Sometimes as I sit and watch the markets, and filter them through the news that is flowing into my ears I get these suspicions that maybe there are things happening in the markets that the news providers don't know yet. Actually I know that this happens all the time in individual stories, and sometimes in the big macro stories.
So oil is trying to act strong today, gold is up again, silver is up strongly, the dollar is down, and the stock market continues up, but on very slim volume.
There is rioting all over the middle-east as the Egypt unrest spreads. The U.S. is being very circumspect, not wanting to get on the wrong side of history again.(A move I applaud.) And now there is news that Iran wants to send two warships through the Suez canal. Something that they haven't done in a long time, I understand. Why would they be doing this now. Is the timing deliberate. I think it probably is. I think Iran would love to provoke a confrontation with the U.S. and Israel that would turn all of the anger in the middle-east toward the U.S. and Israel. And if they started something, what could we do? Of course we would respond in force to any aggression toward Israel, but the world knows the state of our finances. Another war would be another additional deficit pressure. And I don't think we would find the world willing to finance another U.S. war. Usually the U.S. dollar gets strong during times of stress, but there will come the day when safe haven is otherwhere.
And where is OBL? Would he ally with the Iranians?
I just get the feeling that something is up.......I hope not.
Thursday, February 17, 2011
Wednesday, February 16, 2011
Lazlo Birinyi's prediction for the S & P.
The question for viewers on CNBC this morning was, "Where do you stand on Lazlo Birinyi's call?". Mr. Birinyi, who was the head of equity research at the former Salomon Bros., has said that he thinks the S &P could reach 2800 by 2013. That would be about double of where it is now. Given that many of the "traders" have been warning of a market top lately due to the declining volume, and the general bullishness, (both being "contrarian" indicators) his forcast will tend to be regarded by the traders as another bearish contrarian indicator.
I think the stock market appreciation can be thought of as inflation. As the dollar gets weaker, the stock market goes higher. The same as the precious metals and oil and commodities in general.
A look at the USDollar, as tracked by the UUP fund shows the large possibility of a break of long term support. A 20% down move over two years would certainly not be unusual. If you look at the same chart, you see the US Dollar has lost about 20% over the last two years and the S&P has doubled. I don't see why the S&P couldn't double again if the dollar goes down. It would have to be an orderly selloff in the dollar. A panicky move would probably not be good for stocks. Kind of like boiling a frog. Gotta do it slow, or the little sucker wants to jump out of the kettle!
I wouldn't use this to be blindly optimistic. Nothing in the markets is a sure thing, and nothing travels in a straight line. Risk control is always tops in my trading and investing strategy.
I think the stock market appreciation can be thought of as inflation. As the dollar gets weaker, the stock market goes higher. The same as the precious metals and oil and commodities in general.
A look at the USDollar, as tracked by the UUP fund shows the large possibility of a break of long term support. A 20% down move over two years would certainly not be unusual. If you look at the same chart, you see the US Dollar has lost about 20% over the last two years and the S&P has doubled. I don't see why the S&P couldn't double again if the dollar goes down. It would have to be an orderly selloff in the dollar. A panicky move would probably not be good for stocks. Kind of like boiling a frog. Gotta do it slow, or the little sucker wants to jump out of the kettle!
Monday, February 14, 2011
EMS bought privately
In addition to the reasons stated in this article regarding public health insurance making it more profitable for this company, I wonder how their private ambulance and fire services will do with the increased local and state budget woes. Will cities and counties contract for more private ambulance and fire coverage?? And let their highly paid and pensioned public employees go?
This from Bloomberg:
Emergency Medical Services Corp. shares fell the most in almost two years after the company agreed to be bought by private-equity firm Clayton, Dubilier & Rice LLC for $64 a share, less than some investors expected.
EMS shares declined $7.74, or 11 percent, to $62.92 at 4:12 p.m. in New York Stock Exchange composite trading, for the biggest drop since Feb. 27, 2009. Before today, the stock had risen 31 percent since Dec. 13, the day before the company said it was considering strategic alternatives.
“I had expected the range to be between $70 and $75,” said Jeff Hoernemann, an analyst with Feltl & Co. in Minneapolis, in an e-mail. “The final price is certainly a disappointment to some shareholders.”
Stockholders of EMS, the largest U.S. operator of ambulance services and provider of emergency-room doctors, will receive $64 a share in cash, the companies said in a statement today. That’s 9.4 percent below the closing price of $70.66 on Feb. 11 on the New York Stock Exchange, and 19 percent above the closing price Dec. 13, the day before the Greenwood Village, Colorado- based company said it was looking at strategic alternatives.
Recent acquisitions by EMS may have affected the price paid for each share in today’s deal, said Hoernemann. EMS announced purchases of Milford Anesthesia on Dec. 2; Doctor’s Ambulance Service on Dec. 6; Blythe Ambulance services on Jan. 5; and North Pinellas Anesthesia Associates and Northwood Anesthesia Associates, a company based in Tampa, Florida, on Jan. 11.
Directors had pushed for higher bids from Clayton Dubilier and runner-up Bain Capital LLC. Goldman Sachs Group Inc. and Bank of America Corp. advised EMS. Barclays Capital, Deutsche Bank Securities Inc., Morgan Stanley & Co., RBC Capital Markets and UBS Investment Bank acted as financial advisers to Clayton Dubilier.
The deal’s $3.2 billion total includes net debt as well as transaction costs of about $300 million, EMS said in a statement today. The company had $934.3 million in liabilities as of Sept. 30, according to Bloomberg data.
Onex Corp., whose group had 31 percent interest in EMS, will sell their 13.7 million EMS shares for $878 million as part of the deal, the Toronto-based company said in a separate statement.
Thomas Franco, a spokesman for New York-based Clayton Dubilier, referred comment to EMS. EMS spokeswoman Deborah Hileman didn’t return calls requesting comment.
“There’s money to be made in making all of this more efficient and that would be appealing to any private equity buyer,” he said. “I expect to see a lot more consolidation in health services, nursing homes, and long-term care. The number of competitors is going to get smaller and the ones that survive are going to get bigger.”
Private-equity firms had announced 397 pending or completed acquisitions of U.S. health products and services companies in the past five years, with an average size of $449.4 million and a typical premium of 30 percent, according to data compiled by Bloomberg as of Feb. 10. The biggest was the 2006 leveraged buyout of hospital operator HCA Inc. for about $33 billion, led by firms including New York-based KKR & Co. and Bain, which is based in Boston.
“Unless you believe there will be a wholesale repeal of health reform, which I don’t think anybody does, there will be some scenario where there are more covered bodies and more paying customers than you have right now,” Brock said.
EMS’s ambulance unit had 2009 revenue of $1.34 billion and its emergency physician business reported 2009 sales of $1.23 billion. EMS may have generated 2010 revenue of $2.86 billion, according to the average estimate of 10 analysts surveyed by Bloomberg. The company today said it planned to file 2010 results later this month.
This from Bloomberg:
Clayton, Dubilier & Rice Chief Executive Officer Donald Gogel. Photographer: Andrew Harrer/Bloomberg
EMS shares declined $7.74, or 11 percent, to $62.92 at 4:12 p.m. in New York Stock Exchange composite trading, for the biggest drop since Feb. 27, 2009. Before today, the stock had risen 31 percent since Dec. 13, the day before the company said it was considering strategic alternatives.
“I had expected the range to be between $70 and $75,” said Jeff Hoernemann, an analyst with Feltl & Co. in Minneapolis, in an e-mail. “The final price is certainly a disappointment to some shareholders.”
Stockholders of EMS, the largest U.S. operator of ambulance services and provider of emergency-room doctors, will receive $64 a share in cash, the companies said in a statement today. That’s 9.4 percent below the closing price of $70.66 on Feb. 11 on the New York Stock Exchange, and 19 percent above the closing price Dec. 13, the day before the Greenwood Village, Colorado- based company said it was looking at strategic alternatives.
Recent acquisitions by EMS may have affected the price paid for each share in today’s deal, said Hoernemann. EMS announced purchases of Milford Anesthesia on Dec. 2; Doctor’s Ambulance Service on Dec. 6; Blythe Ambulance services on Jan. 5; and North Pinellas Anesthesia Associates and Northwood Anesthesia Associates, a company based in Tampa, Florida, on Jan. 11.
Value ‘Above $70’
“Most analysts and investors alike would agree that based on the pure operational potential of the company in 2011 you could easily value it above $70,” Dawn Brock, an analyst with Kaufman Bros. in New York, said yesterday in an e-mail.Directors had pushed for higher bids from Clayton Dubilier and runner-up Bain Capital LLC. Goldman Sachs Group Inc. and Bank of America Corp. advised EMS. Barclays Capital, Deutsche Bank Securities Inc., Morgan Stanley & Co., RBC Capital Markets and UBS Investment Bank acted as financial advisers to Clayton Dubilier.
The deal’s $3.2 billion total includes net debt as well as transaction costs of about $300 million, EMS said in a statement today. The company had $934.3 million in liabilities as of Sept. 30, according to Bloomberg data.
Onex Corp., whose group had 31 percent interest in EMS, will sell their 13.7 million EMS shares for $878 million as part of the deal, the Toronto-based company said in a separate statement.
Thomas Franco, a spokesman for New York-based Clayton Dubilier, referred comment to EMS. EMS spokeswoman Deborah Hileman didn’t return calls requesting comment.
Health-Care Overhaul
The U.S. health-care overhaul passed last year, designed to give millions of uninsured Americans taxpayer-subsidized medical coverage, made EMS an attractive takeout target, Arthur Henderson, an analyst with Jefferies & Co. in Nashville, Tennessee, said yesterday in a telephone interview. The company’s ambulance and emergency staffing and management units may both profit from the expanded coverage, he said.“There’s money to be made in making all of this more efficient and that would be appealing to any private equity buyer,” he said. “I expect to see a lot more consolidation in health services, nursing homes, and long-term care. The number of competitors is going to get smaller and the ones that survive are going to get bigger.”
Private-equity firms had announced 397 pending or completed acquisitions of U.S. health products and services companies in the past five years, with an average size of $449.4 million and a typical premium of 30 percent, according to data compiled by Bloomberg as of Feb. 10. The biggest was the 2006 leveraged buyout of hospital operator HCA Inc. for about $33 billion, led by firms including New York-based KKR & Co. and Bain, which is based in Boston.
Health Deals
Private-equity firms, which raised $50 billion to $80 billion for health industry deals from 2006 to 2010, “have very deep pockets right now and will be looking to do more deals in this space,” Brock said in a telephone interview yesterday.“Unless you believe there will be a wholesale repeal of health reform, which I don’t think anybody does, there will be some scenario where there are more covered bodies and more paying customers than you have right now,” Brock said.
EMS’s ambulance unit had 2009 revenue of $1.34 billion and its emergency physician business reported 2009 sales of $1.23 billion. EMS may have generated 2010 revenue of $2.86 billion, according to the average estimate of 10 analysts surveyed by Bloomberg. The company today said it planned to file 2010 results later this month.
Sunday, February 13, 2011
Jesse's Café Américain: Modern Monetary Theory: The Sophistry of the US Do...
Jesse's Café Américain: Modern Monetary Theory: The Sophistry of the US Do...: "soph·is·try (s f -str ). n. pl. soph·is·tries. 1. Plausible but fallacious argumentation. 2. A plausible but misleading or fallacious argu..."
Wednesday, February 9, 2011
Is Bernanke a leader?
Here is the text of an e-mail I sent to those Republican shills at CNBC:
What Bernanke is trying to do is to break the currency pegs that the mercantilists around the world have used to keep their products artificially low. We were snookered by these policies for many years. It kept inflation low and we kept interest rates low and we went deep into debt to buy their stuff. Now Bernanke is trying to reverse this trend. They, the Asians in particular, are at risk of inflation if they keep their currencies pegged to the USD as Bernank takes the Dollar down. We need to move jobs back to this country. The devaluation of the dollar will make wages in this country cheaper. The devaluation of the USD will also take away some of the profit margin for those that import. I think this is where all the Republican angst comes from. Their financial supporters don't like the prospect of this new business paradigm. "Hire workers here? We can't do that!".
Bernanke is a leader. It has been so long since we've seen a leader that we don't recognize it, and feel compelled to attack him.
The US is in deep trouble, and it has everything to do with our balance of payments deficit. Importing inflation is the way to reverse that.
Couple Bernanke's policys with the prospect of RELATIVELY cheap energy, and we could import a lot of inflation without a big probem for years. These shale plays in Canada, N. Dak, and NY could be a boon. And as foreign enonomies slow down to avoid overheating, they will use less energy....
gh
What Bernanke is trying to do is to break the currency pegs that the mercantilists around the world have used to keep their products artificially low. We were snookered by these policies for many years. It kept inflation low and we kept interest rates low and we went deep into debt to buy their stuff. Now Bernanke is trying to reverse this trend. They, the Asians in particular, are at risk of inflation if they keep their currencies pegged to the USD as Bernank takes the Dollar down. We need to move jobs back to this country. The devaluation of the dollar will make wages in this country cheaper. The devaluation of the USD will also take away some of the profit margin for those that import. I think this is where all the Republican angst comes from. Their financial supporters don't like the prospect of this new business paradigm. "Hire workers here? We can't do that!".
Bernanke is a leader. It has been so long since we've seen a leader that we don't recognize it, and feel compelled to attack him.
The US is in deep trouble, and it has everything to do with our balance of payments deficit. Importing inflation is the way to reverse that.
Couple Bernanke's policys with the prospect of RELATIVELY cheap energy, and we could import a lot of inflation without a big probem for years. These shale plays in Canada, N. Dak, and NY could be a boon. And as foreign enonomies slow down to avoid overheating, they will use less energy....
gh
Tuesday, February 8, 2011
deja vu all over again
Haven't we seen this rodeo before? One week our illustrious Federal Reserve Bank Chairman talks his talk and gets the inflationistas all worked up, and the next week one of his regional chiefs talks tough about inflation. This week it is the Dallas Fed chairman telling the world that he will vote against any further Quantitative Easing. The markets didn't even hesitate.
The news is uniformly bad about housing. But some of the housing stocks are in solid uptrends. Not all, but a couple anyway. The housing stocks telegraphed the slump in housing when they topped back in July of '05, at least two years before the housing market tanked. The bottom for Lennar was in Nov. '08. The stock has been forming a large "head and shoulders" bottom, the inverse of the topping pattern years earlier. If LEN trades above about 22 it may be a good long term hold. Here is the chart.
The news is uniformly bad about housing. But some of the housing stocks are in solid uptrends. Not all, but a couple anyway. The housing stocks telegraphed the slump in housing when they topped back in July of '05, at least two years before the housing market tanked. The bottom for Lennar was in Nov. '08. The stock has been forming a large "head and shoulders" bottom, the inverse of the topping pattern years earlier. If LEN trades above about 22 it may be a good long term hold. Here is the chart.
Monday, February 7, 2011
A big picture thought.
I believe that oil is the determining factor in modern economies. With that in mind, it seems to me that in a world economy that is competetive for limited oil resources, one countries slowdown is anothers potential gain. China has become one of the U.S.'s main competitors for oil. China is trying to engineer a slowdown. It is hard for any government to "slow" a market based economy, due to the "hot money" that tends to go where the action is. If the hot money flees china, will it come here?
Oil price makes or breaks regional economies. The OPEC price hikes of the 1970's broke the U.S. The S&L crisis was was one result.
The subsequent decline in oil price through the 80's resulted in the oil money dependent USSR going broke.
The high price of oil in the 2007 resulted in the latest round of financial retrenchment.
Almost all countries have been debasing their currencies for the last several years. So the "effective" price of oil may be reset to a higher point. U.S. banks are fully capitalized, waiting for a pickup in the economy to lend. An easing of oil cost, or even holding steady for awhile may be the fuel for the fire here.
Even with long term interest rates moving up we may see the money break loose.(Bond funds in particular are losing money. It has to go somewhere.)
Many warn of the unempoyment picture as being a warning. Employment is a lagging indicator. Companys will tend to wait for their inventories to get low before hiring. Particularly after recent dangers.
I think that the workers who have dropped off the rolls of those looking for work may be related to the early baby boomers deciding to retire early. Many of them had huge gains in their real-estate over the past 30 years and I believe there are large numbers that have taken the opportunity to book their gains over the past few years, move to the more depressed areas of the country, and live off their gains. Many of those that lost their jobs the last couple of years probably collected unemployment insurance, but as it expires they simply stop "looking for work". And many may be content to be "under employed" forever.
The stock market may be due for a pullback, but so far the "bottom pickers" have stepped in to push it higher. The "tell" in markets is how well they handle bad news. ie, how well they bounce back after a selloff.
And as far as the argument that the volume is declining as the markets rise being a sign of weakness, I would propose that as buyers with the intent to hold come into the market, the fact of that holding will reduce volume. Less turnover.....
gh
Oil price makes or breaks regional economies. The OPEC price hikes of the 1970's broke the U.S. The S&L crisis was was one result.
The subsequent decline in oil price through the 80's resulted in the oil money dependent USSR going broke.
The high price of oil in the 2007 resulted in the latest round of financial retrenchment.
Almost all countries have been debasing their currencies for the last several years. So the "effective" price of oil may be reset to a higher point. U.S. banks are fully capitalized, waiting for a pickup in the economy to lend. An easing of oil cost, or even holding steady for awhile may be the fuel for the fire here.
Even with long term interest rates moving up we may see the money break loose.(Bond funds in particular are losing money. It has to go somewhere.)
Many warn of the unempoyment picture as being a warning. Employment is a lagging indicator. Companys will tend to wait for their inventories to get low before hiring. Particularly after recent dangers.
I think that the workers who have dropped off the rolls of those looking for work may be related to the early baby boomers deciding to retire early. Many of them had huge gains in their real-estate over the past 30 years and I believe there are large numbers that have taken the opportunity to book their gains over the past few years, move to the more depressed areas of the country, and live off their gains. Many of those that lost their jobs the last couple of years probably collected unemployment insurance, but as it expires they simply stop "looking for work". And many may be content to be "under employed" forever.
The stock market may be due for a pullback, but so far the "bottom pickers" have stepped in to push it higher. The "tell" in markets is how well they handle bad news. ie, how well they bounce back after a selloff.
And as far as the argument that the volume is declining as the markets rise being a sign of weakness, I would propose that as buyers with the intent to hold come into the market, the fact of that holding will reduce volume. Less turnover.....
gh
Thursday, February 3, 2011
Long bond rates up, bonds down??
As soon as our esteemed Fed Chairman released his comments this morning the bond market sank, and gold and silver rallied. It is probable that bonds will continue to sink over the next few weeks. Here are charts of the Lehman 20 yr. Inverse bond fund. (TBT) A daily chart, and then a weekly chart to give some perspective.
A break above 40 on the weekly and there is no resistance to about 45.
(old support becomes resistance) Lets see how it turns out.
As the TLT chart shows, a drop from here and next probable support at the 85 area. Below 80 is uncharted waters. It was the attempt to drop below 80 that started this whole mess in 08. High oil meant weak bonds, meant popped housing bubble and popped banks....
(old support becomes resistance) Lets see how it turns out.
Wednesday, February 2, 2011
Weak economies?
Here is another good looking chart. From a longer hold perspective. A breakout to new highs would be a buy.
RIO will be a buy at $74, with a risk to about $68. A weekly chart is promising. How does a company that holds up this well portend a weak economy? At least, it signals strong silver prices......
Tuesday, February 1, 2011
Dollar crisis coming soon?
The USD is taking a hard dive toward long term support.
I don't see any support below this level. Unless the Bernank changes course.
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