Mas que bello

G30 as of 1/31/14

			Shares (M)	Shares (M)	Price	Price	Total (M)	Total (M)
Rank	Symbol	Company	12/31/13	01/31/14	12/31/13	01/31/14	12/31/13	01/31/14
1	AAPL	Apple Inc	899.7	892.45	561.02	500.60	504,750	446,760
2	XOM	Exxon Mobil	4370		100.6	92.16	439,622	402,739
3	GOOG	Google	334.09		1120.71	1,180.97	374,418	394,550
4	MSFT	Microsoft	8350	8300	37.41	37.84	312,374	314,072
5	BRK-A	Berkshire Hath	1.65		177,900	169,512	293,535	279,695
6	GE	General Electric	10120	10090	28.03	25.13	283,664	253,562
7	JNJ	Johnson Johnson	2820		91.59	88.47	258,284	249,485
8	WMT	Wal-Mart	3240		78.69	74.68	254,956	241,963
9	WFC	Wells Fargo	5270		45.4	45.34	239,258	238,942
10	RDS-B	Royal Dutch Shell	3140		75.11	72.83	235,845	228,686
11	CVX	Chevron	1920		124.91	111.63	239,827	214,330
12	JPM	JP Morgan Chase	3760		58.48	55.36	219,885	208,154
13	PG	Proctor Gamble	2720	2710	81.41	76.62	221,435	207,640
14	HSBC	HSBC Holdings	4000		55.13	51.49	220,520	205,960
15	PFE	Pfizer	6480		30.63	30.40	198,482	196,992
16	NVS	Novartis	2440		80.38	79.07	196,127	192,931
17	IBM	IBM	1090		187.57	176.68	204,451	192,581
18	VOD	Vodafone	4860		39.31	37.06	191,047	180,112
19	BAC	Bank of America	10670	10590	15.57	16.75	166,132	177,383
20	T	ATT	5270	5230	35.16	33.32	185,293	174,264
21	BHP	BHP Billiton Ltd	2660		68.20	63.95	181,412	170,107
22	KO	Coca Cola	4420		41.31	37.82	182,590	167,164
23	ORCL	Oracle	4540	4500	38.26	36.90	173,700	166,050
24	AMZN	Amazon	457.7		398.79	358.69	182,526	164,172
25	MRK	Merck	2920		50.05	52.97	146,146	154,672
26	BUD	Anheuser-Busch	1600		106.46	95.89	170,336	153,424
27	FB	Facebook	2450		54.65	62.57	133,893	153,297
28	BP	BP plc	3140		48.61	46.89	152,635	147,235
29	CMCSA	Comcast	2620	2650	51.97	54.45	136,161	144,293
30	C	Citigroup	3030		52.11	47.43	157,893	143,713
		Total					6,857,198	6,564,927

The stocks are down 4.3% for the month.

NYSE Margin Debt up again

Source: http://www.nyxdata.com/nysedata/asp/factbook/viewer_edition.asp?mode=table&key=3153&category=8

Somehow I doubt that it will be up again in January.

Como Te Voy A Olvidar

Carmen

Panama canal expansion on hold

"Work on amplifying the 100-year-old waterway that connects the Pacific with the Caribbean has nearly stopped as the consortium tries to resolve a month-long dispute with the Panama Canal Authority (PCA) over $1.6 billion (some 1.2 billion euros) in cost overruns to build a new set of locks. Panamanian authorities believe that extra costs are not justified and have refused to put up any more money.  ... But according to the Dispute Adjudication Board (DAB) mediation panel, which was set up to help resolve such conflicts by the PCA, if the contract with the Sacyr group is broken, the work would not be completed until between 2018 and 2020, rather than 2015 as scheduled."
http://elpais.com/elpais/2014/01/26/inenglish/1390758580_784644.html

The construction company demands more money.  Panama refuses.  Stalemate.

So the global boom in shipping won't happen.
See: http://aftermath2022.blogspot.com/2013/10/panama-canal-expansion-fuels-shipping.html

Que Bello

Abu Dhabi

Abu Dhabi is the richest city in the world. It has 9% of the proven oil reserves in the entire world.  The emirate produces 93% of the oil from the UAE, and it generates 56% of the GDP of the UAE.  It has a nominal GDP of 911 billion dirhams/year ($248 billion).  The city only has 921,000 people.  You do the math.

Dubai has the flash but Abu Dhabi has the cash. Furthermore, the ruler of Abu Dhabi is always the president of the UAE and the capital of the UAE is in Abu Dhabi.

The Abu Dhabi Investment Authority may have as much as $875 billion in assets.  It is the largest sovereign wealth fund in the world and consistently generates returns of of over 7%.

La Cortina

A mover la colita

Que nadie sepa mi sufrir - Piano

Que nadie sepa mi sufrir

See also: http://aftermath2022.blogspot.com/2013/08/no-te-asombres-si-te-digo-lo-que-fuiste.html

http://aftermath2022.blogspot.com/2013/10/la-foule.html  The French version

December 31, 2013 was the high

Dow Jones Industrial Average
Historical Prices

Date	Close
01/24/14	15879.11
01/23/14	16197.35
01/22/14	16373.34
01/21/14	16414.44
01/17/14	16458.56
01/16/14	16417.01
01/15/14	16481.94
01/14/14	16373.86
01/13/14	16257.94
01/10/14	16437.05
01/09/14	16444.76
01/08/14	16462.74
01/07/14	16530.94
01/06/14	16425.10
01/03/14	16469.99
01/02/14	16441.35
12/31/13	16576.66
12/30/13	16504.29
12/27/13	16478.41
12/26/13	16479.88
12/24/13	16357.55

It's pretty clear now that December 31 was the high.  Why does it matter?  Look at this chart:

Once a peak is reached, stocks decline fairly rapidly.  They don't stick around at a permanently high level.  The only question is how low will it go. 

Gold is back

Gold is now higher than it was 6 months ago.  I'm still baffled as to why it dropped, but those days are over.  I think it will break $1300 within a few days.

Obama: They hate me because I am black.

What do you think about that, Bob?


 

U.S. Debt is a Myth

This is an old video from 2011 from economist Mike Norman.  He is a MMTer (Modern Monetary Theory, which is neo-Keynesianism). I can't say I disagree with him.  That's why I have my own measure of money supply in which the government debt is included.

But I can't say that he is right.  Let me try to explain. Let's imagine a very spoiled rich girl with a checkbook.  She has the last name of say, Hilton, and a very wealthy very doting grandfather.  And a coterie of followers who subscribe to her Twitter account and collect anything with her name on it.  She obviously will have a different perspective on life than the average person.  And let's say that she believes that she can create money out of thin air.  All she has to do is write the numbers on the "magic" check and it will appear.  The only caveat is that she only has so many checks.  She's right.  Whatever she creates, her followers will collect because it has her signature on it.  They won't even take it to the bank.  And if they do, her grandfather will make sure it is honored.  Now supposed she developed a theory of economics.  That's Mike Norman for you.  It makes your brain hurt to listen to him.  Ok, Mike you are right.  So please shut up and go away, so I can watch a Peter Schiff video.

Netflix Meltup

Netflix closed at 333.73, up 5 for the day.  Just 4 hours later, it jumped another 60.

Thrive - The Movie

This looks interesting.  This is a trailer for a 2 hour movie which I haven't seen yet.

Catastrophic failure in China

Observers make the logical argument that “to have a market meltdown, you have to have a market” and China does not have one. Instead, Beijing technocrats dictate outcomes. That’s correct, but that is also why China is now heading to catastrophic failure. Because Chinese leaders have the power to prevent corrections, they do so. Because they do so, the underlying imbalances become larger. Because the underlying imbalances become larger, the inevitable corrections are severe. Downturns, which Beijing hates, are essential, allowing adjustments to be made while they are still relatively minor. The last year-on-year contraction in China’s gross domestic product, according to the official National Bureau of Statistics, occurred in 1976, the year Mao Zedong died.  
Why will China’s next correction be historic in its severity? Because Chinese leaders will prevent adjustments until they no longer have the ability to do so. When they no longer have that ability, their system will simply fail. Then, there will be nothing they can do to prevent the freefall.
http://www.forbes.com/sites/gordonchang/2014/01/19/mega-default-in-china-scheduled-for-january-31/

AUD-USD forecast

AUD-USD Research Report
Date 1/19/2014

Big Picture for the AUD
======================
The Australian economy is faltering.  The RBA was trying to establish 3.0% as its benchmark cash rate, but it had to drop it to 2.75% in May 2013 and 2.5% in August, the lowest in history.  It will probably be dropped another 25 basis points in March.

Australia's economy has largely been based on mining and commodities, but those industries are hurt by lower commodity prices and demand.  It depends heavily on China, which is slowing down its growth.  China no longer needs unlimited amounts of iron ore, copper and coal.  Australia is trying to diversify its economy, but its non-mining economy is not growing fast enough to offset the decline in the mining economy.

Australia has very high real estate prices and may be in a bubble which is about to pop.  The average home price in Sydney increased more than 13% in 2013 to more than A$700,00.  Many suburbs of Sydney now have median prices above A$1 million. Average household debt as a percent of annual income is almost 150%, compared with 135% in the US. (http://www.bloomberg.com/news/2013-11-05/bubble-trouble-seen-brewing-in-australia-home-prices-mortgages.html). The lowered interest rates contributed to the high real estate prices, but now houses are very unaffordable and are near their peak even if interest rates drop even further.

The Great Recession of 2008-2009 never really affected Australia.  It grew 2% in 2009 (while other countries were in a severe recession) because of its proximity to the booming Chinese economy and the related mining boom. Australia hasn't had a real estate crash (i.e. prices dropping by more than 10% in one year) in more than 40 years.  The next recession will hit Australia hard.

In a panic, the Australian dollar can drop like a rock.  It dropped 40% over a 3 month period in 2008.  This helped their economy in AUD terms because it made them more competitive.  But this fact doesn't help foreigners invested in AUD.

So obviously, none of this is helpful to the AUD.  But here is the flip side of the argument.  The AUD has already dropped about 16.4% over the last year.  The weaker AUD helps their economy.  And the charts look like a double bottom is in place. Another fact is that the AUD tracks the price of gold, with about a 1 month delay.  And the bottom for gold is in and gold is starting to go higher.  However, the price of gold isn't forecast to rise very much in 2014.

My conclusion is that the AUD is likely to drop further against the dollar, but it is near the bottom. The most likely level in 30 days would be near the bottom first reached on Aug 1, 2013 and then again on Dec 19.  Say about 0.8850.

For a 1 year forecast, the AUD will also probably be close to where it is today, in the 0.88 to 0.89 range.  However, if the RBA cuts the cash rate to 2.25% it will drop even lower, maybe down to 0.85.

Update:  The AUD won't necessarily rise if the price of gold does.  So look for a modest (3%) drop in AUD. Which would put it at about 0.8650 on 12/31, and if the cash rate is dropped again, down to 0.8300.

Short-Term Forecast
===================
The AUD closed on 1/17/14 at 0.8778.  On 1/1/14 it was at 0.8915.  There is support at 0.8728 and resistance at 0.8893.  I think in the short run the trend will be flat or down slightly, so it is probably safer betting on a small downward slide.  So short the AUD by selling it at 0.8880 and buying at 0.8740, a band of 140 pips.  Or the reverse, although you would want to sell at a lower level, like 0.8850.