The Big Picture

---

• 2014 Porsche Cayman S
• Twitter/Square Inventor Jack Dorsey: The Innovator
• Succinct Summation Of Week’s Events (April 26, 2013)
• S&P 500 vs US 10 Year Yield to 1791
• 10 Friday AM Reads
• The Fine Art of Being Worng Wrong
• Chanos: China Is Only Getting Worse
• Art Cashin: End of Austerity?

2014 Porsche Cayman S Posted: 27 Apr 2013 02:00 AM PDT Click to enlarge ~~~ ~~~ ~~~   Videos, more photos after the jump ~~~ Source: Car and Driver

Twitter/Square Inventor Jack Dorsey: The Innovator Posted: 26 Apr 2013 04:30 PM PDT When Jack Dorsey invented Twitter, he changed the way we communicate. Will his latest creation, Square, change the way we shop? Lara Logan reports March 17, 2013 4:00 PM Twitter’s Jack Dorsey on 60 Minutes

Succinct Summation Of Week’s Events (April 26, 2013) Posted: 26 Apr 2013 01:00 PM PDT Succinct Summations week ending April 26, 2013. Positives: 1) With ~70% of S&P500 companies reporting, Q1 earnings are beating expectations (Q4=68.6%). Earnings have risen 3.5% year over year. (Ex financials +1.6%). 2) Despite some slowing economic data here and overseas, the Dow S&P and Nasdaq will all close up for the week. 3) High yield spreads have dropped to their lowest levels in 2 years, signaling a healthy appetite for risk. 4) Weekly jobless claims fell 16,000 to 339,000 — the lowest reading in 6 weeks. 5) New home sales rise 1.5% v expectations of 1.2% sending the homebuilder stock index to a new closing 52 week high 6) Q1 personal consumption expenditure gained 3.2% improving at the best pace since 2010. 7) Q1 U.K. GDP grew 0.3% v expectations of 0.1%. 8) Italy (finally) gets new PM, Enrico Letta sending Italian 10-year yields to their lowest levels since 2010. 9) France, Germany, Italy, Spain and Greece all had strong weeks after underperforming U.S. indices all year. 10)UK economy skirts a triple dip in Q1 with a .3% q/o/q gain, better than est of up .1% and follows a contraction in Q4. Negatives: 1) AP's twitter account was hacked causing another flash crash — individuals are still reticent to trust the integrity of markets. 2) Q1 GDP comes in at +2.5% v expectations of +3.0%. Corporate Revenue growth is flat, up 0.1% year over year with only 36% beating rev estimates and 44% missing. 3) U.S. based stock funds reported $7.3B in weekly outflows, the most since July 2012 (could be a contrarian buy signal). 4) March durable goods fall by -5.7% v expectations of -2.9%.( Core capex rose 0.2% v expectations of 0.3%). 5) Of the 855 companies (any index) that have reported earnings, only 59% have beaten EPS (lowest reading since this current bull market began). 6) U.S. existing home sales came in at -0.6% v expectations of +0.4%. 7) Thomson Reuters/University of Michigan index of consumer sentiment declined to 76.4 from 78.6 a month earlier — the lowest reading in 3 months. 8) Chinese flash PMI came in at 50.5 v expectations of 51.5 (above 50 indicates expansion but this was not an insignificant miss) 9) German flash PMI came in at 48.8 from 50.6 in March (below 50 signals contraction). French PMI comes in at a dismal 44.4, up from 40 in March. 10) Spanish unemployment in Q1 rises to 27.2% from 26% in prior q.

S&P 500 vs US 10 Year Yield to 1791 Posted: 26 Apr 2013 09:00 AM PDT S&P 500 composite vs US 10 yr yield to 1791 (Logarithmic Chart) Click to enlarge Source: Global Financial Data   Have a look above at the visual “Boom Bust nature” that the markets, with a little help fromt he Fed and Human Psychology — helps to create. If we overlaid a chart of volatilty, we would see huge spikes every 5 or so years. It is worth noting the major bubble of the Equity side: 1929 post WW1 bubble, 1996-2000 tech bubble, 2003-07 credit bubble, olus whatever the hell you want to call the current QE driven thingie. Critiques of Central Bank intervention do not have a whole lot of work to do to place much blame on the Fed for these last 3 boom & bust cycles.     Source: Ralph M Dillon (rdillon@globalfinancialdata.com) Global Financial Data www.globalfinancialdata.com

10 Friday AM Reads Posted: 26 Apr 2013 07:00 AM PDT My morning reads: • Why Does Apple Care About Its Share Price? (Businessweek) see also Apple's Next Big Thing (Slate) • Libor ‘Must Be Based on Fact, Not Fiction’ (Yahoo Finance) • Call This Market Surge the Anti-Austerity Rally (CNBC) see also Study reveals austerity's harmful impact on health in Greece (PNHP) • SEC aims to protect investors from fraud under new law (Washington Post) • What price, uninsured depositor risk? (FT Alphaville) see also From the Fed, a New Chill to Banks From Abroad (NYT) • Often unloved, ATF critical to solving major crimes like Boston bombing (Washington Post) • What If We Never Run Out of Oil? (Atlantic) • Eric Schneiderman Challenges Obama Administration Over Mortgage Investigations (HuffPo) see also Homeowners defaulting in loan modification program, report says (Washington Post) • George W. Bush's presidency, in 24 charts (Wonkblog) • Eight New Things We've Learned About Music (Smithsonian) What are you reading?   Drop in Borrowing Squeezes Banks Source: WSJ

The Fine Art of Being Worng Wrong Posted: 26 Apr 2013 06:00 AM PDT   “We are in the business of making mistakes. The only difference between the winners and the losers is that the winners make small mistakes, while the losers make big mistakes.” -Ned Davis “More than anything else, what differentiates people who live up to their potential from those who don't is a willingness to look at themselves and others objectively.” -Ray Dalio “Its okay to be wrong; it is not okay to stay wrong” -Old Traders Expression   On Friday mornings, I like to wax philosophical about recent events. There are often instructive lessons to be learned, if only we pay attention to what others are doing correctly — and incorrectly — in the world of investing and trading. I take every opportunity that presents itself to let someone else pay for my tuition in the school of life. This has been a week of blunders. Whether it is research, trading, market calls, or economics, we have seen some pretty awful judgment exercised. When it comes to investing mistakes, I like to use a simple, 3 step process* to avoid big mistakes and to keep errors manageable. Rule #1: Expect to be wrong. Rule #2: Admit Error Rule #3: Repair The first step is simple attitude shift that is designed to remove your ego from the error recognition and repair process. We know that the best stock pickers in the world are wrong about half the time; we also have learned that four fifths of active fund managers under perform their benchmarks. Almost no economists consistently forecast future GDP, Employment, Interest Rates, etc. — indeed, nearly all get it wrong when they look out more than month or so. If you recognize the statistical certainty that you will be wrong, it should be much easier to accept any error as a normal part of your life. When people refuse to admit error, it is because their sense of self-worth is too tied up in their calls. Once the expectation of error becomes built in, you remove the ego altogether. Admitting error should be part of your regular process. I have found two ways to do this that seem to get good results: 1) Identify the error in a professional capacity to relevant parties. This can be to you, your co-workers and colleagues. 2) Perform regular reviews of your errors with the hope of avoiding them in the future. I do this with my annual mea culpas; Ray Dalio’s Bridgewater hedge fund is notorious for their brutal self-examinations — and they are (arguably) the most successful hedge fund in the world. What does NOT admitting error look like? It is Apple investors, who double up all the whole way down from $700 to $400. It is the radical financial deregulators like Edward Pinto & Peter Wallison blaming the financial crisis on unrelated bank loans to poor minorities. It is the cacophony of excuses from the Gold community, blaming the 30% drop on central banks, Goldman Sachs, “paper” gold, the shorts and the dollar. My friend Albert Edward’s reiterated call for S&P500 at 450 — with the SPX kissing 1600 — smacks of a classic non-admission of error. His preference is to go down with the ship. This week’s mother of all refusals to admit mistake has to be Harvard professors Reinhart & Rogoff. Instead of clearly and honestly issuing a mea culpa, they half admitted error, then back-peddled in a stunningly dishonest OpEd in the NYT today. We still don’t know what the real drop-dead line is for debt because they refuse to admit the mistake and try again (please consider peer reviewed publication next time). Refusal to admit error prevents you from reaching the third step: Repair. If you do not admit the error, how can you fix it? In academia, this affects your reputation. In trading, your P&L is worse off, and in investing, your long-term returns suffer. What mistakes did you make this week? What have you done about it?     Previously: Expect to Be Wrong in the Stock Market (April 5, 2005) My Annual Mea Culpas: 2012, 2011, 2010, 2009 Ray Dalio & the Machinery of Finance (September 15th, 2011)   __________ * If we want to be clever, we can add a fourth step — analyze how and why the error occurred, and consider ways to systemically prevent these in the future. That is a long term business management issue, and is itself worthy of a full post.

Chanos: China Is Only Getting Worse Posted: 26 Apr 2013 04:06 AM PDT Jim Chanos, Kynikos Associates, shares his perspective on the markets; institutional shorting; and why he believes China’s economic troubles are getting worse. China Credit Bubble Trouble: Chanos Wednesday, 24 Apr 2013 ~~~ Chanos Reveals the ‘Art’ of Short-Selling

Art Cashin: End of Austerity? Posted: 26 Apr 2013 01:30 AM PDT CNBC’s Bob Pisani and Art Cashin, of UBS, discuss Europe and why the markets there are up. “Hope springs eternal,” he says. 90 Seconds with Art Cashin: End of Austerity? Wed 24 Apr 13 | 11:40 AM ET

You are subscribed to email updates from The Big Picture To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610

.