The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

Obama Hits 100 Days:

(April 24)

President Obama will mark 100 days in office with a news conference to answer critics who say he is moving too slowly to fix the economy. Results season churns on with Exxon Mobil, Chevron and Verizon three of the big names reporting.

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Week Ahead in Europe: Earnings Crush

4/24/2009

Results from major corporations will dominate the news. Deutsche Bank and software firm SAP face high expectations after U.S. rivals did well in the quarter. When Siemens reports, the focus will be on guidance and cost cutting. (April 24)

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Week Ahead In Asia: Rate Cuts Coming

Japan, Malaysia and New Zealand will hold monetary policy meetings next week. Interest rate cuts are expected in Malaysia and New Zealand. Sharp, Honda and Canon will be among the Japanese companies reporting earnings.

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My fishing buddy David Kotok is hosting a conference in Philly this week where I wll be presenting:

The Financial System, Banks & Economy: After the Storm…Where Are We Now?

The 27th Annual Monetary and Trade Conference:
Thursday, April 30, 2009
The Global Interdependence Center and Drexel University’s LeBow College of Business Present:

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8:15AM Welcome
David Kotok, Program Chair, Global Interdependence Center
George Tsetsekos, Dean, Drexel University’s LeBow College of Business

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8:30AM Bank Industry Analysis featuring
· Chris Whalen, Managing Director of Institutional Risk Analytics: “The US Banking Industry Post Bailout”
· Nancy A. Bush, CFA, NAB Research, LLC: “Creative Destruction in the Banking Industry: What’s Left, and What’s Next…”

Includes 15 minute audience Q&A. Moderator: Martin Heldring, Senior Vice President, TD Bank, and GIC Board of Directors

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9:25 AM Barry Ritholtz, CEO; Director of Equity Research at Fusion IQ: “Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy” Includes audience Q&A

Introduced by Tom Ambrose, President & CEO, Ambrose Wealth Management

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10:00AM Coffee Break

10:20AM Macro Views of Financial Crisis Featuring
· Bob Eisenbeis, Chief Monetary Economist, Cumberland Advisors, “Are Things Really that Bad?”
· Diane Swonk, Chief Economist, Mesirow Financial, “Searching for a Bottom” Includes 15 minute audience Q&A.
Moderator: Bianna Golodryga, ABC News

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11:15AM Keynote Speaker: William Poole, Senior Fellow, Cato Institute and Former President of the Federal Reserve Bank of St. Louis: “Saying Goodbye to Too Big to Fail” Includes 15 minute audience Q&A

Introduced by Albert Brinkman, Senior Vice President, Miami International Holdings

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12:00PM Conclusion: Dr. William C. Dunkelberg, Chairman, Global Interdependence Center and Economic Strategist, Boenning & Scattergood

Bill Moyers speaks with economist Simon Johnson and Ferdinand Pecora biographer and legal scholar Michael Perino. Johnson is a former chief economist of the International Monetary Fund (IMF) and a professor at MIT Sloan School of Management, and Perino is a professor of law at St. John’s University and has been an advisor to the Securities and Exchange Commission.

click for video

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Bill Moyers

http://www.pbs.org/moyers/journal/04242009/watch.html

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From “West Side Story”  to the modern remix, “Worst Slide Story.”

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click for animation

Walt Handelsman via Newsday

Barron’s in collaboration with Business Jet Traveler magazine examines how the corporate-jet market is faring in the recession.

Words from the (investment) wise for the week that was (April 20 – 26, 2009)

“Words from the Wise” this week comes to you in a shortened format as my traveling in the US precludes me from doing my customary commentary. However, a full dose of excerpts from interesting news items and quotes from market commentators is provided.

On Friday, Federal Reserve regulators have released a white paper outlining the criteria they used to assess the financial health of the nation’s 19 biggest banks. On the same day they also briefed the banks about how their companies had fared in the examination. The banks will have until Tuesday to dispute any of the results before they are made public on May 4.

According to the Financial Times, senior Fed officials said US authorities will ask some of the country’s biggest banks to raise more capital following the completion of bank stress tests. The officials also indicated that a second, larger, group of banks will be asked to improve the quality of their capital by increasing their amount of common equity.

Last week investors’ mood was also influenced by tentative signs of economic stabilization in a number of countries and a barrage of earnings report – generally better than feared. As the equity rally ground to a halt on some bourses, the US dollar and government bonds offered little safety appeal and edged weaker. Gold, on the other hand, advanced after China revealed it has almost doubled its gold reserves since 2003. Treasury Inflation Protected Securities (TIPS) also improved on the week.

The performance of the major asset classes is summarized by the chart below, courtesy of StockCharts.com.

After rising for six consecutive weeks, global stock markets experienced a volatile week, including the worst losses since early March on Monday. In the end, the MSCI World Index gained 0.1% (YTD -4.1%) on the week and the MSCI Emerging Markets Index 0.7% (YTD +14.2%), but the S&P 500 Index shaved off -0.4% (YTD -4.1).

Click on the table below for a larger image.

As far as the earnings season is concerned, Bespoke indicated that 156 S&P 500 companies had reported earnings by Thursday, beating estimates in 67% of the cases. Also, so far earnings are down 16.6% versus the first quarter of 2008. While down, this is much better than the -37.3% expected at the start of the earnings season. “The earnings season still has a long way to go, but the current trend has investors optimistic,” said Bespoke.

In an attempt to cast light on the debate of whether we are dealing with a bull market or a bear market rally, William Hester (Hussman Funds) highlighted the following: “Contracting volume is not enough evidence to qualify that this is a bear-market rally with certainty. There are other measures that are showing more strength – such as various indicators of market breadth. But new bull markets, whether at their inception or soon after, have a history of recruiting noticeable improvements in volume. So far this rally lacks that important quality. Over the next few weeks stock market volume will be a metric to watch closely.”

The stock market will show its hand in due course, but it is crucial that the lows of March 9 hold in order for base formation development to remain intact. Should these levels – 677 for the S&P 500 and 6,547 for the Dow Jones – be breached, further downside movements may be in store.

For more discussion on the direction of stock markets, see my recent posts “Video-o-rama: Economy – Recovery or relapse?” and “Has stock market rally run its course?” (And do make a point of listening to Donald Coxe’s webcast of April 24, which can be accessed from the sidebar of the Investment Postcards site.)

Next, a quick textual analysis of my week’s reading. No surprises here, with key words such as “banks”, “market”, “economy”, “economic”, “government” and “prices” featuring prominently.

Economy
“Global business sentiment remains very poor, but it has taken on a slightly better hue in recent weeks. Broad assessments of current and prospective conditions have also moved up measurably since the beginning of the year,” said the latest Survey of Business Confidence of the World conducted by Moody’s Economy.com. “It is premature to conclude that businesses are turning measurably more upbeat, but recent survey results are somewhat encouraging.”

For a further perspective on the outlook for the global economy, also read my posts “Economic rate of decline slowing down?“, “Goldman raises China’s growth forecasts” and “Chinese economy on the rebound“.

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I meant to mention this NYT article from Thursday, with a wild graphical depiction of MERS — Mortgage Electronic Registration Systems — that holds over 60 million mortgages on American homes:

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click for ginormo graphic

via NYT

The full article is worth reading . . .

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Source:
Tracking Loans Through a Firm That Holds Millions
MIKE McINTIRE
NYT, April 23, 2009

http://www.nytimes.com/2009/04/24/business/24mers.html

“Nobody ever sold a stock because they thought it would go up. And as a group, corporate insiders obviously are scarcely enthusiastic about the prospects for a genuine bull market.”

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Or so said Alan Abelson in this week’s Barron’s.

Is he right? How fallible are the CEOs, CFOs, and other execs regarding their own firm’s prospects? Consider:

“If those now infamous shoots of recovery are popping up all over, why would insiders be so aggressively dumping stocks?

Yet, they indisputably are. According to a study prepared for Bloomberg by Washington Service, a research outfit, directors, officers and the like have sold $353 million worth of stock in this fading month, or 8.3 times the total bought. As a matter of fact, according to the firm, insider purchases of $42.5 million are on track to make April the skimpiest month for such buying since July 1992. (emphasis added)

The pace of selling in the first three weeks of this month, incidentally, was the swiftest since the market peaked and the bear came out of hibernation with a vengeance in October ’07.”

There’s more than anecdotal information in insider sales. Bob Bronson, who tracks insider buys and sales, notes “We’ve found insider activity to be a very useful market timing indicator – when used in combination with others — over the short term (weeks) to intermediate term (months).”

Bronson shows that Energy, Consumer Durables and Transports look particularly bearish now:

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Back to Abelson — he concludes:

“We’re quite aware that insiders are not infallible. But they are, after all, in the front lines of commerce and industry and so presumably have a better fix on the economy and the prospects for recovery than analysts and economists, whether of macro or micro persuasion.

And just as they wouldn’t be laying off people in such extraordinary numbers if they thought their business was about to rebound soon, they’d be loath to liquidate their holdings in such an emphatic way if they espied a turnaround in the offing.”

One could argue that sellers are merely taking advantage of the big rally in the markets — the S&P 500 has jumped 28% in 33 trading days, the sharpest rally since the 1930s. But what does that say regarding the bull-tards cry that the longest recession since World War II will soon end?

This may be a classic case of “watch what they do, not what they say . . . ”

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Sources:
Shareholders Be Damned!
ALAN ABELSON
Barron’s APRIL 25, 2009

http://online.barrons.com/article/SB124061355986854673.html

Insider Selling Jumps to Highest Level Since 2007
Michael Tsang and Eric Martin
Bloomberg, April 24 2009

http://www.bloomberg.com/apps/news?pid=email_en&sid=au8cyqeJFifg

Note: For those of you who wish to track this on your own, here are a few resources:

INSIDER SPOTLIGHT
WSJ Sales Tracker

http://online.wsj.com/mdc/public/page/2_3024-insider1.html?mod=mdc_h_usshl

Insider Monitor

http://www.insider-monitor.com/sellday.html

With state and local governments suffering from a steep decline in tax revenues, there’s “another S&L crisis” coming, says Diane Garnick, investment strategist at Invesco.
And since every crisis deserves its own bailout, get ready for the Federal Government to step in an prop up state and local municipalities, says Garnick, whose firm has about $350 billion of assets under management.

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You will note a few things are still in SNAFU mode:

The “<< Older Entries” link / text at the bottom of The Big Picture page doesn’t work. The address shows successive page numbers but the same stories are listed over and over again.

There is no link to email to someone a post.

Some older posts can be found on Google, but are not accessible at the site.

The techs are working on these . . .

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