(MENAFN- ProactiveInvestors) Email of the day on trend consistency
Eoin and David are doing a spectacular job of calling equity trends and should be congratulated on this (I am sure they are being well rewarded on their personal portfolios!).
However on 2 issues I think they have been less accurate.
1. Eoin's answer to Alexander Scaggs/Peter Fisher is inadequate (a) because Ben Bernanke/Janet Yellen/Bill Dudley are all sensitive democrats. They have no interest in boosting equities and making Wall Street wealthier per se. They see it merely as a necessary transmission mechanism to the wider public. As such even though they - and many of us feel that they have helped boost the real economy - they are not celebrating. It took too long has hardly boosted median wage consumers' jobs and pay since 2000 (though it might have been much worse) and more importantly it was probably mostly the result of the competitive devaluation effect of more proactive monetary easing - hence much of this may be unwound over the next 3-5 years as other economies adopt the same medicine. Moreover as most other economies (Japan Europe China) have rapidly ageing demographics and workforces and much more challenging structural rigidities (high minimum wages onerous employment law higher public debt pay as you go pensions etc) they look less likely to benefit from QE - other than through competitive devaluation - which just imports reflation from (steels growth from)/exports deflation to others eg US.
2. Why can't David and Eoin read their long bond and gold charts like they read all others. US10y yield has powerful falling lows and highs that will take a massive change in momentum to change. At this late stage in the cycle I see only one item that can do this - default more particularly sovereign default. Even then it is most likely to benefit US10y because US is probably furthest of all major countries from default. Japan and France are way more likely as are a myriad of small countries (Venezuela Greece Portugal Ukraine etc). Result - flight to quality Incidentally I think short term chart trend still points towards a healthy ongoing correction (from 1.6% low to 2% today to maybe 2.25-2.5%) before bull trend reasserts. Problem is that this renewed uptrend - when and if it comes - is more likely to be associated with an end of cycle flight to quality.
3. Likewise Gold. Sure it is a good safe hedge - but the chart is ugly as - falling lows and falling highs. Tightening in US will not be good for gold - but chart suggests meaner forces at work
Eoin Treacy's view
Thank you for this considered email. I don’t believe we are very far apart in our views but you have the added perspective of having studied under Janet Yellen. The world is awash in liquidity and there is little prospect of the condition changing. The ECB is primed to print a €1 trillion Euro the Japanese are still engaged in QE China is unwilling to allow further Yuan appreciation a number of other Asian countries are responding to low commodity prices by also cutting interest rates and commodity reliant nations are lowering interest rates and printing currency. The Fed is unlikely to be aggressive in raising the Fed funds rate against this background. Regardless of the high-minded aims of the originators of QE the result is the same i.e. increase the supply of money and asset prices rise.
Glencore profit tops estimates
This article by Jesse Riseborough for Bloomberg appeared in Mineweb and may be of interest to subscribers. Here is a section: To combat falling prices and waning demand investors have demanded the world’s biggest mining companies slash spending on new mines and return more cash to shareholders.
Producers will cut spending on projects and exploration by $20 billion this year according to estimates from Macquarie Group Ltd. as they rein in growth plans amid waning prices. Last month Glencore trimmed its spending for 2015 to a range of $6.5 billion to $6.8 billion from an earlier target of $7.9 billion.
Net debt dropped 15 percent to $30.5 billion Glencore said. The company booked $847 million of impairment charges on platinum iron ore and oil assets for the year.
Glencore completed the $29 billion acquisition of Plc in 2013 to add coal copper zinc and nickel mines to its trading empire.
Its approach to about a possible merger was rebuffed by its larger rival in October. That effectively barred it from bidding for six months under U.K. takeover rules. Rio last month reported a 9 percent decline in underlying profit for 2014 and announced a plan to buy back $2 billion of shares.
Eoin Treacy's view
Miners have spent a great deal of money developing new supply which is increasingly reaching market. Unfortunately the demand growth forecasts this investment was made under are not panning out.
The Price of Oil Is About to Blow a Hole in Corporate Accounting
This article by Asjylyn Loder may be of interest to subscribers. Here is a section: The U.S. Securities and Exchange Commission requires drillers to calculate the value of their oil reserves every year using average prices from the first trading days in each of the previous 12 months. Because oil didn’t start its freefall to about $45 till after the OPEC meeting in late November companies in their latest regulatory filings used $95 a barrel to figure out how much oil they could profitably produce and what it’s worth. Of the 12 days that went into the fourth-quarter average crude was above $90 a barrel on 10 of them.
So Continental Resources Inc. led by billionaire Harold Hamm reported last month that the present value of its oil and gas operations increased 13 percent last year to $22.8 billion. For Devon Energy Corp. a pioneer of hydraulic fracturing it jumped 31 percent to $27.9 billion.
This year tells a different story. The average price on the first trading days of January February and March was $51.28 a barrel. That means a lot of pain - and writedowns - are in store when drillers’ first-quarter numbers are announced in April and May.
“It has postponed the reckoning” said Julie Hilt Hannink head of energy research at New York-based CFRA an accounting adviser.
Eoin Treacy's view
Oil prices have bounced from their January lows but nowhere near enough to alter the average pricing for the year to date. In fact since the pace of the short-term advance has moderated there is an increasing possibility that the short covering rally is over. This opens up potential for a retest of the low. If oil follows anything like the path natural gas took following its 2008 crash prices could range for a prolonged period. Such an environment would require some major adjustments by the drilling sector.
Email of the day on cyber security
In passing you recently mentioned Kaspersky's recent claims about spyware being installed on new PC's by "US PC Manufacturers". Refers to article http://www.ft.com/intl/cms/s/0/4d4a8f9c-b668-11e4-95dc-00144feab7de.html'siteedition=intl
As a former R&D executive in one of those companies I thought it relevant that I comment.
Every line of firmware is precious and must work correctly. Every line is inspected by multiple engineers and QA people and the manufacturing team uses hash coding techniques to guarantee that what came out of engineering is what is being implemented in PGA's (chips that contain the firmware). These chips are tested to make sure the firmware did not get corrupted in the process. So any spyware that gets embedded in firmware has to be designed in.
I think it's important to understand that any such implementation would require that the manufacturer's R&D QA and manufacturing teams cooperate in the endeavor. And still keep it secret. Furthermore those teams are across countries as very few PC's are currently manufactured in the US. Think you can keep this kind of thing secret across a whole gaggle of engineers none of whom have security clearances and many of whom are not Americans Bullshit. Add to that the claim is that this happened across multiple US companies Really bullshit.
The idea that code can be somehow magically embedded "deep in the hard disk" is the same notion. The boot area on the hard disk has tight highly inspected code. Again any spyware would have to be designed in and would be known to a large multi-functional team. Blank boot disks arriving at the manufacturer are really truly blank and are completely formatted by the manufacturer prior to copying the boot sector etc.
I very recently spoke with a very senior executive in the computer security business who simply pointed out that Kaspersky is a Russian company and suggesting that this fact should really end the whole conversation.
Perhaps anyone running Kaspersky software should be quite worried about what that (highly invasive deeply embedded software with frequent accesses to Kaspersky's servers) software might be sending back home to Russia. If one uses Kaspersky it's time to give this some thought. McAfee and Norton/Symantec offer better safer solutions.
Eoin Treacy's view
Well said. However regardless of whether the claims made by Kaspersky are true or false they will still be used to help justify championing domestically designed and manufactured products by countries with a desire to compete with the USA in just about every sector.
Speaking Engagements 2015
Eoin Treacy's view
I have accepted an invitation to speak at the annual MTA Symposium in New York on March 26th and 27th. The topic of my talk will be Quality Trends: Bet on quality and monitor consistency
The Chart Seminar 2015
Eoin Treacy's view
Following a productive collaboration last year we have agreed to co-host another Chart Seminar with the CFA Institute in Singapore. This will be on April 16th and 17th at the M Hotel on 81 Anson Road.
To book your place or express interest please contact Sarah Barnes at sarah@fullertreacymoney.com
The full rate for The Chart Seminar is £950 + VAT. (Please note US Australian and Asian delegates as non EU residents are not liable for VAT). The early booking rate of £875 for non-subscribers expires two months ahead of the event start date. Subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.
Private Seminars and Partnering Opportunities
We are also available to conduct private seminars and occasionally agree to speaking engagements at investment conferences and professional societies
Eoin Treacy's view
FullerTreacyMoney set up a feed in December but I didn’t start updating it until yesterday. In the era of social media many people tend to look more at their accounts than free daily emails so we will post content both on our website and via .
Additionally I will post interesting charts on a daily basis when I have completed by morning click though of markets. Today I posted charts of the historical oil price Canadian Dollar Singapore Dollar / Swiss France cross rate Check Point Software and Veolia.
Please feel free to follow us on at https://.com/FullerTreacy We would also be happy to follow the account of any of our subscribers who follow us.
This is your daily comment from www.fullertreacymoney.com.
Subscribe to Fuller Treacy Money Limited for exclusive content and audio: Click here for details.
The information provided on this website (www.fullertreacymoney.com) is for the purposes of information only. This website and its content is not and should not be considered or deemed to be an offer of or invitation to engage in any investment activity. Nothing Fuller Treacy Money does and nothing on this website is intended to operate or be construed as the giving of advice or the making of a recommendation by Fuller Treacy Money to any investor or prospective investor. Fuller Treacy Money and any other group or associated company of it is not authorised or regulated by the Financial Conduct Authority in the UK or any other regulatory body in any other jurisdiction. By means of your login to our service you are deemed to thereby accept our current Terms of Business including this notice Except for permission to download a single copy for personal use the research published by Fuller Treacy Money may not be reproduced distributed or published in whole or in part by any recipient for any purpose without the prior express consent of Fuller Treacy Money. Information featured on the website is based upon information and data provided by Fuller Treacy Money and remains the intellectual property of Fuller Treacy Money. Some of the information may also be provided by third parties and whilst Fuller Treacy Money will seek to ensure that information featured the website is updated on a regular basis Fuller Treacy Money does not accept any responsibility for and disclaims any and all liability for any such information (including the accuracy of such information) or views or opinions expressed on the website. Any person considering an investment opportunity as a result of data presented on the website should give full regard to all the content of the website and should perform their own due diligence and obtain advice from suitably qualified professional advisers before investing. Prospective investors are also encouraged and recommended to take their own independent legal and taxation advice together with any other advice that they may consider necessary to consider the benefits and risks attached to any investment opportunity. No representation or warranty expressed or implied is or will be made or given by Fuller Treacy Money (including its executives employees agents contractors and advisors) in relation to the accuracy or completeness of the contents of the website save that any such liability is not excluded in respect of fraudulent misrepresentation.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.