Sunday, November 25, 2018

Brief mentions... Gianrico Carofiglio, Vivian Maier, New York sports...

--- Gianrico Carofiglio is an Italian crime novel writer who is a former Mafia prosecutor in Bari, Italy. Translations into English of his three notable books were published over ten years ago.  A new one, "The Cold Summer" has recently arrived here.  The deal with Carofiglio's writing is that the crime stories, while interesting, can have a routine template. They seem to be just a vehicle for his insights into how people behave, how they interact, and how they deal with stressful situations.  Just simple statements like "The fact is that most obvious solutions are usually the right ones", or "eventually the spouse always knows". and "as he was the senior person, the argument appeared unassailable, nobody felt up to objecting and the matter was settled", or the observation that "one of the unpleasant aspects of waking early, when it isn't yet light, is that you're confronted with you own anguish", all make sense in context of Carofiglio's writing and maybe a reader's individual perspective.  As this is a translation of a writer who has received awards in his home country, it is assumed here that there is more nuance in the original language.

--- "Finding Vivien Maier" is a documentary that was watched last night, courtesy of a find by Netflix.  It's the story of an eccentric woman who became a famous photographer posthumously.  In her life, her profession was as a nanny for many different families.  She never married, and seemed to have few if any close relationships, even with family.  When she died in 2009, a yard sale aficionado and art collector bought a large box of her negatives sight unseen, and began developing them.  He found other buyers from the same sale and bought everything that had been there.  There were thousands of rolls of undeveloped film as well as  many photos that had been processed.  The work compares well to other notable photographers from the 1950's and 1960's.  It is an interesting story with great photographs shown of people and places in New York, Chicago, and from a trip through Europe, Latin America, and parts of Asia at that time.

--- Wanting to be a New York sports fan can be difficult.  With all of the history of sports in this town,  the money that can be behind it,  and the media attention, how can there be teams this year like the New York Giants and New York Jets in football and the New York Knicks and Brooklyn Nets in basketball.  The Giants forgot to have an offensive line, the Jet's heralded the most boring new sport's "hero" Sam Darnold, the Knicks have no leaders, and the Net no stars, or vice versa.  How above it all are the management teams of these franchises, or just out it egos.  Here we get their games on television whether we want them or not. 

At least there is a new episode of Ray Donovan tonight.

Saturday, November 24, 2018

This market, CEO preening, "My Brilliant Friend"...

---The U.S. equity market had a tough week.  The goal of institutional investors yesterday seemed to be to sell as much as possible, but gently in a half day market that would have limited liquidity.  Keep reducing positions without causing a major downdraft.  That worked until the last hour when either margin calls or panicked retail investors let go.  It was not a good finish.

It's been a tough month and a half.  Since the end of September, the S&P is down roughly 10% and the Nasdaq 15%.  The bounce back that investors have become accustomed to is not happening.  Year end tax positioning among some gets in the way of rational investing, and the outlook for tech is clouded by regulatory uncertainty and questions about the consumer appetite for product upgrades in technology.  The implications of the Trump tax cut and its trickle down premise is looking suspect, as it did from the start.

Corporate earnings generally remain strong, but there is growing skepticism about the longer term.  The market discounts future returns, not a hunky dory now.  An increasingly unbalanced global economy is not positive.  Conclusion:  None.

---The latest Bank of America television advertisement is troubling.  It raises one of my most reliable red flags, that of a CEO promoting himself.  This ad begins with the statement "Listening to what matters most" while following Brian Moynihan getting into a cab, riding through Manhattan, his profile looking out, more Manhattan scenes, then the words "grow, innovate, own a home", Moynihan profile again then "The power to make a difference".  It ends with Moynihan getting out of the car and walking into a BofA office building with his voice overlay, "I am Brian Moynihan and I work for Bank of America".

This is solely a recitation of generic positive statements written by an ad agency, and a very personal promotion of Moynihan.  He seems to be a solid citizen but he is no genius.  This type of self promotion usually does not bode well for a company, and in this case may be red flag for the banking industry as well.  When has a downturn in the banking industry been "as expected".  Almost never, but hubris has almost always preceded it.

--- "My Brilliant Friend"on HBO is exceptional.  The portrayal of a point in time(1930's Italy) resonates as accurate and the child actresses are startlingly good.  As in, I like it and must watch for the next episode.

Sunday, November 18, 2018

A few comments...

---It seems here that there is no leadership to this equity market.  No idea here what tomorrow may bring, and that seems to be the case broadly when listening to market talk during the weekend.  Of note, few really smart analysts and investors are talking, and the ones that do appear to be cautious.  Generally that means that they are not positive about near term market direction, but don't want talk down their own existing holdings.  The view here is that there is too much money looking for a home, one that offers the potential for capital gains or an adequate yield.  This is all short term talk but, as has been said before, the long term is just a series of short terms.  With a strong economy right now, will we soon be looking in the rear view mirror?  The debate now is whether global growth is slowing as tariffs, failed cooperation agreements, and chaotic U.S. "diplomacy" are finally having an impact.

---As we approach year end, the solicitations from various charities begins to increase.  They are acutely aware that potential donors are looking at their capacity to give, and their tax accountant's ability to improve their tax position.  It's tax avoidance really, but the rules are there to be followed.  Especially beneficial can be the donation of appreciated stock, and it can be a windfall for both the charity and the donor.  So "Doing the Most Good", "Fighting Hate, Teaching Tolerance, Seeking Justice", and other good causes are filling the mailbox, and sending donors back to their records to remember what's already been done.  One received today gave the option of checking the donation box of  $2000, $3000, or $4000, as well as an "other" at least.  Pushing your luck folks, that comes off as beyond presumptuous.

---Today and yesterday, New York resident Andrew Stein has been in the print news and on cable.  It's been a while since this ambitious rich Kennedy wannabe tried to act important.  He never has been, but why stop trying now.  He is much older and has a new rug that can only be called comical, about the only change.  His father's cronies fed him viable issues for years that he would find a way to bungle.  He now heads an organization called "Democrats for Trump", and predicted in a New York Times Op-Ed written with, meaning by, Mark Penn saying that Hillary would be nominated by the Democratic Party in 2020.  Only the NYT would print something by this nitwit, but they deserve a weakness like this that shows up in various ways as they are a New York institution.

Oh well.

Postscript:  Just read a comment on Fidelity's website by Howard Marks of Oaktree Capital, a long time successful fund manager.  The title is "Time for Defense" and he suggests that it is more important now to worry about not losing money than missing opportunities.  That's straightforward at least.

Monday, November 12, 2018

Ugh, equity market has an ugly start to the week... GE's troubles...

Concerns about new Apple Iphone sales volumes being below expectations, a fiasco in Malaysia for Goldman Sachs, and gloom from the new GE CEO all contributed to a significant equity market decline today.  Bond markets were closed for the holiday.

GE keeps spiraling down.  CEO Culp was interviewed on CNBC this morning before the open.  There was one stunning statement that woke up this former banker.  Culp stated that GE had $40 billion in back-up bank lines and they had only dipped into them for $2 billion.  Back up lines are just that, meaning that they are in place to reassure creditors that a company will always be viable as a counterparty and all trade letters of credit guaranteed.  Any dip into these lines is a bright red flag.  I mean, how stupid is the CFO of this company to allow this to happen at all, or was it desperately needed.  Either reason is not good.  Culp made the mistake of talking about the stock price, rarely a good idea for a CEO.

Upon questioning Culp said all existing liabilities are manageable but being closely monitored.  That is code for Long Term Care Insurance, which GE capital was a leader in.  When divesting major parts of GE Capital, the company could not sell a significant part of this portfolio, and is managing it in-house.  The tail risk of this type of insurance is immeasurable, and seemingly always underestimated at GE.  Actuarial tables don't tell the story, as people who bought this type of relatively costly insurance generally had good reason to believe that it would be needed.

GE was once a uniquely successful conglomerate under the egomaniac Jack Welch's reign of terror.  Under Jeff Immelt, all investor goodwill accumulated under Welch was wasted through many flawed acquisitions that kept the attention seeking Immelt in the headlines.  Flannery was a bookmark.  Culp has a huge challenge.  At some point GE will be investable, not there yet.

Apple's news rippled through technology stocks broadly, and recently acquired "winners" here like ON, AMD, and ROKU did not fare well.  This type of activity in technology stocks does not bode well for Asia markets tonight.  No projections here, trading some but mostly just watching.

Thursday, November 08, 2018

"These Truths", Jill Lepore

If New Yorker writer Jill Lepore was not already viewed as prolific, now case closed.  This tome, subtitled "a History of the United States", clocks in at over 900 pages including the index.  This is not something that one would read on the subway or even in bed.  It's too heavy, in weight that is.  This is a project that seems based in what some might called inclusive history.  While undertaking the task of truth to  history, this retelling makes a clear point of highlighting the role of women, immigrants, and all minorities.  It is welcome reading, although at times it seems a bit forced as a chapter might be interrupted at length with a digression that is deemed inclusive.

At times it just reads as history, as other times it reads as history told with a perspective on today's events.  It is filled with current colloquialisms, nuances, and phrases.  Compared with traditional history books, from the Beards, to Spengler, Toynbee, Keegan, and those written as college texts that combine the efforts of many historians under the auspices of a publisher, that is a huge difference.  It does make the writing seem personal, which is not at all bad.

Reading the book piecemeal so far, the last chapter that takes the reader to the present, "America, Disrupted" is exceptional for the most part and the chapter "Efficiency and the Masses", that details the Gilded Age, Industrialization, and the lead up to World War I is packed with interesting details that were new here, or at least not remembered.  "The Face of Battle", a chapter about the Civil War, falls short from this perspective, still thorough but somehow not much new.

It may be a month before this book is on the bookshelf, as other more focused books will be welcome breaks, such as "The Library Book", now started, by Susan Orlean, yet another New Yorker writer.  And then there are the newspapers daily... some days are better than others.

Wednesday, November 07, 2018

Election results boost market...

So much for all of the pundits last night wondering about how negatively the Republican party's loss of the House would affect the markets.  It seemed odd at the time, and today the Dow and S&P are up 2% and the Nasdaq up 2.5%.  The markets have liked the corporate tax cuts but apart from that they have been rising in spite of Trump.

With the possibility of some restraint on his power, the concerns about the negative impact of tariffs on global trade, misguided immigration policy, and threats about breaking up technology companies because they don't fall in line with Trump's arbitrary personal vendettas have been somewhat allayed for the moment.  The results are a breath of fresh air for most investors.  Trump has no idea.

Amazon is up 7% today(Washington Post and Bezos), the VHT health care index is up 3.5%, Google and Apple up 3% each --- this is a relief from Trump threats rally.  Somehow the preposterously truth challenged President will claim responsibility for the market rise and his loyalists will fall in line.

Results certainly did favor Trump in some races for Governor and the Senate, and since the Trump train chose to visit areas that already were leaning his way that looks good.  That said, Florida is concerning.  Missouri as well. Georgia looks to some like a disappointment but my God, what a change just to get so close.  Votes still to be counted.

And Dave Brat is gone.  How nice for Virginia!

Democratic Party field for 2020...

The Democrats are not exactly in disarray when it comes to the next Presidential election, but any clear leader is completely lacking.  Whether this could lead to something positive like more voter involvement or something negative like voter fatigue is up in the air.  There is time, but this needs to shake out over the 12 months.

The landscape is broad.  There are as many as five possible candidates from New York.  Andrew Cuomo, despite his disavowals, is clearly and almost manically setting the stage to be "drafted".  Michael Bloomberg is straightforward as always, busy analyzing his chances and setting up behind the scenes support.  New York Mayor Bill de Blasio has unlimited ambition, despite his limitations that are obvious.  Hillary Clinton, having adopted the state, is absolutely willing to be pulled into the race as she and her husband are addicted to the spotlight. Her hints are transparent.  Then there's Kirstin Gillibrand, who looks at Obama's limited Senate experience before running and sees a model for her run, as well as being a more palatable female candidate than Hillary.

Kamala Harris is a star of the West, not enough experience to have much baggage but articulate and carrying a big blue state.  Cory Booker has made his exploratory work clear.  Eric Holder is doing some groundwork, but already seems to be a longshot, as his stature as a politician is much harder to see than his stature as a jurist.  Some talk about Mitch Landrieu of Louisiana, Terry McAuliffe of Virginia, and Martin O'Malley of Maryland, but anyone of those would need some major breakthrough to be viable.  Not likely,  but nothing is impossible anymore.  Sherrod Brown of Ohio, Steve Bullard of Montana, John Delaney of Maryland, and a partridge and a pear tree.

This year there is also a new category of candidate, strong losers.  Into that bucket goes Beto O'Rourke, the strong competitor to Ted Cruz in Texas and Heidi Heitkamp, who lost her Senate seat in North Dakota as she stuck by her principles, and voted against the Bret Kavanaugh knowing that it would hurt her chances(Kavanaugh is deeply flawed, not because of what may or may not have happened in high school but because he is a rigid right wing idealogue on many issues and an ardent Trump supporter, open to political driven decisions as a jurist).  O'Rourke taps into the deep nostalgia of Democrats for a Robert Kennedy style candidate who elicits real enthusiasm.

Then there is the celebrity and business crowd.  Oprah keeps saying no way but here name is kept alive by others.  Howard Schultz of Starbuck's success wants a role in civic engagement.  Tom Steyer has strong opinions that he backs up with activity and funds from his hedge fund success.  Mark Cuban?  There are more that are being missed here.

Key to all of this are the ambitions of perceived party stalwarts like Joe Biden, Bernie Sanders, and Elizabeth Warren.  Biden is perhaps a viable candidate although a bit shopworn.  The opinion here is that Sanders and Warren would be poison for the party.  They would be far too left leaning for crossover Trump voters and anathema to the "deplorables". Yet they are clearly setting up for possible campaigns.  Those two love attention.  Without question, each of the three have significant name recognition so must be taken seriously.

Certainly, there are others that have been overlooked in this review of candidates.  Will this be interesting to watch or just painful?

POSTSCRIPT:  I have been alerted to the omission of Amy Klobuchar from this comment. That was not intentional.  She belongs in this list as well, and may be one of the few that could stand toe to toe with the hostile Trump and stay balanced and focused. 

Monday, November 05, 2018

Bryan Kemp, mid-term 2018 winner of most repulsive campaign...

It was announced this evening that Bryan Kemp, Republican candidate for Governor of Georgia, has won the hotly contested Virgil Goode award for most repulsive campaign in the 2018 mid-term elections.  As the current Attorney General for the state of Georgia, he backed up his consistent lies and bluster with blatant voter suppression action, excluding thousands of voters from the polls, primarily African Americans.  Yes Bryan Kemp, he approved his messages of divisiveness, and the phony twang with which it was delivered.

Thursday, November 01, 2018

Two highlighted NYT obits today --- McCovey and CIA writer... does that make sense...

Today's New York Times has two featured obituaries that have personal importance.

The first one concerned the death of Willie McCovey at the age of 80.  McCovey played for the Danville Leafs of the Carolina league in 1956.  The ball park was not far from our house and my parents would take their seven year old to games several times a year.  They would always have popcorn and they always let me have a Nehi orange soda, a major treat.  The stands were never too crowded and at one game I walked about ten seats down, stood over the home dugout behind the netting, and as Willie came out for a bat I yelled "hit a home run Willie".  He glanced and smiled, and then went to the plate and hit a hooking line drive down the right field line that just barely stayed fair for a home run.  I can still visualize the event today.

The second obit of note was of Victor Marchetti, who wrote the 1974 book "The CIA and the Cult of Intelligence".  It was a groundbreaking book at the time.  Why important to me?  At that time there were three goals in my life --- to become some sort of writer, to live in New York, and to travel internationally.  The last two were certainly achieved.  In 1974 I was living in Goshen, KY outside of Louisville, a teacher there.  To pursue that first dream I introduced myself to the book editor of the Louisville Courier Journal, at that time an esteemed regional newspaper.  She agreed to let me become a free lance book reviewer for the paper, and Marchetti's book about the CIA was one of my reviews that was published.  I worked hours and hours on that article, and $25 was my reward, actually not that bad, inflation adjusted.  That stint of writing reviews was the height of my writing career.

In 2003 I saw a game in Candlestick Park, and Willie was acknowledged by the announcer as being in attendance but I was not close to his wave.  Writing adequately was a significant positive for my career in banking, because it was not a widely held skill in that industry.