Sunday, January 02, 2011

Welcome Back!

The New Year started off with temperatures in the 50's in Northern NY so you won't hear me complaining about that. I'm saving all of my complaining for the Cowboys, who managed to win a meaningless game in the last minute against the 2nd string of the Eagles. The win probably cost the Cowboys 6 spots in the upcoming draft. Only the Cowboys could mess up that situation.

Anyway, the markets had another great year and the few carbon based lifeforms that don't live in CNBC's Fort Lee studio continue to scratch our collective heads. Business profits have stabilized as a result of cost cutting and a weaker US dollar that has bolstered some exports. However, sales volumes remain weak, the US job market is dismal and the US housing market continues to weaken.

I'll try to touch on many of the big themes for 2011 in the coming weeks.

The NY Times did another good piece on the increasing influence of electronic traders on the stock market. I think we need to remember why we have public securities and a stock market. Stocks provide capital to companies and investors get to share in the profits of those companies when they declare dividends. The electronic traders could give a $%@! if a company ever earns a penny or pays a dividend. They are only concerned with buying a stock at $31.1825 and selling it 0.0028 seconds later for $31.1875.

"A SUBSTANTIAL part of all stock trading in the United States takes place in a warehouse in a nondescript business park just off the New Jersey Turnpike.

One new strategy is to use powerful computers to speed-read news reports — even Twitter messages — automatically, then to let their machines interpret and trade on them.

By using such techniques, traders may make only the tiniest fraction of a cent on each trade. But multiplied many times a second over an entire day, those fractions add up to real money. According to Kevin McPartland of the TABB Group, high-frequency traders now account for 56 percent of total stock market trading."

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One of the more valuable data providers I used to follow when I worked for a big bank was the information put out by TrimTabs. TrimTabs keeps track of stock market money flows - who is buying, who is selling, etc.

Well, on Christmas Eve when no one but the most degenerate stock junkie was watching CNBC TrimTabs CEO went on CNBC and dropped some bombshells. Basically, he pointed out that yes the stock market has exploded over the past 2 years but here's the thing - he can't figure out who is buying.

* Corporate America has sold over $130 billion since the start of April.

* Retail investors have hardly bought any U.S. equities - just $17 billion since April

* Foreign investors have provided some buying power - purchasing $109 billion in U.S. stocks from April through October.

* Pension funds - All the anecdotal evidence we have indicates that pension funds have not been making a huge asset allocation shift.

Interesting stuff.

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There was a good deal of press coverage last week when the seasonally adjusted unemployment claims data dipped below 400k for the first time in two years.

"In the week ending Dec. 25, the advance figure for seasonally adjusted initial claims was 388,000, a decrease of 34,000 from the previous week’s revised figure of 422,000. The 4-week moving average was 414,000, a decrease of 12,500 from the previous week’s revised average of 426,500."

In general, I say you have to take the data as presented but sometimes things are so far off they need a little further investigation. The non-seasonally adjusted number for the week of 12/25 was 522k claims (almost 133k more than the reported number). Here's the thing while the seasonally adjusted number helps us compare this December with every other December, the extra 133k people that were "adjusted" away are actual humans that are out of work. If you add up all of the seasonal adjustments in December you get an extra 440k people that are not working actually. It's just something to watch.

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I came across a great idea the other day on the web. It was called the Ten lists everyone should make before they die. Some of the ideas were a little cheesy but in general, I think these are great conversation starters within your family. If you have young kids fill out these lists and share them with your children as they grow. My resolution is to fill out my 10 lists by Jan 31st.

Here's your first topic:

"The 10 people who most helped me in my life. – each of us meet people as we go through life, many of them help us or have an influence upon us. Sometimes we may not realise their influence at the time. Quite often we forget or do not get a chance to thank them. This list is an opportunity to acknowledge those people and to express your thanks."

Maybe it's an old teacher, an old boss, a coach or a friend, but writing this list and maybe even writing to acknowledge their help in shaping your life is a great idea.

Cheers!

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