Next Market Leg Up?

From Business Insider.com:  {Excerpt with my highlights}

"BofA Merrill Lynch head of U.S equity strategy Savita Subramanian is telling clients to get ready for "the next leg of the Great Rotation" — the seismic shift out of bonds and into equities envisioned by the bank's analysts........

'So far the rotation from bonds into equities has primarily been into bond proxies,' she writes in a note. 'Given the supply/demand imbalance for yield, we expect equity income inflows to continue. Demographics argue for continued demand, while supply is likely to stay tight as both interest rates and the S&P 500 payout ratio are trending well below average. And equity income remains compelling, with one in five S&P companies offering a dividend yield higher than that of the [10-year U.S. Treasury note].'.......

.....So, what comes next?

Subramanian writes:

Expect continued inflows into taper-proof yield

"With stretched valuations and interest rate risk looming for high-yield, ex_growth stocks,  the positioning shift we have observed since May is likely to continue as the growing pool of income equity seeks out cheaper, less rate-sensitive stocks that will still meet yield targets. Stocks that offer above-market yields but participate in a cyclical recovery may be most attractive to investors who now have lost money in both bonds and bond-like stocks. These half growth/half yield stocks—which generally offer lower payout ratios  and higher cash levels—are better positioned to grow their dividends over time, with strong representation from our O/W sectors of Tech, Energy and Industrials."....

Link:  http://www.businessinsider.com: Next Leg of the Great Rotation is Coming.

Hawkey Town Repeat? Sports Illustrated So!

Hope we avoid the Sports Illustrated cover curse!

Smidiríní

The Conversation.com:  Machines Threaten Almost Half of Modern Jobs.

Reading the Markets.com: "Bonds Are Not Forever."

Bloomberg.com:  "What 3-D Printing Could Mean for the World's Factory-China"

WSJ/Moneybeat.com:  "Potential Government Shutdown Isnt' Scaring Wall Street."

Pragmatic Capitalsim.com:  Markets Aren't as Stupid as Politicians.

an tSionna {9.27.2013}

Chart of the S&P 500 ETF SPY comes from FINVIZ.com.  A few comments.

*Market has given back all of its post "Taper" move now.  It is oversold short term but remains overbought per our longer term indicators.  

*Rallies have been based on narrowing leadership.  The percentage of stocks above their 200 day moving average has declined from a a mid 70's level back in the spring to around 52% today.  The percentage of stocks above their 50 day moving average is around 65%.  This is high but not at its most elevated historic level.

*Futures indicate a lower opening.  if we close in the "red" today it will mark 6 out of the last seven trading sessions that this has occurred.  Stocks are now trading around the same levels they peaked in the spring and back in July.  SPY closed at 167.17 on May 21st and closed last night at 169.69.  That's only a 1.5% increase in the past four months.  Stocks have now corrected about 2% from their most recent highs.

*Stocks can correct by time, price or both.  The channel shown in the chart above should be monitored to see if we get a change in trend.

**Long ETFs related to the S&P 500 in client and personal accounts.

Bond Performance 2013.

You probably know my feelings on bonds right now.  If you need a refresher go here.  BlackRock shows us this year just how poorly bonds have performed.

"Since 1980 the Barclays US Aggregate Bond Index has only recorded an annual loss twice. For more than 30 years investors have benefited from a secular decline in interest rates (and associated rise in bond prices). But interest rate-sensitive strategies that are reliant on falling interest rates have been punished since May, and the likelihood of a yearly loss for 2013 is high."

*Link:  BlackRock:  A Once Rare Loss for Bonds.  

Emerging Markets

An interesting article from Research Affiliates and via Abnormal Returns.com arguing that emerging markets are priced attractively relative to the US.

Here's the main take away from the article:

"....U.S. equities, judging from their initial sharp negative response to the tapering announcement, have become bond like!  Bad employment numbers and weak housing starts are now good news for equities as they keep rates low.  High yielding stocks, which have enjoyed significant outperformance in the recent years thanks to their income advantage in a low rate world, appear to be most at risk.  Nonetheless, eventually prices are set by fundamentals, even if in the short-run liquidity and flows can push prices away from fair valuation.  Ben Graham’s famous analogy captures this combination of long-term and short-term dynamics: the market is ultimately a weighing machine in spite of its more transient role as a voting machine.  Knowing the estimated long-term valuation allows investors to profit from short-term over- and under-adjustments.  As carry strategies are reversed and the ensuing momentum is driven by hot money, rising rates will continue to cause price declines for nearly all asset classes.  This can mean buying opportunities for investors looking to take positions in pro-cyclical risk assets as the U.S. and global economy slowly regain their footings. 

In particular, EM equities appear to be the more sensibly priced asset class for accessing global growth.  They are trading at a Shiller cyclically adjusted PE (CAPE) of 13.4x, as compared to U.S. equities trading at a Shiller CAPE of 23.6x......." 

In our Letter to A Boston Boy back in July we made our case for foreign exposure via ETFs and why we've been adding these to client portfolios.  These markets have been on a run since then but are still undervalued to US assets according to our work.  Nice to see some empirical work that seems to agree with our thesis.

I have to be out tomorrow but I will be posting on  Thursday and Friday.

Link: Research Affiliates:  The Impact of Tapering on Risky Assets.

*Long certain foreign and emerging market ETFs in client and personal accounts.

PE Ratios

On occasion we take a look at historic PE ratios via Chart of the Day.com  Here's their latest and commentary.

Today's chart illustrates the price to earnings ratio (PE ratio) from 1900 to present. Generally speaking, when the PE ratio is high, stocks are considered to be expensive. When the PE ratio is low, stocks are considered to be inexpensive. From 1900 into the mid-1990s, the PE ratio tended to peak in the low to mid-20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s), surged even higher during the dot-com bust (early 2000s), and spiked to extraordinary levels during the financial crisis (late 2000s). Since the early 2000s, the PE ratio has been trending lower with the very significant but relatively brief exception that was the financial crisis. More recently, the PE ratio has trended higher (to around the 19 level). However, over the past five months, corporate earnings have increased enough to maintain a relatively flat PE ratio -- an overall positive for the stock market.

My comments:  One thing to note is that the chart above has to depict trailing PE averages.  The forward four quarter PE ratio for the S&P 500 is 14.5.

Link:  Chart of the Day.com: Historic PE's

*Long ETFs related to the S&P 500 in client and personal accounts.

Taper Off = Risk On.

If you follow financial markets, you know that the Federal Reserve {Fed} yesterday decided not to end the "Taper" by voting to continue their asset purchases of both Treasury and mortgage securities at the same level for an indefinite period of time.  If you really don't care about these things {which likely means you're not reading blogs such as this} then you may have noticed that the stock market staged a huge rally yesterday afternoon.  Very few investors saw yesterday coming and were caught with expectations leaning in the wrong direction.  When that happens, when investors are caught wrong sided, then for good or bad you getting violent market swings.

First in regards to what the Fed did yesterday, there are other commentators that can do better justice to that.  I'll post a smattering of their commentary here, here, here, here and here.  Below, are a few bullet points on what I think this means for investors and the economy.

Fed was likely surprised by the market's negative reaction last spring when they floated the trial balloon of reducing the "Taper".  Interest rates shot up.  That's impacted many sectors of the economy, especially housing.  While I am in the "Things Are Getting Better" camp.  It is obvious that the "Fed Heads" became worried that current interest rate levels are having a negative impact on the economy.  The best form of economic stimulus then is to keep rates at attractive enough levels that economic growth continues to expand.  Gotta keep those 60 month 0 percent car rates on the table to move vehicles.  Mortgage rates at something close to 5% induce a significant slowdown in that world.  Right now the Fed doesn't think we can afford that, hence yesterday's decision.

Much talk about the trickle down wealth effect yesterday.  That is that the Fed hopes to jump start economic activity by making Americans feel wealthier as their investment portfolios continue to rise.  One of the ways to do this, as reason says, is to keep interest rates artificially low so that asset prices continue to inflate.  I think some of this is valid but I also think we sometimes miss the bigger picture of balance sheet repair.  Courtesy of the Fed, we've been able over the last five years to either buy or refinance everything at historically low rates.  To that point I purchased a car this year at the above mentioned 60 month 0 percent interest rate level.  That means I'm likely saving myself $3-5,000 over the life of that loan versus what I would have paid five years ago.  Corporations are taking advantage of this as well, witness Verizon's recent $49 billion dollar bond deal.  Borrow when you can not when you have too.  The Fed obviously feels that the economy is not done with this balance sheet repair right now.

Interest rate sensitive stocks took off yesterday and we were low scale buyers of these assets in appropriate accounts among a few other things.  These stocks have significantly underperformed this year due to the belief that we were at the beginning stages of a tightening cycle.  That is off the table for now and there is a higher probability that these type of assets will perform better in the coming months than they have for most of the year.

There are other implications from yesterday which I want to sit back and think about over the weekend but this is a quick take away from what just occurred.

Earnings & Valuation Update

From Ed Yardeni:  "The S&P 500 forward earnings is at $119.29 per share and converging toward analysts’ consensus expectation for 2014, which has stabilized recently just under $123. 

S&P 500 revenues expectations are available through the first week of September. The bottom line is that forward revenues, which has been more volatile than forward earnings, rose to a new record high. I calculate that the forward profit margin rose to a new cyclical high of 10.3%, nearing the previous peak of 10.5% during the week of August 30, 2007."

One of the pillars of the market this year is that earnings have generally come in ahead of expectations.  Again we think this comes from a US economy that has continued to improve and corporations that are able to continiously squeeze higher profits from their revenues.  We've discussed for awhile that we might revise our earnings estimates and today we're going to follow through with that threat.  Our previous year end 2013 earnings estimate range or cone of probability for the S&P 500 was $104-108 with a 106.50 midpoint range.  We're going to move that range up slightly to $105.50-110 and we'll up that midpoint target to 107.75.  2014 S&P 500 earnings estimates will be upped to $113-117 per share and a midpoint target of $114.75.

Using these estimates we find that the S&P 500 trades with a 15.85 PE on our 2013 midpoint estimate and in a current PE range of 16.13-15.50. The S&P 500 currently carries an earnings yield of 6.3% on our 2013 midpoint.  

Using next years estimates we find that the S&P 500 trades with a 14.85 PE on our 2014 midpoint estimate and a current PE range of 15-14.57.  The S&P 500 currently carries an earnings yield of 6.7%.

Using the S&P 500 forward earnings supplied by Dr. Yardeni finds that the S&P 500 currently trades with a 14.29 PE for 2013 and an earnings yield of 6.9%.  The 2014 PE is roughly 13.86 and an earnings yield of 7.2%.

Analysts estimates are more aggressive than mind and we'll have to see how the next year pans out.  The key to who is more correct will be whether the economy continues to grow at something north of a 2% rate and whether corporate profit margins can be sustained.  My numbers imply a market that could trade between 1750-1900 by the end of 2014.  Consensus estimates describe a market that could trade between 1750-1975 by the end of 2014.  

Please note that analysts start out optimistic during the year and gradually move estimates lower and while I am showing you what my numbers imply there is no guarantee that any of these estimates or cones of probability will be reached.

*Long ETFs related to the S&P 500 in client and personal accounts.

Link:  Yardeni:  Forward Earnings Still Headed Higher.

Earnings

Highlights from Thomson Reuters "This Week In Earnings Report". 

• Second quarter earnings are expected to grow 4.8% over Q2 2012.

• Of the 496 companies in the S&P 500 that have reported earnings to date for Q2 2013, 66% have reported earnings above analyst expectations. This is higher than the long-term average of 63% and is below the average over the past four quarters of 67%.

• 54% of companies have reported Q2 2013 revenue above analyst expectations. This is lower than the long-term average of 61% and higher than the average over the past four quarters of 48%.

• For Q3 2013, there have been 89 negative EPS preannouncements issued by S&P 500 corporations compared to 18 positive EPS preannouncements. By dividing 89 by 18, one arrives at an N/P ratio of 4.9 for the S&P 500 Index.

• The forward four-quarter (Q213 - Q114) P/E ratio for the S&P 500 is 14.5.

• During the week of September 16, 4 S&P 500 companies are expected to report Q2 2013 earnings.

My comment:  A 14.5 current PE on four quarter forward S&P 500 earnings implies a consensus earnings estimate out to July of 2014 of around $116.25-116.50.  That seems high to me but if it pans out fair value of stocks would be 1804 by my work.  Not saying we're going to get there but that's what the math says is possible.

Long ETFs related to the S&P 500 in client and personal accounts. 

Posting Schedule:  I was supposed to be out today but my schedule had to be changed.  I will instead be out tomorrow and perhaps one more day this week.  I will let you know in advance.

People Still Don't Believe {Part II}

On Tuesday {two posts below this one} I discussed that people are still reluctant to believe in this secular bull market we've been having these past several years.  One of the things I noted in that post in regards to investors sitting on cash was this thought: "While I don't know what the majority of them will end up doing with their cash I do know that it's not beating a rapid rush into the markets.  Its grudgingly syphoning in.  For investors that's a good thing.  There's no long term euphoria built up yet.  The public doesn't believe yet.  It will take many years for them to do so again.  When they do will be the time to be longer term concerned."

Dr. Ed Yardeni over at his blog today posted a chart and some numbers that backs up what I've been saying.  Here's his chart and commentary.  

"Over the past 13 weeks through the week of August 28, the Investment Company Institute estimates that bond funds had net cash outflows totaling $438 billion at an annual rate. Over the same period, equity funds had net cash inflows of $92 billion at an annual rate. I wouldn’t describe that as a “Great Rotation” just yet, but it could be the start of a big swing by retail investors into equities."

The math on those numbers says just 21% of those dollars found their way into the equity markets.  Now I'll throw in one caveat which is that I don't know if international funds are represented in these figures.  While I don't know the exact number, I do know that fund flows into the international space has picked up over the summer.  Even so these figures suggest a sizable dollar figure that's just sitting in cash right now.  The fact that it's not jumping straight back into stocks is longer term bullish and is also the fuel that can potentially carry stocks higher in the future as long as the economy continues to grow.  

Link:  Yardeni:  "The Great Rotation?"

Again a schedule note.  I'm out on business Friday and Monday.  I will have a full week starting next Tuesday.  Thanks.

Financial Crisis

From Business Insider.com:

"Five years ago this week, we saw Lehman Brothers go bankrupt, Merrill Lynch get rescued by Bank of America, and AIG get bailed out by the government.  The credit markets froze, stocks tanked, and the government intervened.  The U.S. Department of the Treasury just published a presentation looking back at the financial crisis and the progress since then.  It included this annotated chart of the S&P 500 and consumer sentiment during the period."

Link:  Business Insider.com.  Complete History of the Financial Crisis 2007-2010.

*Long ETFs related to the S&P 500 in client and personal accounts.

People Still Don't Believe

When I tell folks that I think markets have the potential to do well for the rest of the decade I tend to get three reactions.  Folks usually assume that I'm "talking my book".  They think I need to be positive all the time because I need markets to go up.  Well I'm not positive all the time, although I carry a generally optimistic view of the future.  The caveat there is that humans are flawed creatures and my positive outlook is tapered by a believe that progress will come in fits and starts.

Most of the time folks either flat out don't believe me or nod and agree while skeptically hoping that I'm correct.  I NEVER get this reaction.  "Oh my gosh Chris, I think you're right.  Let me get you my checkbook.  How about let's start with $X00,000."  There was a time many years ago and at the end of an 18 year bull market when that's exactly what would have happened.  Individuals still don't believe in the markets.  They pain and fear of the 2000-2009 period is still too fresh.  CNBC did a story on this yesterday.  Titled, "Mom and Pop are Still Not Believers in the Market", it discusses how investors have largely held on to cash in the face of a substantial bull market in stocks.  here's the main premise excerpted below:

"Since the S&P 500 hit its 666 intraday low on March 9, 2009, the stock market index has been on a volatile but primarily upward trajectory.  The market has wiped out all of the losses it suffered during the financial crisis and soared past its 2007 then-record high of 1,576.  Not shown on the S&P's chart, though, is something less tangible: A level of trust in the market that began to dissipate during the 2000 bear market, re-emerged during the heady days prior to the crisis, and which, by most accounts, has failed to return despite the meteoric market increase.

The big returns have not convinced many mom-and-pop investors that the market is not still stacked against them—a mere plaything controlled by central bankers and computers that is apt to explode again once the next crisis presents itself.  ......While stocks have soared, the retail crowd has been decidedly underinvested and is just now coming off the sidelines.  Since 2000, fixed income has taken in nearly $1 trillion, while equities have lost nearly $400 billion. That tide has turned this year but the main question now is whether it's too late. After all, the nature of the market is that most investors buy high and sell low, entering at peaks and exiting in valleys."

CNBC's article chronicles how money has funneled into fixed income since 2008.  We've warned about this in the past most notably here, here, and here.  2013 is when those warnings about the bond market have come home to roost.  While I haven't seen the most recent numbers.  I do know that so far this year, bond fund through August 1 had lost 2.3% for the year according to the Barclays Capital Aggregate Bond Index.  {See Pittsburgh Post-Gazette}.  August was a horrid month for bonds so those returns now have to be a lot worse.  So many investors are stuck in low return investments while looking at a stock market that's up over 100% since 2009 and wondering what to do.  

While I don't know what the majority of them will end up doing with their cash I do know that it's not beating a rapid rush into the markets.  Its grudgingly syphoning in.  For investors that's a good thing.  There's no long term euphoria built up yet.  The public doesn't believe yet.  It will take many years for them to do so again.  When they do will be the time to be longer term concerned.  

Stocks have had a great year.  I don't know if where we stand today represents something near the peak on a shorter term basis or if we've seen our pause for the fall and are about to head higher.  I do think that probability suggests that on a longer term basis we continue to move higher, albeit in fits and starts. The folks just coming back into stocks, the ones to coin a phrase from a current commercial for a prominent insurance company, who "need to invest again" are late to the party.  They have missed a really nice rally and are probably wondering if they've missed the boat.  Again I'll say that I don't know what happens in the short run, but I think we are a long ways off from the ultimate top in this bull market.  We may not do much for awhile.  Stocks might stall out and do nothing now for maybe something longer than a few months.  But in what should matter to most folks, the really longer term picture in terms of something like a secular bear market, today is not that day in my opinion.

*Long ETFs related to the S&P 500 in client accounts and personal accounts.

A note on posting schedule.  I'm out on business Friday and Monday.  I will have a full week starting next Tuesday.  Thanks.

In the "What If Things Are Getting Better" Department

All the news over the weekend was about Syria.  What seems to never get discussed {except by me} are the things that continue to do well or are getting better.  Here's the latest.

Dr. Ed's Blog:  US auto sales rose in August to a new cyclical high of 16.1 million units (saar), the best pace since November 2007.

Bespoke Investment Group:  ISM Services Index Hits Highest Level Since 2005.

And I'll add an unrelated event but something important non-the-less.  The four quarter forward PE on stocks is currently 14.3.  Applying a 15 PE to the S&P 500 gives us a price of 1725 on the S&P 500.  That a cone of probability of 1725-1750 or about 4-5% from these levels.  Not saying we're going to get there but that's what the math says could potentially occur.

*Long ETFs related to the S&P 500 in client and personal accounts.

The Jewish Holidays

From Bespoke Investment Group:

"There's a common market axiom on Wall Street that says that investors should sell on Rosh Hashanah and buy on Yom Kippur.  In other words, the ten day stretch between the Jewish New Year and the Day of Atonement is a period of time where bulls should go into hibernation.  According to Art Cashin, the reason for the historical weakness in equities during this period is that people of the Jewish religion "wished to be free (as much as possible) of the distraction of worldly goods during a period of reflection and self-appraisal."

Whatever the explanation for the market's weakness, as with all market axioms, there is some truth to the phrase.  The table below shows the historical performance of the S&P 500 from the close before Rosh Hashanah to the close on Yom Kippur going back to 2000.  As shown in the table, the S&P 500 has averaged a decline of 1.43% during the period with positive returns in only five out of thirteen years (38%).  

While the overall average change is -1.43%, we would note that the 18% decline in 2008 does skew the results a bit.  Looking at the median return instead shows that the S&P 500 declines a more modest 0.50% during the period, but it's still negative nonetheless.  For the sake of reference, this year, Rosh Hashanah begins at sundown {on} (9/4) and Yom Kippur ends on 9/14."

My comment:  As with all maxims coming from Wall Street there is some truth to what's described above.  Keep in mind though that the Jewish Holidays do not occur at the same time each year.  It is my understanding that the dates are based on when Passover occurs and thus can float around September and early October.  It is more likely that these holidays occur in a seasonal period where stocks are weak and are not the cause of any declines.  Stocks would likely be weak in the late summer period in any event.  In that case we'd probably look at something else like say the correlation of when the Cubs are mathematically eliminated from the pennant races or the Chicago Bear's record in September!  ;>}

*Long ETFs related to the S&P 500 in client and personal accounts.

Link:  Bespoke: Sell Rosh Hashanah Buy Yom Kippur

L'Shanah Tovah!

an tSionna {09.05.12}

From Chart of the Day:  The stock market has struggled over the past month. Investors are concerned. For some perspective, today's chart presents the Dow's average performance for each calendar month since 1950. As today's chart illustrates, it is not unusual for the stock market to underperform during the May to October time frame with a brief counter-trend rally occurring in July. It is worth noting that the worst calendar month for stock market performance (i.e. September) has just begun.

*Long ETFs related to the Dow Jones Industrial Average in certain client accounts.

Link:  Chart of the Day.com:  September is the Worst Month for Stocks.

God Speed Blue II

The Butler University branch of Lumen Capital is in mourning today!

What is a Dog?

Ok I've decided that the majority of you people need a lesson in what exactly is a dog.  Let's make it simple:

 If you can or must put clothes on it then it is not a dog unless that dog is a sports mascot.  A sweater with school colors is ok.  A polka dotted dress is not.  Dogs are permitted to wear bandanas around their necks as long as the bandana is allowed to get dirty and ultimately ripped apart.

If it likes to get dirty and muddy and kill things then its a dog!

If it rides in a purse it is not a dog.

Finally lets discuss Dogs and their names.

Dogs are named like this:  Tammie, Killer, Sparky, Thunder, Joe, Chopper, Bud, Angel, Tess, even Lucky works.  Sometimes just like John Wayne says they are even just named Dog.  Dogs may be named after beers, they can be named after boxers and even Confederate Generals.  Dogs may also be named after Reggie Jackson, Ancient Gods or Goddessess or emotions that portray Anger or aggression i.e. killer or Chopper.

Dogs are not named:

They are not named after pretty flowers (Rosie is an exception).  They are not named for pastel colors.   Blue is good Red is fine {color of blood!). Whitey and Spotty are also acceptable.  If it sounds like you can buy it at Macy's then it is not an acceptable name for a dog.  If it is a noun, adjective or adverb you would use during a lunch with the Queen then it is not a proper name for a dog!  Biscuit is not an acceptable name.  Seabiscut is OK.  Deerbiscuit is better.  

Some Dogs come with papers.  Others rip papers to shreds.  Some are purebred and some are mutts.  Dogs should tear up you shoes when they are puppies and put a tear in your eye the day they step off.  Dogs should always ride in the front seat with the window down and lay by your feet at the end of the day.  Dogs should not like cat food {unless it is to deprive the cat of nutrition so it will starve} They should also like to feed on cats!  Dogs are friends till death does them part!  RIP Blue II.

Inflation

From Blackrock:

Is inflation an imminent threat? It may not seem that way, but longer term, prices have a tendency to rise, and investors should build in some protection to their purchasing power. Furthermore, in light of the incredible extended period of monetary stimulus by the Fed, the likelihood of future inflation is higher.

Keep in mind that inflation data is not the first place you will see inflation, but rather it will appear in the rising costs of goods and services.  

My comment:  Government statistics say that inflation has been tame for the past several years.  A quick trip to the grocery will debunk that theory pretty fast. {I think food prices are higher over the past 12 years than what the chart above shows.} Investors need to plan for an inflation rate of 3-5% depending on the different category that concerns them in the future.  Gas for example could remain stagnant or decline somewhat in the future as electric cars and natural gas become more of an energy source for transportation.  Colleges however, have seen tuitions increase around 9%.  

Link:  Blackrock:  A Different Way to Look at Inflation.

Microsoft

Microsoft {MSFT} is buying Nokia's devices unit for $7.2 billion dollars today.  Apparently because Steve Ballmer really likes their smart phones and the deal brings Nokia's Chief Executive, Stephen Elop, back to MSFT.  MSFT stock getting crushed in pre markets.  Lots of chatter this am about this.  See here, here, and here. 

I have two long term predictions:

1. Tiger Woods will never win another major golf tournament {defined as the Masters, US Open, The Open-British Open and the PGA}.

2.  MSFT is today what Eastman Kodak was in about 1995 and their long term fates will be similar.  The deal today from what I've been able to read has a certain air of desperation about it so I'll stick to that prediction.

*Long MSFT for several clients as a legacy position.  MSFT is also a component in many of the indices we own both personally and for clients.

Things To Watch

Global concerns that markets will focus on this month via Business Insider and Deutsche Bank.

Remember that because these events are already in the market's crosshairs they have likely to some extent been discounted.  The real thing to fear is something out there that nobody's focusing on, say a natural disaster or one of the events shown above spiraling out of control.