Over the past few weeks, we have taken several looks at the duration and intensity of this rally (see this, this and this).
The following chart, from Ron Griess of the Chart Store really puts this into context:
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Excellent take from former Magellan fund manager Peter Lynch:
“If the professional economists can’t predict economies and professional forecasters can’t predict markets, then what chance does the amateur investor have? You know the answer already, which brings me to my own ‘cocktail party’ theory of market forecasting, developed over the years of standing in the middle of living rooms, near punch bowls, listing to what the nearest ten people said about stocks.
In the first stage of an upward market – one that has been down awhile and that nobody expects to rise again – people aren’t talking about stocks. In fact, if they lumber up to ask me what I do for a living, and I answer, ‘I manage an equity mutual fund,’ they nod politely and wander away. If they don’t wander away, then they quickly change the subject to the Celtics game, the upcoming elections, or the weather. Soon they are talking to a nearby dentist about plaque. When ten people would rather talk to a dentist about plaque than to the manager of an equity mutual fund about stocks, it’s likely the market is about to turn up.
In stage two, after I’ve confessed what I do for a living, the new acquaintances linger a bit longer – perhaps long enough to tell me how risky the stock market is – before they move over to talk to the dentist. The cocktail party talk is still more about plaque than about stocks. The market is up 15 percent from stage one, but few are paying attention.
In stage three, with the market up 30 percent from stage one, a crowd of interested parties ignores the dentist and circles around me all evening. A succession of enthusiastic individuals takes me aside to ask what stocks they should buy. Even the dentist is asking me what stocks he should buy. Everybody at the party has put money into one issue or another, and they’re all discussing what’s happened.
In stage four, once again they’re crowded around me – but this time it’s to tell me what stocks I should buy. Even the dentist has three or four tips, and in the next few days I look up his recommendations in the newspaper and they’ve all gone up. When the neighbors tell me what to buy, and then I wish I had taken their advice, it’s a sure sign that the market has reached a top and is due for a tumble.”
-Peter Lynch, One Up On Wall Street
Hat tip Jeff Saut
Higher headline inflation finally showed up in core PPI as it rose .5% m/o/m, the fastest pace since Oct ’08 and the y/o/y core rose 1.6%, matching the highest since Sept ’09. Headline PPI rose .8% m/o/m, in line with expectations and are now up 3.6% y/o/y. Inflation in the pipeline was also robust as intermediate goods prices rose 1.1% m/o/m, 6% y/o/y. Crude goods prices, the 1st stage of production, rose 3.3% for the month after a 6.5% gain in Dec and is now up 10% y/o/y and core crude goods prices are up 25.6% y/o/y. Headline PPI was led by a 6.9% rise in gasoline prices. Food prices rose .3%. The main factor in the core gain was a 1.4% rise in prescription drug prices. Overall, consumer goods prices rose .9% m/o/m and capital equipment rose .3%. With respect to Treasuries and notwithstanding today’s data, their eyes will be on CPI tomorrow to see what pricing power companies have.
Bring on the renters. Jan Housing Starts were well above expectations at 596k annualized vs the est of 539k. The gain though was solely in the multi family category where starts jumped to 183k from 103k. Single family starts actually fell by 4k to 413k, the lowest since May ’09. Single family permits also fell as they did for multi family. With the secular fall underway in the home ownership rate combined with falling vacancies in the apartment sector, multi family building is rightly responding with supply. Starts for single family homes remain expectedly weak and while an impediment to GDP growth, should be welcome considering the still large supply of existing homes for sale.
Jan Industrial Production unexpectedly fell .1% vs the expected rise of .5% but this was partially offset by an upward revision to the Dec data which showed a rise of 1.2% vs the initial reading of up .8%. Utility output, likely due to the winter storms, has been a swing factor over the Dec/Jan timeframe. Utility output rose 4.1% in Dec m/o/m and then fell 1.6% in Jan. Mining also fell .7% in Jan after a rise in Dec. Motor vehicle/parts production was strong, rising 3.2% and machinery and computer/electronics production were up. Capacity Utilization was 76.1% vs 76.2% in Dec and remains still firmly below the long term average of about 80% and is part of the output gap theory of the Fed in keeping their inflation expectations in check, notwithstanding the rising real world market prices now clearly evident.
I just recorded our FusionIQ Market Overview, discussing the S&P 500 (still in bullish channel) NASDAQ (also bullish), Transports (held key near term support), Bank Index (ugly but stabilized), Hang Sang Index (broke down), US Unemployment (improving). Market seems to be setting up for speculative melt up.
Drama (per episode)
Hugh Laurie (House) $400,000+
Christopher Meloni & Mariska Hargitay (Law & Order: SVU) $395,000 (each)
David Caruso (CSI: Miami) $375,000
Marg Helgenberger (CSI) $375,000
Mark Harmon (NCIS) $375,000
Laurence Fishburne (CSI) $350,000
Kyra Sedgwick (The Closer) $350,000
Denis Leary (Rescue Me) $350,000
Gary Sinise (CSI: NY ) $275,000
Patrick Dempsey (Grey’s Anatomy) $250,000
David Boreanaz (Bones) $200,000
Jeffrey Donovan (Burn Notice) $200,000
Julianna Margulies (The Good Wife ) $175,000
Dana Delany (Body of Proof ) $150,000
Lauren Graham (Parenthood) $150,000
Jada Pinkett Smith (HawthoRNe) $150,000
Jimmy Smits (Outlaw) $150,000
LL Cool J (NCIS: Los Angeles) $125,000
Chris O’Donnell (NCIS: Los Angeles) $125,000
Mark Feuerstein (Royal Pains) $125,000
Jason Lee (Memphis Beat) $125,000
Joe Mantegna (Criminal Minds) $125,000
Tom Selleck (Blue Bloods) $125,000
Michael Weatherly (NCIS) $125,000
Matt Bomer (White Collar) $100,000
Nathan Fillion (Castle) $100,000
Thomas Gibson (Criminal Minds) $100,000
Jon Hamm (Mad Men) $100,000
Cole Hauser (Chase) $100,000
Alex O’Loughlin (Hawaii Five-0) $100,000
Timothy Olyphant (Justified ) $100,000
Scott Caan (Hawaii Five-0) $80,000
Angie Harmon (Rizzoli & Isles) $75,000
Anna Paquin (True Blood) $75,000
Blair Underwood (The Event) $75,000
Zachary Levi (Chuck) $60,000
Ian Somerhalder (The Vampire Diaries) $40,000
Shailene Woodley (The Secret Life of the American Teenager) $40,000
Ashley Tisdale (Hellcats) $30,000
Late Night/Talk Syndication (per year)
Oprah Winfrey $315 million
Judge Judy Sheindlin $45 million
David Letterman (The Late Show) $28 million
Jay Leno (The Tonight Show) $25 million
Conan O’Brien (The Conan O’Brien Show) $10 million
Ellen DeGeneres (The Ellen DeGeneres Show) $8 million
Jimmy Kimmel (Jimmy Kimmel Live) $6 million
Chelsea Handler (Chelsea Lately) $3.5 million
George Lopez (Lopez Tonight) $3.5 million
Reality (per year)
Ryan Seacrest (American Idol) $15 million
Joel McHale (The Soup) $2 million
Piers Morgan (America’s Got Talent) $2 million
Kate Gosselin (Kate Plus 8) $250,000 per episode
Nicole “Snooki” Polizzi (Jersey Shore) $30,000 per episode
Comedy (per episode)
Charlie Sheen (Two and a Half Men) $1.25 million
Jon Cryer (Two and a Half Men) $550,000
Marcia Cross (Desperate Housewives) $400,000
Teri Hatcher (Desperate Housewives) $400,000
Felicity Huffman (Desperate Housewives) $400,000
Eva Longoria Parker (Desperate Housewives) $400,000
Dan Castellaneta (The Simpsons) $400,000
Julie Kavner (The Simpsons) $400,000
Tina Fey (30 Rock) $350,000
Jeremy Piven (Entourage) $350,000
Steve Carell (The Office) $297,000
Angus T. Jones (Two and a Half Men) $250,000
David Duchovny (Californication) $200,000
Kevin Dillon (Entourage) $200,000
Adrian Grenier (Entourage) $200,000
Miranda Cosgrove (iCarly) $180,000
Edie Falco (Nurse Jackie) $175,000
William Shatner ($#*! My Dad Says) $150,000
David Spade (Rules of Engagement) $150,000
Ed O’Neill (Modern Family) $100,000
Patrick Warburton (Rules of Engagement) $85,000
Betty White (Hot in Cleveland) $75,000
Kaley Cuoco (The Big Bang Theory) $60,000
Johnny Galecki (The Big Bang Theory) $60,000
Ty Burrell (Modern Family) $50,000
Jane Lynch (Glee) $50,000
Jim Parsons (The Big Bang Theory) $40,000
Matthew Morrison (Glee) $30,000
Selena Gomez (Wizards of Waverly Place) $30,000
Dylan and Cole Sprouse (The Suite Life of Zack and Cody) $20,000 (each)
Rico Rodriguez (Modern Family) $15,000
News (per year)
Matt Lauer (Today) $16 million +
Katie Couric (CBS) $15 million
Brian Williams (NBC) $12.5 million
Diane Sawyer (ABC) $12 million
Meredith Vieira (Today) $11 million
Bill O’Reilly (Fox News) $10 million
George Stephanopoulos (ABC) $8 million
Keith Olbermann (MSNBC) $7 million
Shepard Smith (Fox News) $7 million
Wolf Blitzer (CNN) $3 million
Christiane Amanpour (ABC) $2 million
Lawrence O’Donnell (MSNBC) $2 million
Eliot Spitzer (CNN) $500,000
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Hat tip Flowing Data
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Source:
Who Are TV’s Top Earners?
Stephen Battaglio
TV Guide August 11, 2010 http://tv.yahoo.com/blog/who-are-tvs-top-earners–1459
Washington’s Blog strives to provide real-time, well-researched and actionable information. George – the head writer at Washington’s Blog – is a busy professional and a former adjunct professor.
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Source of the Iraqi WMD Claims Comes Clean … And Shows that the American and British Governments Willfully Manipulated the Evidence
As I’ve repeatedly pointed out, everyone knew that Iraq didn’t have WMDs.
The Guardian just interviewed the the infamous “Curveball” who provided false evidence about Iraq’s weapons of mass destruction. Curveball admitted that he knowingly lied about WMDs, in order to topple Saddam Hussein. The Guardian has a series notes in a series of articles out today on the issue which reinforce the conclusion that the American and British governments deliberately manipulated the evidence to justify the Iraqi invasion.
In one article, the Guardian notes :
The former head of the CIA in Europe … Tyler Drumheller, who says he warned the head of the US intelligence agency before the 2003 invasion of Iraq that Curveball might be a liar ….
***
“My impression was always that his reporting was done in January and February,” said Drumheller, adding that he had been warned well before 2003 by his counterparts in the German secret service (BND) that Curveball might not be reliable. “We didn’t know if it was true. We knew there were real problems with it and there were inconsistencies.”
He passed on this information to the head of the CIA, George Tenet, he said, and yet Curveball’s testimony still made it into Colin Powell’s famous February 2003 speech justifying an invasion. “Right up to the night of Powell’s speech, I said, don’t use that German reporting because there’s a problem with that,” said Drumheller.
***
He recalled a conversation he had with John McLaughlin, then the CIA’s deputy director. “The week before the speech, I talked to the Deputy McLaughlin, and someone says to him, ‘Tyler’s worried that Curveball might be a fabricator.
“And McLaughlin said, ‘Oh, I hope not, because this is really all we have.’ And I said, and I’ve got to be honest with you, I said: ‘You’ve got to be kidding? his is all we have!’”
In a second article, the Guardian reports:
A senior aide to Colin Powell at the time of his pivotal speech to the United Nations said on Tuesday that Curveball’s admission raised questions about the CIA’s role.
Lawrence Wilkerson, who was chief of staff to the then US secretary of state Powell in the build-up to the invasion, said the lies of Rafid Ahmed Alwan al-Janabi, also known by the codename Curveball, raised questions about how the CIA had briefed Powell ahead of his crucial speech to the UN security council presenting the case for war.
In particular, why did the CIA’s then director George Tenet and his deputy John McLaughlin believe the claim by Curveball, “and convey that to Powell even though the CIA’s own European chief Tyler Drumheller had already raised serious doubts.
“And why did Tenet and McLaughlin portray the presence of mobile biological labs in Iraq to the secretary of state with a degree of conviction bordering on passionate, soul-felt certainty?”
***
“This is very damning testimony and an indictment of the work the US put into the pre-war intelligence. The decision to go to war, to spend billions on sending hundreds of thousands of soldiers to the region, was in large part taken on the basis of an admitted liar,” said Ashwin Madia, head of an organisation of progressive US military veterans, VoteVets.
***
Judith Yaphe, a former CIA analyst on Iraq now at the National Defence University in Washington, said … “There were people at the time who doubted what Curveball was saying, but if the administration doesn’t want to believe it, it doesn’t make much difference.”
With Jan PPI out today and CPI Thursday, this afternoon the minutes from the Jan FOMC meeting will reveal their thoughts of 3 weeks ago on the impact commodity inflation is or is not having on their inflation outlook. After yesterday’s 4% CPI print y/o/y in the UK, BoE Gov King said because he still expects inflation to slowdown in the medium term, he’s not in a rush to raise rates from the current historical low of .5%. Jan UK jobless claims did unexpectedly rise and it’s this concern with the economy that has him very reluctant to raise rates even as higher inflation poses its own threats. In the US, as the avg 30 yr mortgage rate last week was above 5%, the MBA said refi’s fell 11.4% to the lowest since July ’09 and purchases fell 5.9%, near the lowest since Oct. II: Bulls 52.2 v 53.4 Bears 19.6 v 23.3, .5 pt from lowest since April and those expecting a Correction (still a bull who wants to buy dip) rose to 28.2 from 23.3, the most since Nov.
Expat writes:
I am interested in your opinion and advice. I traded oil for eighteen years before retiring to the south of France where I tend my orange trees and teach at two business schools in the area. Since I know pretty much nothing, I am forced to teach the little I know, which is commodity trading.
I have canvassed my friends and enemies in the business and read good and bad books and articles by experts, so-called experts, and outright frauds. I have plenty of information on fundamentals and the mechanics of markets, but it’s harder to teach students how traders think.
So, would you impart a few aphorisms, tips, or vapid advice . . .
Thanks, Chris, I have been meaning to pull all of these together in one place, and you motivated me to get off my bum and do so.
Start with these various rules:
• Livermores Seven Trading Lessons
• Bob Farrell’s 10 Rules for Investing
• John Murphy’s Ten Laws of Technical Trading
• Art Huprich’s Market Truisms and Axioms
“They had to know. But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ”
-Bernie Madoff from Prison
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The first interview for publication since being arrested in December 2008, Bernie Madoff speaks with the NYT. It is a bizarre and fascinating.
One would expect a longer interview with full Q&A to be forthcoming . . .
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click for interactive timeline
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Source:
From Prison, Madoff Says Banks ‘Had to Know’ of Fraud
DIANA B. HENRIQUES
NYT, February 15, 2011
http://www.nytimes.com/2011/02/16/business/madoff-prison-interview.html
"Markets can remain irrational longer than you can remain solvent." —John Maynard Keynes
After 3 quarters in a row that averaged just 1.2%, Q4 GDP grew 2.8%, a touch below expectations of 3.0% BUT Nominal GDP grew well below forecasts. Because the price deflator was up just .4% vs the estimate of 1.9%, Nominal GDP was up 3.2% vs the estimate of 4.9%. Personal Consumption rose 2.0% vs the forecast of 2.4%. Fixed Investment rose 3.3% helped by a 5.2% increase in equipment and software spending and residential construction rose by 10.9%. Trade was a slight drag on GDP growth and government spending was as well led by a 12.5% decline on national...
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