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
Margins
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.
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
Margins
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.
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
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.
Monday, February 6, 2012
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
http://ocw.mit.edu/courses/#sloan-school-of-management
Am definitely following Introduction to computer science and programming this year and I look forward to a certificate of completion from MITx.
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 |
| AT&T | T |
| 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 |
| FLIR Systems | FLIR |
| 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 |
| IBM | IBM |
| Infosys Limited | INFY |
| Intel | INTC |
| IntercontinentalExchange | ICE |
| Internationa Flavors & Fragrances | IFF |
| Intuit | INTU |
| Intuitive Surgical | ISRG |
| Iron Mountain | IRM |
| J.M. Smucker | SJM |
| L-3 | LLL |
| Lincare | LNCR |
| ManTech | MANT |
| McCormick | MKC |
| McDonald’s | MCD |
| Microsoft | MSFT |
| Nike | NKE |
| Progressive | PGR |
| Public Storage | PSA |
| Quest Diagnostics | DGX |
| Raven Industries | RAVN |
| RLI Corp. | RLI |
| 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 |
| TJX | TJX |
| 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
http://www.theatlantic.com/business/archive/2011/01/picture-of-the-day-shanghai-in-1990-and-2010/69959/
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.
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
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