The Worst-Case Scenario: Getting Real With Global GDP!
by Phil - June 6th, 2010 8:27 am
$10,500.
That is the per capita average GDP for the 6Bn ape-like creatures on this planet who have pockets and purses. Of the still hairy and pocketless apes, there are only about 1M left and they are mainly prisoners so we won’t be worrying about them but it would be nice to consider the plight of our ancestors once in a while… Anyway, so 6Bn of us fill in those last 3 images in the planetary labor pool with the vast majority of us STILL FARMING and, of course, a select group of us are still hunting and gathering and contributing very little to the GDP.
None of our problems are new – as noted in this 2005 cartoon:
The United States of America with it’s highly evolved population of shopoholics has a per capita GDP of $46,381 – VERY IMPRESSIVE but we rank 6th! Brunei does a little better than we do and Singapore is up at $50,523 (so let’s hear it for corporal punishment) and Norway (one of my top choices of countries to flee to when it all hits the fan) is at $52,561 but Luxembourgh ($78,395 – banking) and Qatar ($83,841 – oil) simply trounce us in earnings power per person. For those of you who like to think Capitalism is all about keeping score – they must be better than you because they make more money, right?
Below the US, per capita GDP drops off fairly quickly. Rounding out the top 10 are Switzerland ($43,007 – watches and more bankers), Hong Kong ($42,748 – don’t tell China!), Netherlands ($39,938 – legal drugs!), Ireland ($39,468 – free beer when on wellfare!) and Australia ($38,911 – beer comes in oil cans plus gigantic bouncing rats). 20th on the list is Germany at $34,212, Greece is 25th at $29,882 (but not for long), 30th is South Korea at $27,978, 40th is Slovakia at $21,245. Lithuania comes in at 50 with $16,542 (1 ahead of Russia) and it steadies out there with emerging market star Brazil in 75th place with $10,514 and, keep in mind – that is where you FINALLY get to the average leverl of economic activity for the world.
Another BRIC in the global wall is mighty China, with a per capita GDP of $6,567 for each of their 1.2Bn persons and India’s Billion people average out at less than half of that, at $2,941, ranking 128th and still ahead of 53…
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Free Money Thursday – 130 S&P New Highs Can’t Be Wrong!
by Phil - March 18th, 2010 7:59 am
130 S&P 500 companies hit 52-week highs yesterday.
Things must be even better than I thought in yesterday’s post and there has been a conga line of pom-pom waving analysts on GE/CNBC this morning telling us how UNDER valued everything is because we just don’t see the BIG PICTURE. As Bespoke notes in their chart of the S&P and it’s new highs, you want to see more and more stocks hitting new highs to sustain a rally but my question is – with the market now at 17-month highs and making new highs every day – what’s up with the other 370 stocks?
In an ordinary market, I wouldn’t question it but this is not an ordinary market. 52 weeks ago we were at 666 on the S&P and stocks were making DECADE lows. Here we are with the index up almost 80% off that bottom and we can’t pull a lousy 52-week high from 2/3 of the index??? We’ll be keeping an eye on this indicator to see how things pan out but notice when the market fell – there were no doubts, 80% of the stocks made 52-week lows last fall – not THAT’S a sell-off. That’s the kind of dramatic numbers you expect to see in a dramatic market move – not this wimpy 40% stuff – let’s see some conviction people!
AAPL is convicted – they are up 191% from their lows and AAPL is 15% of the Nasdaq so, all by themselves, AAPL has accounted for 28% of the Nasdaq’s move from 1,265 to 2,389 (89%). TRV is also moving with conviction, up 54% since March and adding 160 much-needed points to the Dow, a great swap for C, who would have only added about 24 had they remained in the index. CSCO replaced GM (because they are soooooo similar) and they too have been a great trade for the Dow, up 100% off the March lows and slapping 104 bonus points on the index.
Ah, now we see how our industrials can do so well despite all the unemployment and lower cap utilization and lack of demand and high commodity input costs – we just shuffle the deck until we find a set of cards that work! Even so, as I’ve pointed out this week, the Dow has been lagging the Nasdaq and the Russell by a wide margin and the NYSE and S&P have…
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25% Off the Top Tuesday
by Phil - November 17th, 2009 8:09 am
10,500 – that’s 75% of 14,000 in the Dow!
On the S&P we topped out all the way up at 1,550 in October, 2007 so 1,162 would be the target there. For the Nasdaq it’s 2,100 (already over), 7,750 on the NYSE is still far away and 637 on the Russell is tantalizingly close (5%ish). The SOX still need to gain 30% to get back to 400 and the the Transports are going to need a lot of gas to get back to 2,250. (see Fallond’s breakout charts here)
Oil was $100 a barrel in October 2007 so $75 is right on track and gold is clearly our over-achiever, UP 42% from 2 years ago and that is "obviously" according to the pundits, because the dollar is trading 1.5% lower than it was back then. We are being led higher by great companies like XOM who, at $75 are well above their 75% level at $67. This is VERY impressive since they earned $9.4Bn in Q3 ’07 and just $4.7Bn last Q on 20% less sales but that doesn’t stop investors (or at least tradebots) from snapping them up at these prices.
TRV was added to the Dow and that stock is now OVER the 2007 highs of $52.50, which is really impressive as they are doing it with less revenues ($200M) and less earnings ($263M, 21%). Perhaps we are seeing a pattern? Earn 50% less, like XOM and get valued 16% lower, earn 21% less, like TRV and get valued 5% HIGHER. CAT was at $70 in Q3, 2007 with $11.4Bn in sales and a $927M profit so OF COURSE they are at $60 now (down just 14%) on $7.3Bn in sales and $404M in profits. Just like XOM, 56% less earnings equals a 14% haircut on the stock price. After all, you can’t fool these savvy investors, can you?
I’ll be going through the Dow in detail this weekend as we set up our new Buy List for Members as (if we are going to accept the premise that these investors are not crazy) there are certainly some bargains in the Dow like VZ (got ‘em already), who earned $1.3Bn on $23.8Bn in sales 2 years ago and earned $1.2Bn on $27.3Bn in sales last Q, yet they are still trading 25% below where they were. INTC made more money on less sales but they are trading…
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Thrill-Ride Thursday: Jobs, What Jobs?
by Phil - October 15th, 2009 8:12 am
Yesterday was very hard for us.
Our theoretically conservative $100,000 Portfolio dropped 6% in one day as we had a farily bearish position into options expiration that I stubbornly refused to adjust this week. Surely, I thought, after running up 250 Dow points from Thursday, 10,000 would act as some kind of resistance? We’re also up a neat 500 points for the month of October so that’s our 5% rule and to not get a 1% pullback, even in the most bullish of markets, is very rare indeed.
So we stayed bearish yesterday and got crushed by the AMZN $90 calls we sold as well as UYG calls we sold and our PSQ calls we bought for protection got slaughtered as the Nasdaq flew up not 5% but 5.5% for the month and up 6.2% from it’s October 2nd low. While we are disappointed, we’re not terribly concerned as we’re only going to roll the calls to November anyway and I did promise the members that, if we hold our breakout levels for 2 closes, then I’ll be shifting more bullish. I’ve been trying to identify more bullish positions this week but our mix has still tended bearish as I’m just having so much trouble buying into this rally.
In yesterday’s Member Chat, my comments on the current situation was:
I do wish we were more bullish, this is a very smart group of people and we’re pretty bearish but so is the general investing public or there’d be volume to this rally. I have a hard time ignoring the fact that 600,000 more people lost their jobs this week and, even if it’s "only" 500,000, I still think that’s not really a sign of a healty economy. I think the REITs are off in fantasy land and I think so is the government, who cannot keep borrowing money at these low rates. The dollar has dropped 25% of it’s value since March so the market is only 25% ahead of the currency fall which means a flight back to the dollar, which could happen very suddenly if an EU nation like Spain collapses, could send our market down as fast a 9/11.
That being said, we have no choice but to follow the technicals and now that we can look at nice, easy support levels like Dow 10,000, S&P 1,100, NYSE 7.200, Nas, 2,200 and RUT 620 and simply call
…
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Monday Market Mania
by Phil - June 1st, 2009 8:21 am
We are off to one crazy start this morning!
The futures markets have gone wild, ostensibly led by China, which had a PMI of 53.1 for May and, even though that’s DOWN from 53.5 in April, it’s still positive enough to be called a "green shoot" and between that and a collapsing dollar, the futures are flying higher (priced in dollars). Since 2 am (now 7:30) the dollar has fallen 1.5% against the the Pound and the Euro and gold has rocketed as high as $990 while oil ran over $68 a barrel (2.5% rule), almost a clean double off the bottom (up 95% actually). Of course GM is going bankrupt and there is an Air France jet that is missing over the Atlantic (not looking good either) but none of that is phasing the pre-market bulls as our futures are up about 1.5%.
Yes the market is showing all the classic manic symptoms as it suddenly escalates over the past several days, completing a 5% move this morning off 8,200 (8,610 is the exact mark). Gone are the depressive negative views but whether the market is delusional or simply just no longer depressed remains to be seen. I’m amazed at this run-up ahead of 8:30′s Consumer Spending numbers – maybe "THEY" already know it’s going to be good or maybe "THEY" are squeezing everything they can out of last week’s momentum before we get some bad data that pushes the markets back into a depressive phase.
The action has been fast and furious early this morning. The Nikkei was at 9,600 at lunch, was jammed up to 9,677 at the close but then was jammed up to 9,740 AFTER the close. The dollar fell 1.5% since 2am (so far) as Geithner went to China, supposedly to support the dollar but he ended up supporting the Hang Seng, up 4% today which is interesting as it got a huge reaction but Chicago’s PMI at 34 (contraction) got NO reaction last week) and now we are back to SEPTEMBER levels in China.
Amazingly, what Geithner said this morning actually makes my case that this whole optimistic house of cards may collapse (see Thursday’s post) because every country cannot depend on every other country to pull them out of recession and Geithner warned this morning that China needs to recognize "That it can’t pull itself out of the slowdown by exporting even more goods to U.S. households, which…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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