago. The big story today is how AAPL suppliers are abusing workers in Asia and doing things that would never pass muster in the USA. I expect to see a flurry of reports about questionable performance, increased competition, and management mis-cues in the coming months - all in a programmed strategy to bring the stock down. Now that RIMM has been kicked to the gutter despite being highly profitable and not without a lot of intellectual property and the promise of maintaining substantial global share in a growth market, Mr Market will turn it's ugly side toward AAPL, IMO.
We are all concerned about this but the reality is that ALL search engines mine the data and sell it because they can, and it pays well. Forget about the concept of "private". Most social media such as Facebook is similarly corrupt in that it takes every keystroke you make and develops a profile about you from which data is aggregated and sold to those who hope to profit from this information. It's called "doing business in the Digital Age".
"The European Central Bank said it will lend euro-area banks 489 billion euros of three-year loans (1,134-day loans) at the average rate of its benchmark rate –currently at 1.0%- over the period of the loan. The loans will start tomorrow as the bank said that 523 banks asked for the funds at the auction."
Didn't Japan try this a decade or two ago, trying stimulation with very cheap money? It got them nowhere. It is highly probable that all we will end up with is another carry-trade scenario only this time it will be cheap money from Europe funding hot markets and currency trades elsewhere. The amount of trickle-down inside the Eurozone will be questionable, as I see it.
Booting up the printing presses will only speed up the race to the bottom. Europeans also need to get real and eat their losses. Buying gold, anyone?
More evidence of just how insidious the power of HB&B has become over the past 15 years. Not satisfied with marginalizing the regulators of markets, they have bought off Congress, taken control of Treasury policy, and used the taxpayer as a meal ticket to solve any issues related to financial risk. Now they have been exposed as fundamental in re-shaping bankruptcy law to their benefit. What's left? Laws that require an investor to split gains with his broker? The market has become most unwelcome to the individual investor, and I'm thinking it is time to depart and look for opportunities in another asset class such as real estate.
"New claims for jobless benefits have been drifting lower since the springtime, suggesting a relatively low and declining layoff rate."
One could also surmise that in terms of making economies through payroll reduction measures this is a spent force as a way to juice profits. The low hanging fruit has been removed from the payroll and one wonders how many companies can continue to stretch the remaining workforce. We should expect to see a diminishing layoff rate from this point or we are headed for a depression, IMO.
Since man evolved from being a hunter-gatherer into a political animal those who chose politics for a vocation had to decide whether they would serve others or seek to attain power over others while serving themselves. Most have chosen the latter, so we shouldn't be surprised when the ultimate form of power, i.e. world domination, should be the aspiration of these well-organized elites. It is for this reason I eschew investment in multinational corporations that are willing to uproot from the first-world and shift to locations where they can exploit others for the sake of enhanced profit. In doing so they often add to the corruption existing in many of these political arenas and lower the bar for all humanity. They have put the very future of our planet in jeopardy in the process. Capitalism isn't supposed to work this way.
"Nation ( Canada )" was your addition. I took the original copy as the writer making a kind of self-deprecating remark about his nation, which I understand is not Canada. While I can agree that the discourse is touching nerves, I think the takeaway point is that our financial system is imploding because of the manner in which this generation treats debt. HB&B have determined in this era of easy lending that the debt-servicing ratio for families as it relates to carrying real estate loans was 35-40% of gross family income. A generation ago it was 20 - 25%. The effect of interest rate movements upward by a point or two means hardship if it is a car loan, but devastating if it is a mortgage. High DS ratios and low initial lending rates have been used to suck this generation into over-paying for real estate and over-borrowing through equity takeout loans taken by the "ME!" generation which believes instant gratification and entitlement are a constitutional right. We are all suffering because of an inevitable severe decline in property values. The growing demands that are shaping the welfare state are a consequence of the pain many, many families are feeling. Politicians are only too willing to respond if it means getting more votes.
If one looks beyond the IPO to the business model of GRPN there is much to question. On the surface one might think that this is a high tech solution for retailing since it revolves around mobile telecommunications driving "local" customers to retailers with deep discounts called "daily deals". However, the company is burning cash ( losing $60M last time I looked ) with operations that are more akin to a call-centre than a software driven enterprise. Almost 1,000 people, mostly working out of the old Macy's store in Chicago, are making outbound calls to retailers to get deals. This product has a very short shelf life unless they figure out how to do this differently. A simple sniff test should have turned many off buying. The IPO was ridiculously priced and meant only to get the original private equity OUT! Another crime fabricated by HB&B that will go unpunished, IMO.
"Do you suppose all those congresspeople who got in on the IPO are still holding?"
Kevin,
I know Herman Cain bought in heavy, thinking it was a good Chicago company called Grope-on and he couldn't resist the impulse to get in on the action. He's still holding, of course!
There's been a lot of chat today about the importance of rules and how they influence markets. I have commented before on this and feel the necessity to rant a little once more. In the past quarter-century or so the word "rule" has become a workhorse for those seeking to open doors for the systemic abuse of financial and legislative processes, to their gain. Clubs have rules, games have rules, and elites like them because they can be misinterpreted without serious consequences and are usually self-serving. Societies however function best with LAWS. Effective laws require punitive consequences for those who violate them. When you hear a financier or politician speak of "rules" know well that they are representing someone other than their investors or constituents, and motives should be highly questioned. They are simply not to be trusted. It is not by chance that there has been a failure of legislators and regulators to create and enforce laws while substituting their preference for referring back to "rules" ( even those with numbers attached to them to create the impression of legitimacy ). This has allowed HB&B to run roughshod over our capital economies. This will not change until LAWS are created and enforced which put the perps in jail. OWS will not disappear because tent cities are being taken down. It was never about holding onto real estate nor should the message being measured by the optics of these places despite the media's attempts to make it so. It is in the minds of people, most of whom have never marched, vocalized, or written down their feelings. This collective sense of broken capitalism has resulted in a few extreme anti-capitalists gaining a slight foothold in trying to make OWS take a left turn. However, I believe there is a mass of everyday people who are simply seeking justice under LAWS. Eventually it will happen, hopefully it will be a non-violent process.
What I fail to understand is the lack of public indignation in Canada over the huge exploitation of the resource without regard to a higher degree of upgrading or seeking to value-add. Wouldn't there be much more to gain by refining in Canada and exporting the refined products? I know this sounds simplistic, but what is the economic argument that goes against this line of thinking? Canada should also be looking at pipelines and refineries that can deliver to other markets from it's own shores. After all, a lot of this Keystone XL oil is destined to be exported from the Gulf Coast, so why is the middle-man needed? One wonders if this pipeline debacle isn't telling us that at present the world IS awash in oil and it is politics and finance keeping the price high, not supply and demand factors.
"IMO, the problem with EU is not in "recession or no recession" plane. It's its very existence that is in question. It's almost as if this issue is too big to grasp for many."
Your "Too big to grasp" perspective for Europe is another version of "Too big to fail". Architects of both put their foundations in sinking sand and greedy bankers expect taxpayers to bail them out of their mistakes so it can be business as usual after systemic failure. Rather, they should be going to jail.
At first glance I believed the S.B. resignation and subsequent rise in the 10yr Italy yield above 7% was key to today's negative decline. Passing that benchmark strongly suggests another one of the PIGS is headed for the slaughterhouse. Meanwhile, watching Obama and Sarko bad-mouthing their peer behind an open mike was another confidence-crushing event. If the world is looking to its current "leaders" in government and finance to make things better do you really think things are going to turn around anytime soon? I feel I have no alternative but to reduce risk today.
In recent months I too sold my positions in both RY and BNS. I am prepared to wait until each is back down to the $42 - $43 area where the current dividend yield would be about 5%. At that point, should the market continued to punish the stock I would consider my purchase to be akin to a cashable high-yield life annuity, enjoy the income and hold them for the long term. There are NO banks beyond the borders of Canada to which I would give even a passing glance.
I think as every year goes by the 20th century concept of a commercialized Christmas involving retailed goods fades for many of us who were part of the consumed generation. This year we have booked three suites at Great Wolf Lodge for ourselves, children and families, including six grandchildren. A couple of fun days of family gathering beats the stress of shopping and lasting memories trump packaged gifts, IMO.
Folks, Let's not forget that Mark Carney is a Goldman Sachs alumni, so as far as I'm concerned he is in the catbird's seat at the FSB in order to please those who put him there via a circuitous route through London, New York and Ottawa. There is nothing patriotic about what is going on unless you hold your allegiance to the One World Government ambitions of HB&B.
If Greece goes out of the euro, it is likely other PIGS will follow with the probable result being the collapse of the euro itself. This scenario would mean that the dollar would be resored as the sole reserve currency and the dollar would rise accordingly. A euro collapse could lead to European inflation and trade wars that go global. Evetually, intererst rates will rise, further reducing bond values. If this plays out it will be necessary for the US to take advantage of the strong dollar to re-industrialize and avoid the temptation to buy offshore goods which would be cheaper than local goods in many cases. Should trade barriers exist then domestic supply will be forced on the buyer, but think of the job creation!
Geoff,
Since you asked for our thoughts, here is my 2C worth. AAPL is ripe for a major slap down by Mr Market. The analyst community has drooled over this one since the iPhone appeared just a few short years ago. The big story today is how AAPL suppliers are abusing workers in Asia and doing things that would never pass muster in the USA. I expect to see a flurry of reports about questionable performance, increased competition, and management mis-cues in the coming months - all in a programmed strategy to bring the stock down. Now that RIMM has been kicked to the gutter despite being highly profitable and not without a lot of intellectual property and the promise of maintaining substantial global share in a growth market, Mr Market will turn it's ugly side toward AAPL, IMO.
We are all concerned about this but the reality is that ALL search engines mine the data and sell it because they can, and it pays well. Forget about the concept of "private". Most social media such as Facebook is similarly corrupt in that it takes every keystroke you make and develops a profile about you from which data is aggregated and sold to those who hope to profit from this information. It's called "doing business in the Digital Age".
"The European Central Bank said it will lend euro-area banks 489 billion euros of three-year loans (1,134-day loans) at the average rate of its benchmark rate –currently at 1.0%- over the period of the loan. The loans will start tomorrow as the bank said that 523 banks asked for the funds at the auction."
Didn't Japan try this a decade or two ago, trying stimulation with very cheap money? It got them nowhere. It is highly probable that all we will end up with is another carry-trade scenario only this time it will be cheap money from Europe funding hot markets and currency trades elsewhere. The amount of trickle-down inside the Eurozone will be questionable, as I see it.
Booting up the printing presses will only speed up the race to the bottom. Europeans also need to get real and eat their losses. Buying gold, anyone?
Thanks Jim,
More evidence of just how insidious the power of HB&B has become over the past 15 years. Not satisfied with marginalizing the regulators of markets, they have bought off Congress, taken control of Treasury policy, and used the taxpayer as a meal ticket to solve any issues related to financial risk. Now they have been exposed as fundamental in re-shaping bankruptcy law to their benefit. What's left? Laws that require an investor to split gains with his broker? The market has become most unwelcome to the individual investor, and I'm thinking it is time to depart and look for opportunities in another asset class such as real estate.
"New claims for jobless benefits have been drifting lower since the springtime, suggesting a relatively low and declining layoff rate."
One could also surmise that in terms of making economies through payroll reduction measures this is a spent force as a way to juice profits. The low hanging fruit has been removed from the payroll and one wonders how many companies can continue to stretch the remaining workforce. We should expect to see a diminishing layoff rate from this point or we are headed for a depression, IMO.
BAM and GS make quite a duo. Talk about your "Axis of evil"! Sounds like a new Mafia family in the making.
Since man evolved from being a hunter-gatherer into a political animal those who chose politics for a vocation had to decide whether they would serve others or seek to attain power over others while serving themselves. Most have chosen the latter, so we shouldn't be surprised when the ultimate form of power, i.e. world domination, should be the aspiration of these well-organized elites. It is for this reason I eschew investment in multinational corporations that are willing to uproot from the first-world and shift to locations where they can exploit others for the sake of enhanced profit. In doing so they often add to the corruption existing in many of these political arenas and lower the bar for all humanity. They have put the very future of our planet in jeopardy in the process. Capitalism isn't supposed to work this way.
Athan,
"Nation ( Canada )" was your addition. I took the original copy as the writer making a kind of self-deprecating remark about his nation, which I understand is not Canada. While I can agree that the discourse is touching nerves, I think the takeaway point is that our financial system is imploding because of the manner in which this generation treats debt. HB&B have determined in this era of easy lending that the debt-servicing ratio for families as it relates to carrying real estate loans was 35-40% of gross family income. A generation ago it was 20 - 25%. The effect of interest rate movements upward by a point or two means hardship if it is a car loan, but devastating if it is a mortgage. High DS ratios and low initial lending rates have been used to suck this generation into over-paying for real estate and over-borrowing through equity takeout loans taken by the "ME!" generation which believes instant gratification and entitlement are a constitutional right. We are all suffering because of an inevitable severe decline in property values. The growing demands that are shaping the welfare state are a consequence of the pain many, many families are feeling. Politicians are only too willing to respond if it means getting more votes.
If one looks beyond the IPO to the business model of GRPN there is much to question. On the surface one might think that this is a high tech solution for retailing since it revolves around mobile telecommunications driving "local" customers to retailers with deep discounts called "daily deals". However, the company is burning cash ( losing $60M last time I looked ) with operations that are more akin to a call-centre than a software driven enterprise. Almost 1,000 people, mostly working out of the old Macy's store in Chicago, are making outbound calls to retailers to get deals. This product has a very short shelf life unless they figure out how to do this differently. A simple sniff test should have turned many off buying. The IPO was ridiculously priced and meant only to get the original private equity OUT! Another crime fabricated by HB&B that will go unpunished, IMO.
"Do you suppose all those congresspeople who got in on the IPO are still holding?"
Kevin,
I know Herman Cain bought in heavy, thinking it was a good Chicago company called Grope-on and he couldn't resist the impulse to get in on the action. He's still holding, of course!
Sounds like a good reason for a beneficiary to favor life support in 2010. I do wonder if there was a bump in the mortality rate in January, 2011?
There's been a lot of chat today about the importance of rules and how they influence markets. I have commented before on this and feel the necessity to rant a little once more. In the past quarter-century or so the word "rule" has become a workhorse for those seeking to open doors for the systemic abuse of financial and legislative processes, to their gain. Clubs have rules, games have rules, and elites like them because they can be misinterpreted without serious consequences and are usually self-serving. Societies however function best with LAWS. Effective laws require punitive consequences for those who violate them. When you hear a financier or politician speak of "rules" know well that they are representing someone other than their investors or constituents, and motives should be highly questioned. They are simply not to be trusted. It is not by chance that there has been a failure of legislators and regulators to create and enforce laws while substituting their preference for referring back to "rules" ( even those with numbers attached to them to create the impression of legitimacy ). This has allowed HB&B to run roughshod over our capital economies. This will not change until LAWS are created and enforced which put the perps in jail. OWS will not disappear because tent cities are being taken down. It was never about holding onto real estate nor should the message being measured by the optics of these places despite the media's attempts to make it so. It is in the minds of people, most of whom have never marched, vocalized, or written down their feelings. This collective sense of broken capitalism has resulted in a few extreme anti-capitalists gaining a slight foothold in trying to make OWS take a left turn. However, I believe there is a mass of everyday people who are simply seeking justice under LAWS. Eventually it will happen, hopefully it will be a non-violent process.
Craig,
While I concur with your choice, to expect The People to share our thinking would be to have them act, well, un-American.
What I fail to understand is the lack of public indignation in Canada over the huge exploitation of the resource without regard to a higher degree of upgrading or seeking to value-add. Wouldn't there be much more to gain by refining in Canada and exporting the refined products? I know this sounds simplistic, but what is the economic argument that goes against this line of thinking? Canada should also be looking at pipelines and refineries that can deliver to other markets from it's own shores. After all, a lot of this Keystone XL oil is destined to be exported from the Gulf Coast, so why is the middle-man needed? One wonders if this pipeline debacle isn't telling us that at present the world IS awash in oil and it is politics and finance keeping the price high, not supply and demand factors.
Vad,
"IMO, the problem with EU is not in "recession or no recession" plane. It's its very existence that is in question. It's almost as if this issue is too big to grasp for many."
Your "Too big to grasp" perspective for Europe is another version of "Too big to fail". Architects of both put their foundations in sinking sand and greedy bankers expect taxpayers to bail them out of their mistakes so it can be business as usual after systemic failure. Rather, they should be going to jail.
At first glance I believed the S.B. resignation and subsequent rise in the 10yr Italy yield above 7% was key to today's negative decline. Passing that benchmark strongly suggests another one of the PIGS is headed for the slaughterhouse. Meanwhile, watching Obama and Sarko bad-mouthing their peer behind an open mike was another confidence-crushing event. If the world is looking to its current "leaders" in government and finance to make things better do you really think things are going to turn around anytime soon? I feel I have no alternative but to reduce risk today.
In recent months I too sold my positions in both RY and BNS. I am prepared to wait until each is back down to the $42 - $43 area where the current dividend yield would be about 5%. At that point, should the market continued to punish the stock I would consider my purchase to be akin to a cashable high-yield life annuity, enjoy the income and hold them for the long term. There are NO banks beyond the borders of Canada to which I would give even a passing glance.
Thanks Craig,
I think as every year goes by the 20th century concept of a commercialized Christmas involving retailed goods fades for many of us who were part of the consumed generation. This year we have booked three suites at Great Wolf Lodge for ourselves, children and families, including six grandchildren. A couple of fun days of family gathering beats the stress of shopping and lasting memories trump packaged gifts, IMO.
Folks, Let's not forget that Mark Carney is a Goldman Sachs alumni, so as far as I'm concerned he is in the catbird's seat at the FSB in order to please those who put him there via a circuitous route through London, New York and Ottawa. There is nothing patriotic about what is going on unless you hold your allegiance to the One World Government ambitions of HB&B.
If Greece goes out of the euro, it is likely other PIGS will follow with the probable result being the collapse of the euro itself. This scenario would mean that the dollar would be resored as the sole reserve currency and the dollar would rise accordingly. A euro collapse could lead to European inflation and trade wars that go global. Evetually, intererst rates will rise, further reducing bond values. If this plays out it will be necessary for the US to take advantage of the strong dollar to re-industrialize and avoid the temptation to buy offshore goods which would be cheaper than local goods in many cases. Should trade barriers exist then domestic supply will be forced on the buyer, but think of the job creation!