FT -

• US Dept of Agric - food inflation will surge in the 2nd half of this year as wholesale prices filter through the supply chain, affecting consumers
• This will fuel global concerns about rising inflation and the potential for destabilizating food riots in developing countries
• Investors may tell today's surveys they are bullish but US trading is at 2004 levels. There are good fundamental reasons to think shares are a poor medium-term bet. But exuberance remains pretty mild.

Bespoke

• Weight Watchers (WTW) was up 45% in one day on a very strong earnings report. NTRI also rose 8% that day. However, NTRI reported 5 days later, and was down almost 30% after the report. Keep this example in the back of your mind the next time you think about trading a stock based on news from one of its peers/competitors.

SP500 last 50 years

	1	2	3	4	5	6	7	8	9	10	11	12
avg	1.02	-0.24	1.17	1.51	0.27	-0.06	1.00	0.05	-0.46	0.62	1.56	1.73
std	4.94	3.50	3.42	3.89	3.73	3.56	4.12	4.65	4.50	5.54	4.44	3.20
largest(6#)	0.99	0.60	0.69	0.81	0.59	0.53	0.74	0.75	0.65	0.93	0.83	0.74
smallest(6#)	-0.71	-0.63	-0.51	-0.55	-0.67	-0.67	-0.64	-0.88	-0.90	-1.04	-0.74	-0.39
avg*	0.74	-0.20	1.00	1.25	0.35	0.08	0.90	0.18	-0.21	0.73	1.46	1.37
std*	3.35	2.12	2.07	2.56	2.52	2.37	2.98	2.83	2.91	2.50	2.74	1.98
avg* - std*	-2.62	-2.33	-1.07	-1.31	-2.17	-2.28	-2.08	-2.65	-3.13	-1.78	-1.27	-0.60

Best months to invest overall are: Dec, Nov, Apr, Mar, Jan, Jul, Oct
Best months* to invest overall are: Nov,Dec, Apr, Mar, Jul, Oct, Jan,
Worst Months are: Sept, Feb
Best Months incl std are: Dec, Mar, Nov, Apr, Oct

TPC -

• Rising oil prices will actually cause deflation in core CPI during a balance sheet recession because people will spend more of their money on gas. CPI will obviously still rise.

TPC

• Housing numbers still negative - case shiller 20 city is -2.38% yoy (-2.4% expected)
• Oil is up 8% on Libya unrest...market also selling off about 2% - fear is that turmoil will spread to Saudi Arabia and Iran. Oil current price is $94, breaking point for US is $120 (Merrill Lynch)
  
• Copper is down almost 3.5%, it has not moved for the last month while equities have been rallying. Usually copper is forward looking

ADash

• Still positive because of 'market drum beat' (eps moving higher, upward eps revisions)
• Good - ECRI still improving, St. Louis Fed Stress still improving (it's even slightly negative now!), Philly Fed had a big jump (small improvement was meaningless), Rail Traffic was good for industrial production,
  
• Bad - Existing home sales were overstated by about 15%, retail sales were a big disappointment, initial claims were up
• Week ahead
  • energy prices!
  • interest rates
  • case-shiller if its mildly positive, that would be good since bad expectations are built into market. number came in as expected so there was no effect
  
  

Calls	Strike Price	Puts
0.5	30	0
0	31.22	0.875
0	35	4.6
0	36.22	5.85
0	41.22	10.85

TPC -

• citigroup economic surprise index sends warning - http://pragcap.com/the-citigroup-economic-surprise-index-sends-a-warning. It shows how recent economic reports have been trending versus expectations
• Fed-Ex reduces earnings guidance, it is somewhat an indicator of overall health of economy. They cited higher fuel prices and bad weather.

QuantE

• SPY close above 5day ema for at least 10 days in a row, and today is the highest close of the last 10 days. ~avg .4% after 3 days
  

TPC -

• Warren Buffet indicator US Stock Market vs GNP is at 106%, > 100% supposed to be overvalued, <>
  
  
  

• Eurozone core CPI at 1.1%, CPI at 2.4%. With Unemployment at 10%, unlikely that CPI will move up.
• China core CPI at 2.1% , overall at 4.9%

• San Diego housing prices are definitely rolling over, w/ almost 5% dip from Dec - Jan

ADash -

• The early expectation is for 2012 to have total net income passing the $1 Trillion mark to $1.0113 Trillion. That will also put the “EPS” for the S&P 500 over the $100 “per share” level for the first time at $106.79. That is up from $57.71 for 2009, $82.93 for 2010, and $95.20 for 2011. In an environment where the 10-year T-note is yielding 3.63%, a P/E of 15.8x based on 2010 and 13.7x based on 2011 earnings looks attractive. The P/E based on 2012 earnings is 12.2x.
• Bank loan requirements (1/25/11) allowed for provisions where mark to market is not necessary and loans can be amortized, while making reasonable allowances for loan losses. This is small business friendly and therefore 'good'.
  

Bad

• Interest rates are higher
• Michigan Consumer sentiment missed.

Bespoke

• Smart money indicator (last 1 hour of the day smart money buys while dumb money buys in the beginning of the day). If you look at YTD performance, open is up .04% while last hour is up .08%.
  

FT - Study on performance of long-run securities - http://www.ft.com/cms/s/0/506f713c-3634-11e0-9b3b-00144feabdc0.html

• Except for world wars, equities will outperform cash over any 20 year period
• Over the last decade bonds beat equities for the first time since 1930s
• US Treasury Bond yields have been locked in a protracted downward trend since the 1980s, when the FED convinced markets it was prepared to cause real economic pain in its effort to contain inflation
• Long term bond yield - which need to be high if investors think they need to protect against inflation in the future - steadily fell over this period
• Since 1982, avg annual return (price appreciation + interest payments) on long-dated bonds compared to short-date bonds, has been 5.2%. However since 1900, that figure has only been .8%.
  => Unlikely that bond returns will match the period since 1982 and Barclays warns that inflation will return

Why inflation will return

• Will come from emerging world:
  • During Great Moderation, supply of cheap labor exported lower inflation to the rest of the world
  • Emerging market's demand for resources is now exporting inflation, notably in industrial metals and in food
  • central banks would thus raise rates => ie bond yields
• 'Fed Model' holds that bond yields drive equity valuations. Higher yields from bonds will attract investors unless higher earnings yields are forthcoming on stocks.
• When yields are less than 5.2% , rising yields show optimism about growth and do not hinder companies from raising money.
  
• When yields are greater than 5.2%, this relationship flips because central banks have real concerns about inflation and make it materially more expensive for companies to do business
  =>Treasury yields rising above 5.2% triggered the credit crisis in the summer of 2007. If it gets that high again, the ongoing downward trend in yields will have been broken
  

http://online.wsj.com/article/SB10001424052748704132204576135812275017014.html

• annual food inflation rate came down from 17.1% to 13.1%
• central bank has had 7 rate hikes since march, which is affecting stockmarket
• 47% of CPI is annual food inflation
• Indian industrial output on Friday - Index of Industrial Production (IIP) figures today showed that growth plunged to a dismal 1.6% in December 2010, compared to 2.7% in the preceding month and 18% in the same month a year ago. (Market rallied 1.6% on this, what does that mean?)
  

IFN is not the best vehicle for getting into india. Barely tracks CNX (S&P nifty fifty for india)
Use EPI or PIN.
^NSEI just crossed its 300MA. Historically this has been a decent time to buy.