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Writings on Wall St

~ A blog about financial markets, the economy and other topical issues of the day

Writings on Wall St

Monthly Archives: September 2012

Friday Morning Reads: 2 reasons to expect growth to increase

28 Friday Sep 2012

Posted by jcinvests in Uncategorized

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Some things I’m reading this morning:

  • Why do investors keep listening to Meredith Whitney (WSJ)
  • Two reason to expect economic growth to increase (CalculatedRisk)
  • On Wall Street trading desks, here’s what they’re talking about right now (BusinessInsider)
  • Charlie Gasparino writes that business leaders are concerned that Romney is muzzling Paul Ryan (NYP); see also, evidence for concern (MSNBC)
  • Erin Callan, the Lehman Bros CFO, who told us everything is fine, is moving to FLA (DealBook)
  • The craziest Cheers anecdote involving Ted Danson & Woody Harrelson (VanityFair)
  •  Rarely seen Rolling Stones film resurfacing in expanded form (NYT)
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More on Housing

27 Thursday Sep 2012

Posted by jcinvests in Uncategorized

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Two great links to add to yesterday’s discussion on housing.  The first is an interactive chart based on the Case-Shiller 20-city Composite Home Price Index.  The chart goes back to 2000.

Housing’s Rise & Fall in 20 Cities-INTERACTIVE CHART

The second is a short, but data-rich article by Cullen Roche of Pragmatic Capitalism.  He makes the case, and I completely agree, that the fundamentals in the residential real estate market are improving, but that real estate remains mired in a deep slump.

More on that “housing recovery”

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Thursday Morning Reads: moon river covers

27 Thursday Sep 2012

Posted by jcinvests in Uncategorized

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Some things I’m reading this morning:

  • U.S. stock market futures are pointing up ahead of Spanish budget plan (Marketwatch)
  • Sheila Bair, in new book, faults Obama & Bush advisers during financial crisis (WashingtonPost)
  • This video of the Madrid protest should make you scared (BusinessInsider)
  • CEO confidence plummets on U.S. outlook (24/7WallStreet)
  • This much needed pullback is complete (ArmoTrader)
  • NY Times David Pogue rips iPhone 5 map app (NYT)
  • Wisconsin ad campaign aimed at Chicago & Twin Cities businesses (ChicagoTribune)
  • VIX for dummies–warning, Technically WONKISH (MarketSciBlog)
  • Andy Williams died two nights ago. I must admit a certain fondness for anything Moon River. Here’s the original plus an eclectic group of others (including REM, Louis Armstrong & The Killers) covering the classic hit (Buzzfeed)
  • Arnold’s Blueprint, 30 for 30 documentary short on Arnold Schwarzenegger (Grantland)

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Chicago population growth, house prices and the Merch Mart

26 Wednesday Sep 2012

Posted by jcinvests in Uncategorized

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Some trends that might be of interest for my Chicago clients and readers:

  • Of the 15 most populous cities in the U.S., Chicago was one of only two cities with a negative population growth rate during the 2000s (w/ a growth rate of -6.9%; Detroit was the other w/ a -25.0% growth rate);
  • The slower population growth rate was a contributor to a smaller residential housing bubble in Chicago as compared to other major U.S. cities;
  • Yesterday’s release of the Case-Shiller Home Price Index data showed Chicago as one of only four cities in the 20-city composite that had a negative year-over-year (Y/Y) change in home prices.  Atlanta’s housing market is still a mess as they came in with a 10% decline, while Las Vegas’ Y/Y price change was not surprisingly also worse than Chicago’s.
  • Even though the bubble never became quite as large in Chicago on a relative basis, the trend, where Chicago’s Y/Y price changes do not improve as much as the broader 20-city composite has continued uninterrupted since April 2009.
  • That leaves Chicago housing down 30.7% from the peak in 2006 vs. the 20-city composite which is basically the same at down 30.0% from the 2006 peak.

Just like across the country, the employment situation will dictate how quickly the Chicago housing market recovers. On that front, today’s NY Times has an excellent article about how Chicago’s Merchandise Mart is being revitalized to attract technology companies and is becoming an aspiring rival to Silicon Valley (link to the article here).

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Wednesday Morning Reads: the QE hangover

26 Wednesday Sep 2012

Posted by jcinvests in Uncategorized

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Some things I’m reading this morning:

  • The QE hangover (MarketBeat)
  • S&P works off overbought levels (Bespoke)
  • Barry Ritholtz of Fusion IQ on stocks outlook (Bloomberg)
  • Home prices rise again, this time on the low end (NYT)
  • Eurozone as it happened: riot police clash w/ anti-austerity protesters in Madrid (Guardian)
  • On Keystone, environmentalists lose by winning (Bloomberg)
  • Cellphones are eating the family budget (WSJ)
  • Why exit is an option for Germany (FT)
  • White Sox announcer Hawk Harrelson named most biased announcer in baseball (WSJ)
  • 32 photos of NFL coaches yelling at scab refs (Deadspin)
  • I’m not Jay Cutler’s biggest fan, but Chris Chelios is an idiot (TMZ)

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Has Apple Peaked?

25 Tuesday Sep 2012

Posted by jcinvests in Uncategorized

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The list of tech companies that have lost their mojo is long.  Think MicroSoft, Research in Motion (Blackberry), Yahoo and Netscape just to mention a few.  Developments move at warp speed in the tech world.  Success breeds complacency.  MicroSoft’s “lost decade” could serve as business-school case study on the pitfalls of success.

That’s why Joe Nocera’s article in the last weekend’s NY Times is a must read.  The article, titled Has Apple Peaked? , questions the future growth prospects of Apple.  Nocera argues that the iPhone 5’s glitch with its new map application is a sign of more bad things to come.  This wouldn’t have happened, Nocera says, with Steve Jobs at the helm.  But even when Jobs was running the company, Nocera notes that Apple was becoming more territorial, while not focusing on product development and marketing.  He uses the Samsung lawsuit as proof.

On the latter, I find Nocera’s argument ridiculous.  The lawyers and the product engineers/marketers can work in parallel.  Fighting for your patents does not preclude everything else.  In fact, if successful in court like Apple was, then it only provides a cushion in other parts of the business.

In general, I say Apple is a must-owned stock for any investment portfolio with the size and risk profile to necessitate individual stock ownership.  Beyond just a holding, it should be an overweight.   The hysteria surrounding the products still has momentum.  There are several other needle moving new product initiatives in the 5-year plan developed by Jobs.  The next product launches will easily snap into the vertical integration that only continues to strengthen with each existing component sold.  Furthermore, the China market is still largely untapped and products such as the PC still only command a market share of only around 12%, providing plenty of upside.

This doesn’t even include the fundamentals of the stock.  Here, the numbers speak for themselves.  A P/E ratio of 15 and a forward P/E ratio of 12 (these types of valuation ratios are comparable to stable and conservative “value” companies such as Healthcare stocks), operating margins in the 35% range that are unheard of, $52 billion in cash and other short term investments on the balance sheet, growth rate in earnings of 60% over the past three years, and a PEG ratio of 0.6 (anything below 1 is great).

Nocera presents some interesting points and the Apple story will peak some day, but not yet.

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Tuesday Morning Reads: case-shiller shows gains

25 Tuesday Sep 2012

Posted by jcinvests in Uncategorized

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Some things I’m reading this morning:

  • Just released S&P Case-Shiller Home Price Index shows gains in July (S&P)
  • Caterpillar cuts 2015 outlook as mining spending falls (Bloomberg)
  • Jeffrey Gundlach in this weeks Barron’s CEO spotlight (Barrons)
  • Chicago Fed points to slowing economy (PragCap)
  • Retail investors jump into syndicated loans (SoberLook)
  • SAC Capital boosts stakes in Magellan Health Services & Bill Barrety Corp (MarketFolly)
  • Stagnating economic indicators & moderating manufacturing are really concerning (BonddadBlog)
  • OFFICIALLY LOST: Packers fall to Seahawks, refs on controversial touchdown call (MilwaukeeJS)
  • Five Guys voted favorite burger chain (LATimes)
  • Those Winkelvoss twins make big home purchase (ZorillaCity)

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Monday Morning Reads: foxconn riots

24 Monday Sep 2012

Posted by jcinvests in Uncategorized

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Some things I’m reading this morning:

  • Economic schedule for this week (CalculatedRisk)
  • Riot breaks out a Foxconn–Chinese plant that manufactures Apple products (AolTech)
  • Apple sells out of iPhone 5; sales top 5MM (Reuters)
  • The biggest myth in the stock market today (BusinessInsider)
  • Excess Bullishness (CapitalObserver)
  • ECB in panic (Telegraph)
  • Obama or Romney, stock market loses 20% by 2016 (Marketwatch)
  • Chinese ‘stimulus’ evaporates (MacroBusiness)
  • How the song ‘Seven Nation Army’ conquered the sports world (Deadspin)
  • Buying this thing will make me happy (McSweeney’s)

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Enjoy your weekend…part II of II…the beatles

21 Friday Sep 2012

Posted by jcinvests in Uncategorized

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The market neither advanced nor retreated during the week.  Which actually is constructive given the run it’s been on.

It’s almost time for the weekend.  So, here’s a nice piece by James Altucher about the Beatles “last concert”.  Be sure you click on the image of the Beatles to view the video.

Have a nice weekend!

Competence & the Beatles Last Concert

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Enjoy your weekend…part I of II…Robert Rubin

21 Friday Sep 2012

Posted by jcinvests in Uncategorized

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I have two excellent long form reads for you guys for the weekend.  The first, here below, is more of a business-related topic.  The link later will be music-related.  Here’s the set-up:

So many people and organizations were complicit in causing this financial crisis of the past five years that it’s difficult to place blame on any one person or group.  But, I’ve maintained for years now that Robert Rubin and Alan Greenspan are within the top five contributors.  In fact, I’d argue that they’re #1 and #2.

Robert Rubin was the Treasury Secretary under Bill Clinton.  He was responsible for the repeal of the Glass-Steagall Act, the law that prohibited depository banks to be separate from investment banks.  Basically, the law prevented banks from taking deposits and using those funds for riskier investments.

After the Clinton years, he then went on to a very senior role at Citigroup where he encouraged the bank to make massively leveraged bets that would ultimately unravel badly, causing hundreds of billions in taxpayer dollars needed to save the institution.  During this time Rubin pocketed over $120 million!

Below, is the complete story written in a wonderful narrative by William Cohan.

RETHINKING ROBERT RUBIN

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Writings on Wall St is a blog about financial markets and the economy. Chris Lynn is a Chicago & Milwaukee based Registered Investment Advisor (RIA).

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RSS Writings on Wall St

  • 2018–the year in markets December 28, 2018
  • What’s all the fuss? Higher rates, the Fed & the stock market October 15, 2018
  • market sell off February 6, 2018
  • 3rd Quarter Market Update October 3, 2017
  • Tuesday Morning Reads–Wall Street hits another record high October 3, 2017
  • Brexit June 24, 2016
  • Fiduciary Standard March 11, 2016
  • Gut Wrenching Drawdown February 11, 2016
  • Monday Morning Reads–are we headed for recession? January 25, 2016
  • Trying to comprehend the stock market’s drop? January 21, 2016
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Writings on Wall St is a blog about financial markets and the economy. Chris Lynn is a Chicago & Milwaukee based Registered Investment Advisor (RIA).

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