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Financial news I consider important, with my opinion, which is worth as much as you paid for it.
Please click HERE to read a synopsis of my view of the financial situation.

Thursday, January 24, 2013

Apple stock, a buy?

If you like Apple, today is a very good day to buy their stock, chart wise.  It should open at 459 a share.  This will place the stock just on the very long trend line I showed a week ago.
If the stock closes on or below 450 today or in the future, sell.  Otherwise the long trend support may hold, and what does not go down will go up.



Wednesday, January 23, 2013

March of the Robots, Deflation for decades

Many economic blogs for years have called for US Dollar inflation.  This has not materialized as a general event.  I have covered this on the blog before.  Credit = Money, and Credit is not expanding like it did into 2007.   High unemployment stagnates wages.   And as I have called for since 2008 natural resources would creep up in cost over time due to global resource competition.  Specifically as India and China grow wealthier, they will consume a larger chunk of the resource pie.

Another deflationary force is Technology.  Every year less people can do more work.  Technology does create new jobs, but typically for higher education at the expense of lower skilled workers.  The wages are higher, but there are net fewer jobs.

I am a techie, I love tech.  I am not suggesting the world follow the Amish.
But I see technology efficiencies now biting into the technology world.  The area of growth for jobs is now also becoming a victim of the success of itself.

Pure capitalists state that if we freed the economy from the shackles of all government intervention, that the market will find optimal balance.     I question if that balance can ever equal full employment again.
People use history to project future events.  The capitalist 1800's and 1900's that yielded the middle class and a booming economy is not the same backdrop we face today.

The Western Baby boomers are aging, the younger generation have endured a decade of stagnant jobs.
And technology marches on.

What I think is happening is a shift in who is employable.   If you look at the industrial revolution, people shifted from agriculture to the urban centers to staff factories.   Those who did not adapt may have had to experience lower wage jobs in the fields relative to the new industry wages.

I think that is what we are starting to see now, the efficiencies of technology reaching deep into the economy to 'raise' the bar.   I have a couple of items for you to consider.

First, there is robotics.  This industrial industry has for the last decade taken a chunk out of the large manufacturing jobs.   Consider this, Apple is moving some manufacturing BACK to the USA from abroad.   Termed reshoring work.  But instead of 1,000s of factory workers, it is expected TOTAL employment, including the receptionist, to be 200.  Why? Automation.

Baxter, a robot targeting SMALL companies to replace 'expensive' workers at 9 bucks an hour is being marketed for a total of 22K per Robot.  In 18 months you can expect this robot to do much more than today, and every 18 months thereafter.  Dare I say the price will also steadily be reduced.
It isn't out of the question in 6 or 8 years that the Robot be under 10K. In a decade every McDonalds will have 2 people and rest robots running the operations.

Combine above trends with IT trends of eliminating IT datacenters and consolidating on the cloud, and we have massive deflationary forces at work.

Now for a quick higher level view of job facts.  Mish posted two images below about the US labor force over the last five years.  Considering the US government is spending 3.4 Trillion of a 15 trillion economy each year, the US is barely treading water.  Dare I say the forces I quote are hard to keep at bay. Simply look at industries hardest hit.  Those that can be automated or outsourced.

What does this amount to?  Well we are in interesting times in the years ahead.   There will be explosive new companies with tremendous growth as new areas continue to unfold.  Society is a bell curve of capability, and the bar for new jobs will continue to be raised.  I expect an ever increasing higher REAL unemployment rate. (if you don't ignore those who give up trying to work)  There will be continued deflationary forces between baby boomers retiring, technology, and overall unemployment.  And I still think natural resource contention as China kick starts their consumer economy along with India.

I do have optimism, to read that post, click here!






Tuesday, January 22, 2013

Bullish on Miners

I have been waiting for WEEKS for a clear sign that Gold miners are a strong buy.
The best indicator I can muster is the mining sector has held firm from further declines in recent months.

Gary of the Smart Money tracker posted on his public blog that this time its different with miners.
An indicator, a mild one, is that this time instead of the usual sharp down in miners like we have seen for years, this time its more mild.  Click here to read and see charts.

What is likely happening is that gold miners are being bought, en mass on the recent down slope preventing the usual sharp down forcing action.  But this is speculation, no scientific proof.  The chart could be round for  any reason or no reason.

The market was expected to swan dive because of Government Fiscal cliff, that fizzled.  Also sharp downturn AFTER the elections.  Also because of bad Christmas sales.  Frankly, pick any of 100 reasons why it should turn down and has not.

And that is the point, it hasn't.  What can't go down usually will go up.  While some stocks may soar (think AAPL as a comeback king temporarily) I still like the gold miners for long play for my 401K.

ETF for Gold Miners GDX is at 45.82, GDXJ at 20.48
ETF for gold (GLD) at 163 and silver (SLV) at 31.12


Wednesday, January 16, 2013

Currency War is raging or Germany in trouble

I have been saying since 2008, we are in a currency war.  A currency war is when all countries try to boost prosperity by making THEIR currency go lower, so that their countries products are cheaper, relative to the rest of the world.

The problem with this scenario is the other countries see what is being attempted and actively prevent this master, grand plan from occurring.  The net result is all currencies devalue, resulting in higher prices for natural resources.  Natural resources being physical cannot be as easily manipulated like services or other assets based solely on currency worth relative to other objects in the same currency.

Germany on Tuesday announced "Bundesbank to pull gold from New York and Paris".  This is a first sign that the international banking system is losing it's cohesion OR that Germany having more difficulty dealing with the Euro than is publicly known.  Moving gold back to Germany to allow Germany to use the gold as they wish, as they attempt to stabilize their currency.

Either way, this is a tell-tale moment in the history of banking since the great depression.  Since then the western countries have been evolving the financial system based on a trust system.  That ideal actually is the right one, the world banking system at it's heart is trust.   Embracing trust is a good thing for prosperity and business.  However, if that trust is abused, sentiment changes.  Or possibly the trust is just as strong, but the financial system strains is pressuring Germany to deal with and needs the gold closer to home.

As a reminder, I STRONGLY oppose gold as money.  It is the exact opposite of trust.  A currency system based on gold basically allows zero growth without first paying a 'tax' to extract gold, refine it, and print coins as overhead to expanding the economy.  In the very rapid changing world we live, such draconian limitations would smother the economy.

Either way, 2013 is shaping up to be a fun year.

Tuesday, January 15, 2013

Apple

Back on Feb 16th, 2012, I posted "Apple chart and the Market".
Apple has just started its parabolic rise.  At that time, when Apple was worth $520 a share that consider putting in stops or taking some profits.

My timing was off, but the sentiment was true then and true now.  The stock went parabolic and became the worlds most valuable company in human history in August 20th, 2012 post at 664 a share.  Apple was worth more than Merck, Intel, Anheuser-Busch, Toyota, and Verizon combined within days after that post.

Looking back, that was clearly when the bell was rung , that Apple was near its all time high.  Apple may break that high, but I seriously doubt in the next 4 years ahead (if ever).

Here we sit, with Apple at 486 a share.  From a technical perspective, one can argue it is merely a correction for the stock to revisit new highs in the year ahead.  Perhaps.

But if Apple stock hits 450 a share and CLOSES the market at 450 or lower, to me, Apple is a broken stock.
The stock will have shattered it's uptrend in place since February 2009, 4 years later.  That should give anyone pause for thought.
As a techie, I don't like Apple's future, and I haven't since Google announced Android OS.
Apple to me is the IBM/Microsoft of phones, and Google the IBM PC clone/Linux competitor.  The innovation in Android can't be outdone by soo many companies against 1.    Hardware will continue to be commoditized  and the consumer won't see a difference in apple that is material than android.
And that is EXACTLY what Google wants! Commodity hardware but their software to enable Google services.

And I for one do believe, Steve Jobs cannot be replaced.  Apple faltered when they kicked him out, and they will falter again now that he is gone.  He was that good.

With that said, I have 3 iphones, 2 ipads, another iphone used as itouch, and a MacBook.
My father and nephews have iphone/itouches.  And I still recommend iphone to anyone non-technical.
But for the power user, the Google Nexus 4 is closing the gap.  There are not many gaps left, actually.  That is a setup for the year ahead for Android to outshine Apple, and that, will not be good for the stock.  Apple as a tech company could announce tech and surprise on the upside, to me that isn't as likely as when Jobs was running the show.

Further, the iphone form factor is NOT THE END GAME!  Next up is Google Glass, then something else, then brain control.  So unless Apple can lead in every new device in the years ahead, it will be a commodity player.

Combined with the news that Apple slashed orders, well, you get the gist.  If you own Apple stock, put a stop in.  Not for all shares, say, 25%, and repeat this pattern to ensure some profits are locked in.

If you held all the way to the top, don't hold all the way to the bottom, that isn't stock, that's a family member.

Trend line below since 2009.
EDITED 10:37 pm
Friend sent me this link on Apple options.  It indicates that the near term bottom of this downswing won't turn around until on/after January 18th.  So if the stock can stop the slide, and you actually want  more Apple stock, the 18th may be a good time.  I still remain pessimistic of Apple hitting 700 a share given reasons above.






Sunday, January 13, 2013

Solar, Buy Low Sell High - 6 months later

In post on June 27th, 2012 titled "Solar, Buy low Sell High" I discussed the value play to buy FSLR (solar company) , TAN (Solar ETF) , and OIH (Oil ETF) purely based on they were beat up at that time.
Also called out FSLR as it started to move at 20.50

TAN was just under 18 a share, now at 18.96.
FSLR was at about 15, now 32
OIH was at about 33, now at 40.70

I did two posts today, both throwback looks on the non-gold miner stocks to buy.
See other called 'Social Media Stocks - Five Months later'

Charts below with red circles on the items.
For these stocks, a long term hold for years is not a bad idea.  A stop at just above your purchase price for the long haul hold.  Otherwise set stops at comfortable levels to lock in gains if they pull back.  Be sure to leave plenty of wiggle room.




Social Media Stocks - five months later

On August 15th I posted "Social Media Stocks".  In that post I called for a bottoming of the social media stocks beat up so badly.  My biggest error, being such an IT person, is to buy that day, and not roll into the stocks over next couple months.

In any event, the play is shaping up good.  Facebook is significantly higher than that day.
Groupon is about break even from that day.
ZNGA, well, its down percent wise still pretty decent, but looking to be firming up.

If you bought these stocks, time to start placing stop losses and looking for an exit.
I posted then, and still continue to believe, holding long term presents significant risk in these companies.

With that said, there is nothing wrong with adjusting stop losses periodically upwards and continue to let it ride higher.  You may get severely punished overnight with news causing stock to open down significantly.  But when isn't that possible?

Below are the charts, with the red circle on when I called for purchasing.  Good luck.



Thursday, January 10, 2013

Time to buy Gold Miners...again

I have posted a few times in last 6 months or so looking to get into miners.
I am buying more miners here...again.
Slowly building position.  4 year charts below.
Gold is an option too.

GDX is at 44.36
GDXJ is at 19.89
GLD is at 160.49



Sunday, January 6, 2013

Cost of Living Measurement

The US government publishes data on Consumer Price Index (CPI) and calculates annual inflation.  The purpose of calculating annual inflation is to provide a measurement of cost of living adjustments required annually to keep up living standards.

The concept is sound, and reasonable.   Everyone knows prices change over time.  Some change due to technology and efficiency.  Some change due to resource scarcity, and yet some is currency valuations.  I am sure if you search the web, you can find some pretty interesting theories on drivers of basic living costs changes.

In truth, probably each one has some play in prices, the emphasis on weight of the contribution is really the debate.

But one thing that has come under hot debate is the measurement of cost of living changes.  To me its pretty simple.  Cost for food, energy, and shelter should be the core components, with a smaller component related to basics realities in a modern world that everyone must face to compete.  The smaller component I will ignore, since it is pretty much impossible to gain consensus.  (Example, must you have one of these: house phone, cell phone, or internet?  In my opinion yes to be gainfully employed in a job above minimum wage).


The economic aspect that concerns me the most is the Baby Boomers in the USA.  This demographic has dwarfed my entire life experience as I travel in their wake.   The inflation 70's, to gogo 80's, and the bubble 2000 can be traced back to their influence.  As they retire, its certain their economic impact will be staggering.

The government entities are painfully aware of the dwarfing economic challenges this presents.   Stand-up politicians who talk straight on these issues are not to be found, for those that do are un-electable.
Thats OK, its life.  People vote for the story they want, reality of trouble is not welcome.

But for my lifestyle, it is important to keep an eye on the dwarfing aspects of the baby boomer retirement ahead.   And one way the government can 'kick the can' a little is to play games with the CPI.

How? A continual slow under-reporting of CPI ensures that the baby boomers don't get the value out of their Social Security dollars.  To those getting benefits, no one 'cut' their promised entitlement.  They are getting what is promised in monthly checks.  But if the cost of living is higher than reported, the net is the baby boomers must live with less than what was promised decades ago.

This in a strange way, benefits me.  For I am not a baby boomer, and that generation gets less, which in turn means I have to pay less of my work contribution to sustain their living standards.

But this also hurts me potentially.  As the CPI is used to determine what is a fair annual raise, inflation-adjusted interest rates, and other gauges that will also curtail my own future living.

So what to do?  You can keep an eye on TRUE annual inflation to gauge your own living standards for your own future.

A web site called Shadow Government Statistics does this for you.  The site maintains a deluge of information bases on 'old government  metrics that were created at a time the goal was to actually accurately measure statistics.  These old standards when used to current situations gives an interesting gauge of current reporting vs older reporting.

One can argue, and there is truth to this, that the weight of economic changes shifts in importance as the living of USA citizens shift focus on different items.  For example if US Postage stamps had a part of CPI, in today's current world, it is immaterial.  When in the 1890's, it may have been more material to citizens.

In any event, I highly recommend looking at Shadow Government Stats inflation charts, if anything to give perspective.

Below is two graphs, first is 1990 CPI, second is 1980 CPI government computation methods.  Both compared against current computations.
The 1980 shows 10% annual inflation, while 1990 shows 6% inflation, compared to 2% today.
Keep in mind, the USA had the highest average gasoline prices on RECORD in 2012, yet inflation is 2%.
Fuel costs are passed into the entire supply chain, alternate fuels are not substantially inplace yet.
I happen to think inflation is BETWEEN 2% and below 6%.  I think there is truth to the changes made over the years.  I don't think the government as ahead of its time for changing process to match reality, so I am sure changes were needed.

But one thing is certain, if your a baby boomer, in 1979 when promised your future social security benefits, the CPI that was used when that promise was made is not nearly comprised of the same components of today.  And I suspect it will be modified again in the next 5 years even further.






Tuesday, January 1, 2013

Predictions for 2013, and beyond

In the last year, my focus on the pulse of the global financial disaster has waned.
There are many reasons, some personal (work, family), some because my disposition is shifting.
I have a longer term view of what is happening than I did a few years ago.  I see all this turmoil as part of what is required to reset the financial system into a new model, one more technology driven and open.  Less pointy hat wearing mean with secret sauce to make the world go round.

How this plays out will be very interesting in the next four years.  I think the party is over from 2008 to 2012, and its time to get down and dirty.  I have high hopes that the entire system will remain in tact, but not better for wear by 2017.  By 2017, that is when I have grave concerns of the system stability.


With this backdrop I have a hard time making a predictions for 2013, for I see any of this happening over the next few years.  But making a 4 year prediction is no fun for anyone.  So I'll try my best for 2013 predictions.  I reserve the right to carry some into 2014.

1) Currency wars will continue to escalate.  Everyone is all in for currency debasement, with one exception, China.  They are of course FOR currency debasement, when it suits them.  If China believes they can withstand a rising currency, they will, for their advancement of global financial leadership.  Europe has shown to not have the stomach to hold the line, they too, will print.

2) Gold and Gold miners will do WAAY better than 2012.  2012 wasn't fantastic year for gold or gold miners.  I expect 2013 will be the start of the spiral up.   Gold will hit 1900 an ounce in 2013, may end lower, but will not cross below 1500 an ounce.  I wouldn't be surprised if the low for 2013 for gold will be in January.

3) CRB index bottomed in 2012, and will not break the 2012 low in 2013.  CRB will end HIGHER than it entered in 2012.  As for it's high and low, eh, its part of the process that I described in 2008 The Big Picture.

4) Europe, this will be toughest call.  Status quote may be maintained.  It will all depend on the will of the people under 40 years old in those countries under stress to make change happen.  Greece, Spain, Portugal, and other countries under duress may lead to leaving the Euro.  Bottom line is Europe WANTS these distressed countries to remain, and keep the debts in tact and raise more debts.  These citizens must decide to live under debt slavery passed down from the generations, or restart.  I'll go with one country gets either out or some strange modifications to Euro-membership rules.

5) in 2012 I made a prediction that the market would end lower, its a miss.  I am modifying the position.  If the US stock market was prices RELATIVE to CRB index, it will end lower in 2013, 2014, 2015, and 2016.  When I say end lower, I really mean trend lower. December 31st is not a magical day, so the exact position to 1 year before is kinda random on the pulse of the market.  But I'll go with lower relative to cost of resources.

6) OK, this is one hell of a call to make, I am making the call that the US 30 year treasury bond rate that has trended lower since 1986 will BOTTOM in 2013.  It may or may not break out of the range.   The setup is breaking up in 2013 or setup for 2014 to beak up.  The key element here is final US 30 year interest rate in 2013 as a low period 37 years after it trended downward.

7) US dollar will NOT go higher than it did in 2012.  If it does, it will be a 'spike' on panic for less than a week.  In general, the US dollar has seen its uplift since 2008, time for it to swing lower.  We WILL BREAK the USD low set in 2011, but may not be materially lower. Again, setup for 2014.


8) China will have a major scare here and there, but will not go materially lower in the markets than what was set in December 2012.  May dip 'for a month' lower, but china markets will end higher than today.
Overall China reform will get under way in 2013.


9) No major reform of US financial markets.  This includes continued fantasy accounting in place since 2009, no significant laws to match Glass-Steagall act dismantled in 2000 by Clinton.  No significant prosecutions of financial wrong doing.  More appeasement and lack of law. (some may read this as a gimme )

10) A major world event will happen in 2013.  Major on the magnitude of a bomb in Israel, a country like Iran, North Korea, etc having a revolution.  2013 will see a spike up in stability issues, leading into 2014-2017.  Sorry I can't be more specific, but I don't have my fortune telling cards handy.

Items 9 and 10 may seem hokey, feel free to disregard and hold me to the first eight.  I tried to be as specific as possible.

Karl of the Market Ticker has his predictions.