Archive | October, 2015

Not At All Inventory Corrections Happen In Recessions


As we had suspected in our latest quarterly conference call, economic growth in the 3Q was feeling worse than it was due to a reduction in inventories. Final sales of domestic product remained pretty strong as it contributed 3% to real GDP. Change in private inventories pulled down real GDP by -1.4%. Inventories dragged down real GDP […]

The Smart Money Has Never Been This Long the Long Bond

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Back at the beginning of 2014 when commercial traders were net long nearly 40,000 options and futures contracts on the US long bond it marked the peak in yields and preceded a 13 month rally in bonds that took 30-year treasury rates from 4% to 2.25%. Just recently the commercial traders, AKA “smart money”, were net […]

Q: Is the Chinese Rate Cut a Silver Bullet? A: No!

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Today the Peoples Bank of China cut the benchmark interest rate by .25% and lowered banks’ reserve requirements by .5%. The measure is supposed to spur growth and make life a little easier on debt-ridden Chinese companies. In the immediate term it may give a slight boost to the economy, but there is no chance […]

Greek Financials May Have Dominated Since 8/24, But They Still Look Really Ugly


Those who read today’s earlier post learned that the best performer from the Financial sector since the August decline was Greece. Whether or not that is surprising, we thought we’d give a slightly more broad perspective on the group (comprised of just four companies, all Diversified Banks). Year-to-date, they are down an average of 75%: […]

What’s Done Well Since The 8/24 Low?


The easy answer to the question posed in the title is pretty much everything. Only three countries (Brazil, Czech Republic, and Israel) have seen the median stock in their country deliver negative performance, in USD, since 8/24. The same holds if we look at average performance, as well. EM stocks have definitely had the best breadth on […]

The Irresistible Force Paradox


I enrolled in auto-tutorial physics my senior year at college. At the time, it seemed a more reasonable (read “easy”) choice, given that I didn’t remember much of the calculus I took freshman year. I quickly realized that enduring a calculus refresher might have been considerably more enjoyable than the ten units– each completed by passing a one-on-one […]

How Knowledge Investments Translate Into Superior Profitability


Regular readers are by now well versed in our belief that companies that invest in more knowledge assets, or intangible assets, than their peers leads to a sustainable competitive advantage that manifests itself in superior margins and profitability. We call these knowledge intensive companies Knowledge Leaders. For those that are not as familiar, please check out our three part series for the […]