Markets Fluctuate

A sideways correction, so far

J.P. Morgan famously responded when asked about the direction of stock prices: “They will fluctuate.”

That’s as true now as ever. From the low point on October 3rd to the recent high on April 2nd, the S&P 500 advanced nearly 30%. Following a move that big, a correction of some kind was . . . → Read More: Markets Fluctuate

What does Macau tell us about China’s economy?
China will avoid a recession

Investors are highly suspicious of Chinese government economic statistics and rightfully so. The large State Owned Enterprises (SOEs) are headed by well connected political hacks and local governments know what Beijing wants to hear.

Still, there are several indicators that can be used to measure Chinese . . . → Read More: What does Macau tell us about China’s economy?

Apple Translates Well
“I think there’s room to expand,”  Jim Cramer

Apple has 51 new stores on the drawing board, adding to the total of 361 stores worldwide. Of those 51 new locations, 28 are scheduled to open in China and Hong Kong. At the moment there is one Apple store in Hong Kong and 5 in mainland . . . → Read More: Apple Translates Well

America’s Two GDPs
Housing and government drag down the total

For many investors things just don’t add up. Why is the stock market so strong when the economy seems so wimpy? How can consumers be spending so much with unemployment over 8%?

This chart might explain some of the confusion. (We hope it doesn’t add to it!)

The blue line . . . → Read More: America’s Two GDPs

Another year of tax uncertainty
Why most of this year’s gains might come in the first half

Higher taxes on investment income and gains are scheduled to kick in at the end of this year. While we all have differing opinions about the wisdom of these increases, there is little doubt that they will have a depressing effect . . . → Read More: Another year of tax uncertainty

Asian Consumers
Three companies that are making us money in Asia

For a very long time there’s been a debate among investors: How should you invest in Asia? In companies based there or US companies doing business there?

We’ve a done a little of both. However, we still like US companies for their relatively clean bookkeeping and transparent governance. . . . → Read More: Asian Consumers

Cheap Stock and High Prices
When is a $500 stock cheaper than an $82 stock?

This month Apple’s stock closed above $500 per share and CNBC announced its “market cap”, or total value, had reached $475 billion. That number rang a bell, and sure enough, that was the peak in market value for Cisco Systems in early 2000.

The . . . → Read More: Cheap Stock and High Prices

Making Money in a Hurry
Price/Earnings ratios recover from last year’s correction

There are only two ways to make money in the stock market—slow and fast. The slow money comes from an increase in earning power over time. The fast money comes when investors change their minds about the future of that earning power.

The optimism or pessimism about . . . → Read More: Making Money in a Hurry

Loan Demand is Up…Finally
Consumers and small businesses lead the way

There are many reasons why the current recovery has been so weak, but very high on the list is debt reduction on the part of individuals and small businesses—so-called “deleveraging”. The Fed has driven interest rates down in an attempt to encourage borrowing, which leads to spending . . . → Read More: Loan Demand is Up…Finally

Don’t fight the Fed
Every major central bank is making money easier to borrow

There’s a very old rule in the stock market: “Don’t fight the Fed”. It works in both directions—if the Fed is making money more plentiful and cheaper to borrow, stock prices have a tail wind. The opposite is true when the Fed is making . . . → Read More: Don’t fight the Fed