Waiting for the magic number
November 05, 2015 20:01:18 | 0 comments

Tomorrow the BLS releases the unemployment number and payroll number.Mr market believes that those numbers will determine what the FED will do next. Estimates are between 165 new additions and 170, below the 187 which would be below the average of the last 7 months. It is important to note that both numbers are below 200 a month which happens to be considered the number that shows the economy is still growing. If we continue with numbers below 200 I doubt the FED will raise rates.

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Republicans and the CNBC
November 02, 2015 14:41:16 | 0 comments

Last week the republican debate on CNBC has provoked a rebellion against the moderators. Although I agree that the format is not favorable for a more ample discussion, how one can fix that when you have 10 people trying to convey their messages and you have limited amount of time? It is inevitable that those who are bolder will go over their time, they will talk over the others; in certain moments there were so much talking that was impossible to know who was screaming more. The rebellion against the moderators is unjustified however. Republicans are customary liars and they distort the facts: they got very upset because they were being questioned about their lies or as Kasich pointed out, their fantasies.

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Taking no chances
October 28, 2015 13:01:19 | 0 comments

The market has been reacting strongly to companies in this earnings seasons.Any sign of weakness as a small miss on earnings , sales or revenues ; if the guidance is not raised , anything can lead  to strong reactions. Last week SKX ( the shoemaker skechers)reported quarterly sales record but way below the analysts estimates. As a result, the stock fell almost 30%.Akamai ( Akam)reported this morning , beating estimates but giving weak guidance for next quarter. quarter. As a result shares were down 18%.

These and others examples tell me that investors are afraid of the future and don't want to take any risk.Talking of recession is increasing, signs of a slow down in some areas are popping.

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Dead week.
September 14, 2015 13:18:16 | 0 comments

Nobody is going to do much this week, waiting for the Fed’s decision e nothing is more unclear at this moment then the effect of such decision in the markets. Being the decision a binary event, there are two groups in the market: on Group 1, we find those who think the FED must and will increase rates as all the conditions, except inflation, have being met. Among then, the more extreme think that the FED is already late. On group 2, we find those who think that given the international environment and the potential impact of a greater slowdown in China, an interest rate increase can wait. If group 1 is correct and the FED raises interest rates that will be considered (by that group) good news and positive for the markets. Group 2 however will think that the decision was a mistake and will act accordingly. The issue is to find out which group will be more influential in the markets. If the FED doesn’t raise interest rate, the same reasoning applies with opposite results. In other words, unless you are an algorithm trader, the best course of action is to wait. If you are in cash, just keep...

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When good news is bad news or...
September 04, 2015 14:05:22 | 0 comments

how irrational is the market. Today the jobs report came out and we learned that the US economy added 179,000 jobs in August, less than expected but still a good number, and the unemployment rate dropped to 5.1%.Next thing you know markets are down , not a little but a lot. The interpretation is that the FED will raise rates in September. Why do I dispute the rationality of the market? For one, less unemployment means more people buying goods, improvement in wages also means more people buying, good for businees, good for the economy. Also an increase from zero to 0.25 won’t make a big impact. That is also I am still confident that this too shall pass….. In the meantime, the deterioration of the Brazilian economy and the lack of direction in the government is worrisome, which reminds me of Seneca: If one does not know to which port one is sailing, no wind is favorable.

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Confirmation, but not out of the woods yet.
August 28, 2015 13:15:41 | 0 comments

The release of several indicators about the American economy this week confirmed the economy is doing fine, thank you! The Q2 GDP was revised up to 3.7%, personal consumption expenditures were also revise upwards to 3.1% and residential investment increased to 7.8%.That was confirmation that we don’t have recession on site and we should continue focusing on the fundamentals. The same cannot be said about Brazil and China: in Brazil the data released showed a contraction of 1.9% and some analysts think that is happening with China too, although with China we never know. The US stock market had two great days but as of now, futures are pointing lower. As I said in my newsletter, the best option is to take some Dramamine to face the next month. Until more clarification from the FED, the stock market will continue its roller coaster trajectory, trading in a range: as for the S&P, we will  be locked between 1870 -1990 points.

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Where to look
August 26, 2015 13:43:17 | 0 comments

Yesterday, the US market opened high but could not hold the gains and ended up in negative territory. If you were staring at your screen and seeing all those green arrows turning red as the hours were passing, you have probably ended up worrying and wondering what is next.  In the meantime , Germany GDP came at  +1.6%, consumer confidence jump to 101.5 from 90.9, new home sales jumped 21% since last year and home builder confidence is at its high. It is all about where you are looking and I say, for those who are in the US and invested in the stock market, don’t look at your screen. Maybe you are in Brazil or China: is this case, honestly there is nowhere to look and find reason to be optimistic. In Brazil, the economic crisis is getting worse because of the political crisis. In China, the Government is and will use everything on his power to prevent further deterioration. The problem is we don’t know how big the problem is due to the lack of transparency on the data. We now know that China won’t grow at 7%. The question is how much will it grow, at 6% or at 3%? There is a big differen...

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Everybody is selling…..what should you do?
August 24, 2015 16:14:45 | 0 comments

Wait. On my last newsletter I suggest that we should ignore the noise and focus on the fundamentals. Two days later, the selloff begun and my theory is being tested, brutally tested. Take AAPL, for instance, an “anchor” in my portfolio: I have AAPL bought in tranches between 100 and 125.Some at 130. At the open today, AAPL got as low as 95 and now it at 105. I will wait because I still believe this is one of the best companies in the world- although I personally don’t like its products. As I wrote in the blog the selloff was caused by the conjunction of bad news in China, declining oil prices and an unclear FED statement. The panic that followed is the noise I was referring to. The fundamentals I am concentrating on are:  the strength of the American economy and the awareness of the FED in regards to the world environment.  It is true that if the situation in China deteriorates further, there will be an impact in the American economy as a result of slowing growth, thus the stock market will be affected. The FED knows that however, so my guess is that will prevent an interest rate in...

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The sentence that spooked the markets
August 20, 2015 14:58:02 | 0 comments

"Most (officials) judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point." What it means is in the eyes of the beholder. For me, it means that the FED is over the fence, afraid to jump to either side. This, plus the decline in oil prices, led to the carnage we are seeing today in the stock markets.

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Post crisis economic growth: why austerity is not an answer.slide 2
August 17, 2015 18:45:55 | 0 comments

slide 2 Source: Wall Street Journal

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