Category Archives: Market Comments

Zigg is Back with a Friday Question: “A Market/House on Rock or Sand?”

Posted on March 23, 2012 by | Comments Off

Zigg, in his usual contrarian way, stepped from his island, which is full of fair weather fans and mentioned an old fable for thoughts on the current market.

According to Zigg, a possible way to paraphrase certain markets is similar to the fabled wolf and pig story.

A Capital Market/House on firm footing:

  • Strong Earnings
  • Heavy Trading Volumes
  • Early in the Economic Cycle
  • Stable Interest Rate Policy 

A Capital Market/House on Less firm footing, according to Zigg:

  • Weak Trading Volume
  • Decreasing Earnings Growth
  • Mid to Late Economic Cycle
  • Political and Geographic uncertainty

While we agree with Zigg in certain areas, unlike our fabled friends, capital markets can transplant their foundations very easily, however it is still worth staying on guard and watching for strong winds, just in case.

Have a Great Day!

JK

214-706-4300

www.jkfinancialinc.com

Comments Off

Posted in Investing/Financial Planning, Market Comments

Tagged ,

Portfolio Insurance/Umbrellas are Inexpensive Today!

Posted on March 20, 2012 by | Comments Off

Purchasing an umbrella in the rain is often more expensive than while the sun shines. Portfolio insurance carries many of the same characteristics.

As market participants ring the all clear bell, we happily enjoy the fruits of their efforts as portfolio insurance has become cheaper, due in most part to the continued downward path of the CBOE Volatility Index or VIX.

The VIX, a measurement of fear, also has a directly influence on the option prices we have mentioned in many of our educational series.

We are not calling for rain, however if an umbrella was needed during the last storm, now is a better time to make the purchase than during the storm.

Have a Great Day!

JK

214-706-4300

www.jkfinancialinc.com

PS Getting Closer to our Special Private Client Event in late April !

Comments Off

Posted in Investing/Financial Planning, Market Comments

Tagged , ,

Chance Meeting With Axel Merk of the Merk Funds…”Greece is Gone, One Way or Another”

Posted on March 6, 2012 by | Comments Off

Last week, through a CFA related event, I had the opportunity to have lunch and visit with Axel Merk of the Merk funds. One of the fun, and this time, slightly embarrassing moments, associated with these type of events are often I have not met the manager in person prior to the event. At this event, I had carried on a 10 minute conversation with Axel, the founder of the Merk Fund group before I figured out his identity. Not withstanding our awkward introduction, Axel a currency and macro economic expert had some very interesting ideas concerning the state of the global economy.

Axel Merk, a Swiss born, German raised well-traveled founder of the Merk funds, specializes in macro economic event. As founder of the Merk Fund Group, which is a global currency investment Mutual Fund group, Axel and his team of managers use their expertise to attempt to exploit currency opportunities in a conservative manner.

Here are Axel’s main points from my perch:

  • The Federal Reserve has pushed rates so low, a main gauge, the interest rate yield curve, is less effective at giving clues.
  • Asia and the EU will try to grow at any cost, even if man-handling their currencies are necessary.
  • There are many mandatory global market participants, not profit maximizing, leading to inefficiencies.
  • Global investors are watching our presidential election race closely, as almost every country is thrown under the bus at one time or another during the debates.
  • Greece is gone, according to Axel and they have made many mistakes along this way. (See Cartoon, a Merk funds specialty)

Axel impressed me as much as any professional investor has before. I am fortunate to meet and visit with a tremendous amount of professional investors which allows us to develop a benchmark. Axel and his firm will be a regular part of future discussions due to their expertise, competence, global knowledge and objectivity.

Have a Super Day!

JK

P.S. Zigg says “Don’t Forget About me!”   I told him not to worry, we would not.

www.jkfinancialinc.com

214-706-4300

Comments Off

Posted in Economy, Investing/Financial Planning, Market Comments, World Political

Tagged ,

Energizer Bunny Capital Markets….”Going and Going”

Posted on February 28, 2012 by | Comments Off

For those familiar with the Energizer Bunny that keeps “Going and Going” we liken the capital markets of late to the famed commercial.

Yesterday capital markets were faced with further discontent from G-20 members who were meeting just south of the US border in Mexico city, only to have market participants shrug it off later in the day. Along with G-20 concerns, gas prices have risen to levels that provide a small headwind, nearing $110/barrel WTI.

Last night, our timely party poopers, the S&P Ratings Agency, put Greece on Selective Default notice. In true Energizer fashion the capital markets smartly appear to keep “Going and Going.”

By some estimates over $450 billion has left the capital equity markets in the last few years in search of a new home. If our feelings are correct, that money may be returning, happily providing our “Going and Going” markets. Markets never rise in a permanent straight line, but let’s all enjoy the ride!

Today, from the Eastern US area, Donald starts his second of three full days of training on our new rebalancing allocation system, Tamarac. So far our expectations have been met, which means further enhancements to investment portfolios. Thank you technology!

Have a Good Day!

JK

214-706-4300

www.jkfinancialinc.com

Comments Off

Posted in Donald Capone, Investing/Financial Planning, Market Comments, Personal

Tagged , , ,

Why Markets Can Seem So Weird; 90 Day Treadmill Update and a Mr. Mom Weekend

Posted on February 24, 2012 by | Comments Off

With over 90% of S&P 500 companies reporting this 90 day Treadmill Season, we thought it timely to point out how markets can seem weird at times.

The average surprise, according to Thomson Reuters this quarter, is positive 3.9% across all sectors of the S&P 500 with the following winners:

  1. Technology + 9.6% Positive Surprise
  2. Industrials + 8.5% Positivie Surprise

And the Following Losers:

  1. Utilities -2.8% Negative Surprise
  2. Telcom -0.5 Negative Surprise

Worth noting, the negatives are not extreme, which is good.  With a relatively normal earnings season and forward estimates for the next quarter trending down a little over 1% (we always say the capital markets are forward-looking) Why are the markets so weird, and going up?

Fear and Greed (Relatives of Zigg and Zagg)

The markets may seem weird by going up, with earnings trending down and a somber picture moving forward until we consider our friends fear and greed. Fear has subsided greatly over the Greek situation, rightly or wrongly. Remember last year was a relatively flat to down year in the capital markets even as companies turned in 15%+ report cards from their annual treadmill reports.  Greed, another friend, has increased somewhat as risk appetites have returned to the table and are showing their hands in money flow, asset selection, and rotation of leadership.

A Mr. Mom Weekend:

For the next 60 hours (I am not counting..haha) I will fly solo with Sophia (7) and Pierce (4) as a girls trip to the coast takes Pamela away for some much-needed R&R. Watch out fashion police, (I always have trouble finding matching clothes) and yes they will probably get an extra chocolate or two, but it will be much safer here in Dallas with Mr. Mom, than on the coast with a group of 9 girls on Segway’s!

Have a Great Weekend!

JK

214-706-4300

www.jkfinancialinc.com

Comments Off

Posted in Earnings Season, Investing/Financial Planning, Market Comments

Tagged , , , , , ,

Confessions of A Federal Reserve Official

Posted on February 23, 2012 by | Comments Off

As mentioned in an earlier post, Dr. Harvey Rosenblum was the keynote speaker at the Texas Investment Symposium Event (Tips). Dr. Rosenblum, a very candid speaker with a knack for making complex subjects understandable, (economics can be very confusing) said something during his speech, very matter-of-factly that I have not heard before from a Fed official.

Dr. Rosenblum confessed that the FOMC’s current interest rate policy no longer has the teeth prior policy makers had available them.  Long suspicious of this fact by many, including myself, it was interesting to hear Dr. Rosenblum so casually mention this fact.

Why is current interest rate policy less effective?

The following chart is of the FOMC target interest rate policy. Notice how this last cycle we have moved to zero and are holding.

Where can you go from here ?

Fed Target Rate: New York Fed.org

There are no more bullets in the gun! Notice in prior years there was room to move down (turn the heat up on the economy) and have an effect on the economy. Since we currently have a close to zero interest rate policy, it makes sense that the latest changes have had a much slower result in changing the direction of our current economic situation.

Other Operations Necessary

Dr. Rosenblum mentioned over a half of dozen NEW economic stimulus plans that were established during the 07-09 crisis, many of which are now closed, as the new open market operations (economic stimulus) levers of the future.  While there may be many new future tools for the FED to embrace our bet is an eventual return to normalcy.

What is old is New Again

Similar to that old phrase of what is old is new again, we are wishful of an eventual rising of short-term rates that will allow Fed policy makers to “re-load” the gun for the eventual next economic downturn.

Have a Great Day!

JK

214-706-4300

www.jkfinancialinc.com

Comments Off

Posted in Economy, Interest Rates, Investing/Financial Planning

Are Those Rose Colored Glasses You Are Wearing? Zigg Makes an Appearance

Posted on February 10, 2012 by | Comments Off

You guessed it, Zigg is back, and this time with a different message. For those new to Zigg, he has a residence on small island near the shore of a large group of fair weather friends, called Zagger’s, who often represent the majority voice at any given moment.

Last fall, when everyone was Zagging in the negative direction, Zigg spoke calmly and confidently to us on Friday’s, pointing out the positive events of the week, and letting us know that things are not always as negative as they seem.

This week Zigg has a different message for us. Possibly Zigg’s message is due to his Zagging friends taking residence on his island, telling him the sky is bright, and it will never cloud again. 

Zigging while others are Zagging this week means pointing out a few items:

  • Consensus moods (Zagger’s) often lead to clumsy investing, do not let your guard down, just as we bought when markets were down, we sell when they are up in order to keep your portfolio driving speed (allocations) appropriate.
  • It is very highly likely, capital markets will not match their January return of 4% throughout the year, leaving us with a 48% return for the year.
  • Shhhh……. While we hate to say it, the EU still has a few problems.
  • It is an election year!

While always positive, and never one to stick his head in the sand, Zigg did want to pull the umbrella from a few of his Zagger friend’s drinks (and maybe send a couple home.)  Zigg also understands, be careful what you ask for!

Have a Great Weekend!

JK

214-706-4300

www.jkfinancialinc.com

Comments Off

Posted in Investing/Financial Planning, Market Comments

Tagged , , ,

Non-Farm Payrolls Blow Past Expectations – Black Clouds… ???

Posted on February 3, 2012 by | Comments Off

This morning non-farm payrolls came in at 243k versus expectations of 140k, far exceeding expectations. This surprising report has put a fire in the capital markets around the globe.

While this is only one report, most economists believe it takes about 210k to bite into the unemployment situation.

Given the Black Cloud CFA Forecast dinner post, and the dialogue I have gladly received from many of you, we now have another positive tea leaf on the table.

Thanks for all of your emails and comments, and thanks for reading our work, we greatly appreciate it!

Have a Great Day and we have another post coming shortly today to slide you lightly into your super bowl weekend !

JK

214-706-4300

www.jkfinancialinc.com

Comments Off

Posted in Investing/Financial Planning, Market Comments

Tagged , , , ,

The Black Cloud of Panelists at the CFA Dinner

Posted on February 2, 2012 by | Comments Off

Last night, as mentioned earlier in the week, a group of “experts” joined to visit and discuss the domestic and global economic situation at great length. Each one of the four horsemen spoke on a very macro view of the world.

As dinner concluded and the microphone volumes increased the blue skies turned dark and I began to fear of indoor lightning bolts and rain. Projected time frames ran from an optimistic 2018 to a pessimistic 2022 for the good times to return.

Over use of leverage, EU debt issues, and continued government criticisms were abundant as we hit the mid-point of the discussion. One speaker virtually guaranteed we were in a recession at the current time. We will keep track as the year passes.

While I operate most times from an optimistic view-point and “There are very few statues of pessimists!” it is healthy to always listen to the negative views. In the case of this dinner, one night may cover several days or even a week of negatives.

After reviewing my notes from the meeting one last time……still all negatives, definitely a weeks worth!

Have a Great Day!

JK

214-706-4300

www.jkfinancialinc.com

Comments Off

Posted in Market Comments, World Political

Tagged ,

Facebook and Sipping from the Earnings Fire Hydrant

Posted on January 31, 2012 by | Comments Off

It appears the long-awaited Facebook IPO is nearing the Wall Street docks, with Morgan Stanley and Goldman Sachs (surprised Goldie is not lead, with their large earlier investment) being the underwriters.

Yesterday I saw or heard at least six different opinions on the Facebook IPO most of which were positive. At this time, given the lack of information that has been officially released, it is impossible to formulate an accurate opinion. It is difficult to pick the team that will win the big game, especially not having any idea who are the players. Our position is casual observers during this process, however we are always interested.

Today we have 29 companies from the S&P 500 reporting which is similar to taking a sip of water from a fire hydrant.  Most earnings have been ok, but not terrific, again setting the bar relatively low, in our opinion.

Donald is in town tomorrow for a group of expert forecasts for economic and capital market related events sponsored by the local CFA association. We will bring you the cliff note edition of facts, should they prove interesting.

Back to work as conference calls beckon.

Have a Super Day !

JK

214-706-4300

www.jkfinancialinc.com

Comments Off

Posted in Earnings Season, Investing/Financial Planning, Market Comments

Tagged ,