Permanent Value

Week In Review 3/13/15

Bruce Doole
March 13th, 2015

Buffett, Investing, You and Me

We have provided our view of the current economic, financial and political news that influences global investing with an eye to the future. We recently shifted our outlook and became more confident that we were at an inflection point for the global economies and that fears of further economic declines and deflation would dissipate. A change was at hand. Change has been a major theme of ours over the past year. We constantly are looking for both positive and negative changes as it influences our capital allocation; regional and industry emphasis and finally company selection. We are investors and are patient to let events play out over time. For instance, we predicted over two years ago that the United States would significantly increase its oil production, which would change global energy dynamics and lead to OPEC losing its dominance over global pricing. It has been one of our long-term themes.

Another theme has been infrastructure spending. We felt then and even more now that nations around the globe would need to significantly increase infrastructure spending to better compete in a global economy and to create jobs. Add India to that list of countries announcing major spending plans. Read their new budget plans announced a few days ago. We are there and have been for a year now. That is another example of what successful global investing is all about. These are investments, not trades.

- Bill Ehrman, Private Wealth Magazine

THIS WEEK’S ECONOMIC DATA

  • U.S. consumer spending was down 0.2% in January.
  • Canada’s gross domestic product (GDP) rose at a 2.4% annual rate in the fourth quarter.
  • U.S. construction spending was down 1.1% in January.
  • German retail sales rose 2.9% in January, easily topping the 0.4% gain expected by economists.
  • U.S. weekly jobless claims rose to 320,000, their highest level since May 2014.
  • U.S. productivity fell at a 2.2% annual pace during the fourth quarter.
  • Eurozone retail sales were up 3.7% year-over-year in January and up 1.1% from December.
  • U.S. unemployment fell to 5.5% in February, down from 5.7% in January.

- Ivy Funds

Week In Review 2/20/15

Bruce Doole
February 20th, 2015

The Cascade Effect of Europe’s QE
QE Begins in Europe
After months of hinting and speculation, the European Central Bank (ECB) finally embarked on a new quantitative easing (QE) program that is massive in both size and scope. QE by itself probably won’t solve Europe’s chronic economic malaise, though it should mitigate the risk of deflation and support European exporters through a weaker euro. The reach of the €1 trillion-plus program, however, extends beyond the continent; the impact will be evident in holding down global bond yields.

Monetary Policy, Two Ways
As we have discussed for some time now, central banks are taking increasingly divergent paths with their monetary policies. On the easing side, China, Denmark, India and others joined Europe and Japan in taking steps to address deflationary threats and bolster slowing economies. On the tightening side, besides Brazil and its three recent rate hikes, the Federal Reserve (Fed) is the only major central bank preparing to raise interest rates this year. As the disparity deepens, we expect markets to remain volatile, especially currency markets. Equity markets with central bank support are well positioned, such as in Europe and Japan, while challenging times could be ahead for those without such backing.

Cheaper Oil Is a Good Thing, for the Most Part
Another major shift to the investment climate has been the plunge in oil prices, which stirred up much market volatility and prompted questions about the strength of the world economy. However, prices seemed to have stabilized in recent weeks on reports of lower output, which could help ease some of the anxiety. Remember: Cheaper oil is a boost to consumer spending and global growth.

Opportunities in International Stocks, Credit
Given the market dynamics, it makes sense to look outside the United States for value, where central bank accommodation is keeping equity markets buoyant and where plenty of bad news is already baked into valuations. While investors continue to favor U.S. Treasury debt, we prefer the credit corners of the bond market that offer the prospect of higher income.

- Russ Koesterich, Black Rock

Week In Review – 1/30/15

Bruce Doole
January 30th, 2015

10 Super Super Bowl Numbers: 2015

Sports and numbers go together, but this year that seems to be more true than ever with the hullabaloo over the deflated footballs used by the New England Patriots in the AFC championship game.

It’s likely that few fans knew the balls were to have air pressure of 11.5 to 13.5 psi, or that putting 2 pounds less in a ball would make much difference to quarterbacks and receivers.

Deflate-gate took over the conversation last week, but as the game gets closer, breakdowns of the Patriots and the Seattle Seahawks and their strengths and weaknesses have received some attention.

This year, we scoured the Web to find 10 Super Super Bowl Numbers. If the game is one-sided, maybe these fun facts can keep the conversation going.

$2.19 billion: Amount of ad revenue generated over the past decade.

That’s the amount of ad revenue generated over the previous decade, The Wall Street Journal reported, and the price of a 30-second commercial is up 75% over that same time period. This year, that amount of time can be had for $4.5 million, up $300,000 from last year.

1.25 million: Expected number of chicken wings that will be consumed.

That’s a lot of chicken wings, but Americans are up to the task of eating every last one of them on Super Sunday. The National Chicken Council says that’s enough to put 572 wings on each seat in all 32 NFL stadiums. The council says Seattle fans are 17% less likely than those in other cities to eat wings and those in Boston are 8% less likely. And don’t forget the 9 million pounds of guacamole and the accompanying chips.

25.3 million: The number of tweets sent during last year’s Super Bowl by 5.6 million people. The game was watched by 112.2 million people in the U.S.

$18.3 million: Profit expected for Las Vegas casinos, as reported by WalletHub, on bets of $115 million. And bettors don’t only focus on who will win or lose the game. Vegas offers more than 350 so-called prop bets, on everything from whether the coin flip will land heads or tails to the length of the National Anthem. For the record, the average time for the anthem is 116 seconds.

3,734,938: That’s the number of people who have attended a Super Bowl game. The largest crowd was 103,985 fans at the 14th game, played at the Rose Bowl in Pasadena, California, the Associated Press reported.

1.5 million: The number of people expected to call in sick on Monday, according to Kronos. Another 4.4 million might show up late. HR professionals beware.

10,000: The number of volunteers enlisted to help make the big game and the events leading up to it go off without a hitch. The volunteers work at Super Bowl Central in downtown Phoenix, manning social media and performing other duties.

253: The percentage increase in online viewership of Super Bowl ads since 2010, according to Inc. The website adds that online viewing increases the reach of an ad by 48%.

50 or is that L? What’s in a number? Quite a bit, evidently. The NFL is making a change next year for the 50th Super Bowl. Say goodbye to Roman numerals, at least for a year. The NFL said a simple L on the game’s logo just didn’t look right. The game will be played in the home stadium of the San Francisco 49ers. The first game was played in Los Angeles but, alas, there is no team in that city to host the 2016 title game.

20: Percentage increase in antacid sales the day after the big game. It’s no wonder, as was noted on the page about chicken wing consumption.

- Dan Berman, Think Advisor