By Sam Ro - Boeing’s 787 Dreamliner was originally scheduled to fly in September 2007. Just a few days before the maiden flight, management announced what would be the beginning of a 2+ year delay. That’s long even by airline standards. In its five or six announcements—it’s hard to keep count—management blamed everything from a shortage of fasteners to incomplete software to a labor strike.
The latest delay was announced on June 23, 2009. Management said, “first flight of the 787 Dreamliner will be postponed due to a need to reinforce an area within the side-of-body section of the aircraft.” I’m not an aerospace engineer, so I won’t say how I really feel about that. Regarding first flight and aircraft deliveries, they said, “It will be several weeks before the new schedule is available.”
Several weeks later on July 22, 2009, Boeing announced their Q2 financial results. Regarding the 787, they said “The company expects to complete its assessment of the schedule and financial implications during the third quarter.” Not only have they delayed first flight, they have also delayed the new schedule for first flight. They also added that they recently completed “low-speed taxi tests on the first flight test aircraft.” I guess you learn to walk before you run…or fly. Again, I’m not an aerospace engineer.
At this point, I have lost confidence in management and I am only 99% sure that the Dreamliner will eventually get off the ground. While I think it would be risky to bet against BA stock at current levels, I would not recommend you buy it either. If that 1% disaster comes true, shares will take a Black Swan-style swan dive
Friday, July 24, 2009
Another Reason Why a Buy/Hold Strategy is the Way to Go, Part 2
By Taesik Yoon – In a post last Friday I wrote about a white paper written by Sal L. Arnuk and Joseph Saluzzi of Themis Trading LLC that discussed specific trading strategies designed at “exploiting new market dynamics” and how this has negatively affected real investors.
My coworker Sam (another contributor here) sent me a link to a front page article on today’s New York Times titled Stock Traders Find Speed Pays, in Milliseconds.
Click HERE for a link to the article.
The article essentially deals with the same topic--how traders are able to profit from high-frequency/high speed trading due to incentives, loopholes, and speed advantage in order placement. However, it’s more reader friendly. It also provides a very detailed real world example of how such a trading strategy led to higher prices being paid by regular (i.e. slower) investors for shares of Broadcom, a semiconductor company, on July 15.
As I noted in my prior post, the best way to minimize the impact of such strategies is to follow a simple BUY/HOLD strategy. Even in the example presented in the article, the exploitation in Broadcom’s stock price was within the range of $26.20 and $26.40 per share. For portfolio managers attempting to get the best execution for large blocks of share purchases, this probably will lead to inflated prices paid. But for an investor willing to hold long-term, paying $26.20 or $26.40 doesn’t make much of a difference if you expect the stock to be at $40 in a couple of years.
Of course, no one wants to pay more than they have to. Nor should they. But until these practices are curbed, the risk that you may pay higher prices on stock purchases does exist. Let’s just hope that these strategies don’t result in the persistence of (or worse yet, growth in) artificially inflated stock prices over longer periods. The last thing we need is the development of another bubble.
My coworker Sam (another contributor here) sent me a link to a front page article on today’s New York Times titled Stock Traders Find Speed Pays, in Milliseconds.
Click HERE for a link to the article.
The article essentially deals with the same topic--how traders are able to profit from high-frequency/high speed trading due to incentives, loopholes, and speed advantage in order placement. However, it’s more reader friendly. It also provides a very detailed real world example of how such a trading strategy led to higher prices being paid by regular (i.e. slower) investors for shares of Broadcom, a semiconductor company, on July 15.
As I noted in my prior post, the best way to minimize the impact of such strategies is to follow a simple BUY/HOLD strategy. Even in the example presented in the article, the exploitation in Broadcom’s stock price was within the range of $26.20 and $26.40 per share. For portfolio managers attempting to get the best execution for large blocks of share purchases, this probably will lead to inflated prices paid. But for an investor willing to hold long-term, paying $26.20 or $26.40 doesn’t make much of a difference if you expect the stock to be at $40 in a couple of years.
Of course, no one wants to pay more than they have to. Nor should they. But until these practices are curbed, the risk that you may pay higher prices on stock purchases does exist. Let’s just hope that these strategies don’t result in the persistence of (or worse yet, growth in) artificially inflated stock prices over longer periods. The last thing we need is the development of another bubble.
Thursday, July 23, 2009
What? No Green Shoots?
By Jeff Diamond - On Tuesday, in response to Rep. Bachus' question on the poor condition of the commercial real estate market, Fed Chair Ben Bernanke said, "As the recession’s gotten worse in the last six months or so, we’re seeing increased vacancy, declining rents, falling prices -- and so, more pressure on commercial real estate."
Let's recap... In a moment of unscripted candor, Ben Bernanke said that the recession has worsened over the last six months! Despite all his spin about green shoots and stabilization, he very matter of factly stated that things are continuing to worsen. He went on to say that our government is considering measures to help out commercial real estate in the future. Is there any sector of the U.S. economy that will be allowed to correct? Does everything pose a systemic risk? I continue to be amazed at what lengths the Fed and the Treasury will go to prevent markets from imposing discipline or penalties on poor risk decisions.
If you listen carefully, however, you can occasionally glean the truth even from Bernanke... The economy is still worsening. It's a matter of fact. No one questioned Bernanke's description, since we all know it's true. Green shoots are a lie, a very convenient lie, but a lie that our government considers necessary. They need to provide the rationale for more ill-considered risk-taking among investors. That's the only hope they've got to whip this recession that has "worsened over the last six months."
Let's recap... In a moment of unscripted candor, Ben Bernanke said that the recession has worsened over the last six months! Despite all his spin about green shoots and stabilization, he very matter of factly stated that things are continuing to worsen. He went on to say that our government is considering measures to help out commercial real estate in the future. Is there any sector of the U.S. economy that will be allowed to correct? Does everything pose a systemic risk? I continue to be amazed at what lengths the Fed and the Treasury will go to prevent markets from imposing discipline or penalties on poor risk decisions.
If you listen carefully, however, you can occasionally glean the truth even from Bernanke... The economy is still worsening. It's a matter of fact. No one questioned Bernanke's description, since we all know it's true. Green shoots are a lie, a very convenient lie, but a lie that our government considers necessary. They need to provide the rationale for more ill-considered risk-taking among investors. That's the only hope they've got to whip this recession that has "worsened over the last six months."
Tuesday, July 21, 2009
Exit Strategy?
By Jeff Diamond - The Fed's exit strategy to its unprecedented monetary easing and money printing depend on the economy and our financial markets returning to normal. A happily expanding GDP, a receding of the credit crisis, a reduction in the massive levels of debt in both the public and private sectors, and several other dream-like occurrences. Now, let's consider the likelihood of that versus the likelihood of another crisis developing... Which do you think will happen first?
My personal prediction is for fireworks (i.e. severe selloff) to occur in either the Treasury market or the U.S. dollar. I will not recap the horrendous fundamentals that make this a possibility, since they are so widely described elsewhere...
So, I predict that the best laid exit strategies for the Fed will not come to be. Just as they were forced to take extraordinary actions to prevent a meltdown of the financial system, they will have to respond to a market spike in interest rates and/or a freefall in the U.S. dollar. That will preempt their plans for an orderly return to "normal."
We can listen to Ben Bernanke wax poetic today and tomorrow in front of his Congressional audience, but I think it's a waste of time. Whatever plans he outlines today will not come to pass in the manner that he is going to describe...
My personal prediction is for fireworks (i.e. severe selloff) to occur in either the Treasury market or the U.S. dollar. I will not recap the horrendous fundamentals that make this a possibility, since they are so widely described elsewhere...
So, I predict that the best laid exit strategies for the Fed will not come to be. Just as they were forced to take extraordinary actions to prevent a meltdown of the financial system, they will have to respond to a market spike in interest rates and/or a freefall in the U.S. dollar. That will preempt their plans for an orderly return to "normal."
We can listen to Ben Bernanke wax poetic today and tomorrow in front of his Congressional audience, but I think it's a waste of time. Whatever plans he outlines today will not come to pass in the manner that he is going to describe...
Friday, July 17, 2009
Another Reason Why a Buy/Hold Strategy is the Way to Go
By Taesik Yoon - A friend at work gave me a white paper written by Sal L. Arnuk and Joseph Saluzzi from Themis Trading LLC, an independent brokerage firm, titled Toxic Equity Trading Order Flow on Wall Street.
I had seen Mr. Saluzzi a few times before on Bloomberg TV speaking about the overvaluation of the equity markets and the rampant manipulation of stock prices by program trading. The paper expands on the latter by outlining the specific “toxic” trading strategies traders employ by “exploiting new market dynamics” and how this has negatively affected real investors.
Click HERE for a link to the PDF.
The strategies outlined and examples given provide a very good understanding of how these market exploitations work. And unlike so many other critical articles I’ve read in the past, the authors provide two clear recommendations as to what can be done (from regulatory standpoint) to stem these types of trading practices.
I agree that these practices occur. They highlight the fact that some financial institutions will do anything to make a profit—even at the expense of their own clients. And I’ll admit that while generating profits by inducing false price movements is not a new concept, being able to profit by simply buying the right to place your server in the NYSE or NASDAQ server room certainly is. (Though in this age of ever evolving technology I really should know better.)
As for the impact on the individual investor, it probably does result in some investors paying a slightly inflated price on their stock trading transactions. But over the longer-run, what are a few pennies?
If anything, this is just another reason why following a BUY/HOLD strategy is the way to go. I’ve long been a proponent of this simple investing method. If my analysis concludes that a particular stock is worth $30.00 per share in two years, then does it really matter whether I buy it at $20.01 or $20.03 today?
Of course, if these strategies somehow result in the artificial inflation in equity values over longer periods then it could jeopardize any investing strategy, including BUY/HOLD. But as someone who has seen this strategy work time and time again during his ten years of buying and selling stocks, I’ll take my chances.
I had seen Mr. Saluzzi a few times before on Bloomberg TV speaking about the overvaluation of the equity markets and the rampant manipulation of stock prices by program trading. The paper expands on the latter by outlining the specific “toxic” trading strategies traders employ by “exploiting new market dynamics” and how this has negatively affected real investors.
Click HERE for a link to the PDF.
The strategies outlined and examples given provide a very good understanding of how these market exploitations work. And unlike so many other critical articles I’ve read in the past, the authors provide two clear recommendations as to what can be done (from regulatory standpoint) to stem these types of trading practices.
I agree that these practices occur. They highlight the fact that some financial institutions will do anything to make a profit—even at the expense of their own clients. And I’ll admit that while generating profits by inducing false price movements is not a new concept, being able to profit by simply buying the right to place your server in the NYSE or NASDAQ server room certainly is. (Though in this age of ever evolving technology I really should know better.)
As for the impact on the individual investor, it probably does result in some investors paying a slightly inflated price on their stock trading transactions. But over the longer-run, what are a few pennies?
If anything, this is just another reason why following a BUY/HOLD strategy is the way to go. I’ve long been a proponent of this simple investing method. If my analysis concludes that a particular stock is worth $30.00 per share in two years, then does it really matter whether I buy it at $20.01 or $20.03 today?
Of course, if these strategies somehow result in the artificial inflation in equity values over longer periods then it could jeopardize any investing strategy, including BUY/HOLD. But as someone who has seen this strategy work time and time again during his ten years of buying and selling stocks, I’ll take my chances.
S&P 500's Stealth Earnings Growth
By Sam Ro - How could analysts expect S&P 500 earnings to grow from $49 in 2008 to $55 in 2009 and to $74 in 2010? One explanation is turnover on the index.
Let's consider the impact of General Motors. According to data compiled by S&P's Howard Silverblatt on June 2, the S&P 500's consumer discretionary sector earnings were expected to fall 75.6% year-over-year in Q2. This was due to the massive loss estimated for GM. But now that GM has been removed from the S&P 500, Q2 consumer discretionary earnings are expected to jump 36.6% year-over-year. It's clear how changing a constituent can have a material impact on the index's earnings estimates and valuations.
And GM isn't the only money loser that got booted from the index in the last year or so. Lehman Brothers, Freddie Mac, and Fannie Mae bled money for the S&P 500 in 2008, but they're not in the index today. This could at least partially explain the expectation for 300% year-over-year earnings growth in the S&P 500's financials sector in Q2.
Let's consider the impact of General Motors. According to data compiled by S&P's Howard Silverblatt on June 2, the S&P 500's consumer discretionary sector earnings were expected to fall 75.6% year-over-year in Q2. This was due to the massive loss estimated for GM. But now that GM has been removed from the S&P 500, Q2 consumer discretionary earnings are expected to jump 36.6% year-over-year. It's clear how changing a constituent can have a material impact on the index's earnings estimates and valuations.
And GM isn't the only money loser that got booted from the index in the last year or so. Lehman Brothers, Freddie Mac, and Fannie Mae bled money for the S&P 500 in 2008, but they're not in the index today. This could at least partially explain the expectation for 300% year-over-year earnings growth in the S&P 500's financials sector in Q2.
Thursday, July 16, 2009
Stocks Will Give up Their Recent Gains
By Vahan Janjigian - What should we make of the 7% rally in the major market indexes over the past four days? In my opinion, not much. Stocks will likely give up those gains, and possibly more, in short order.
On the plus side, we saw an upbeat report from Intel. And today, the market rallied on news that Nouriel Roubini, one of the biggest bears on or off Wall Street, thinks the worse is over. But don't get your hopes up. Turns out Dell, one of Intel's biggest customers accounting for 18% of Intel's net revenue in 2008, is not so optimistic. As for Roubini, he quickly refuted comments attributed to him saying they were taken out of context. He hasn't changed his outlook at all.
Google's earnings announcement, which came after the market closed, was much better than expected. However, the sell-off in the stock in after hours trading is a clear indication that this market has rallied too far too fast.
On the plus side, we saw an upbeat report from Intel. And today, the market rallied on news that Nouriel Roubini, one of the biggest bears on or off Wall Street, thinks the worse is over. But don't get your hopes up. Turns out Dell, one of Intel's biggest customers accounting for 18% of Intel's net revenue in 2008, is not so optimistic. As for Roubini, he quickly refuted comments attributed to him saying they were taken out of context. He hasn't changed his outlook at all.
Google's earnings announcement, which came after the market closed, was much better than expected. However, the sell-off in the stock in after hours trading is a clear indication that this market has rallied too far too fast.
IBM Has Got a Magic Potion
By Jeff Diamond - IBM beat estimates! What a surprise... Not! I haven't been counting, but Bloomberg just announced that this was the 17th quarter in a row that IBM has "surprised" to the upside! Sweet! I wonder how they surprised this time? Did they cut their pension contribution again? Maybe a few acquisitions or a lowered tax rate? Oh, or maybe a favorable FX conversion? IBM has got more tricks up its sleeve than a Las Vegas magician.
Nothing much has changed on Wall Street. Enjoy the rally while it lasts, but as we have seen in the past these games have mostly lead to tears, and no one ever sees it coming!
July 17th UPDATE - So, riddle me this: How does earnings-per-share at IBM rise 18 percent year-over-year while revenues fall 13 percent during the same period??? I don't know the answer, but with the stock closing up over 4 percent on the day the market doesn't seem to mind. Clearly, IBM does possess a very powerful potion!
Nothing much has changed on Wall Street. Enjoy the rally while it lasts, but as we have seen in the past these games have mostly lead to tears, and no one ever sees it coming!
July 17th UPDATE - So, riddle me this: How does earnings-per-share at IBM rise 18 percent year-over-year while revenues fall 13 percent during the same period??? I don't know the answer, but with the stock closing up over 4 percent on the day the market doesn't seem to mind. Clearly, IBM does possess a very powerful potion!
What Comes to Mind
By Jeff Diamond - All I can think when watching the Paulson hearing is that so much of this mess would have been self-correcting if our government had not bailed out all the bad players. AIG and some banks would have failed. Our government could have used that $700 billion TARP money to bail out the non-risk seeking depositors and policy holders. The surviving banks (and investment banks) would have gotten religion and reeled in excessive behavior while having had a less competitive playing field in front of them for the future. Boards of directors at all sorts of public companies would have become more activist to protect shareholders, and many CEO's would have been replaced by the boards (rather than all this questioning of the former Treasury Sec'y as to why the government didn't replace more CEO's.)
As it stands our government is doing everything within its power to maintain the status quo and put back the "broken" system that allowed this crisis to develop in the first place. Capitalism has been circumvented, and many of the correction mechanisms within a capitalist system have not been allowed to work.
In my opinion, our system is still sick. We are not well positioned for more than a temporary recovery. The cancer is still there. The government has essentially covered up the symptoms but not done anything to cure the patient. In fact, it is standing in its way of healing.
As it stands our government is doing everything within its power to maintain the status quo and put back the "broken" system that allowed this crisis to develop in the first place. Capitalism has been circumvented, and many of the correction mechanisms within a capitalist system have not been allowed to work.
In my opinion, our system is still sick. We are not well positioned for more than a temporary recovery. The cancer is still there. The government has essentially covered up the symptoms but not done anything to cure the patient. In fact, it is standing in its way of healing.
Tuesday, July 14, 2009
Higher Tax Rates Do Not Result in Higher Tax Revenues
By Vahan Janjigian - It is absolutely mind boggling how people continue to confuse higher tax rates with higher tax revenues. Numerous pundits continue to argue that we need to raise tax rates to fund the growing budget deficit. But raising tax rates is one sure way of making sure the budget deficit grows even larger.
There are only two ways to shrink a deficit: 1) Spend less money. 2) Generate more revenue. Spending less money is a great idea, but given all the promises the government has made to various constituents, this is not likely to happen in the near future. Therefore, we must raise more revenue, but that will not happen by raising tax rates.
Higher tax rates are a recipe for reduced employment and slower economic growth (or a more severe recession). Time and time again, we have seen how tax rate cuts have spurred employment, economic growth, and tax revenues. Budget deficits during such lower tax rate/higher tax revenue eras are the result of uncontrolled spending, not the result of less revenue.
Politicians should be clear and honest. Tell us we need more tax revenue, not higher tax rates. Then lower tax rates to make sure we get the revenue we need.
There are only two ways to shrink a deficit: 1) Spend less money. 2) Generate more revenue. Spending less money is a great idea, but given all the promises the government has made to various constituents, this is not likely to happen in the near future. Therefore, we must raise more revenue, but that will not happen by raising tax rates.
Higher tax rates are a recipe for reduced employment and slower economic growth (or a more severe recession). Time and time again, we have seen how tax rate cuts have spurred employment, economic growth, and tax revenues. Budget deficits during such lower tax rate/higher tax revenue eras are the result of uncontrolled spending, not the result of less revenue.
Politicians should be clear and honest. Tell us we need more tax revenue, not higher tax rates. Then lower tax rates to make sure we get the revenue we need.
Monday, July 13, 2009
Morgan Stanley and the Future of Research
By Sam Ro - The Financial Times recently reported Morgan Stanley tapped a 15 year old summer intern for some insight into "How Teenagers Consume Media." The introduction reads, "Without claiming representation or statistical accuracy, his piece provides one of the clearest and most thought provoking insights we have seen."
So, as the requirement to provide independent third party research expires in the next few weeks (Global Research Analyst Settlement), is this a preview of research to come? It's cheap (Hello, cost savings!), it has no statistical basis (Nassim Taleb would be proud), and it's independent (How corrupt could a teenager be?).
Of course, I don't really expect research departments to be taken over by high school kids. However, I do expect to see an increasing use of unconventional research. Surely, statistical study will reveal that conventional research has made you very little, if any, money in recent years.
So, as the requirement to provide independent third party research expires in the next few weeks (Global Research Analyst Settlement), is this a preview of research to come? It's cheap (Hello, cost savings!), it has no statistical basis (Nassim Taleb would be proud), and it's independent (How corrupt could a teenager be?).
Of course, I don't really expect research departments to be taken over by high school kids. However, I do expect to see an increasing use of unconventional research. Surely, statistical study will reveal that conventional research has made you very little, if any, money in recent years.
Friday, July 10, 2009
Enough Already!
By Jeff Diamond - I’m getting tired of Tim Geithner, Ben Bernanke, Barney Frank, Larry Summers, and President Obama making false promises about what our government can accomplish with all of this intervention. The intervention spans markets, private enterprise, government, and even the judicial system (as they make end runs around bankruptcy law and contract law, etc.)
When in the world are they going to admit that we’ve got problems that the government can’t fix? When are they going to allow some of the “too big to fail” institutions to fail? You know it’s coming. They know it’s coming (or at least they should!) Bad risk-takers should fail. That’s the way capitalism works, and if you intervene on the downside, then don’t expect capitalism to work to the upside either. Sure, we might get bouts of improved economic activity, but don’t expect a lasting recovery. Just look at Japan. We are looking a lot more like them all the time. They started intervening back in the early 1990’s and look how far that has gotten them.
Bubbles form when capital is misallocated, and they burst when that misallocation leads to unsustainable price levels. Admittedly, the bursting is no fun. It’s damn painful. So, I understand the desire and willingness of politicians to step in to alleviate the pain (and I have no doubt that we would be in the same position if George W. Bush were still President and Henry Paulson in the Treasury.) The problem is by not allowing the markets and the economy to “clear,” our government just delays the day of reckoning.
The topic of stimulus package II keeps resurfacing since there is general dissatisfaction with the continuing malaise. Now, I guess I should distinguish between bailouts and stimulus. I am vaguely sympathetic to a well-structured stimulus plan. The problem is that the stimulus money isn’t getting spent on stimulus. The biggest share of Stimulus Package I was given to the states who are using it to support their bloated and unsupportable state budgets. Revenues have fallen off a cliff in most states around the country and they aren’t going to bounce back big enough and quick enough to avoid painful cutbacks. Just look at California, even with the stimulus money from the federal government they can’t make ends meet! Federal, state, and local governments are attempting to provide too many services and benefits that they cannot (and never could) afford.
So, when is the greatest capitalist society in the history of the world ever going to allow capitalism to work? The first step is allowing the bad actors to fail and suffer their due (and that includes the states.) Yes, asset prices will fall and people will lose more jobs, but it will happen anyway. Just pick your timeframe… One or two years of pain? Or, one or two decades? If you picked the latter, then I hope you are prepared for all sorts of unintended consequences. We are already seeing the bad actors that the government has propped up undercut their competition who didn’t need a bailout. The explosion in government debt is going to lead to something bad. I’d guess higher interest rates and a weak currency, but who knows? And who knows what the unintended consequences of the unintended consequences will be, but in general, I’d guess that they won’t be pleasant.
So, this grand experiment in government intervention needs to grind to a halt. Let’s take our medicine and get on with it! The average American isn’t getting much out of all this anyway. I can see how the “too big to fail” crowd with all of its lobbying money is getting something, but it’s hardly trickling down. In fact, banks are rushing to cut credit lines, raise minimum payments and interest rates even on its customers in good standing. If the government wants to offer incentives for investment so that money flows rather than being hoarded, then maybe you can convince me, but enough of the money printing and exploding debt. That’s going to lead to nothing but trouble.
When in the world are they going to admit that we’ve got problems that the government can’t fix? When are they going to allow some of the “too big to fail” institutions to fail? You know it’s coming. They know it’s coming (or at least they should!) Bad risk-takers should fail. That’s the way capitalism works, and if you intervene on the downside, then don’t expect capitalism to work to the upside either. Sure, we might get bouts of improved economic activity, but don’t expect a lasting recovery. Just look at Japan. We are looking a lot more like them all the time. They started intervening back in the early 1990’s and look how far that has gotten them.
Bubbles form when capital is misallocated, and they burst when that misallocation leads to unsustainable price levels. Admittedly, the bursting is no fun. It’s damn painful. So, I understand the desire and willingness of politicians to step in to alleviate the pain (and I have no doubt that we would be in the same position if George W. Bush were still President and Henry Paulson in the Treasury.) The problem is by not allowing the markets and the economy to “clear,” our government just delays the day of reckoning.
The topic of stimulus package II keeps resurfacing since there is general dissatisfaction with the continuing malaise. Now, I guess I should distinguish between bailouts and stimulus. I am vaguely sympathetic to a well-structured stimulus plan. The problem is that the stimulus money isn’t getting spent on stimulus. The biggest share of Stimulus Package I was given to the states who are using it to support their bloated and unsupportable state budgets. Revenues have fallen off a cliff in most states around the country and they aren’t going to bounce back big enough and quick enough to avoid painful cutbacks. Just look at California, even with the stimulus money from the federal government they can’t make ends meet! Federal, state, and local governments are attempting to provide too many services and benefits that they cannot (and never could) afford.
So, when is the greatest capitalist society in the history of the world ever going to allow capitalism to work? The first step is allowing the bad actors to fail and suffer their due (and that includes the states.) Yes, asset prices will fall and people will lose more jobs, but it will happen anyway. Just pick your timeframe… One or two years of pain? Or, one or two decades? If you picked the latter, then I hope you are prepared for all sorts of unintended consequences. We are already seeing the bad actors that the government has propped up undercut their competition who didn’t need a bailout. The explosion in government debt is going to lead to something bad. I’d guess higher interest rates and a weak currency, but who knows? And who knows what the unintended consequences of the unintended consequences will be, but in general, I’d guess that they won’t be pleasant.
So, this grand experiment in government intervention needs to grind to a halt. Let’s take our medicine and get on with it! The average American isn’t getting much out of all this anyway. I can see how the “too big to fail” crowd with all of its lobbying money is getting something, but it’s hardly trickling down. In fact, banks are rushing to cut credit lines, raise minimum payments and interest rates even on its customers in good standing. If the government wants to offer incentives for investment so that money flows rather than being hoarded, then maybe you can convince me, but enough of the money printing and exploding debt. That’s going to lead to nothing but trouble.
Wednesday, July 08, 2009
The Madoff Affair on PBS
By Vahan Janjigian - Last night I took time to watch The Madoff Affair, a video production by Frontline that aired on PBS not too long ago. The entire investment industry has been following events related to the world's largest stock fraud ever since news of it first broke in December 2008.
The Frontline production does an excellent job of covering Bernie Madoff's career from the time he graduated from Hofstra University in 1960 to his conviction. His fraud began soon after he married his high school sweetheart and took an office in her father's accounting firm. Madoff first started a market-making operation, which he grew by paying for order flow.
However, he also started an investment advisory business without registering with the SEC. He did what he knew how to do very well: He paid for investments. In fact, he paid big bucks to so-called feeder funds to send him their clients' money. Amazingly, these feeders did virtually no due diligence on Madoff.
As all Ponzi schemes are prone to do, Madoff's fraud blew up when the long bull run in equities ended and stocks started falling fast. His clients started asking for their money back; not because they were unhappy with his performance, but because they needed their money to cover loses in their other investments. Of course, what they didn't realize at the time was that their money was gone and Madoff's outstanding performance was nothing but fiction.
One of the most tragic events of the Madoff fraud was the suicide of Thierry Magon de la Villehuchet. He was a money manager from France who had invested everything with Madoff. He killed himself shortly after Madoff's fraud became public. Frontline interviews Villehuchet's brother who calls the suicide honorable.
I urge you to watch the video if you would like a more complete understanding of how Madoff earned the trust of investors and got away with his fraud for so long.
The Frontline production does an excellent job of covering Bernie Madoff's career from the time he graduated from Hofstra University in 1960 to his conviction. His fraud began soon after he married his high school sweetheart and took an office in her father's accounting firm. Madoff first started a market-making operation, which he grew by paying for order flow.
However, he also started an investment advisory business without registering with the SEC. He did what he knew how to do very well: He paid for investments. In fact, he paid big bucks to so-called feeder funds to send him their clients' money. Amazingly, these feeders did virtually no due diligence on Madoff.
As all Ponzi schemes are prone to do, Madoff's fraud blew up when the long bull run in equities ended and stocks started falling fast. His clients started asking for their money back; not because they were unhappy with his performance, but because they needed their money to cover loses in their other investments. Of course, what they didn't realize at the time was that their money was gone and Madoff's outstanding performance was nothing but fiction.
One of the most tragic events of the Madoff fraud was the suicide of Thierry Magon de la Villehuchet. He was a money manager from France who had invested everything with Madoff. He killed himself shortly after Madoff's fraud became public. Frontline interviews Villehuchet's brother who calls the suicide honorable.
I urge you to watch the video if you would like a more complete understanding of how Madoff earned the trust of investors and got away with his fraud for so long.
Tuesday, July 07, 2009
The Blame Game
By Taesik Yoon - One of the things that has bothered me most in the aftermath of the financial mess that we are still digging ourselves out of is the blame game that so many seem to be playing. Sure, there is plenty of blame to go around and plenty of participants to share in that blame. However, to wholly place blame on any single one of these players is both narrow minded and a sorry attempt to absolve others of their share of responsibility.
The latest ire of these finger pointers comes in the form of a recent, now widely-circulated, article written in the latest issue of Rolling Stone magazine by contributing editor Matt Taibbi.
Here’s a link to the article: The Great American Bubble Machine
In it the author trashes Goldman Sachs. He blames the financial institution and the reach of its not-so-invisible hand (through company alums that have managed to infiltrate key positions in our government) for engineering “every major market manipulation since the Great Depression.”
In reality, the article focuses more on the present decade—specifically on how Goldman’s “unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam” beginning with the tech/dotcom bubble, moving on to the housing bubble, then the bubble in commodity prices. It even highlights how Goldman rigged the federal bailout.
My problem with the article has little to do with the facts presented. Generally, I found it to be well-researched. The specific examples of how Goldman profited from these bubbles both legally and illegally were compelling and enlightening.
But Mr. Taibbi was not above distorting the truth to make a stronger argument for his thesis. For example, he notes that Goldman converted from an investment bank to a bank holding company specifically so it could participate in the taxpayer-backed TARP funding. The author is right that Goldman received $10 billion in TARP funds. However, what he conveniently omits is the fact that Goldman never wanted (or likely even needed) these funds. It has also been among the most vocal at wanting to pay the funds back as soon as possible. In mid-June, it did just that, repurchasing $10 billion in preferred shares from the government, as well as paying an additional $425 million in dividends, which is expected to reduce second quarter earnings by 77 cents.
In other words, Goldman not only gave back the taxpayer money it borrowed less than three quarters after borrowing it, it also paid an additional $425 million to taxpayers. If the company was as brazen as the article suggests or if the money provided was, as he states, “…10 billion free dollars in a paper bag to buy lunch,” then why pay it back so soon or at all?
What makes this particular omission so egregious is the fact that a key reason why Goldman wanted to payback TARP funds so quickly was because of all the restrictions on compensation set forth in it. This, in fact, is completely consistent with Mr. Taibbi’s argument that Goldman is all about greed and paying fat bonuses. The only reason I can see for leaving this out is because it would invalidate his more important argument that the funds were provided to Goldman by its chummy government buddies without impunity. This sort of data mining is dangerous. It serves the exact same purpose he claims Goldman is guilty of: duping the uninformed.
And speaking of the general public, Taibbi does not note their participation in this mess. I, on the other hand, am not as kind. In the end, it all comes down to supply and demand. For example, with regard to the housing bubble, he notes how Goldman’s influence helped lead to a regulatory environment which allowed the CDO market to explode. But that only represents the supply side. You still need mortgage demand to drive the CDO market. This demand is driven by consumers. If we would have been more disciplined there would have been no pool of sub-prime loans to package together as CDOs. Whether or not financial institutions or government agencies helped perpetuate an environment of easy credit and mortgage lending practices, it was ultimately up to the consumer to decide to take that credit or leave it.
This is not to shift the blame entirely on individuals, but rather to highlight just how easy it would be to do so. Nor am I trying to absolve Goldman of wrong doing. There is no denying the company profited immensely from each one of the bubbles Mr. Taibbi lists at the expense of the American public. Additionally, there is no way to defend some of the unscrupulous tactics Goldman used to generate profits during these bubbles.
But Goldman certainty was not the only one to employ such tactics. Indeed, investment banks are like drug dealers. Only instead of selling crack or heroin, they sell a much more potent intoxicant—the promise of wealth and quick riches—all while doing their best to mask the risk inherent. And I would agree that Goldman was probably the biggest dealer on the street. But there is no doubt in my mind that if you could not buy from it, there would plenty of others more than willing to take your money. In other words, these bubbles would have occurred with or without Goldman’s involvement. The problem for Goldman was that it was among the last dealers standing after the raid and that makes it an easy target.
Mr. Taibbi ends by stating, “This is the world we live in now. And in this world, some of us have to play by the rules, while others get a note from the principal excusing them from homework until the end of time… It’s gangster state, running on gangster economics… And maybe we can’t stop it, but we should at least know where it’s going.”
This to me is the ultimate cop-out. It essentially boils down to saying here’s the problem. Unfortunately, I can provide no solutions—not even one; the reality of the situation is that there is not much we can do about it.
Well, I’ve got one solution for him and anyone else who shares his view: buy Goldman Sachs’ stock. After all, if Mr. Taibbi is correct in his assessment, then Goldman’s stock is what we in the industry refer to as an arbitrage (risk-free) opportunity. By his account, Goldman already owns all the air it needs to inflate the cap-n-trade bubble he is so certain will be the next to take place. Therefore, Goldman should be the biggest beneficiary. As an owner of Goldman shares, so should you.
The latest ire of these finger pointers comes in the form of a recent, now widely-circulated, article written in the latest issue of Rolling Stone magazine by contributing editor Matt Taibbi.
Here’s a link to the article: The Great American Bubble Machine
In it the author trashes Goldman Sachs. He blames the financial institution and the reach of its not-so-invisible hand (through company alums that have managed to infiltrate key positions in our government) for engineering “every major market manipulation since the Great Depression.”
In reality, the article focuses more on the present decade—specifically on how Goldman’s “unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam” beginning with the tech/dotcom bubble, moving on to the housing bubble, then the bubble in commodity prices. It even highlights how Goldman rigged the federal bailout.
My problem with the article has little to do with the facts presented. Generally, I found it to be well-researched. The specific examples of how Goldman profited from these bubbles both legally and illegally were compelling and enlightening.
But Mr. Taibbi was not above distorting the truth to make a stronger argument for his thesis. For example, he notes that Goldman converted from an investment bank to a bank holding company specifically so it could participate in the taxpayer-backed TARP funding. The author is right that Goldman received $10 billion in TARP funds. However, what he conveniently omits is the fact that Goldman never wanted (or likely even needed) these funds. It has also been among the most vocal at wanting to pay the funds back as soon as possible. In mid-June, it did just that, repurchasing $10 billion in preferred shares from the government, as well as paying an additional $425 million in dividends, which is expected to reduce second quarter earnings by 77 cents.
In other words, Goldman not only gave back the taxpayer money it borrowed less than three quarters after borrowing it, it also paid an additional $425 million to taxpayers. If the company was as brazen as the article suggests or if the money provided was, as he states, “…10 billion free dollars in a paper bag to buy lunch,” then why pay it back so soon or at all?
What makes this particular omission so egregious is the fact that a key reason why Goldman wanted to payback TARP funds so quickly was because of all the restrictions on compensation set forth in it. This, in fact, is completely consistent with Mr. Taibbi’s argument that Goldman is all about greed and paying fat bonuses. The only reason I can see for leaving this out is because it would invalidate his more important argument that the funds were provided to Goldman by its chummy government buddies without impunity. This sort of data mining is dangerous. It serves the exact same purpose he claims Goldman is guilty of: duping the uninformed.
And speaking of the general public, Taibbi does not note their participation in this mess. I, on the other hand, am not as kind. In the end, it all comes down to supply and demand. For example, with regard to the housing bubble, he notes how Goldman’s influence helped lead to a regulatory environment which allowed the CDO market to explode. But that only represents the supply side. You still need mortgage demand to drive the CDO market. This demand is driven by consumers. If we would have been more disciplined there would have been no pool of sub-prime loans to package together as CDOs. Whether or not financial institutions or government agencies helped perpetuate an environment of easy credit and mortgage lending practices, it was ultimately up to the consumer to decide to take that credit or leave it.
This is not to shift the blame entirely on individuals, but rather to highlight just how easy it would be to do so. Nor am I trying to absolve Goldman of wrong doing. There is no denying the company profited immensely from each one of the bubbles Mr. Taibbi lists at the expense of the American public. Additionally, there is no way to defend some of the unscrupulous tactics Goldman used to generate profits during these bubbles.
But Goldman certainty was not the only one to employ such tactics. Indeed, investment banks are like drug dealers. Only instead of selling crack or heroin, they sell a much more potent intoxicant—the promise of wealth and quick riches—all while doing their best to mask the risk inherent. And I would agree that Goldman was probably the biggest dealer on the street. But there is no doubt in my mind that if you could not buy from it, there would plenty of others more than willing to take your money. In other words, these bubbles would have occurred with or without Goldman’s involvement. The problem for Goldman was that it was among the last dealers standing after the raid and that makes it an easy target.
Mr. Taibbi ends by stating, “This is the world we live in now. And in this world, some of us have to play by the rules, while others get a note from the principal excusing them from homework until the end of time… It’s gangster state, running on gangster economics… And maybe we can’t stop it, but we should at least know where it’s going.”
This to me is the ultimate cop-out. It essentially boils down to saying here’s the problem. Unfortunately, I can provide no solutions—not even one; the reality of the situation is that there is not much we can do about it.
Well, I’ve got one solution for him and anyone else who shares his view: buy Goldman Sachs’ stock. After all, if Mr. Taibbi is correct in his assessment, then Goldman’s stock is what we in the industry refer to as an arbitrage (risk-free) opportunity. By his account, Goldman already owns all the air it needs to inflate the cap-n-trade bubble he is so certain will be the next to take place. Therefore, Goldman should be the biggest beneficiary. As an owner of Goldman shares, so should you.
Monday, July 06, 2009
July 1 Commentary From FGI
The following commentary appeared in the July issue of the Forbes Growth Investor, which was made available to subscribers on July 1.
By Vahan Janjigian - June was a bad month for celebrities. Ed McMahon, Farrah Fawcett, Michael Jackson, and Billy Mays all passed away. June was also a bad month for Federal Reserve Chairman Ben Bernanke; although he presumably is still in good health.
I have blamed the Fed in the past for many of the bubbles our economy experienced in recent years. Its easy monetary policy caused the technology bubble of the late 1990s, the housing bubble that peaked in 2006, and the commodities bubble that followed shortly thereafter. Nonetheless, I would also argue that Ben Bernanke has done an admirable job of responding to the financial crisis that began shortly after he took over as Fed chairman. Under Bernanke’s leadership, the Fed responded quickly and decisively by slashing interest rates and increasing the money supply. While these actions increase the risk of inflation and threaten to erode further the value of the U.S. dollar, I believe they were necessary to restore confidence and prevent a total collapse of the financial system.
However, Bernanke now finds himself in political hot water. Congress recently grilled him amid allegations that he coerced Bank of America CEO Ken Lewis to consummate the Merrill Lynch acquisition against his better judgment. Bernanke even stands accused of urging Lewis not to disclose the poor state of Merrill’s health to his shareholders. Democrats and Republicans attacked him with equal ferocity.
As I explain on my blog, I believe Bernanke’s days as Fed chairman are numbered. President Barack Obama appears reluctant to give him a strong endorsement. Obama recently said Bernanke is doing a “fine” job. When questioned during a press conference, he refused to say if he would reappoint Bernanke as chairman. Soon after Bernanke’s grilling in Congress, the White House issued a tepid statement saying it had “confidence” in Bernanke. As the nearby cartoon illustrates, when praise from your boss is this impassive, it’s time to shop your resume. Besides, I believe Larry Summers is hungry for Bernanke’s job and I believe Obama would like to give it to him.
As for the economy, I still see no evidence that things are getting better. At best, they are still getting worse, but at a slower pace. According to the S&P/Case-Shiller Index, housing prices fell 18% year-over-year in April. The good news, if you can call it that, is that prices are no longer falling at an accelerating rate on a nationwide basis. Unfortunately, price declines are accelerating in some key markets, which until recently had been holding up well. These include Charlotte and New York.
In addition, according to the Conference Board, after three consecutive monthly gains, the Consumer Confidence Index fell more than five points in May. Consumers became more pessimistic about their present situation. They also grew more wary about their near-term outlook for jobs and income. This is not what hard-hit retailers were hoping to hear.
Overall, I continue to believe there is a significant risk for a near-term sell-off in equities. Keep some cash on hand to take advantage of the sell-off when it occurs.
Sunday, July 05, 2009
Preview of Q2 Earnings Season
By Sam Ro - Based on my reading of Q1 earnings announcements, I think corporate managers may have been a little too optimistic in their expectations for economic recovery. Below is some language I expect to hear during the Q2 earnings announcement season.
(Company XYZ) Reports Second Quarter Results
Q2 net revenue was weaker than we had initially anticipated. April and May were inline with our projections. However, demand fell significantly in June. Year-over-year comparisons were particularly challenging due to last year’s stimulus checks. Top line weakness was partially offset by favorable currency movements since the beginning of the year (i.e. the weaker dollar).
Net income was in the low end of our previous guidance due to weak volume. However, the operating profit margin benefited from cost saving restructuring initiatives, which included idling factories and laying off employees. Thanks to significant reductions in capital expenditures, the company had significant free cash flows which were used to repurchase shares. Adjusted for restructuring charges, earnings per share was in the high end of our guidance.
“Our company has performed well in this challenging macroeconomic situation,” said the CEO. “We continue to take actions to right-size our operations in response to the evolving demand environment. We believe we will be in a stronger competitive position when the recession ends.”
“Because economic conditions continue to deteriorate, we believed it was prudent to revise downward our full year earnings guidance range. We continue to see further deterioration in consumer confidence due to weak employment conditions and higher-than-expected gasoline prices. Raw material and energy costs are higher than we had initially budgeted, which is pressuring our gross profit margins. Projected weakness should be partially offset by the benefits of a weaker dollar.”
We look forward to speaking to you again in three months.
(Company XYZ) Reports Second Quarter Results
Q2 net revenue was weaker than we had initially anticipated. April and May were inline with our projections. However, demand fell significantly in June. Year-over-year comparisons were particularly challenging due to last year’s stimulus checks. Top line weakness was partially offset by favorable currency movements since the beginning of the year (i.e. the weaker dollar).
Net income was in the low end of our previous guidance due to weak volume. However, the operating profit margin benefited from cost saving restructuring initiatives, which included idling factories and laying off employees. Thanks to significant reductions in capital expenditures, the company had significant free cash flows which were used to repurchase shares. Adjusted for restructuring charges, earnings per share was in the high end of our guidance.
“Our company has performed well in this challenging macroeconomic situation,” said the CEO. “We continue to take actions to right-size our operations in response to the evolving demand environment. We believe we will be in a stronger competitive position when the recession ends.”
“Because economic conditions continue to deteriorate, we believed it was prudent to revise downward our full year earnings guidance range. We continue to see further deterioration in consumer confidence due to weak employment conditions and higher-than-expected gasoline prices. Raw material and energy costs are higher than we had initially budgeted, which is pressuring our gross profit margins. Projected weakness should be partially offset by the benefits of a weaker dollar.”
We look forward to speaking to you again in three months.
Friday, July 03, 2009
So California is Issuing IOU's?
By Jeff Diamond - So California is issuing IOU’s… And Bank of America, Wells Fargo, and others are accepting them as cash? It has been far too long since anyone has asked the question as to what qualifies as money these days. The Federal Reserve is creating dollars out of thin air at record speed, and the Federal government is spending stimulus and TARP money faster than anyone can count. If the old saying of “as goes California, so goes the nation” holds true, then we’re going to see a new kind of money printing in addition to to what the Federal Reserve and the U.S. Treasury have hidden up their sleeves.
Personally, I am very concerned about how all this is going to play out. At every level of government the only answer to our problems that politicians and bureaucrats seem capable of offering is to print money and issue more debt. Of course, FASB did its part by rejiggering accounting rules so that banks could hang onto their toxic assets and claim that they are still worth 100 cents on the dollar (bravo!)
If real estate hadn’t become so over-inflated (and over-built), then I would be telling everyone I knew to get out of stocks and bonds and to grab up as much “real” assets as possible… Unfortunately, real estate has become the epicenter of this financial implosion thanks to too many years of low rates, easy credit, massive leverage, and speculation. So, that’s hardly going to provide shelter in the storm.
Clearly, our government is hoping that their massive new money printing will avert deflation and bring on inflation. The rally in the stock market off the March 9 low is a good start, but since the economy is still clearly sucking wind, the government cannot remove their foot from the fiscal or monetary throttle. Increasingly, I hear more calls for a second round of economic stimulus in addition to the extraordinary measures already undertaken by the Fed. So here’s the trick… How do they do this without crashing the dollar and/or the bond market? Both are creaking more loudly all the time!
It seems that whenever the stock market rallies, the dollar weakens and bonds sell off. When the stock market falls, then we see the dollar rally and bonds hold firm. Seemingly, there is no formula for a steady currency and rising stocks and bonds… Clearly, our government is happy to throw the dollar under the bus, but while that has helped to rally stocks while also plugging holes in the financial system, the recent harsh sell-off in bonds helped to undermine the rally in stocks.
The answer is that our government cannot and should not be trying to save everyone and everything. Money printing, low rates, and debt got us into this mess in the first place, so why should that now get us out? Let’s just hope that all of these extraordinary measures don’t break what’s still working and that a new crisis isn’t the catalyst that ushers in real change.
Personally, I am very concerned about how all this is going to play out. At every level of government the only answer to our problems that politicians and bureaucrats seem capable of offering is to print money and issue more debt. Of course, FASB did its part by rejiggering accounting rules so that banks could hang onto their toxic assets and claim that they are still worth 100 cents on the dollar (bravo!)
If real estate hadn’t become so over-inflated (and over-built), then I would be telling everyone I knew to get out of stocks and bonds and to grab up as much “real” assets as possible… Unfortunately, real estate has become the epicenter of this financial implosion thanks to too many years of low rates, easy credit, massive leverage, and speculation. So, that’s hardly going to provide shelter in the storm.
Clearly, our government is hoping that their massive new money printing will avert deflation and bring on inflation. The rally in the stock market off the March 9 low is a good start, but since the economy is still clearly sucking wind, the government cannot remove their foot from the fiscal or monetary throttle. Increasingly, I hear more calls for a second round of economic stimulus in addition to the extraordinary measures already undertaken by the Fed. So here’s the trick… How do they do this without crashing the dollar and/or the bond market? Both are creaking more loudly all the time!
It seems that whenever the stock market rallies, the dollar weakens and bonds sell off. When the stock market falls, then we see the dollar rally and bonds hold firm. Seemingly, there is no formula for a steady currency and rising stocks and bonds… Clearly, our government is happy to throw the dollar under the bus, but while that has helped to rally stocks while also plugging holes in the financial system, the recent harsh sell-off in bonds helped to undermine the rally in stocks.
The answer is that our government cannot and should not be trying to save everyone and everything. Money printing, low rates, and debt got us into this mess in the first place, so why should that now get us out? Let’s just hope that all of these extraordinary measures don’t break what’s still working and that a new crisis isn’t the catalyst that ushers in real change.
Wednesday, July 01, 2009
New Bloggers
I am often asked to make more frequent postings to this blog. Although I would love to do so, I don't always have the time. Therefore, I have invited a few individuals whose opinions I greatly respect to post their views and comments to my blog. Obviously, I won't always agree with them and neither will you, but they are smart investors and serious thinkers.
Sam Ro is an equity analyst in my group at Forbes. He is fully involved with the entire process of picking stocks and researching companies for recommendation in the Forbes Growth Investor and Special Situation Survey investment newsletters. Just a few weeks ago Sam sat for the Level III exam of the Chartered Financial Analyst program. He has a degree in Religion from Boston University.
Taesik Yoon is a senior equity analyst and has been working closely with me at Forbes for 10 years. He has proven to be an excellent stock picker. He serves as associate editor of the Forbes Growth Investor and he is also fully engaged with the Special Situation Survey letter. Tae earned the CFA designation four years ago. He graduated from New York University with a degree in Marketing and International Business.
Jeffrey Diamond does not work at Forbes, but he joins our blog with a great deal of pertinent experience. He left Wall Street in 1995 after spending 12 years in fixed income sales at Credit Suisse First Boston and Bear Stearns. During that time he worked in both Tokyo and New York. Jeff has a B.A. from Columbia College (a.k.a., Columbia University in the City of New York) and has been managing money privately since 2000. He is an avid watcher of the economy and markets and has a true knack for seeing beyond the obvious.
I am looking forward to reading their comments. I have no doubt you will find them interesting and provocative.
Sam Ro is an equity analyst in my group at Forbes. He is fully involved with the entire process of picking stocks and researching companies for recommendation in the Forbes Growth Investor and Special Situation Survey investment newsletters. Just a few weeks ago Sam sat for the Level III exam of the Chartered Financial Analyst program. He has a degree in Religion from Boston University.
Taesik Yoon is a senior equity analyst and has been working closely with me at Forbes for 10 years. He has proven to be an excellent stock picker. He serves as associate editor of the Forbes Growth Investor and he is also fully engaged with the Special Situation Survey letter. Tae earned the CFA designation four years ago. He graduated from New York University with a degree in Marketing and International Business.
Jeffrey Diamond does not work at Forbes, but he joins our blog with a great deal of pertinent experience. He left Wall Street in 1995 after spending 12 years in fixed income sales at Credit Suisse First Boston and Bear Stearns. During that time he worked in both Tokyo and New York. Jeff has a B.A. from Columbia College (a.k.a., Columbia University in the City of New York) and has been managing money privately since 2000. He is an avid watcher of the economy and markets and has a true knack for seeing beyond the obvious.
I am looking forward to reading their comments. I have no doubt you will find them interesting and provocative.
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