The Big Picture

Succinct Summation of Week’s Events 9.19.14
Is Money Flowing Out of Europe?
Whiteout in Finance
Playboy Bunnies, Mila Kunis and the Myth of the Celebrity Stockpicker
10 Friday AM Reads
Scottish Banks Are Voting ‘Nay’
2016 Mercedes GT: 911 Fighter

Succinct Summation of Week’s Events 9.19.14

Posted: 19 Sep 2014 01:00 PM PDT

Succinct Summations week ending September 19th

Positives:

1. S&P 500 and the Dow made new all-time highs.
2. Initial jobless claims fell 36k last week to 280k, the lowest number in 7 years.
3. NAHB housing market index came in at 59, up from 55 in August and the highest reading since 2005.
4. Empire State Manufacturing grew to 27.5 in September, the highest level since October 2009.
5. PPI was flat in August, in line with expectations. Y/O/Y prices were up 1.8%, also in line.
6. U.S. core CPI didn't increase for the first time since 2010; CPI came in down 0.2%, vs flat estimates
7. Energy prices fell 2.6% m/o/m and gasoline prices fell 4.1% m/o/m.

Negatives:

1. Housing starts come in at 956k v 1,037k expected, down 14% m/o/m
2. U.S. industrial production fell 0.1% m/o/m vs a 0.3% expected gain.
3. The Philly Fed Index came in at 22.5, down from 28 and slightly lower than the 23 expected.
4. Motor vehicle production dropped 7.6% m/o/m.
5. Germany sold 3.3B euros of 2 year debt a negative yield, indicative of uncertainty across the pond.

Is Money Flowing Out of Europe?

Posted: 19 Sep 2014 11:00 AM PDT

Source: FT

Europe is experiencing a reversal.

The Financial Times writes:

The withdrawals brought to an end 12 months of almost continuous inflows, powered by confidence that the eurozone debt crisis had retreated and that the region's economies were returning to growth. In the 12 months to July, assets under management at EPFR-tracked European equity funds expanded by 50 per cent to more than $1.2tn, one of the biggest sustained expansions since its records started in 1998.

The article also notes an increase in outflows from European equity funds since the first half of the year.

Continues here

Whiteout in Finance

Posted: 19 Sep 2014 09:00 AM PDT

Of the many profession that seems to be disproportionately white, I cannot help but note that Finance is amongst the whitest:

More after the jump

Source: Chief Investment Officer

Playboy Bunnies, Mila Kunis and the Myth of the Celebrity Stockpicker

Posted: 19 Sep 2014 06:30 AM PDT

Last week, I came across the following headline: "As music sales fall, sax player Kenny G turns to stockpicking."

My immediate reaction: Uh oh. The last thing any bull market needs is for celebrities to be featured in the financial press. As soon as that starts, it means the bull market must be near a top, right?

Before you nod your head in agreement, let’s do some digging to see if the contrary-indicator idea is right and not just a trading-desk anecdote. A search shows that the stock-trading celebrity is a regular feature of what is obviously a bored financial press. If only there were anything important going on that might be worth their attention, then journalists wouldn't have to bother with this sort of fluff. But hey, nothing really important has been happening, so why not discuss the Kenny G Long Short Leveraged Alpha Fund?

Where was I? Oh, celebrity stock-picking.

Here is a brief survey of how they have done:

Continues here

10 Friday AM Reads

Posted: 19 Sep 2014 05:00 AM PDT

Is it Friday already — how did that happen so quickly? Before we send you off to work, some morning train reads to round out your week:

• Dirty Secret of $1 Trillion Loans Is When You Get Your Money Back (Bloomberg)
• A History of Misses for RadioShack (DealBook)
• The Darwin Economy: Why Smith’s Invisible Hand Breaks Down (Farnam Street)
• ‘Buy and hold’ investors: You’re doing it wrong (USA Today)

Continues here

Scottish Banks Are Voting ‘Nay’

Posted: 19 Sep 2014 04:30 AM PDT

Source: Societe Generale

Albert Edwards, the insightful but not especially upbeat analyst at Societe Generale SA, writes to warn:

The sequence of events which might flow from a Yes vote may be as unpredictable and as uncontrollable as those of the late 1980s in Eastern Europe, which led to the ultimate demise of the USSR.

Edwards notes how successfully the U.K. currency union worked during the 2008 crisis. The relative strength of the pound worked in favor of two Scottish banks that required bailouts — Royal Bank of Scotland and HBOS Plc (now part of Lloyds Banking Group Plc.).

Continues here

2016 Mercedes GT: 911 Fighter

Posted: 19 Sep 2014 03:00 AM PDT