Archive | July, 2010

Stone Street Market Notes

29 Jul

A couple of posts on Scribd for your viewing pleasure

STIRS Update (July 28, 2010)

Fixed Income ETF’s and a Fed Observation (July 29, 2010)

Closing Notes – 7/28/10

28 Jul

Available for download on Scribd: http://scr.bi/djgZep

Morning Call – July 27, 2010

27 Jul

Morning Call July 27 2010 (Direct PDF Link)

Morning Call July 26, 2010

26 Jul

Morning Call July 26 2010 (Direct PDF Link)

On Unemployment And The Social Divide

25 Jul

“We pass the word around; we ponder how the case is put by different people, we read the poetry; we meditate over the literature; we play the music; we change our minds; we reach an understanding. Society evolves this way, not by shouting each other down, but by the unique capacity of unique, individual human beings to comprehend each other.” –Lewis Thomas, The Medusa and the Snail (1979)

I am increasingly alarmed at this new era that our nation finds ourselves progressing towards. Its nothing new and uncharted, rather for those who know and understand history; you will see that we are rapidly in danger of repeating ourselves. I am resigned to the fact that this probably won’ t change minds who are not willing to look at things from other perspectives, but I feel that instead of kicking people when they’re down by resorting to ad-hominem attacks/name-calling instead of coming up with solutions and engaging in civil debate, we should all, as a society indeed be focused on the latter. Consider this statement:

Heller said the current economic downturn and policies may bring back the hobos of the Great Depression, people who wandered the country taking odd jobs. -Rep. Dean Heller, Feb. 2010

I have seen a lot of vitriol expressed from those who have a job, directed at the unfortunate people who lost theirs during the Crisis of 2008 (which is still, in my humble opinion, an ongoing affair). It’s a level of vitriol that causes me great alarm, given that many of my friends/acquaintances/associates now find themselves in the lucky 10% (16+% if you include U-6). All of them come from varied backgrounds: clerical office work, construction, manufacturing (robotic programming, machinists, etc.), computers (programming, networking, project management, etc.) and finance. Their degree status is varied as well, along with their saving patterns during the relative  boom time from 2003-2007. One thing that I can say personally about these people is that they do not fit the description that an increasing number of people who have a job use to describe them. While it is true that there may be a small group of people who milk/game the system; surely they are not the majority. It would be similar to the SEIU painting everyone on Wall Street with the same brush as greedy/entitled people. You and I both know that’s not true; the majority are hardworking, honest people who go to do a job. The same applies to the unemployed. These people didn’t drive the economy into the ground, they are the  collateral damage that occurred when a small minority who held the power did.

Many people are pounding the pavement, day after day, looking for work. For some people, they’re looking for any work at huge reductions in salaries/benefits. With a 5:1 applicant to job opening ratio across several industries, the simple forces of supply and demand are kicking in. While some people need to be more resilient and not get discouraged in applying for jobs while not even getting a basic response back, the majority of people keep looking, turning over every nook and cranny. Being unemployed can destroy your social/professional network, one must guard against that. However, trying to maintain a social network while worrying about how you’re going to pay the bills and other things that happen in  life , while looking for jobs and doing critical self-assessments that are necessary to find a way to improve your image in front of prospective employers. Again, instead of painting the majority with the sins of a small few, really look at the facts: Hiring manager and CEO surveys all are saying that there are reduced plans to hire in the second half of 2010. While we have made progress in reducing the applicant to job ratio from 6:1, we still have a long way to go. And I believe that the majority of people who are unemployed are trying, some more futile than others, but they are at least trying. Trying to re-make themselves to deal with a rapidly changing job marketplace and make themselves more marketable so that they at least have a chance of hearing something from their places at which they apply to.

We are becoming a nation that is divided. I opined just this previous week at a gathering of financial professionals in Chicago that Al Qaeda has achieved their primary target of dividing our country, pitting fellow Americans against each other and tearing up the fabric of our society. And they did not have to even lift a finger: we are doing this to ourselves. Excessive greed in the far corners of our financial system by both Wall and Main streets, a systematic and methodical destruction of the middle class and a level of partisan bitterness that I have never seen in my lifetime – for many people who have a longer life span than myself, I’m sure it would be the same (you can feel free to comment and share your observations). Instead of looking for solutions to get Americans back to work, those who have jobs and wealth are stomping on those people who are actually trying to improve their situation. Again, people are painting broad strokes while failing to look at the issue from other people’s perspectives. I am not calling for redistributionist policies, free lunches/welfare at the expense of the deficit; rather I am at least asking that we show some level of compassion and use the American engine of thought and economic might to come up with solutions that not only address our short term issues, but enable these people to take a horrible situation, get on their feet, retrain so that America can lead again.

Now that I’ve blasted people for not coming up with solutions, here are a few that I can think of that would make an immediate impact and get our country moving again:

1. Offer incentives to small businesses to hire unemployed workers – Tax breaks, “stimulus measures” can work. If business is incentivized and the costs outweigh the benefits, they will make the moves to hire people. I realize that this has been tried already, but we need to revisit it. But the policies need to be constructed with the business community at the table, not in a Washington backroom.

2.As a condition for unemployment, instead of penalizing those who decide to take classes to retrain, encourage them to do so. Much like tuition reimbursement in companies, their college educations in retraining can be subject to a number of criteria. Extra emphasis needs to be had on the industries of the future (no, pushing ‘Green Jobs’ is not adequate when we have a clearly defined deficit of people in this nation who lack Mathematics and Science skills).

3.Clarity in policies – DC needs to listen to its citizens and business leaders (both small and large) alike and provide certainty.

4.Stop talking about being “pro growth” and “pro business” while backhanding the people who are in charge of creating job growth in the nation

5.Stop stomping on each other’s throats and help – Volunteer to help the unemployed shape up their resumes, help give mock interviews and give people feedback so that they can improve themselves. Help them rebuild their professional networks instead of ostracizing and shunning them.

6.I’m missing a few things, most certainly – Comment on this and offer your ideas. I will compile the results. Instead of dividing our nation we need to confront the issue head on with solutions.

Someone Please Explain This…

15 Jul

So I mostly follow individual stocks in the consumer discretionary space so every now and then I take a look at the bigger. This time (as I’ve noticed seems to be a trend), I’m confused. While the S&P500 is down 27% over the past 3 years, the S&P consumer discretionary index is down only 21% and the retail index is only down 13% (the latter was actually higher than 3 years back a few short months ago!).

I don’t get it. Help?

Value at Risk: Enjoy the Cement Shoes

14 Jul

I have zero value to add here, besides to say that as a movement, can we all just fucking kill VaR, especially how it has/is currently used?  What a fantastically misappropriated “tool!”  Everyone, even financial novices know all about its limitations, but its still quoted with painful frequency.  This needs to stop.  VaR is Dead.  I am making it so.  Brothers, Sisters, and everyone in between, join with me to decry this nonsense once and for all!