"There is some truth to the phrase that the stock market has predicted nine of the last five recessions... but that is a much better track record than the consensus of economists. Every time the financial markets get volatile and messy like this it deserves attention because the markets are trying to tell us that there is a severe issue out there."
It appears that IBM once again "beat" the GAAP EPS by using the oldest trick in the accounting book: a sharply lower effective tax rate. While IBM had used 22.3% for its tax rate a year ago, it decided to use a far lower effective tax rate in the current quarter, only 12.5%. The non-GAAP tax rate was also sharply lower.
Warren Buffett has been consistently wrong on oil, but many experts are calling a bottom on oil prices now that the investor extraordinaire has upped his ante in Phillips 66, betting that he can’t be wrong three times in a row.
<Q - Mike L. Mayo>: What percent of the $17 billion is not investment grade? <A - John R. Shrewsberry>: I would say most of it. Most of it. <Q - Mike L. Mayo>: So most of the $17 billion is non-investment grade. <A - John R. Shrewsberry>: Correct.
The Dallas Fed met with the banks a week ago and effectively suspended mark-to-market on energy debts and as a result no impairments are being written down. Furthermore, as we reported earlier this week when first nothing the rumor, the Fed indicated "under the table" that banks were to work with the energy companies on delivering without a markdown on worry that a backstop, or bail-in, was needed after reviewing loan losses would exceed the current tier 1 capital tranches.
At Berkshire’s annual meeting last May, Buffett said he made “no apologies whatsoever” about Clayton’s “exemplary” lending, in response to a question about an earlier Seattle Times story saying that Clayton trapped borrowers into unaffordable loans on depreciating homes. Well it seems the billionaire will need to send some more donations in as yesterday, four members of Congress sent a joint letter demanding an investigation into predatory practices at Warren Buffett’s mobile home unit Clayton Homes.
Tank cars, once feverishly ordered during the US shale boom, are sitting on sidings. Lessors are obtaining car rents 20-30 per cent below early 2015 — “if you’re lucky enough to keep your car in service”, said James Husband of RailSolutions, a consultancy.
When will we know that the United States is really close to “normalizing interest rates”? The U.S. dollar will no longer exist, and (hopefully) neither will the Federal Reserve – the entity which promised to “protect” that dollar.
Obama's Keystone pipeline rejection "mission accomplished" banner has just led to a big slap on the face of the former constitutional expert, and could carry a multi-billion dollar chage after late this afternoon, TransCanada filed a lawsuit in Federal court in Houston, suing the U.S. government and claiming the Obama acted unconstitutionally when he rejected the Keystone XL, while also seeking $15 billion alleging the pipeline denial was "arbitrary and unjustified."
A lot of people were expecting some really great things to happen in 2015, but most of them did not happen. But what did happen? A global financial crisis began during the second half of 2015 threatens to greatly accelerate as we enter 2016. This is what the early stages of a financial crisis look like, and the worst is yet to come.
My overriding theme and the central drama for the coming year is that unexpected events can take on greater importance as the Federal Reserve ends its near-decade-long Zero Interest Rate Policy. Consensus premises and forecasts will likely fall flat, in a rather spectacular manner. The low-conviction and directionless market that we saw in 2015 could become a no-conviction and very-much-directed market (i.e. one that's directed lower) in 2016. There will be no peace on earth in 2016, and our markets could lose a cushion of protection as valuations contract. (Just as "malinvestment" represented a key theme this year, we expect a compression of price-to-earnings ratios to serve as a big market driver in 2016.) In other words, we don't think 2016 will be fun.
"Security prices are not low. I wouldn’t say high, but full. So people are thinking cautiously but they’re acting bullish and they’re behaving in a pro-risk fashion. While investor behavior hasn’t sunk to the depths seen just before the crisis, in many ways I feel it has entered the zone of imprudence... The market is not an accommodating machine. It will not go where you want it to go just because you need it to go there."
The aristocracy’s control over all the mainstream ‘news’ is ironclad - and this includes the political magazines as well as ‘intellectual’ magazines. American ‘news’ media stifle democracy in America; they’re not part of democracy, in America. They’re like poison that’s presented as being ‘medicine’ instead. Suckers don’t just swallow it; they come back for more of that propaganda. A press like this makes it impossible for there to be intelligent, informed, rather than misinformed and/or stupid, voting in national political elections in the United States.