Author: s4k

Media Bias in 1858

At the conclusion of the first joint debate at Ottawa, August 21, 1858 between Lincoln and Douglas, the Tribune, which was a pro Lincoln paper, reported:
At the conclusion of the debate, when Mr. Lincoln walked down from the platform, he was seized by the multitude and borne off on their shoulders, in the center of a crowd of five thousand shouting Republicans, with a band of music in front. The Chicago delegation scattered for the cars, and so ended the great debate.
The Times, which was a pro Douglas paper, reported the opposite:
When Douglas had concluded the shouts were tremendous; his excoriation of Lincoln was so severe, that the republicans hung their heads in shame. The democrats, however, were loud in their vociferation.

 

Cash is King

Apple’s pile of cash.Naysayers say most of this is held outside the USA. My response: so? If you had a bank account in France would you not consider it cash?

Burning Money

Looking at some potential new stocks to buy I come across Tesla. Two issues  jump out at me when taking a birds eye view.
First, I look at their cash flow.

Not bad. I look a little deeper to see where all this cash flow is coming from.

Answer: Net cash flow from financing…
Than I take a look at the free cash flow (FCF).

The stock price continues to go up. Investors do not seem to be concerned.
Second, I don’t like their story. Maybe I should say, I don’t understand their story. I don’t understand why people waste money on new cars. Buy an indestructible Japanese used car. They run for 250K miles.

No Hike

As expected, no rate hike. Full statement below.

Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Gains in employment, household spending, and business fixed investment have been solid, and the unemployment rate has stayed low. On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 percent. Market-based measures of inflation compensation have increased in recent months but remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong. Inflation on a 12‑month basis is expected to move up this year and to stabilize around the Committee’s 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1-1/4 to 1‑1/2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

Voting for the FOMC monetary policy action were Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Loretta J. Mester; Jerome H. Powell; Randal K. Quarles; and John C. Williams.

Market Update

There is a sea of red the last few days. The bond market is looking like a nightmare. The dollar and bond market are oversold. The general market is overbought. It is looking like a correction may be underway. We are holding our positions. I also will be added a few new positions soon. Calling corrections with precision is impossible so I will not bother. I think we are in the latter stages of this bull market and more money is to be made. I do not see any evidence that a recession is on the horizon (6 months). I think 2018 will be much like 2017. Modest 10% pull backs followed by making new highs. When I think this bull market is approaching its end I will say so.

90 Years Later…

…Jesse Livermore called the top in bitcoin.

Read about his favorite book here.
A biography of his life was detailed in Reminiscences of a Stock Operator. It is amazing Hollywood never made a movie about his life. He made and lost many fortunes. After making a $1.5 billion (in 2017 USD) by shorting the market in 1929, he lost it all. I always wondered how he lost all that money. Some where, hidden in the foot notes of history is the answer to this.

Savings Rate Plunge

Personnel saving rates have plunged to more than a decade lower. It is not to far away from making an all time low, since accurate records have been kept anyway. This is a product of federal reserve policy over the last few decades. Pushing interest rates down discourages savings and encourages borrowing. Capitalism needs capital.