10 Wednesday AM Reads

We survived the snowpacalypse, with both electricity and internet access intact. Hence, our free range morning train reads:

• Apple’s Earnings: The Staggering Numbers (WSJ)
• Strong Dollar Squeezes U.S. Firms (WSJsee also U.S. Strengths Buoy Consumers but Hurt Corporations With Business Abroad (Dealbook)
• A Dozen Things I’ve Learned from Joel Greenblatt about Value Investing (25iq)
• The new phase of deflation fear and headline noise is actually a good thing for markets (TRB)
• Open letter to the German readers: That which you were never told about Greece (Syriza)

Continues here


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Discussions found on the web:
  1. Willy2 commented on Jan 28

    “Strong Dollar Squeezes U.S. Firms” (from: WSJ) ????

    I came across info that says a strong USD is a straw man. It’s an excuse for a company’s poor financial performance. A lot of companies have hedged their currency exposure. Oil price dropping is much more harmful to earnings. According to my info every job in the energy sector supports three jobs outside the energy sector. And that multiplier effect now goes into reverse.

    See this video:

    “Loss to S&P earnings worst since 2008 financial crisis”


    – Oilprices dropping causes the biggest drop in S&P earnings in the energy sector but that drop is NOT compensated with a similar rise in earnings elesewhere.


    • rd commented on Jan 28

      If the rest of the world is in recession or very slow growth, that focus abroad isn’t going to help earnings much unless they can increase revenue by expanding market share abroad. The rise in the US dollar is just piling on to the overall business cycle issue in the rest of the world.

      A couple of years ago, I saw articles denigrating Warren Buffet’s favorite valuation indicator, the stock market cap vs US GDP. The argument being made was that the US companies generated so much revenue and earnings overseas that the US GDP shouldn’t be viewed as a limiter today compared to previous decades. It will be interesting to see how that argument plays out over the next couple of years to see if this time is actually different.

  2. rd commented on Jan 28

    So the new leader of Greece was able to form a majority coalition government without even having discussions with the status quo parties. That should scare the bejeezus out of the status quo in Europe because Greece is generally unable to form any sort of coherent coalition government without lots of disparate parties making up dysfunctional coalitions. If he can actually do a Roosevelt 100 days thing without the previous major parties even in the discussion, then that is a sea change in public opinion.

    This should be an interesting few months as he is talking about dignity of the people and debt renegotiation. He clearly has not been getting the memos about what the past decade has been about. I have seen elsewhere he is raising the minimum wage which clearly flies in the face of the status quo. It will be interesting to see how much the plunging Euro helps Greece as a major revaluation of the Greek currency would be the traditional way of addressing many of their unemployment ills, so Europe is at least providing them partial relief on that front, although I don’t think that has ben the goal of the ECB.


  3. S Brennan commented on Jan 28

    Thanks for the letter from SYRIZA. The fact that Alexis Tsipras is an adherent of FDR policies offers great hope. His position is reasonable…no let me change that…sane, in contrast to the German government under Merkel, who have lost their collective minds.

    Germans are reasonable people, when they are not being completely insane. I fear that many Germans have lost the contrasted wisdom imparted by the Great War, it’s aftermath, which resulted in WW II and FDR’s policy makers decision to set things right under the great American logistician…Gen. Marshall, whose studied compassion was the result of flinty eyed understanding of the reality of mankind.

    • rd commented on Jan 28

      Unfortunately, Europeans have a history of going stark raving mad and slaughtering lots of people every few decades. Nationalistic pride and prejudice have as much to do with it as geopolitical strategies. They often don’t think through the outcomes to others or themselves. 1915-18 was unimaginable when a bunch of egos mixed with geopolitical desires marched headlong into the inferno in 1914. The results were destruction of an entire European generation and the collapse of Imperial Russia into a 70 year communist dictatorship.

      Arrogant nationalism led to the Versailles reparation demands that led to the collapse of the Weimar Republic and the rise of Hitler’s Germany. Hitler’s nationalism in turn sparked the demolition of much of Europe, especially Germany and many minorities. Much of Germany was then partitioned into the Soviet bloc.

      Truman was able to accomplish in 1945-46 what Wilson could not in 1918-19, which set the stage for the past 70 years of peace in Europe. However, the rhetoric in Europe is building to the point where they could screw it up big time. Watching Putin in Ukraine along with Merkel and Hollande in the Eurozone doesn’t fill me with great enthusiasm that the leadership of the major powers in Europe is much ahead of their counterparts in 1914 or 1939 in processing the potential future events.

  4. Jojo commented on Jan 28

    Oh boy. The military-industrial people are licking their fat lips with the prospect of India as a new volume customer. One day, someone we sold big weapons to is going to start WWIII.
    In the Asian Arms Race, the Prize Is India
    By Bruce Einhorn
    January 22, 2015

    Barack Obama will be the guest of honor at India’s Republic Day parade on Jan. 26. The celebrations will feature child acrobats, marching bands, and colorful floats representing India’s states and territories. Also on display will be the country’s military hardware, much of which dates from the Soviet era. One of the topics of discussion when Obama meets with Prime Minister Narendra Modi will be how to upgrade India’s defense capabilities.

    India, the world’s largest importer of weapons and defense systems, spent $5.6 billion in 2013, according to the Stockholm International Peace Research Institute. Modi wants to spend more: Since taking power in May, he’s signed off on $20 billion in arms procurement proposals, about double the amount spent in the prior fiscal year. Harsh Pant, a professor at the India Institute of King’s College London, estimates the costs of modernizing India’s weaponry will run to $130 billion over the next seven years. “A lot of Western arms exporters would be interested in that,” he says.


  5. VennData commented on Jan 28

    Obamacare Fine to Be Owed by as Many as 6 Million Taxpayers

    ​”…​As many as 6 million U.S. taxpayers will have to pay a penalty of as much as 1 percent of income because they went without health insurance in part or all of 2014, the Treasury Department said.​..”


    LOL. Pay up GOP tough guys. An when you want emergency medical care… who you gonna call?

    • WallaWalla commented on Jan 28

      Don’t forget about the IRS clawback from people who purchased healthcare on the open market but overestimated their subsidy. Have you looked at how much more complicated this makes filling taxes for anybody who bought insurance on an open exchange? It’s not pretty in my humble opinion.

      Don’t be so callous. Even if these people made a poor decision by not purchasing insurance, not every single one of them was doing it out of ideological spite. There is still so much misinformation floating around regarding the PPACA. The decision to forego insurance may have seemed perfectly reasonable from these people’s point of view.

      Show these people compassion and try to correct their misunderstandings. Sorry, but your constant derision is a bit grating even when I agree with you 80% of the time.

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