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Author: michael

Even in winter …

Even in winter …

some flowers bloom very well … and if you look closely you’ll find a live bee too!

This is one of my fav flower pics ever … to have this vibrant yellow in January
Backyard visitor

Backyard visitor

These folks eat the food almost as fast as i can make it and put it out … 1x week, I am adding new sugar water for these little ones.

These next two pics are the same bird … don’t ask me how they do it

Truly … the same bird and i did not touch the pics at all … this is exactly how they were in my camera

Mr Toad sliding down the ride (again)

Mr Toad sliding down the ride (again)

This visualization does not do justice to YTD rates … a table

EOY 20191/23/2020
30 yr2.3902.140
10 yr1.9201.700
2 yr1.5801.490
3mo1.5501.540

If there is a correlation between long bond yields and anticipated inflation … inflation expectations were just lowered by ~25 basis points in 16 days. Maybe this is just a confluence of terrible geopolitical events and happy days are right around the corner … we’ll see.

Lost in the noise …

Lost in the noise …

Quote: “

Further, it is entirely possible that Trump is breaking US law by not being transparent about what, exactly, the thinking is behind the auto tariff threat against America’s European allies. That is, never mind international norms or the WTO or the possibly irreparable damage the administration is doing to transatlantic relations – Trump may be committing a pseudo-impeachable offense by essentially stonewalling Congress (not to mention the public) on the auto tariffs.

“The Trump administration may run into difficulty introducing car tariffs arbitrarily, as Mnuchin said, because the law it has invoked confines the justification to national security”, Bloomberg dryly noted this week, on the way to reminding you that “the Trump administration has so far refused to release a report justifying the possible tariffs despite demands from Congress, where opposition to them is bipartisan”.

Corporate taxes – you ok w/it?

Corporate taxes – you ok w/it?

Quarterly earnings releases are just starting and of the approximately 40 companies in which I own stock, I will carefully parse thru earnings call and SEC documents.

JNJ was the first, and i found this paragraph quite startling …

quote: “Regarding taxes, in the quarter, our effective tax rate was 4.9% compared to the fourth quarter of 2018 tax rate of 2.6%. The current quarter includes an estimated tax expense for the transition provisions of Swiss tax reform partially offset by reorganization of certain foreign subsidiaries and additional impacts of recently issued regulations associated with U.S. tax reform. We encourage you to reference our 10-K for further details on this and other specific tax matters. Excluding special items, the effective tax rate was 10.7%, relatively consistent with the same period last year, which was 11.1%.”

I have yet to form a strong opinion one way or the other, but the level of effective taxation is WAY below what i am paying … should we be ok w/ that?

Place your bets!

Place your bets!

Heisenberg posted a great table today showing all the major broker houses and their 2020 crystal balls – quote below. The cynical side of me says anything that ends in ‘0’ or ‘5’ is a best guess and rounded up; the only non 0 or 5 is 3388 from Wells Fargo. (i had an old boss who would jump down any clearly round number – they just don’t really occur that often)

Quote – “Below is the full breakdown of house calls organized by bank, strategist, target and EPS forecast:

  • Bank of America; Savita Subramanian; 3,300; $177
  • Bank of Montreal; Brian Belski; 3,400; $176
  • Barclays; Maneesh Deshpande; 3,300; $166
  • BTIG; Julian Emanuel; 3,450; $175
  • Canaccord; Tony Dwyer; 3,440; $172
  • Citigroup; Tobias Levkovich; 3,375; $174.25
  • Cornerstone Macro; Michael Kantrowitz; 3,400; $172
  • Credit Suisse; Jonathan Golub; 3,600; $175
  • Deutsche Bank; Binky Chadha; 3,250; $175
  • Evercore ISI; Dennis Debusschere; 3,400; $178
  • Fundstrat Global Advisors; Tom Lee; 3,450; $178
  • Goldman Sachs; David Kostin; 3,400; $174
  • Jefferies; Sean Darby; 3,300; $176
  • JPMorgan; Dubravko Lakos-Bujas; 3,400; $180
  • Morgan Stanley; Mike Wilson; 3,000; $165
  • Ned Davis Research; Ed Clissold; 3,425; $168
  • Oppenheimer; John Stoltzfus; 3,500; $175
  • RBC Capital Markets; Lori Calvasina; 3,460; $174
  • Scotiabank; Hugo Ste-Marie; 3,350; $167
  • Societe Generale; Sophie Huynh; 3,050; $164
  • Stifel Nicolaus; Barry Bannister; 3,265; $167
  • UBS; Francois Trahan; 3,250; $170
  • Wells Fargo; Chris Harvey; 3,388; $166
How many times will this be updated / changed as new information is 'discovered'?

How many times will this be updated / changed as new information is 'discovered'?

quote: “It is now clear our ancestors must have dispersed from a region south of the Zambezi River. This is consistent with geographical, archaeological and climate data, including the fact that this area would have been a fertile wetland at the time the first modern humans emerged.”

This was in an article that referenced the source article in NATURE but requires payment.

Valuation insights

Valuation insights

A couple of recent posts by same author are worth a walk-thru imho.

There’s a bit of an echo chamber as I am fairly aligned here in the valuation tiering – my variance is however i am not so willing to take capital risks in the middle tier and will accept lower return rates for lower capital risk, aka, bills and short-term high quality bonds.

https://seekingalpha.com/article/4315341-expectations-for-next-decade

The subsequent post walks thru some critical questions investors need to bat around for actionable direction https://seekingalpha.com/article/4317012-lyn-aldens-positioning-for-2020-diversified-global-focus

Confounding economic variables … normal or a new norm?

Confounding economic variables … normal or a new norm?

Just read thru the data and the post’s comments … typical 3-option take-away: a) economy growing, b) economy slowing down, or c) unclear direction with conflicting indicators … subjective response.

https://seekingalpha.com/article/4317748-green-shoots-bond-market-is-ignoring

Should we start to question our standard forward looking (predictive) indicators given the irrational exuberance of central banks’ actions over last 10 years? Don’t have an answer, but ecourage folks to struggle with the question.

Employment data diving

Employment data diving

This author typically does a great job putting a data story together – i’m not sure they’re intended to be actionable, but they surely help me think. One caveat here is that my own observations often align – bias caution

https://seekingalpha.com/article/4317559-employment-in-2020-downshift-in-jobs-growth-will-prevent-interest-rates-from-rising-again

Here are the editor’s summary bullets – quote:

  • US employment growth continues to decline toward population growth, increasing the probability of a rise in the unemployment rate.
  • Aggregate earnings growth continues to decline, putting a lid on aggregate consumption growth.
  • Leading indicators of employment do not suggest a sustained increase in cyclical employment growth is around the corner yet.
  • As long as employment growth continues to decline, we cannot remove the risk of a recession in 2020.
  • If GDP growth does not increase and recession risk remains on the table, interest rates will not be able to rise, keeping the bond bears at bay for another year.