Debt the only excess in US?

Lawerence Fuller (no relation) often makes great summary statements around macro data.  i find his weekly updates mandatory reading … in this installment, he made two things that caught me

  1. US job growth is bound to coastal areas with technology businesses
  2. US debt across all debtors is the key excess; which means as rates (if they do) increase materially, we will have fall ou

The geographic divergence of job growth, the types of jobs and their impact on other industries as Lawerence points out will be something to watch carefull and a position / observation to surely validate

https://seekingalpha.com/article/4102466-endless-expansion

Weekly Update, August 27, 2017

  • Doug Short’s weekly SPX graph –
  • I still think the transports are a valuable indicator – does not matter where the goods were purchased (inside bricks or inside bytes), supply chain transportation needs to deliver the goods.  My take away is that there is no HUGE good news, but there is also an absence of bad news.  Report – I really like data visualizations that put multiple year slices across same seasonality; for example, http://econintersect.com/images/z%20truck1.PNG?v=34
  • Not much immediate value to this visualization, but interesting nonetheless  – is the key variable, the capital required for the business?  That premise held until Lam Research, which is fairly capital intense (Semi tools)
  • Jeff Miller’s Weekly indicator dashboard – the most striking data pattern is still the 10yr and anticipated inflation … really runs counter to the ‘expansion and higher rates’ narrative
  • Another very interesting graphic from Jeff Miller – take a look at the 2050 forecast and notice the current developed countries drop from the list, e.g., Russia, Japan, as well as the rise of Nigeria
  • Here is a new author (referenced  by Jeff Miller) with an interesting statement that reflects some of my thinking about Europe:
    • “What’s happening is that we’ve gone from a period where the strong dollar was distorting corporate earnings to now where the weak dollar is helping the bottom line. It comes down to this: Europe’s economy is trailing by about three years. All of what Mr. Draghi is doing, and has been doing, comes largely from Mr. Bernanke’s playbook.”
    • The full report is here:  http://www.crossingwallstreet.com/archives/2017/08/cws-market-review-august-25-2017.html
  • For beginner FAST graph users, Chuck’s review of NVDIA is a treat https://seekingalpha.com/article/4101039-nvidia-forecast-profits-cash-flow-prices
    • I still have not taken a stance on NVDA … i am not a buyer at these levels, and cannot quite cross the chasm to a short.
  • A push for a more negative stance on US equities … this parallels my thinking and hence why i am ‘more or less’ looking for long positions in EU or Asia and shorts in US  https://seekingalpha.com/article/4102119-riding-storm
  • Another beat on the drum, but this concept is worth some thought … can an ETF be more liquid than the underlying assets?  Maybe in minutes, but not longer would be my thought https://seekingalpha.com/article/4102097-canary-watch
  • An update from SA author “Rose” https://seekingalpha.com/article/4102054-84-stock-portfolio-oh-buy-evaluation-process i love her methodical and easy to understand approach; i just do not see how she keeps clarity on 84 positions and watch lists.  I have less than 50 entries in both buckets and find myself superficially understanding more than i expect.
  • A new idea for non-taxed account https://seekingalpha.com/article/4102053-pattern-energy-wind-back – i have not done due diligence yet, but it has surfaced at the top of US longs
  • Morningstar on the ‘herd’ http://beta.morningstar.com/articles/822654/our-ultimate-stockpickers-top-10-highconviction-an.html

Commentary

  • My bias is short US, long EU and Asia (way more value-careful in Asia) though i am incredibly cautious – with >15% cash in accounts that typically would be <3%.
  • My vulture, scavenger investor personna is out in force watching for others’ dramatic exaggerations; even as a trader, e.g., last fortnight’s DSW trade
  • After increasing CSCO position recently, GE is back in my radar as a short term (1-3 years) opportunity.  Just seems that the pressure lower exceeds reality given GE business model of large capital intensive sales that follow with support and services reocurring revenue.  That revenue analysis i have yet to see carefully done.

DSW bet paid off

I had a funny feeling (gut check) that DSW earnings could not be worse than what Friday’s price reflected, so i took a small speculative position.  This morning, I sold out the position at $19.00 after purchasing at $15.85 … a 19.8% gain in 3 days.  Ok, i was a super chicken and did a very small amount to test out the Robinhood platform.  But DSW is worth watching.  My first experience w/ Robinhood was not overwhelmingly positive, but i will continue testing it out.

Weekly Update, Aug 20, 2017

  • Brian Gilmartin’s analyses are almost always worth reading, and this very short one had a very troubling line – https://seekingalpha.com/article/4100520-russell-2000-teetering-edge  
    • “An interesting fact was thrown out from the panel – from Jason, Chris Verrone, Rissmiller, et. al.: approximately 1/3rd of the Russell 2000 components are now unprofitable? The percentage could be higher, but I also could have heard wrong too.”
    • This got my attention.  If accurate, it feels too much like 1999 for me.
  • Another piece from Brian, that i cannot quite my head around.  Basically he is saying that based on S&P earnigns yield, the 10yr Treasury could increase 100% and still be the lesser value investment.  I was thinking that a 10yr just over 3% would attract my conservatively invested funds;  I could be way off here. https://seekingalpha.com/article/4100466-s-and-p-500-earnings-yield-5_70-percent-week-telling-us
  • Doug Short’s weekly S&P 500graph (curtesy of Jeff Miller) … geopolitical events and too many people looking for excuse to take profits
  • Jeff’s weekly scorecard  … I studied this one and was surprise that 10yr note was same as last week and lower across monthly and quarterly.  
  • Here is an analysis that puts a few things into context:  a) GDP growth rates, b) large company growth rates, and c) the inference that our expectations as investors need to be reset (and if you do not do on your own, then the market will help just like it did in the internet bubble pop) https://www.advisorperspectives.com/commentaries/2017/08/20/imaginary-growth-assumptions-and-the-steep-adjustment-ahead

Commentary

  • I upped my CSCO position by 50% and it is now my largest holding in taxable portfolio … i looked at IBM, CSCO and QTS as the top investments during this last Trump decline.  CSCO i own now at $20.29 cost basis and yielding over 5%.  I also understand their transformation strategy.  I do not understand IBM.  QTS has to decline below $50 before i can be tempted.
  • I reviewed CAH this weekend thinking that i liked it at $69 and now it is <$65.  I could not ‘write the check’ to buy the company.  Their margins are just too thin to fight off any viable competitor from the bottom or adjacent markets, e.g., Amazon.  I am also treading carefully in healthcare given the future US political posturing that will only get worse as folks ready for 2018 election.
  • I also started a very small trading account in a new platform – Robinhood.  First postion was a small pre-earnings gamble on DSW.  DSW got killed on the Foot Locker results, but i am not sure those are apples-to-apples.  I am betting that DSW will not be as impacted as expected … this is true speculation, not investing.

Weekly Update- Aug 13, 2017

Commentary

  • Open question:  Is it time to adjust annual return expectations for the next couple of years to <5%?  – i have a fairly low risk master portfolio and pegged returns on average to ~5% including dividends.  Upside surprises are nice, but is it time to even plan for worse (at least one major scenario)?
  • Two small portfolio adjustments this past week:  a) purchased another slice of LTC after the price declined nearly 10% on the week (this is a really well run organization and my position is in IRA.  i will build it further as price passes rationality)  The news of the week seemed to be one tennant of LTC being in default with a maximum 5% bottomline hit.  Lower price exceeded the mark imho.  b) i exited out of OHI in my taxable account.  I did not want losing position there as it was a temporary park for dividend and possible appreciation.  OHI still has several tennant issues to work thru as well as the larger macro confusion on fedral healthcare policy.  I have not decided if i will build out position in IRA.

A new REIT commentator

A REIT commentator surfaced today that i had not seen before (probably just my miss due to information overload) … i thought this was a good quick review of the REIT landscapte https://seekingalpha.com/article/4097044-reits-foundation-become-increasingly-shaky

As with most commentators, one needs to critically review their insights and inferences … and look for opposing or at least differing opinions, e.g., Adam vs Brad from the Seeking Alpha crowd.

Where i ended up aligned w/ Adam:  caution on OHI (maybe even reduce).  Where i diverged:  not FR, but STAG (from Brad), but the segment is compelling!

Weekly Reads, Reviews and Comments – Aug 6, 2017

Data based fear

I read this … and i think a bit too much fear building, but cannot be simply ignored.  https://seekingalpha.com/article/4092664-hot-potatoes-dutch-tulips

I have been leaning toward more and more cash based on my own analysis and convictions, and articles like this make it hard to remain balanced and objective.  Rational logic anchored in consistent and reliable data is needed, not more emotion (fear or greed).