Archive - Jul 20, 2015

Here's what the chart looks like, and as you can see, it has thrust down to an interesting point not seen for about a decade:

Unfortunately, Trump’s antics will make it only more difficult to hold a sane debate about taking that time-out from immigration. So, one alternative is an insane debate about it, one based on sheer grievance and gall rather than the responsibilities of governance. We've feared for many years that we are all set up to welcome a red-white-and-blue, corn-pone Nazi political savior type. We don’t think Donald Trump is it. But he will be a stalking horse for a far more skillful demagogue when the time comes. There’s a fair chance that the wheels will come off the banking and monetary system well before the 2016 election. Who knows who or what will come out of the woodwork before then.

But the recovery... demand... growth... front-month WTI Crude just broke beloe $50 for the first time since April...

The Bloomberg Commodity Index tumbled once again today, hitting its lowest level since 2002. Stocks did not. We have seen this kind of 'deflationary' boom before... and it did not end well...

The power, if not necessarily the Truth, resides primarily with the bulls right now or at least it does in certain parts of the market. The NASDAQ broke out last week to new highs but the S&P 500 and even the more speculative Russell 2000 did not. The market’s advance continues to narrow, to concentrate among fewer and fewer names. Bulls will tell you that this is just a pause and the advance will broaden out. And if enough people believe that and there isn’t any convincing reason to sell, they might be right for a while. But at some point the rose colored glasses will come off and someone might wonder aloud why Celgene paid $7 billion for a company with trailing 12 month revenue of $4.5 million. Someone might wonder why Netflix is worth $48 billion and CBS is only worth $27 billion with more than twice the revenue, better margins, a higher ROE and the ability to produce positive cash flow. Until then it’s just a dream within a dream and somebody keeps hitting snooze on the alarm clock.

Even after a few weeks have passed, the unexpected visit of the Saudi Deputy Crown Prince to the St. Petersburg Economic Forum still has a lot of people scratching their heads. The news is full of widespread and contradictory theories, while questions abound. Why had the Saudis accepted an invitation from a country sanctioned by the U.S., its oldest and strongest ally? It is still a bit early for all the pieces to neatly fit together but now, after the dust has settled somewhat, a pattern seems to be emerging that may explain the situation.

Any valet confronted with the aformentioned message is, by federal statute, permitted to drop a deuce into the front trunk of the vehicle.

Putting it all together, here is the LTM GAAP and non-GAAP EPS, and the resultant P/E ratios for the S&P on a 2015 forward basis (using Deutsche Bank's optimistic growth forecasts for the rest of 2015 which have Q4 2015 GAAP EPS projected to grow 23% from lastt Q4). As of this moment, with the S&P500 at 2130, the S&P 500 is trading at 18.1x forward (non-GAAP) PE based on 2015P EPS of 118, and an unprecedented 20.3x GAAP PE if one uses the far more realistic 105 GAAP EPS.

More than 40,000 food items are being sold with a "poisonous" 10% Value Added Tax hike as of today, burdening the average Greek household with at least 55 euro extra costs per month.

As we showed before when we showed the various Greek circle of debt hell, unless Greece finds a way to access the market once again following its "triumphal return" in mid-2014 when it issued bonds that cost investors (with other people's money) their 2015 bonus, it is only then that the Greek debt repayment hell begins.

The Mexican Peso has devalued 23.5% in the last 12 months, breaking 16.00/USD for the first time in history today...

And then this happened: during a press conference currently taking place, FIFA's embattled President has stormed out of today's Press Conference after comedian Simon Brodkin interrupted the meeting and threw money at him.

We love reading quotes from Hussman in 2000 and 2007. The air is getting pretty thin up here. A stock market driven by Google, Apple, Netflix and a few other tech darlings with no earnings does not make a market. Time is running out for the bulls. The same morons on CNBC ridiculed and scorned his facts then and they scorn and ridicule him now. Do we trust Jim Cramer and Steve Liesman or John Hussman? Guess.

Two sides separated by the money line.