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

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Tonite I will be on Fast Money on CNBC at 5:00pm discussing Japan and EWJ.

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UPDATE: Videos will be posted later.

This is what I was referring to Monday on Fast Money: Too many folks are too bullish…

In the interview, Jim Bianco mentioned that corporate cash levels at nearly $2 trillion is not that far out of line with its historical average; Jim also challenges the argument that bond fund investors holding Treasuries and will be rotating back into stocks.

Lastly the interview noted that Goldman Sachs Asset Management Jim O’Neill’s forecast that stocks could gain 20% in 2011. O’Neill’s call is now nearly a consensus call.

After a failure I feel lonely and afraid. Its hardest at these moments to pick yourself up and give a little in order to get. The only way to climb out of the hole, when you have a metaphoric needle sticking out of your veins and you’re lying in the gutter that the world has kicked you to, is to give back without asking, give as if you were the richest man in the world.

This is not the same as giving to charity. There are so many other ways to give that are underappreciated. But its exactly these types of giving where the world will give you back ten times more than you gave.

Here’s 13 ways that Giving can help you Receive more

-          Give credit where its due. Every day, give credit to your boss, your friends, your employees, your colleagues, even if it was your own ideas. Just give them credit. Everyone knows the reality. And the reality is YOU.

-         Give Equity. When I started Stockpickr, someone wrote a blog post criticizing me for giving thestreet.com 50% of my business. One of my employees even quit, he was so upset at that decision. (Although he’s since gone on to better things.) But that decision hooked thestreet.com into my business. Once the company was up for sale (which was the second after we launched the company) they were basically locked into my tractor beam to the point where they had to buy the company. If I had given them any less of the business I’d probably be sitting on a worthless website right now, post financial crisis.

-          Give a customer more than they asked for. When I first did websites for New line cinema (in my old business, Reset), I offered to essentially do websites for all of their movies for almost free. That kept business coming from the whole Time Warner family and also gave my employees fun stuff to do in between doing websites for Con Edison and other boring companies. It also got clients for me because everyone thought our New Line sites were ‘edgy’.

-          Give up.  Some businesses just don’t work. Don’t make the issue worse by raising money and being fooled by the prophets who tell you persistence is key. 140love.com was my latest bad idea. Go check it out. I put $30k into that baby and on the eve of raising $500k I told everyone to save their wires and not send the  money. It was a bad idea. The ghost-site still exists. Knock yourselves out.

-          Give ideas. I’ve told this story before, but when I was really down and wanted to get things going for myself, I came up with as many ideas as I could for other people and simply gave them away for free. The results were stupendous. Sit down every day, picture a person you can give ideas to, and come up with ten good ideas for them. At the very least this will exercise the idea muscle, which atrophies like any other muscle if it’s not in constant use.

-         Give time. Cornell, my alma-mater, recently asked me to donate some money, like they ask all alumni. I said there’s no way I can do that, since I’ve repeatedly written articles suggesting that parents not send their kids to college. BUT, I would be more than happy to give my time. So I went up, spoke to a bunch of groups of very smart, talented college students, and even found out about a business done by students who had just graduated that seemed interesting. I immediately came home and invested in the business. More on that in another post.

-          Give silence. My 8 year old was crying the other day. She was upset about nothing. Like 8 year old girls sometimes get. But I sat down next to her and said nothing and just listened while her mind thrashed about a bit. I’m glad I did it. Just to hear her laugh a little by the end of it.

-          Give to yourself. When I have a score, I give to myself. I’ll stay in a nice hotel, or go on a nice trip, or buy some books, or take some time to go to an art gallery or museum. I take for myself when I’ve been given. Which goes along with…

-          Give thanks. Every day at the end of the day, I think of the things I’m thankful and grateful for. You don’t need to be good at meditation to be as enlightened as the Buddha. Just spend a few minutes a day counting the things you are thankful for. I’m thankful for my family. I’m thankful for the people who have remained friends over the years. I’m also thankful Ben Bernanke decided to print up another $600bb dollars over the next few months. I hope I can take some of that and put it in my pocket.

-          Give for free. Don’t fool yourself into thinking that giving to charity is a good thing. It’s a completely selfish act when you give $100 for someone to finish a 100 mile race for charity and you put your name all over the donation. If you really want to “give”, do it anonymous and stop waving it in front of our faces.

-          Give your honesty. When someone asks for your opinion on something there’s so many incentives to lie. When someone asks you to dinner or out to an event, the first impulse is to be dishonest and say, “sorry, my leg is breaking that day, I can’t”. But be honest and constructive in your honesty. Give value when you give your opinion. Help someone be better by making sure you are not only honest with them but really honest with yourself as to why your opinions are what they are. Where do they come from deep down.  Make their lives better and they will one day return the favor. Try being 100% honest for just one day. Its not as easy as it seems. Never criticize but improve the things around you when you give your honesty.

-          Save a life every day. I’ve written about this before. But my goal in life is to be a vigilante, anonymous superhero. If you can save a life a day, with strangers or with friends, then you’re a hero. And heroes have all sorts of benefits in life that civilians never get or don’t even know exists. If you don’t believe me, save a life today and see what happens.

-          Meditate on giving. Above I said give thanks for everything there is to be thankful for. That’s one meditation. The other meditation is to think of all the giving you can do tomorrow. Go up and down this list and see what items on it you can do tomorrow.

Give first, then receive. It works.

Huge NYT article on Charles David Keeling, the scientist who first measured the increased carbon in the atmosphere. The Keeling curve, as its now known, shows a steady increase in CO2 concentrations in our air over the past century. Keeling also discovered the seasonal variations of CO2 in the atmosphere.

I thought the biography of the man was quite fascinating. He was a stickler for getting the measurements and the process precisely correct, and his golden rule was “no hanky-panky.

Keeling’s widow said her husband would have been dismayed about how the factual issues had been politicized. “He was a registered Republican,” she said. “He just didn’t think of it as a political issue at all.”

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Science . . . It works, Bitches.

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Please use the comments to demonstrate your own ignorance, lack of scientific knowledge, ability to repeat discredited memes, and lack of respect for empirical data. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are anonymous after all.

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Source:
A Scientist, His Work and a Climate Reckoning
JUSTIN GILLIS
NYT, December 21, 2010
http://www.nytimes.com/2010/12/22/science/earth/22carbon.html

(I reordered this correctly)

Part I

Part II

Part III

Part IV (Check out Jack Black in the background . . .)

Hat tip Russ

Nov Existing Home Sales totaled 4.68mm annualized, below expectations of 4.75mm. With the foreclosure disruption hitting in late Sept, Nov closings were likely influenced by this but it’s still the best level of sales since June and up from 4.43mm in Oct. All regions saw a rise and the gain was led solely by the single family sector. Distressed sales made up 33% of sales, in line with prior months but that may be impacted in the months ahead because of the foreclosure delays. Months supply fell to 9.5 from 10.5, the lowest since June but still remains well above a healthy level of 6 mo’s and some speculate that including shadow inventory, the level is more like 2 yrs. The listed # of homes for sale was 3.71mm, an 8 month low. The median price rose .4% y/o/y. Bottom line, while encouraging that sales are bouncing, they are still near levels last seen in 1997 with a lot more inventory ahead to plough through.

As of late, I have been intrigued by Japan. It is a part of the world that investors seem to detest ignore, despite signs of technical improvement.

I’ve talked about this in the office, and with some of our clients who either own specific Japanese names — or live there. The thought process is Japan is a potential surprise in 2011.

I first spotted this on FusionIQ; The reason was due to it flipping back and forth between a Neutral and a Buy in October. EWJ is a VERY interesting chart — much more so than the Nikkei Dow; EWJ is in a nice uptrend that slipped over its the December 2009 highs earlier this month; It just got over its April 10 highs this week.

Here are 10 Reasons I want to own some Japan for 2011:

10 Reasons to Think About Japan

1. Everyone seems to hates — or just ignore — Japan as an investment; its widely disliked for its bad demographics, aging population, ongoing MULTI-DECADE recession.

2. The chart! Nice uptrend, new highs.

3. Institutionally and on Main Street, Japan is VERY under-owned.

4. The island nation is still the 2nd biggest economy in the world in real (not nominal GDP) dollars; they are a huge exporter, and an industrial powerhouse.

5. Proximity to China: As it grows, Japan has easy access to even cheaper low end manufacturing. The high value engineering and design work stays in Japan, but the toxic smokestack industry moves to the mainland.

6. Improving global economy could help Japan’s export business.

7. If China rescues Europe, Japan benefits.

8. The country has shown long term resilience to misfortune — the only nation to be nuked (2X!)

9. Modern infrastructure, highly educated, excellent work force; forward thinking gadget-head consumers.

10. Consumer prices are anticipated being flat next year — the 1st time after 3 years deflation.

And did I mention I like the chart ? Note how many times EWJ got turned back at $11. What would get me really excited was a high volume breakout over $10.90-11.

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EWJ iShares Japan (10 Year Weekly)

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EWJ iShares Japan (12 Month (Daily)

All charts courtesy of FusionIQ

All the inflationistas – and hyper-inflationistas: You missed your window. Inflation was running rampant during 2001-07, and you somehow seemed to overlook that.

Now, inflation is running at its lowest levels in half a century, and its all you eejits can talk about.

Bloomberg:

“Inflation is also lower than the policy makers’ long-term forecast. The Fed’s preferred price gauge, which is tied to consumer spending and strips out food and energy costs, rose at a 0.5 percent annual pace, the slowest since record-keeping began in 1959, today’s report showed. In their statement last week, Fed officials said inflation measures “have continued to trend downward.”

I hate the core level as a measure of inflation; There is no reason to strip out Food & Energy just because they are volatile.

But keep in mind — the biggest ingredient by cost in a box of Corn Flakes ain’t corn — (not cardboard for the box) it is labor. This is true for many processed products — including food — the biggest input costs are labor.

Consider that as you fight the inflation tape:
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1913-2010 CPI

Click for ginormous charts

Chart via Economagic
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2001-10 CPI

Chart via Economagic

Coincident with a 6% rally thus far in Dec and joining almost every single strategist on Wall St that is bullish for 2011, Investors Intelligence said the number of bullish newsletter writers has reached its highest level since mid Oct ’07, 1 week after the S&P 500 had its all time record high close of 1565. Bulls rose 2 pts to 58.8 (got as high as 62 in Oct ’07) while Bears were little changed at 20.6 (got as low as 19.6 in Oct ’07). The bulls can be right for a period of time so this is not an indicator to go out and sell everything but it does highlight that the likely risk reward in the short term is getting more iffy. Also, ABC confidence rose 2 pts to -41, the best in 6 months. Rounding up, the average gallon of gasoline touched $3.00 ($2.997 to be exact) last night for the 1st time since Oct ’08. The MBA said refi’s fell 24.6% to a 7 month low and purchases fell 2.5%. Seasonally these figures do fall in late Dec but the recent rise in rates is definitely having an impact on refi’s. Following my higher interest rate theme in ’11, Brazil’s central bank raised its ’11 inflation forecast and said rates will rise.

Everybody’s excited today because Bloomberg came out with some “hard” numbers on Kindle device sales for 2010 that exceeded expectations at 8 million units. That’s well ahead of the analyst consensus that Amazon would sell 5 million Kindles this year which would have more than doubled the 2.4 million that sold in 2009.

Of course, Amazon still refuses to verify any of these numbers. That’s a shame. Because even though readers and market watchers are still in the full flush of seeing electronic readers and tablets out-pace all hopes, there are some important questions worth asking about the Kindle device. Like, is there a natural ceiling for Kindle sales? And are we getting close to it?

Before I get there, let’s be clear that I’m talking about the electronic reader itself, not the Kindle service itself. Amazon seems to have won a very important victory this year that’s gone mostly un-noticed. By aggressively building and deploying the Kindle app for every hand-held device imaginable and making sure there was a Kindle app for iPad there on day one, Amazon has migrated Kindle from being device dependent to becoming a full-fledged cloud service.

This isn’t a small detail. Amazon as a device agnostic repository of your reading is a powerful market position. Under the agency pricing model, Amazon takes a 30% toll on all sales through the app. The gross margins are sure to be substantial. The barriers to entry and endowment effect for both competitors and customers will be huge. Down the road, 2010 is likely to be seen not as the year Amazon cut the price of the Kindle below $200 but the year they fended off Apple, Barnes and Noble and Google to become the dominant force in cloud-based reading.

That brings me back to the 8 million Kindle devices Amazon sold this year. That’s nothing to sneeze at. And, at first glance, Kindle device sales seem to be accelerating. Here’s how Bloomberg’s Joseph Galante and Peter Burrows put it:

In October, the company said that sales of the lighter, faster Kindles, which were introduced in July, had surpassed total Kindle sales in the fourth quarter of 2009, the company’s busiest time of year.

But one of the things we think we know about Kindle buyers is that they are heavy readers. That would make sense. The value of the device is greater for the regular book buyer than it is for the occasional reader.

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