Wednesday, May 30, 2007

The China syndrome

The China syndrome; the blind faith in the communist countries stock market’s ability to continue to defy all odds and grow without any connection to earnings and cash flow. Well China isn’t the only emerging market that to my mind has grown disproportionately in the last 7 years. While the US economy has increased by 50% in size our stock market has barely kept up with inflation, at the same time emerging markets have flourished and generated outsized gains. A melt down in the emerging markets should be no surprise to anyone who reads this blog on a regular basis, we all know its coming and its just a matter of when. The issue is did the gains in these emerging markets dull investors ability to understand the inherent risks involved in emerging market investing? If investors have granted to much credibility to the quality and stability of these markets we might be in for a nasty surprise. I continue to feel the cat is already out of the bag and the underlining Chinese market has been correcting for some time , so even a significant correction may at this point have little consequence to out side investors.As they say it is hard for me to believe the most anticipated bursting of the China Equity bubble will have the impact of all the dire warnings .

Tuesday, May 29, 2007

news news news

Commercial building is hot in Texas, Florida, California, New York and other parts of the West Coast, Midwest and Northeast, industry officials say. Spending on nonresidential construction was up nearly 14 percent during the first three months of 2007 from last year, according to the U.S. Census Bureau. (AP)

what some here describe as the first war in cyberspace, a three-week battle that forced the Estonian authorities to defend their small country from a data flood they say was set off by orders from Russia or ethnic Russian sources in retaliation for the removal of the statue. There are still minor disruptions. (Herald Tribune)

CARACAS (AFP) - President Hugo Chavez's clampdown on opposition television stations widened Monday as police used rubber bullets and tear gas on demonstrators protesting what they called an attack on free speech.

WASHINGTON (MarketWatch) -- U.S. home prices fell 1.4% in the first quarter compared with a year earlier, the first year-over-year decline since 1991, according to the S&P/Case-Shiller home price index released Tuesday. A year ago, home prices were rising at an 11.5% pace. The 10-city price index fell 1.9% year-on-year through March, while the 20-city index dropped 1.4%. Thirteen of 20 cities have seen falling prices in the past year, led by Detroit and San Diego. Home prices rose 10% in Seattle. The national decline "is reaffirmation of the pullback in the U.S. residential real estate market," said Robert Shiller, chief economist for MacroMarkets LLC, and co-inventor of the index.

May 29 (Bloomberg) -- A tax-cut war is spreading across Europe as leaders of the continent's biggest economies give up criticizing smaller neighbors for slashing business rates and decide to join them instead.

May 29 (Bloomberg) -- Colorado and Utah have as much oil as Saudi Arabia, Iran, Iraq, Venezuela, Nigeria, Kuwait, Libya, Angola, Algeria, Indonesia, Qatar and the United Arab Emirates combined.

Friday, May 25, 2007

high risk borrowers and speculators.

Its not that I don’t see how the Real estate slowdown can spill over and crimp the economy as a whole, it’s just that in the past when real estate slowed down interest rates and inflation were higher and raising. I continue to think that with an environment of stable rates and low inflation the damage will be confined mostly to high risk borrowers and speculators.

Wednesday, May 23, 2007

in the news

House Minority Leader John Boehner, speaking to a private gathering of Republican activists last night, called the Senate's immigration compromise bill a "piece of shit" but said that he had promised President Bush earlier in the day that he would let his teeth be a barrier to such thoughts in public. (the Hot Line)

The Chinese government is to use $3bn of its vast foreign exchange reserves to buy a 9.9 per cent stake in Blackstone, the US buy-out fund, in an unprecedented move that underlines Beijing’s desire to tap into the private equity boom. (FT)

Eric Schmidt, Google’s chief executive, said gathering more personal data was a key way for Google to expand and the company believes that is the logical extension of its stated mission to organise the world’s information. (FT)

WASHINGTON--With only months left on a moratorium restricting state governments from taxing Internet access, the U.S. House of Representatives on Tuesday began a debate over whether the ban should be made permanent or allowed to lapse. (CNET

Climate change will be considered a joke in five years time, meteorologist Augie Auer told the annual meeting of Mid Canterbury Federated Farmers in Ashburton this week. (By ANDREW SWALLOW - The Timaru Herald)

CARACAS (Reuters) - Tens of thousands of protesters on Saturday denounced President Hugo Chavez's plans to close an opposition television channel, accusing their leader of maiming Venezuelan democracy as he forges a socialist state.

Jesse Adam Macbeth, 23, formerly of Phoenix, garnered attention on blogs and in some alternative media after he began claiming in 2005 to have been awarded a Purple Heart for his service, which he said included slaughtering innocents in a Fallujah mosque. His story was contradicted by his discharge form, showing that he was kicked out of the Army after six weeks at Fort Benning, Ga., in 2003 because of his “entry level performance and conduct.” (AP)

Our $99 concert tickets, which I am sure will be printed on recycled paper, do not go towards any concrete measures to halt global warming, or to repair any damage done to the Earth. The proceeds don't go directly to purchasing solar batteries for anyone or subsidising public transport anywhere. The event just goes to raising awareness. And right now? That's not only a waste of time but a gross indulgence. It's just a green rubber bracelet to string on your arm next to the white rubber band that will magically make poverty history, and the yellow one that cures cancer. (theage.comau)

Tuesday, May 22, 2007

Only 5 stocks in the Dow Jones Industrial (BA, CAT, MO, UTX and XOM) have made substantial gains during the past 7 years with a return of 100% or more

Since the market highs of 2000 only 5 Dow Jones Industrials Stocks have made significant new highs over the last 7 years .


Was 44.00
Is now 96.62


Was 41.88
Is now 82.94


Was 25.97
Is now 74.72


Was 18.20
Is now 69.75


Was 31.91
Is now 69.10

Monday, May 21, 2007

Inflection point

The market rally last week seemed a bit thin, with weaker breath and volume and struck me more as a consolidation week, not really resolving any market direction questions. The S&P 500 is looking to break out to an all time high. If it can push to new highs with stronger volume and breath, this would signal substantially higher markets in my view, however past pushes by major market indexes to new highs have been accompanied by significant short term consolidation periods.

In the long run I am very bullish, but in the short run we are at one of those points that could set the tone of the market for the next several months. My bet is a big push in volume and a move to the upside. Low risk investors may do well to keep their powder dry or take some gains. Longer term and high risk investors should use any setback as a buying opportunity. A move upward accompanied by significantly higher volume would be a very bullish signal, continued muddling along under low volume would suggest more time is needed for bullish technical formations to develop.

Friday, May 18, 2007

Here we go again More Consumer Confidence Bull

US Consumer confidence seemed to surprise everyone for being stronger than expected. Again as I have said be for in this modern era with all this information technology .It seems rather odd that polling peoples buying opinions is a better gauge than consumers easily measured real buying habits. Most major retailers could tell you by the minute how much of a particular good is sold so at this point I can only think that easily manipulated consumer confidence surveys are just another symptom of lazy journalism and the agenda driven news epidemic. The economy is far stronger than the consensus is crediting it for. Consumer spending has a certain predictable cyclicality to it and the weather can force significant changes in those patterns. Every time there’s been a slow down of any kind in spending in the last 40 years economist have called for a recession. The old joke is that economist’s have called 9 of the last 2 recessions and are always looking for the 10th.

Monday, May 14, 2007

When to sell and undreperforming Mutual Fund ?

Did you know the average top rated mutual fund can have periods of three consecutive years of underperformance in a ten year period?

Warren Buffett a man of the people always looking out for the little guy

Wow do I love Warren Buffett a man of the people always looking out for the little guy against big bad Wall Street. The man who consistently supports the inheritance tax and most other taxes on the middle class, because he knows full well how to spend your money better than you do ,has suddenly decided to oppose the new proposed landing tax on private jets .Why so ,the increase in private jet landing fees would be used to offset a decrease in landing fees for commercial airlines ,but Mr. Buffet doesn’t want to pay the increased fees for his private jet ,hmmm private jet but doesn’t the man of the people live in the same house and drove the same car since before he came one of the richest men in the world, yea right .

Saturday, May 12, 2007

Sign Up Today !

If you would like to get on the "one small voice" email list a regular email blast please submit your email to

Friday, May 11, 2007

Weak retail maybe its just "global warming"?

There is a lot made the recent slow down in retail spending, folks did you forget it rained for 7 straight days causing flooding throughout the north east ? In the short run the weather and higher gas prices can affect retails sales. I am also sure that States like New Jersey with their continued tax increases put a damper on retail cheer as well. Yes folks Taxes raise costs, increased cost slow demand (econ 101). My bet would be that lower retail sales is just a seasonal issue and not the beginning of something more sinister like the “R” word (recession). However, gas prices fluctuate up and down ,but taxes have a tendency to only move higher ,so if we were to see sustained tax increases for some time it would have very negative consequences on economic growth.The weather is and has always been the weather and as they say the, "wind blows all over the place" so from time to time mother nature will let you know whos still boss. The weak housing market is also considered a culprit of weaker retail sales, again did I mention increases in property taxes? The jury is still out as to the effect of a major down turn in housing ,my feeling is that the those that participated in excesses are going to feel the most pain and that this wont spark a national malise.

Wednesday, May 09, 2007

FED Watch.........................

Looks like the market is on FED watch ,I am not expecting much either way Baring any major surprise event interest rates should remain stable for most of the year .

Monday, May 07, 2007

The average return in the Dow during that time for the year following a Mid Term Election Year has been an amazing 15.7%

Yearly Return of the Dow since 1943 following a Mid Term Election Year


1943 up 13.8 %

1947 up 2.2 %

1951 up 14.4 %

1955 up 20.8 %

1959 up 16.4 %

1963 up 17 %

1967 up 15.2 %

1971 up 6.7 %

1975 up 38.3 %

1979 up 4.2 %

1983 up 20.3%

1987 up 2.3 %

1991 up 20.3 %

1995 up 33.5 %

1999 up 25.2 %

2003 up 25.3 %

in the news..................

Conservative candidate Nicolas Sarkozy has won the hotly-contested French presidential election. The final count gave Mr Sarkozy 53.06%, compared with 46.94% for socialist Segolene Royal, with turnout at 85%. (BBC)

Ballmer may be about to follow up on his pledge. Microsoft, the world's biggest software maker, has held talks with Yahoo! Inc. about a partnership to develop Web search and advertising programs to fight Google, people briefed on the discussions said. That would help remedy what Mehdi says is his one regret in the past year. (Bloomberg)

The record $188 billion of LBOs announced in the first quarter are fueling U.S. investigations of insider trading. Prosecutors charged a Credit Suisse Group investment banker with leaking tips in about nine takeovers on May 3, the second major bust of the year. Seven of the 11 insider lawsuits filed by the SEC this year involve options. (Bloomberg)

Warren Buffett on Sunday said the $5bn hostile bid for Dow Jones by Rupert Murdoch’s News Corp is part of a trend that will see an increasing number of newspapers owned by tycoons motivated by more than financial returns.(FT)

“Climate’s always been changing and it’s been changing rapidly at various times, and so something was making it change in the past,” he told us in an interview this past winter. “Before there were enough people to make any difference at all, two million years ago, nobody was changing the climate, yet the climate was changing, okay?” (Reid A. Bryson holds the 30th PhD in Meteorology granted in the history of American education. Emeritus Professor and founding chairman of the University of Wisconsin Department of Meteorology—now the Department of Oceanic and Atmospheric Sciences)

Wednesday, May 02, 2007

Sell in May and go away ...not so fast

Sell in May and go away ,well maybe, if Crude Oil breaks $68 a barrel then yes but if the resistance holds I would not bet the ranch. The market has exhibited and inverse relationship to the price of crude for some time .Merger activity, over extended foreign markets, extreme bearishness and the lack luster under performance of US markets since March 2000 couple with good over all economic performance all signal it might be time for a catch up rally . By catch up I mean the DOW Jones historically has returned around 11% a year, this would put the DOW Jones somewhere north of 24,000 at this juncture. Unlike many of my Elliot Wave compatriots I fail to see any bullishness at all, in fact in the last several years I have seen a total lack of faith in the markets ability to give even nominal real returns, with many individual investors throwing in the towel. The general political and social predisposition is that of a negative malaise, with doom and gloom being the order of the day and a growing dooms day cult of “global warming” gaining ground with a religious fervor. This brings even a older Wall Street saying ,” when everyone knows something it always wrong” .