Bill Cara’s Blog for Aug 30, 2012
CTA Trading Desk Morning Report
[7:00am ET] Good morning.
Thanks Les for pointing us to the Matt Taibbi article in Rolling Stone on Mitt Romney.
From my wider lens I think that, for the most part, Taibbi is an expert in rehashing the words of others. He’s less a journalist than a story-teller. He’s less a story-teller than a spin-master.
As a writer, Taibbi overwhelms the senses with embellishments. Many people, I suspect, find his art entertaining. I do not, but then again I’m not looking for entertainment when I read about business and capital markets.
Regarding his piece on Mitt Romney, the matter of Bain Capital’s use of debt to effect corporate turnarounds, that Taibbi harps on, is way over-done. Debt is simply a tool when equity is not available. Not all restructurings are successful, which is a fact. Good people subsequently lose their jobs in many of these situations, unfortunately.
But missing in Taibbi’s story about Romney and private equity firms like Bain Capital is that when companies in bad shape are restored to good health, equity becomes available, and in the hands of good managers new equity is used to replace unnecessary debt.
So, to make his point, Taibbi tells half the story. He does it because he has an agenda.
To draw an analogy, to understand a corporation you need to be aware of both the balance sheet (a snap-shot of financial condition at a point in time) and the income statement (the picture of how the profits and losses happened over time). The whole story, not half of one, is needed for a proper assessment.
In Romney’s case, my view is that he is a person who does whatever it takes to succeed. He has goals and objectives. He has been a winner, not for his words, but because of his actions.
In the last election I wanted Obama to win because I wanted change. Soon after I was complaining that Obama was “talking us to death” and that the country was not going to get change. This time I want Romney to win because he is, as I say, action oriented. He understands business, and knows how to assemble the resources needed to win. The White House, we know, is a business.
At this point, it’s not a matter of wanting change, but needing change, and I believe Romney, of the two candidates, is the one who will make it happen. I intend to watch his speech tonight, and to how the GOP spin-masters present it afterwards.
Then it’s back to work tomorrow morning!
Good morning, Geoff here.
The market has been a snoozer as we wait for the global central bankers to speak so I don’t have a lot to say this morning.
However, do you know the phrase; “the trend is your friend”?
You want to be long when the market is trending up.
There are a few ways to see if the market is in an uptrend including: price, moving averages, ADX, Aroon and RSI. Here are a few examples:
As you can see, these signals are still pointing to the market in an uptrend. However, the market looks to be losing that momentum and is at a turning point that is looking for a catalyst. Jackson Hole could be that catalyst, but I think we may need to wait until the German vote comes in. If you need a list of catalysts with dates, I posted some in yesterday’s notes.
Have a great trading day!
Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
|Symbol||Name||Last Trade||Change||Related Info|
||7.43 (0.37%)||Components, Chart, More|
||0.00 (0.00%)||Components, Chart, More|
||17.46 (0.51%)||Components, Chart, More|
||53.83 (0.77%)||Components, Chart, More|
||0.76 (0.23%)||Components, Chart, More|
|^OSEAX||OSE All Share||482.78
||3.56 (0.73%)||Components, Chart, More|
||2.34 (0.73%)||Components, Chart, More|
||22.40 (0.35%)||Components, Chart, More|
||10.31 (0.18%)||Components, Chart, More|
||0.40 (0.04%)||Chart, More|
||6.86 (0.48%)||Chart, More|
|GD.AT||Athex Composite Share Price Index||636.99
||3.85 (0.60%)||Chart, More|
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.