Posted January 10, 2010 at 7:01 pm
By Tim Gray:
In 2009, emerging markets flew higher than a frigate bird, with the MSCI Emerging Markets Index returning 74.5 percent. Latin America, the top performer among MSCI’s developing-market indexes, returned nearly 98 percent.
As investors scurried to cash in, emerging-market mutual funds swelled, attracting more than $80 billion in new money, according to EPFR Global, a tracker of market data in Cambridge, Mass. That was the highest annual inflow since EPFR began keeping track, beating the previous record by more than $25 billion.
Those kinds of numbers, at a time when economies in the United States, Europe and Japan are ailing, have raised the possibility that emerging markets are surging toward an investment bubble.
Filed Under: Market Bytes
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Posted January 8, 2010 at 11:51 am
From The Small Cap Network:
They say a picture is worth a thousand words. If that’s the case, I’m going to save you a lot of time and reading by showing you a picture of the S&P 500′s aggregate past and future earnings.
Of course, I’ll still chime in with my two cents.
The nearby chart is a snapshot of the S&P 500′s earnings – if it were a stock – and the S&P 500′s P/E ratio over the last several years. To the extent the data was available, we’ve added the forecasted numbers as well.
A couple of explanations are in order. For starters, the reason you see two lines for each data set is to differentiate between operating earnings (thin, red), and reported [or GAAP] earnings (thick, blue).
The horizontal dashed line plotted on top of the operating P/E ratio data is a long-term average of the same data…. a calculation that’s meant slightly less in recent quarters, as the difference between GAAP and operating income has widened thanks to some stunning (and repeated) ‘one time’ losses. Nevertheless, it’s a good frame of reference. The vertical line just marks today, so you can see where the actual data stops and the forecasted data starts.
It is what it is, for better or worse.
A handful of things stick out right away, with last quarter’s drop in GAAP earnings being one of them. They were down (again), yet operating earnings were a hair higher. Are we already starting to take massive extraordinary markdowns again? Geez.
The expectation on the earnings front is bullish on both an operating as well as a GAAP basis, but note we actually haven’t seen evidence that we’ll be able to grow either set of numbers… and 87% of Q3′s numbers are now in. Hopefully Q4 results will tick higher, though I’m not holding my breath.
And even if earnings do meet expectations, so what? As of the end of last quarter, the reported P/E ratio of 82.47 is abnormally high. The estimated Q4 GAAP P/E ratio of 23.5 – which is very optimistic to begin with – would only represent a move the higher end of the market’s normal P/E range.
Something else worth noting is the way both P/E ratios fell under the long-term average in 2005 and 2006. So, the fact that the forecasted P/E ratios are currently set up under the long-term norm of 20.0 doesn’t actually mean the market’s underestimated. Instead, it just means stocks are fairly valued at their current levels. Translation: It’ll be hard to justify any real growth if the earnings estimates are on target.
Nothing is set in stone, of course, and we can only work with the data we have right now. But, this is something of a discouraging picture. It’s NOT a reason to avoid the market altogether…. the data simply suggests paying careful attention to the stocks you pick, since there is no rising tide to lift all the market’s boats.
As the data and estimates change, we’ll post any updates here. Have a great weekend.
Filed Under: Market Bytes
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Posted January 8, 2010 at 7:33 am
From ETFDesk Daily:
Much has been made of the BRIC countries (Brazil, Russia, India, and China) and their return to center state in 2010. There is no argument here that their growth potential is promising, and equally as important, their political clout is rising. It is hard to say that they really deserve the tag of “Emerging Markets” any longer.
The graph below illustrates the enourmous outperformance of the “BRICs” relative to Emerging Markets and the World Index.
Source: Bloomberg
Now may be the time to look beyond the BRIC countries and to look to a new frontier of countries with enormous growth potential. While some of these fall out of the traditional definition of “Emerging Markets” (namely, Australia), who really cares about such titles anyway?
The Business Insider had some interesting insights in going beyond BRICs to the ‘MAVENS’
Filed Under: Market Bytes
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Posted January 7, 2010 at 8:26 am
From Visual Economics:
In today’s complicated world, information is coming at you from every direction. Television, print, and the Internet are a powerful trifecta of data delivery systems that can confuse, overwhelm, and discourage people from really getting to the heart of what they want and need to know.
When you are trying to understand the complex world of finances and economics, sometimes simplicity is key. Confusing jargon and technical terms are not what you need to understand your personal financial situation, or that of the country and the rest of the world.
Visual Economics is here to help you, by unraveling the complexities of all types of economic and financial data. Using charts, graphs, diagrams, and lists, we break down information for you that might otherwise be boring, dense, even uninteresting.
From protecting yourself from identity theft to where your tax dollars are going to saving for college, we provide you with instant access to any financial and economic information you are looking for!
Filed Under: Market Bytes
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Posted January 4, 2010 at 10:10 pm
From The Pragmatic Capitalist:
As we turn the page on a new year the trend in insider trading remains largely the same as it was in 2009. Although the holiday week was shortened, insiders still found time to unload millions of shares in their own companies. In the last week of the year insiders sold over $222MM worth of stock while purchasing just $18.5MM worth of stock.
We believe this very bearish data is likely due to the long-term trends executives see within their own companies. Although insider trading is never a good short-term indicator it is very useful as a long-term indicator.
After all, insiders…
Filed Under: Market Bytes
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Posted January 4, 2010 at 7:11 pm
By Chris Kahn:
Oil started the new year Monday trading above $81 a barrel, almost double what it fetched at the beginning of 2009 even though the U.S. is using much less.
Prices, which have been propped up by a weak dollar, will get even more support as winter weather chills the country. The U.S. may be using less crude, but China and other developing nations are using more to fuel their burgeoning manufacturing industries, and that can push prices higher in the U.S. as well.
Gasoline, heating oil and other fuels are already heading higher and may continue to do so as the market tests how much people are willing to pay for energy, analysts said.
A surprisingly strong manufacturing report Monday may hint at an improving employment picture in the U.S., but right now consumer demand remains weak because millions have lost jobs.
There is concern that energy costs are outpacing job recovery.
“It’s going to slow down the economic recovery in the U.S.,” said Andrew Lipow, president of Lipow Oil Associates in Houston. “And much of that extra money we’re spending will be headed back overseas since we still import two-thirds of our energy.”
The Labor Department releases its monthly employment report Friday and that could affect energy prices ahead.
Filed Under: Market Bytes
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Posted January 4, 2010 at 11:21 am
From Seeking Alpha:
As we head towards 2010, we invited ten top Seeking Alpha contributors, most
of whom are professional money managers, to share their thoughts and predictions for the new year.
Click through below to learn how they are now adjusting client and personal portfolios; are they protecting 2009′s gains, or preparing to be more aggressive? What stocks, ETFs and other instruments do they think will perform best in 2010?
We’ll run new responses through the first week of 2010, and update this page accordingly:
Filed Under: Market Bytes
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Posted December 30, 2009 at 12:05 pm
by Peter Gorenstein
Tech Ticker conducted hundreds of interviews this year with dozens of guests on numerous topics. But one guest consistently garnered massive amounts of excitement and (for the most part) positive reaction from you, the audience.
Without question, Howard Davidowitz of Davidowitz & Associates is the audience’s favorite guest of the year.
Davidowitz is a straight shooter who always tells it like he sees it.
Filed Under: Market Bytes
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Posted December 30, 2009 at 11:55 am
From Barry Goss:
Referencing the GROWING trend for any and all mainstream financial news anchors to squat ‘n’ yodel (or just sing Kumbaya) every time they see a positive stat (no matter how questionable) like the consumer confidence numbers INCREASING, a private highly-paid analyst I have access to finished off his briefing today with:
“You’ve no doubt by now noticed a theme running through my briefings: beware the consensus. Hope is a wonderful and necessary human emotion… but hope is not a strategy.
“I am not prepared to increase the family exposure to equities until I see some real value emerge. In the meantime, I suggest sticking to the low hanging fruit – the slow and steady rise in Treasury yields.”
How To Play: If you’d like to know how to profit from the steady rise in Treasure Yields, go to your Wealth Vault ‘Table of Contents’ and click on the “Stocks, Forex, Futures, ETFs, & Managed Funds” category. Then read the page titled: “How To Short The US Government.”
Getting The Raw Truth: If you’d like to better understand how real data gets distorted, or at the very least repressed in the minds of cheer-leading mainstream reports, you can subscribe to John Williams’s ShadowStats.com or read this article (including the comments section).
Filed Under: Market Bytes
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Posted December 29, 2009 at 9:22 am
From The Wall Street Journal:
‘The Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each. Unlimited access to bailout funds through 2012 was “necessary for preserving the continued strength and stability of the mortgage market,” the Treasury said. Fannie and Freddie purchase or guarantee most U.S. home mortgages and have run up huge losses stemming from the worst wave of defaults since the 1930s.’
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