Thursday, January 29, 2015

Thursday morning news

Well, the market's still looking weak, mainly because Americans are big sissies who have no pride in their country.

Here's the news:

Bespoke - domestics outperforming internationals in 2015. Well, yeah - because people are selling internationals and buying domestics, cos they can read the USD chart.

Polemic's Pains - three bells in a row and euphoric highs. My new favourite blogger, this guy has some interesting two-steps-ahead-of-Whitey arguments about the market:
I have suggested before that with bond yields at zero any equity paying a dividend can be priced up to near infinity and still give better yield, but now with bond and cash in bank yields going negative we can say that an equity doesn't even have to pay a dividend to give a better yield. How strange it would be if we end up with negative dividend equities where holders are charged each year for the pleasure of owning the stock, but I guess that's only what a company doing countless rights issues is actually doing.

So whilst various quarters remark on the equity valuations being at historic stupid highs, with respect to earnings expectations rolling and dividend payouts, on a yield basis they are very good value. Add to that the fact that the market has been fighting every up move and is not monstrously allocated to equities I can still see those babies moving higher. It ain't over 'til the euphoria is at its highest but the market, like a clubber afraid of missing the fun, is only just fumbling in its pocket for the pill.

This of course applies to European equities more than the US, which is just coming down from its own MDMA (Monstrous Debt Monitising Action) induced high. Considering the mood toward Europe expressed by every US commentator from November to mid-January I would be very surprised if any of them are not longer than 'very short' which suggests there is plenty more Edward the Seconding to be administered to those positions.
Read him, he's great and he even mocks bitcoins.

Bespoke - Dow stocks having a rough January. This post is telling:
24 of the 30 Dow stocks currently have a higher dividend yield than the 1.72% that the 10-Year Treasury Note is yielding. Key Tech stocks in the index like Cisco (CSCO), Intel (INTC), Microsoft (MSFT) and IBM are all yielding at or close to 3% right now. After steep drops for a lot of these largecap names to start the year, these dividends are looking more and more enticing compared to a "risk-free" rate of 1.72%.
So as above, why in the name of god and all that is holy would you buy a 10Y UST and earn under 2% coupon for 10 years, when you can buy a stock yielding 3% today and expose yourself to worldwide growth? I guess it must be because you think there won't be any worldwide growth for ten years? Is that it? Is there a good reason for a risk premium for stocks being 1% above the 10Y?

FT Alphaville - the Fed and the NAIRU. Of course, you could argue that the NAIRU goes lower in a deflationary setting. But that would mean the proper course of action for the Fed is to stay ultra-accommodative til unemployment is low enough to stabilize inflation at 2%, at which point they're setting up to knock all those people out of employment when deflation abates. - mining M&A: private equity can't run away fast enough. And it's all because of you bankers and mining CEOs.

Chronicles of Brodrick - blah blah oil blah blah oil. Yabut seriously lots of interesting perspective here. That production chart is especially interesting, for those who worry about US oil production.

IKN - The Clive is a big meanie. Quote:
Also, Clive Johnson is still an employee of B2Gold and has not been fired as yet, according to our latest information. However Clive, IKN and its burgeoning mailbox can confirm that without a shadow of a doubt you're not as popular in the mining world as you think you are. And you owe apologies, too.
Come on, dude. I'm sure there are equally burgeoning mailboxes out there full of well-considered opinions about you and me, too. Being cunts is what makes us special. If people don't hate you, you're not contributing to the world.

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