Friday, February 12, 2016
Thursday February 11, 2016 – 88 degrees in Claremont, the skies are crystal clear, the 210 freeway is its’ usual parking lot, and in the world of finance the 10 year United States Treasury yield hit 1.65%
As some of my readers know the 10 year U.S. Treasury is the risk free interest rate, the standard bearer for the best credit interest on money (capital). The yield has been dropping, why? Investors are pulling out of equities (stocks) and heading to safer venues.
Why? Oil – how low can it go? China – the slowdown in their economy to better their own consumers. Presidential Politics – The Donald has people now actually saying…can he be our next President? AND Bernie Sanders, Mr. increase taxes to stick it to The Man. U.S. Dollar – is still very strong making US exports expensive.
Major stock indexes around the world hit multiyear lows yesterday as bank stocks led the intensifying rout, amid concerns that global central banks struggling to boost growth will worsen an already tough environment for lenders. Investors also piled into gold, seeking shelter on fears that a turn toward negative interest rates in some countries is threatening to destabilize the global financial system. A rally in energy and banking shares lifted European markets today, with the Stoxx Europe 600 up 1.8% in early trade. Meanwhile, monetary-policy makers are coming to the grim conclusion that financial markets aren’t letting them tighten financial conditions gradually. The market turmoil speaks to deeper problems and could spark a recession, even as current U.S. economic data show no recession.
We certainly do not know where or when this stock market will finally bottom and would not be surprised if the S&P ultimately breaches the 1800 level before a sustaining rally commences ... However, we do think a bottom is nearing. ... The character of a market bottom is forming. Values have been significantly cheapened, investor sentiment has turned decidedly more fearful and a potential positive catalyst of better economic news may be on the horizon.
The market selloff has gotten pretty emotional, particularly among individual investors. Recent readings from the American Association of Individual Investors show that bullishness among small investors is at its lowest level since the 'flash crash.' Who can blame them? Since the beginning of the year the S&P 500 is off about 10 percent and the small cap Russell 2000 is more than 15 percent lower. Considering the lack of good news, it's heartening to see favorable action in the Smart Money index, which tracks stock market action in the first half hour of trading and compares it to the last half hour. ... For all the terrible headlines, it appears that market action before the closing bell is much more positive than morning activity, indicating that the pros are accumulating stocks.
The global equity bear market deepened in Asian trading, with Japanese stocks headed for their worst week since 2008 amid anxiety over central banks' ability to revive the world economy. U.S. crude rose from a 12-year low. The Topix index slumped 4.1 percent in Tokyo as traders returned from holiday, pushing the regional Asian benchmark toward its steepest weekly drop since gyrations in Chinese assets at the start of the year. The index pared some of its losses as the yen weakened for the first time this week. U.S. index futures indicated gains after losses there helped the MSCI All-Country Index cap a 20 percent slide from its May record. ... Japanese Finance Minister Taro Aso said regulators will respond to market volatility if necessary after a move to negative rates failed to assuage anxieties last month.
What does this mean for Wall Street, tough times are coming. What does this mean for Main Street, the economy will not get better and we hope not worse.
COLLEGE CHRONICLES – Is the bubble on the horizon?
With money tight, UC Berkeley must 'reimagine' its future: In a message to the Berkeley community, Chancellor Nicholas B. Dirks said a "new normal" of dwindling state support would continue to squeeze one of the nation's premier public research universities, prompting the need for a sweeping review likely to bring both painful changes and some positive investments.
ILLINOIS COLLEGES IN CRISIS: If the potential for layoffs, furloughs or even a full-blown shutdown didn't have Illinois colleges worried enough, now they're bracing for accreditation sanctions. Higher education funding in the Prairie State is still tied up in an eight-month budget battle, and Barbara Gellman-Danley, president of the Higher Learning Commission, recently told Gov. Bruce Rauner and top state lawmakers that the consequences could be dire. "A criterion for accreditation is demonstration of the availability of financial, physical and human resources necessary to provide quality higher education," she said. If there are no resources, a college could ultimately lose its accreditation - and, of course, its access to federal financial aid. HLC wants all the Illinois colleges it accredits to develop a plan for students if they believe they could shut down or suspend operations in the next few months. "The lack of state funding is putting Illinois colleges and universities at serious risk and jeopardizing the future of students."
ONLINE EDUCATION - Santa Clara University's Markkula Center for Applied Ethics is offering a free online course on how to run an ethical political campaign" from Feb. 15 through June 18....The course is for anyone involved in politics including candidates, campaign staff, political consultants, and even campaign volunteers.
-- Special guest lecturers: Tom Campbell, dean of Chapman University School of Law and former five-term Republican United States Congressman; Anna Eshoo, U.S. Representative for California's 18th Congressional District; Steve Glazer, California State Senator representing the 7th District; Joe Simitian, Santa Clara County Supervisor, has served at almost every level of government including school board, city council, California State Assembly and Senate; Richard Temple, co-founder of political consulting firm McNally Temple Associates, Inc.
BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to: Lt. Geoff Ball …our Lt. Dan; Joe Garagiola (90) Scottsdale, AZ.; John Grisham (61) McLean, VA.; Sergio Mendes (75) Sao Paolo, Brazil; Nick Nolte (75) Malibu, CA.; Burt Reynolds (80) Boca Raton, FL.; George Stephanopoulos (55) New York, NY.
LAW AND ORDER - Former Los Angeles County Sheriff pleads guilty to federal corruption charges: Lee Baca, a media-savvy lawman who used his platform as head of the nation's largest sheriff's department to travel the world touting progressive policing policies, had largely been out of sight since leaving office a year early in January 2014. He consistently dodged questions about any connection to the corruption even as other former underlings pleaded guilty or were convicted.
WEEKEND READS - The 100 Jokes That Shaped Modern Comedy," by Jesse David Fox in New York Magazine: "From the Marx Brothers to The Simpsons, Richard Pryor to Amy Schumer: 100 bits, sketches, and one-liners that changed humor forever.
USA TODAY 28th anniversary Super Bowl Ad Meter, FUNNY BONE WINS OUT: Laughter was key in this year's rivalry for consumer approval: The main advertising formula for this year's Super Bowl ... boiled down to: ... Make 'em laugh. The winning streak ended for Anheuser-Busch InBev, a 14-time Ad Meter victor which won the last three years.
--TOP 10: " Hyundai: Kevin Hart keeps tabs on daughter's date ...  KraftHeinz: Weiner dogs race to human ketchup bottles ...  Doritos: Baby responds to Doritos during ultrasound ...  Doritos: Dogs get creative to sneak into market ...  Hyundai: Women in car star struck by Ryan Reynolds ...  Hyundai: A couple escapes hungry, talking bears ...  Honda: Sheep sing Queen hit heard in a Ridgeline ...  Audi: Retired astronaut relives thrill sports car ...  Budweiser: Helen Mirren lectures on drunken driving ...  Toyota: Bank robbers discover joy of new Prius 90.
--BOTTOM 5: " SoFi: Great people deserve great loans ...  AstraZeneca, others: A man struggles with his constipation ...  Persil: Stain fighter introduces new detergent ...  Valeant: Xifaxan diarrhea treatment ...  Valeant NFL greats beat toe fungus.
NFL PICK OF THE WEEK – Our NFL season is over, congrats to John Elway and his Denver Broncos, a popular victory in Super Bowl 50. A very mediocre season for Rink Rats but always fun. Season to date (11-10)
COLLEGE HOCKEY GAME OF THE WEEK – Saturday 2/13 7:00 PM CT, Lifetime: #2 North Dakota Fighting Sioux (22-3-3) vs. #13 University of Denver Pioneers (13-8-5). A big weekend in the WCHA, ND is too tough, 5 – 4. Season to date (5-6).
THE SWAMI’S WEEK TOP PICKS –
(SCIAC, Feb. 13) Women Hoops; California Lutheran Regals (17-5) vs. Claremont Mudd Scripps Republicans (18-4) – Scripps has won 13 in a row, they will make it 14, 58 – 48.
(NHL, Feb. 13) Washington Capitals (39-9-4) vs. Dallas Stars (34-15-5), Caps continue their season roll, but look out for that first round in the playoffs, 4 – 2.
(NBA) All Star weekend, adios to Kobe.
Season to date (17 -11)
Next week: Words of the month and Gravity.
Until Next Sunday, Adios.
February 12, 2016
CARTOON OF THE WEEK – Flint