Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
WESTERN DIGITAL WDC Stock Trend Analysis - CHIA! - Risk 1 - 23rd Jun 21
AMC Is the Best-Performing Stock in America: Don’t Buy It - 23rd Jun 21
Stock Market Calling the Fed‘s Bluff - 23rd Jun 21
Could Bitcoin Price CRASH Target A Bottom Below $7500? - 23rd Jun 21
Bitcoin and cryptos: Your 'long-term investment'? - 23rd Jun 21
Unlocking The Next Stage Of The Hydrogen Boom - 23rd Jun 21
USDT Ponzi Scheme FINAL WARNING To EXIT Before Tether Collapses Crypto Exchange Markets - 22nd Jun 21
Stock Market Correction Starting - 22nd Jun 21
This Green SuperFuel Could Change Everything For the $14 Trillion Shipping Industry - 22nd Jun 21
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Memorial Day Financial Markets Musings

Stock-Markets / Financial Markets 2010 Jun 01, 2010 - 02:36 AM GMT

By: PhilStockWorld

Stock-Markets

Best Financial Markets Analysis ArticleIt’s been a quiet weekend and our futures are up about a quarter point as the EU session draws to a close.

The DAX gave up half it’s gains into the close and the CAC never could get going while the FTSE is closed today.  Asia was pretty flat, except the Shanghai, which fell 2.4% steeply into the close.  Our futures were up about half a point but gave up half of that in what is, of course, thin to nonexistent trading.  12 of Spain’s 45 banks are in merger talks as they scramble to become too big to fail and Trichet made some nice noises this morning. 


In the best commentary yet on the global situation, the 6 month-old "Best Party," which is headed by a comedian, won the Reykjavik elections, after campaigning with the catch slogan "Whatever Works."  The Best Party promises to get a polar bear for the zoo and preaches the benefits of "anarcho-surrealism."  While the Best Party’s critics implored its team of comedians, actors and musicians to end their campaign, soon to be-mayor Jon Gnarr insisted he would follow through to the end. It was the best way to expose the "ridiculous" state of traditional politics, he said.  Gnarr also promised free towels, to lobby for a Disney Iceland, getting Parliament drug-free by 2020 and to cut down on the number of Santas at Christmas.  Heck, sounds good to me!

I love this video from Barry Ritholtz’s site:  "The Surprising Truth About What Motivates Us

Another good catch from Barry is Alan Abelson’s Barron’s article that notes that insiders have been outnumbering buying during May at a rate of 77:1, a worsening situation we’ve been tracking all year in Ilene’s "Insider Zone."  Insiders aren’t supposed to sell based on specific events they know about but they can be a good indicator of long-term economic problems that are currently being sugar-coated, even in their own outlooks. 

One of the big ones I’m seeing and have been talking about for some time is margin pressures, brought about by persistently high commodity and labor prices in the face of slowing consumer spending.  Deflation rears its ugly head this weekend as Wal-Mart is slashing prices pushing the cost of 32 essential grocery items like Coke and ketchup down by 30%.  In fact, Wal-Mart is bearing the cost of some of the deep price cuts, not its suppliers, according to Bill Pecoriello, an analyst who heads ConsumerEdge Research LLC, based on discussions with industry officials.  According to Pecoriello, on a basket of five food items, from Coke to Lay’s potato chips, the total price was $11.23 at Wal-Mart, 24 percent less than it was a year ago. It’s also almost 14 percent lower than Kroger and almost 26 percent lower than Safeway, according to Pecoriello’s estimates. The firm gathers pricing data representing 15,000 stores across the country.

We passed a major milestone this weekend as our National Debt Clock rolled past the $13,000,000,000,0000 mark.  That doesn’t include another $2Tn in local municipal debt or $1.1Tn in state deficits and we are, of course, not even mentioning the $14Tn Social Security Liability or the already $19Tn Prescription Drug Program that was passed by Bush just 7 years ago, which is kind of funny because it costs more money per year than Obama’s entire Health Care Reform is projected to cost over 10 years yet it has done pretty much nothing other than funnel Billions of dollars to the drug companies that lobbied for it.

But I digress.  Speaking of health care, ALL of those outstanding debs and liabilities pale in comparison to our $75Tn Medicare Deficit.  This massive unfunded liability is what Hillary tried to get a handle on 20 years ago and what we are now tackling in a very half-assed way with the current watered-down reform.  I guess Iceland has it right as this number is so big (5 times GDP) and so unfixable that you may as well make a joke out if it and elect the funny guys because it’s way too depressing otherwise…

There were a few great graphics this weekend.  One came from Kipliger called "How Much Does It Cost to Retire?" and the other one is a "must view" because it says so much about consumer psychology and we at PSW spend a lot of time studying investor psychology so think of ways investors do the same thing with "brand name" stocks:

Now that we have this firm basis for discussion with margin pressures and brand-name vs. generics - let’s look at how they combine in coffee wars, where McDonald’s is facing off against Starbucks with their McCafe brand that already grabbed $1.5Bn in business last year - some of which certainly affected SBUX.  Now the Baristas strike back by putting their downscale Seattle’s Best Coffee in Burger King and Subway restaurants as well as AMC movie theaters and supermarkets across the country.  Will this lead to coffee deflation or just over-saturation and, if so, how do we get the stains out?

Speaking of over-saturation, there can be only one in the wireless telecom endgame and T and VZ have now passed the 60% mark in market share with the beheading of competitors Aloha (eaten by T), Suncom (eaten by TMobile) along with Rural Cellular and Alltell, who were snapped up by VZ. 

The DOJ has labeled the wireless market to be "highly concentrated," which is just a step before "in need of breaking up" so we’ll have to keep an eye on this sector but I think T and VZ are now frozen out from anything but internal growth and they have to be careful about that because 66% market share will be a call to action. 

Speaking of Ireland (or was it Scotland?) - Ireland is, according to IrishCentral.com, TOTALLY SCREWED.  These guys need a comedy government stat as it seems, according to former IMF chief economist Simon Johnson: "Ireland’s politicians, rather than facing up to their problems, are making things ever worse. Simply put, the Irish miracle was a mirage driven by clever use of tax-haven rules and a huge credit boom that permitted real estate prices and construction to grow quickly before declining ever more rapidly…  When we adjust Ireland’s figures accordingly, the situation is dire. The budget deficit was about 17.9 percent of G.N.P. in 2009, and based on European Commission data (and assuming the G.N.P.-G.D.P. gap remains the same) it will be roughly 14.6 percent in 2010 and 15.1 percent in 2011." 

Time has a good summary of Germany’s attempts to prop this whole mess up but it’s a weak old and I’m really starting to get worried that Merkel is losing the power to force Germany to bail out the EU for Germany’s own good.  I’ve been reading Der Spiegel but I think all news from Germany needs to monitored closely as any change from their government in policy towards maintaining the Europe could doom it.  I don’t think it’s likely but the possibility is frightening, pretty much the same way I didn’t see how Al Gore could lose the 2000 election - sometimes entire nations make irrational decisions and the unthinkable happens and we are left to deal with the inevitable disaster that follows.  Sorry, I tend to get political when I do a lot of reading as all roads to economic hell have been paved with Bush’s intentions…

Speaking of Bush - It turns out our 43rd President was one of The Richest Presidents Ever but only half as wealthy as the man who preceded him.  Bill Clinton has an inflation-adjusted net worth of $38M while GWB is only good for $20M - even with the tax cuts.  Obama has $5M, Poppy Bush $23M, Reagan $13M, Carter $7M (same as Ford), Nixon had $15Bn but poverty fighting Johnson had $98M (radio and TV stations) and ultra-liberal Kennedy was our only Billionaire President.  What I found most interesting was our #2 man - George Washington!  Adjusted for inflation, the General’s 8,000 acres of Virginia farmland (that was cared for by 300 slaves) was worth $525M.  Washington’s salary was, at the time, also the most of any President, consuming 2% of the US budget - what would be $60M a year today! 

Of course Kennedy didn’t mind paying 70% on his additional, marginal income, nor did any President since the Great Depression when the low-tax policies of the 20s were blamed for leaving our country in a weakened financial condition that led to economic disaster.  Bush the First drove top rates down from 70% to 50% and Bush II took us to 37% but no individual tax breaks compare to what our richest citizens are getting today - the Corporations! 

They say nothing is certain, but death and taxes, right?  Well, not quite, it turns out, if you’re a large corporation.  According to Forbes, many of America’s 25 largest companies pay less – much less – in taxes than the average American. How so? Unlike most Americans, large companies can operate losing businesses in the U.S. – and profitable ones abroad, where tax rates are lower. That’s how a company like General Electric has managed to owe a negative $1.1 billion in income tax in 2009 ( that’s quite a refund), despite its $10.3 billion pretax income and $157 billion in sales. Some banks made out quite well last year, too: Bank of America did not pay a dime in taxes on its $4.4 billion income, thanks to a slew of deductions and provisions for credit losses; neither did Citigroup.  Zero taxes on $10.3Bn in earnings - keep that in mind when you are wondering if GE’s CNBC may or may not have a bias…

On the rarely seen opposite side of the corporate coin, Panera Bread Co has opened a "Saint Louis Bread Company Cares Cafe" as a nonprofit with the door policy of "Take what you need, leave your fair share."  The café, which reopened Sunday as a nonprofit, has cashiers who provide receipts with suggested prices and direct customers to the store’s five donation boxes. The menu is the same as Panera, except for the day-old baked goods brought in from sister stores in the area.  “I’m trying to find out what human nature is all about,” Ron Shaich, who stepped down as Panera’s CEO last week but remains as chairman, told USA Today. “My hope is that we can eventually do this in every community where there’s a Panera.”

See, if I read long enough, I can find one story that brightens my day - something that does give me hope for the future and restores my faith in humanity.  It only takes one man to change the whole world so my most profound thanks to Ron Shaich for trying - I’m already a customer and I’ll now become a shareholder too as it’s nice to own a stock you can be proud to be associated with.  

Our thanks should also go out to all the troops today, who have fought and are fighting for us around the world.  It’s up to those of us at home to work towards giving them a country they can be proud to come home to.

Have a happy holiday,

By Phil

www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

© 2010 Copyright  PhilStockWorld - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in