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.


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