Tag Archives: Markets

Why do Capital Markets Move Up and Down?

Posted on May 18, 2010 by | Comments Off

Most recently the capital markets have taken a breather after a very long, almost unstoppable, run in an upward direction.

Have you eve wondered what exactly makes the markets move in one direction or another?

The true answer is pretty simple; No one is 100% certain, especially in the shorter term!

Often many write, (present party included), on the reasons for capital market movement and the recent events that have occurred. Over longer periods of time generally the markets are relatively rational, but not always. Just as some days we wake up and feel terrific, and other days for no apparent reason, we rise to a long, tough, less positive day, the capital markets will suddenly take a negative tone as well, sometimes for almost no apparent reason.  

Many who have visited our office comment on one of our market reminder sayings written on our window with erasable ink “The Markets can stay irrational longer than you can stay solvent.”  This saying became very popular by short sellers during the late 90′s tech bubble, as many short investors were correct in the direction and the valuation, but went broke just before they were vindicated.

Here are a few items that dramatically change market direction, Big Multinational events, Money Flows to and from certain areas of the markets, Investor Confidence, and often peer pressure. For peer pressure examples, take a look at the Financial Times  Market Macro Map popup, of the world markets, over a few mornings, and see how the tone is set globally and moves across the world.

Many times we agree with the market headlines on the direction and reason, but not always. There are times when markets move, especially in the short term, for reasons that are unknown to anyone.

Have A Good Day!

JK

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Posted in Investing/Financial Planning, Market Comments

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The Fear of the Unknown; Bernanke Update; State of the Union

Posted on January 27, 2010 by | Comments Off

To some the Capital Markets may seem mysterious and maybe even schizophrenic at times, due to the sudden frequent change of character.    

Not Really!    

The Capital Markets are very intuitive, insightful, but often overly dramatic. As we mentioned in our Trifecta post earlier, participants of the Markets now have a lot on their plate as they deal with several different possible structural changes.    

Bernanke is getting more support as the end of the month deadline approaches, which in our opinion is good news. (We think stability in offices is a good idea.)    

Today, we add one more worry for participants, as there have been rumors of an aggressive speech at the State of the Union tonight. In our opinion much of this rhetoric is overstated and will be forgotten in just a few days.  Even with the passing of some of these worries, Capital Markets may feel a hangover of sorts as many global markets have taken their cue from our land and become squeamish themselves.    

State of the Union 2010

Tune in tonight and keep an eye out for any decided changes from earlier views.  If there are, we will update you accordingly.    

Have a Great Day!    

JK

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Posted in Economy, Market Comments

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Earnings, Earnings, Earnings-Currently One of the busiest weeks of the Quarter

Posted on January 26, 2010 by | Comments Off

This week marks one of the busiest week for earnings of the quarter as many companies begin reporting their 90 day treadmill results.

As we had said in an earlier post, earning season is going well.

You might ask why the markets are not acting well? When markets turn tail and begin a downward move, almost every stock within the capital markets comes along without discretion. Even companies reporting excellent results are often pulled down by their peers.

The tugging downward of good companies by their not-so-do-well brethrens makes for excellent investment opportunities.

Is the Glass Half Full or Half Empty?

Have a good day!

JK

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Posted in Market Comments

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A Structural Trifecta for the Capital Markets to Digest

Posted on January 23, 2010 by | Comments Off

Over the last recession, fundamentals deteriorated, and the capital markets began a squishy journey starting in 2008 and firming late first quarter of 2009. Fundamentals are the key drivers for the capital markets, but they are not the only driver. Structural changes can also have a major impact on our capital markets.  

Over the last several business days, the capital markets have been hit by a trifecta of structural changes:  

Trifecta

  1. During a publicly traded financial company conference call (we think this was no coincidence), President Obama hit the airwaves and laid out plans to dramatically change the financial industry. Details shocked many participants and immediately changed valuations of many financial companies.
  2. A question of Bernanke’s re-appointment (due by end of January), which seemed a 100% lock just weeks ago, seeped into the picture.
  3. An unexpected interim party change in a Senate seat, from a historically compliant party region (Boston, Ma.)   

Given the fundamental positives we have had at our back over the last year, it will be interesting to see how investors stomach the latest capital market movements. In our opinion, this is the first test many investors will have seen in almost a year, and is a process of shaking out the weaker hands of the market.  

Have a Great Day!  

JK

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Posted in Economy, Market Comments

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Nice Start to Earnings Season – Remember today is a Witching day

Posted on January 15, 2010 by | Comments Off

With the unofficial start of earnings season marked earlier this week, Alcoa,  which disappointed many investors, we began to take a few deep breaths in anticipation of a tough season.

Fortunately Alcoa was the exception, not the rule, as for the most part, earnings have been good, with company managers gaining confidence in their outlook, customers, and future for the year, which bodes well for employment i.e. As growth and confidence from a company level increases, hiring of employees will most likely follow.

Lastly, today is a Friday Witching, which means synthetic contracts expire, this usually puts short-term unforseen trading pressure on stocks and the indexes along with extreme total market volume.

Have a Good Weekend !

JK

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Black Friday, Cyber Monday Update– The Winner “Suzie the Saver”!

Posted on December 2, 2009 by | Comments Off

As a quick update from last weeks humorous duo of fabricated personalities, we wanted to give you a quick status report.

It appears as if “Sammy the Spender” did make a few runs to the store, but was trumped by “Suzie the Saver” as we firmly established a new holiday lingo “Cyber Monday“. 

As a side note, I found myself on a few cell phone text updates for holiday specials, as an interesting way to monitor company sales, the technology they were using, and this rather new form of marketing.

Overall we estimate retail and related sales were not as robust as expected, as the consumer, rightly so, remains frugal in spending. This situation will form an interesting end of the year struggle as public companies via for a smaller sales pool, at reduced rates. We will keep you updated!

Have a Good Day!

JK

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Posted in Economy, General Financial Planning, Investing/Financial Planning, Market Comments

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Dubai, The Reaction is What Matters !

Posted on November 30, 2009 by | Comments Off

Most likely, anyone hearing the Dubai news over the holiday shortened week that just passed, had some type of mental image of the area.

The importance of the region is not as great as the World Reaction to the news. The World is a much smaller place today and getting smaller by the minute. See our August 17, 2009 post  An Interesting Weekend of Sports and How it Relates to World Capital Markets 

A quick Summary of the events and a few stats of Dubai:

  • Dubai announces they need an extension on their estimated $70-90 billion of debt (Interesting comparable stat- Bill and Melinda Gates foundation Assets ~$35 billion http://www.gatesfoundation.org/about/Pages/foundation-fact-sheet.aspx)
  • Dubai GDP annually is about $85 billion (Debt approximately equal to GDP)
  • Dubai Population ~1.5 million (Phoenix Arizona 1.5 million)
  • Federal Government of Abu Dhabi loaned Dubai $10 Billion earlier this year

In our opinion, the big Government is teaching less than thrifty little brother a lesson, especially after the quick usage of the $10 billion, but again the importance is the connection of the world reactions.

In closing we have attached an outstanding image from the CIA’s website along with their commentary.

“The artificial peninsula and islands that make up Palm Jumeirah in Dubai as seen from the International Space Station. This massive earthwork is reclaimed from Dubai’s Persian Gulf coast. Advertised as “being visible from the Moon,” the palm-shaped structure displays 17 huge fronds framed by an 11-km (7 mi) protective barrier. It is the first of three residential and commercial palm-shaped projects being undertaken in Dubai. Image courtesy of NASA.”

Have a Good Day!

JK

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Posted in Economy, Market Comments

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Black Friday Looms-”Sammy the Spender” and “Susie the Saver”

Posted on November 24, 2009 by | Comments Off

Most know that Black Friday’s name came from days gone when retailers finally turned a profit for the first time of the year, or moved into the “Black”.

Fortunately as analysts in this day and age, most companies profit throughout the year, but certainly have a heavy dependence on the next few days of revenue.

In a slightly humorous two-part post starting today, we share two totally different imaginary people, “Sammy the Spender” and “Susie the Saver”. 

Today “Sammy the Spender” (An Analyst and Investor’s Dream) 

We want everyone to hit the malls with Sammy and shop until they drop. Retailers and consumer related companies are ready for a frugal shopper and have stocked their inventories and priced their products appropriately. All retailers need are a few good shopping hours. Sammy, which we hope shows up on Friday morning, early, in good spirits, with money to burn, would make for a major positive season. Consumers have been relatively frugal as unemployment fears have reigned in their spending, keeping consumer related companies on their toes.  As an Analyst, we hope Sammy makes for a positive start to the season! 

Last holiday season was extremely tough for retailers, making comparable growth numbers (comparisons from last year) a low, and easily jumped hurdle. As revenue numbers are reported  from the season, easy comparisons should make for nice growth year over year, in turn propelling further good will (moving upwards) the capital markets.

As an Analyst and Investor, we wish Sammy a Spirited Holiday, and VERY busy Season.

Tomorrow: ”Susie the Saver”  Our Planning and Investing Client!

JK

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Posted in General Financial Planning, Market Comments

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Searching for Ideas and the Economy

Posted on November 12, 2009 by | Comments Off

Yesterday (and today) I had the opportunity to visit with many publicly traded company managers. http://www.threepa.com/SWIdeas.html

Throughout the day yesterday, and most of today, I will be attending a conference for investors where publicly traded companies present explanations and updates about their firms. On Wednesday I visited with companies from the following Sectors of our economy, Biotech, Consumer, Energy, Financial, and Consumer Staples just to name a few. In most cases the CEO and CFO/IR representative was present.

As I left the conference yesterday, a few points became clearer to me:

  1. Most companies weathered the storm of the latest recession fairly well.
  2. This latest recession was a doozie!
  3. The Financial related company fully expected interest rates to begin moving upward (Further confirming our theme mentioned many times A Coiled Spring Being Held Down…Careful !)
  4. Energy prices are expected to rise in the future (Supporting our theme of inflation in the future.)
  5. Consumers are continuing to be careful with their spending.
  6. It’s too early to sound the all clear bell, but things are improving.
  7. Overseas is growing faster than domestically (Confirming our thinking the world is a much smaller place today An Interesting Weekend of Sports and How it Relates to World Capital Markets)

As you know we certainly embrace electronics and are big fans of distant virtual and distant connections, (several times during the conference Donald was looking at information live, as I was listening to managers) but it is very nice to shake hands, look managers in the eyes, and visit with them one on one, every so often.

Did the visits change our minds?

Not really, rather most visits help to confirm our current thoughts and beliefs, helping give us confidence in our delivery of thoughts to you.  Being humble, given the most recent events of the latest two years, was evident from both managers and investor’s. We have all learned a lot, which will certainly help us in the future.

Have a Good Day!

JK

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Posted in Economy, Investing/Financial Planning, Market Comments

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Mutual Fund Year End Today (10-30-09) Possible Sways in the Capital Markets

Posted on October 30, 2009 by | Comments Off

Today marks the year-end for many Mutual Fund companies.

Due to end of year, 12/31,  payout and distributions for most Mutual Fund companies, today marks most Mutual Fund companies fiscal year-end.

Mutual Funds dominate the capital markets as their hands are large and heavy. Over the last several days we have seen higher trading volumes, and swaying markets. Much of this could be due to year-end adjustment from fund companies. Only a very small change from a huge company can change the tone of the capital markets easily.

By the end of next week, we should have a more normal capital market environment as there will most likely be clean up adjustments early next week.

Have  Good Day !

JK

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