Sunday, August 12, 2012

What's the middle class?

Interesting article on the difficulties of defining the middle class. Here is Brazil's according to different sources:

Using 10$ to 50$ PPP income per day here is how they look for different countries:

Tuesday, May 1, 2012


James Montier at GMO has an interesting white paper on margins arguing that "what goes up must come down".
Starting from the the equation that income=expenditures and decomposing each side further he comes to the following defintion of profits:

Profits = Investment – Household Savings – Government Savings – Foreign Savings + Dividends
(explanations here)
He then shows that since roughly the peak in the market 2006/2007 the contribution to margins from the rising budget deficit has been substantial.

Watch those margins when budget deficit reduction measures are implemented.

Sunday, April 1, 2012


Hussman has a very interesting chart showing margins and subsquent 5 year earnings growth. Usually the higher the margins the lower the subsequent growth in earnings.

The most recent data show however that earnings have kept growing though margins were already very high. Buttonwood tries to explain why. Normally high margins and profits attract investments and competition and hence lower margins and profits. But currently investment is still low enabling companies to continue to earn unusually high profits. Hence the record high margins.

Here is a chart showing gross domestic investment and gdp indexed to 100 in December 2007. Investment has not yet recovered but it is catching up.

Beware the margin reversal.

Friday, February 24, 2012

Chinese Migration

A nice little video on Chinese migration from the economist.

Wednesday, February 15, 2012

Ugly Bond Math

A very intersting chart from EconomPic comparing current market yield and 5 year forward returns. With an index duraion of roughly 5 in the us both data sets track each other closely.

Thursday, January 12, 2012

Fuel Prices and Fuel Consumption

Econbrowser highlights this chart from a recent research paper on how to reduce petroleum consumption from transportation.

Wednesday, January 4, 2012

MIT Open Course Ware

Am definitely following Introduction to computer science and programming this year and I look forward to a certificate of completion from MITx.

A List of Good Companies

According to Crossingwallstreet, rated by CNN as the best buy and hold blogger

Company Symbol
Abbott Laboratories ABT
AmerisourceBergen ABC
AutoZone AZO
Balchem BCPC
Ball BLL
Baxter International BAX
Becton Dickinson BDX
Biogen Idec BIIB
C.H. Robinson Worldwide CHRW
Cerner CERN
Charles Schwab SCHW
Church & Dwight CHD
Clorox CLX
Coach COH
Coca-Cola KO
Cognizant Technology Solutions CTSH
Colgate-Palmolive CL
Community Health Systems CYH
Compuware CPWR
Costco Wholesale COST
Cummins CMI
CVS Caremark CVS
Danaher DHR
Darden Restaurants DRI
DaVita DVA
Deluxe DLX
Dentsply International XRAY
Dolby Laboratories DLB
Donaldson DCI
Expeditors International EXPD
Express Scripts ESRX
FactSet Research Systems FDS
Fair Isaac FICO
Fastenal FAST
Flowers Foods FLO
Flowers Foods FLO
FMC Technologies FTI
Forest Laboratories FRX
General Dynamics GD
Gilead Sciences GILD
Graco GGG
Hasbro HAS
Hormel Foods HRL
Hospira Inc HSP
Humana HUM
Infosys Limited INFY
Intel INTC
IntercontinentalExchange ICE
Internationa Flavors & Fragrances IFF
Intuit INTU
Intuitive Surgical ISRG
Iron Mountain IRM
J.M. Smucker SJM
Lincare LNCR
ManTech MANT
McCormick MKC
McDonald’s MCD
Microsoft MSFT
Nike NKE
Progressive PGR
Public Storage PSA
Quest Diagnostics DGX
Raven Industries RAVN
Ross Stores ROST
Seaboard SEB
SEI Investments SEIC
Seneca Foods SENEA
Sigma-Aldrich SIAL
Snap-On SNA
St. Jude Medical STJ
Starbucks SBUX
State Street STT
Stericycle SRCL
Target TGT
Teradata TDC
Thermo Fisher TMO
Tiffany TIF
U.S. Bancorp USB
United Technologies UTX
V.F. Corporation VFC
Varian Medical Systems VAR
Visa V
W.W. Grainger GWW
Walgreen WAG
Waters WAT
WellPoint WLP
Wells Fargo WFC
Western Union WU
Weyco WEYS
Yum! Brands YUM
Zimmer ZMH

Tuesday, January 3, 2012

Shanghai 1990 and 2010

H/T Brad DeLong for the link

Monday, January 2, 2012

Outlook 2012

Here are Wall Street's 2012 forecasts for the S&P 500. Bloomberg has the details here.
The mean forecast is 1348, up a tad more than 7% from the current level. Last year the pros were too optimistic forecasting an 9% rise while the market has been flat in 2011. They thought the S&P 500 would move to 1382 with a 2011 EPS of 93. They now think the market will move less with a 2012 EPS 10% higher. Not a lot of enthusiasm here.
The strategists have been right on the EPS side just a tad cautious but the market did not move with lots of risk aversion. If they are correct on the earnings side again and animal spirits return they could for once be too pessimistic. Let's check that in a year.

Firm                 Strategist           2012 Close   2012 EPS
Bank of America Savita Subramanian 1,350 $104.50
Bank of Montreal Ben Joyce 1,325 $102.00
Barclays Barry Knapp 1,330 $103.00
Citigroup* Tobias Levkovich 1,375 $101.00
Credit Suisse Andrew Garthwaite 1,340
Deutsche Bank Binky Chadha 1,500 $106.00
Goldman Sachs David Kostin 1,250 $100.00
HSBC Garry Evans 1,190
JPMorgan Thomas Lee 1,430 $105.00
Morgan Stanley Adam Parker $103.20
Oppenheimer Brian Belski 1,400 $101.00
RBC Myles Zyblock $101.00
UBS** Jonathan Golub 1,325 $99.00
Wells Fargo Gina Martin Adams 1,360 $101.99
Mean 1,348 $102.31
Median 1,345 $102.00
High 1,500 $106.00
Low 1,190 $99.00