Considering Steve Jobs’ recent Mark Twain moment and Warren Buffett’s advancing age, I think it’s appropriate to ask, “who’s more valuable to the company they founded: Buffett to Berkshire Hathaway or Jobs to Apple?”

Considering Steve Jobs’ recent Mark Twain moment and Warren Buffett’s advancing age, I think it’s appropriate to ask, “who’s more valuable to the company they founded: Buffett to Berkshire Hathaway or Jobs to Apple?”

I’ve been reading Barron’s since I was a kid (sad, I know). These days I skim most of it with one exception. I read Michael Santoli’s column religiously; in my estimation, he’s got to be one of the best financial writers around today.

That being said, his latest column conveniently validates a point I have been belaboring for months: sentiment is just about as negative as it gets and this can only be taken as a bullish sign for the markets.

Santoli writes:

Consider that the University of Michigan’s consumer confidence gauge recently hit depths only registered before in 1980, at the time of double-digit interest rates and a triple-digit Dow. The NFIB’s Small Business Optimism measure has plunged well below any prior low in its 12-year history. (Thanks to the folks at www.sentimentrader.com for assembling this data montage.)

These downcast economic views come in the context of a broader public discontent. Fewer than 20% of poll respondents lately have been saying in the country is on the “right track.” The last time the numbers were so low was…never. Similarly, President Bush’s ebb in approval rating this year — 19% — was a new low for any president since the surveys began under FDR….

From a tactical perspective, it’s worth noting that very low consumer- confidence readings — similar to extremes of bearishness among investors — tend to have positive implications for stock performance six months or a year later. We now have the rare condition where typically emotional, volatile and short-term-focused Wall Street has somewhat more equanimity than the stereotypically level-headed Main Street set.

True, some investor-sentiment indicators near recent market lows fleetingly approximated the kind of risk aversion and despair that coincided with market lows in 2002, 1998 and earlier episodes. (One of these, Ned Davis Research’s crowd sentiment poll, is flashing an equivocal, but net-bullish, signal.)

But today the investor mindset is more one of caution than panic, neglect rather than hatred. It seems investors are skeptical and just defensive enough now that downside from here need not be too severe, even if the economic data erode further and/or oil prices recover.

Word up.

Source:
The Psychological Recession
Michael Santoli
Barron’s
August 25, 2008

I’ve been reading Barron’s since I was a kid (sad, I know). These days I skim most of it with one exception. I read Michael Santoli’s column religiously; in my estimation, he’s got to be one of the best financial writers around today.

That being said, his latest column conveniently validates a point I have been belaboring for months: sentiment is just about as negative as it gets and this can only be taken as a bullish sign for the markets.

Santoli writes:

Consider that the University of Michigan’s consumer confidence gauge recently hit depths only registered before in 1980, at the time of double-digit interest rates and a triple-digit Dow. The NFIB’s Small Business Optimism measure has plunged well below any prior low in its 12-year history. (Thanks to the folks at www.sentimentrader.com for assembling this data montage.)

These downcast economic views come in the context of a broader public discontent. Fewer than 20% of poll respondents lately have been saying in the country is on the “right track.” The last time the numbers were so low was…never. Similarly, President Bush’s ebb in approval rating this year — 19% — was a new low for any president since the surveys began under FDR….

From a tactical perspective, it’s worth noting that very low consumer- confidence readings — similar to extremes of bearishness among investors — tend to have positive implications for stock performance six months or a year later. We now have the rare condition where typically emotional, volatile and short-term-focused Wall Street has somewhat more equanimity than the stereotypically level-headed Main Street set.

True, some investor-sentiment indicators near recent market lows fleetingly approximated the kind of risk aversion and despair that coincided with market lows in 2002, 1998 and earlier episodes. (One of these, Ned Davis Research’s crowd sentiment poll, is flashing an equivocal, but net-bullish, signal.)

But today the investor mindset is more one of caution than panic, neglect rather than hatred. It seems investors are skeptical and just defensive enough now that downside from here need not be too severe, even if the economic data erode further and/or oil prices recover.

Word up.

Source:
The Psychological Recession
Michael Santoli
Barron’s
August 25, 2008

Almost two months ago I featured a chart that suggested our equities market looked cheap to foreigners. Today we get a couple of news stories that confirm this view:

Japanese Banks Go on a Shopping Spree

Canada’s Largest Drilling Company to Buy a U.S. Rival

And the NY Times recently ran a piece about foreigners flying into Manhattan for weekend shopping sprees:

They’ll Take Manhattan, in Cash

So international businesses are finding value in our assets and foreign consumers are celebrating the weak dollar by buying up Manhattan. And I expect it won’t be long before this bargain hunting tranfers to our relatively cheap (in terms of currency) stock market.
(Click for audio)

Sources:
Chart of the Day: S&P 500 in Euros
Jesse Felder
My Back Pages
July 2, 2008

Japanese Banks Go on a Shopping Spree
Leslie P. Norton
Barron’s
August 25, 2008

Canada’s Largest Drilling Company to Buy a U.S. Rival
Reuters
Augst 25, 2008

They’ll Take Manhattan, in Cash
Alex Williams
The New York Times
August 3, 2008

Almost two months ago I featured a chart that suggested our equities market looked cheap to foreigners. Today we get a couple of news stories that confirm this view:

Japanese Banks Go on a Shopping Spree

Canada’s Largest Drilling Company to Buy a U.S. Rival

And the NY Times recently ran a piece about foreigners flying into Manhattan for weekend shopping sprees:

They’ll Take Manhattan, in Cash

So international businesses are finding value in our assets and foreign consumers are celebrating the weak dollar by buying up Manhattan. And I expect it won’t be long before this bargain hunting tranfers to our relatively cheap (in terms of currency) stock market.
(Click for audio)

Sources:
Chart of the Day: S&P 500 in Euros
Jesse Felder
My Back Pages
July 2, 2008

Japanese Banks Go on a Shopping Spree
Leslie P. Norton
Barron’s
August 25, 2008

Canada’s Largest Drilling Company to Buy a U.S. Rival
Reuters
Augst 25, 2008

They’ll Take Manhattan, in Cash
Alex Williams
The New York Times
August 3, 2008

The chart above shows the ratio of the price of natural gas in relation to the price of crude oil. While crude oil has fallen over 20% in the past couple of months, the natural gas price has fallen over 40% and now looks cheap in comparison.

Nearly every time the ratio between the two has fallen below 0.08 over the past decade natural gas has found an intermediate-term bottom. And, being a very seasonal commodity, natural gas has found a September bottom in each of the past two years:

The chart above shows the ratio of the price of natural gas in relation to the price of crude oil. While crude oil has fallen over 20% in the past couple of months, the natural gas price has fallen over 40% and now looks cheap in comparison.

Nearly every time the ratio between the two has fallen below 0.08 over the past decade natural gas has found an intermediate-term bottom. And, being a very seasonal commodity, natural gas has found a September bottom in each of the past two years:

According to Bespoke Investment Group, housing futures have already made a bottom; whether it is THE bottom is the question du jour.

Source:
Housing Futures Show Signs of Life
Bespoke Investment Group
August 26, 2008

According to Bespoke Investment Group, housing futures have already made a bottom; whether it is THE bottom is the question du jour.

Source:
Housing Futures Show Signs of Life
Bespoke Investment Group
August 26, 2008