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merenkov 1496 posts  |  Last Activity: 12 hours ago Member since: Jun 7, 2004
  • The Atlanta Fed’s GDPNow forecast has been bouncing near the zero level the past few weeks, but has settled at 0.1% for Q1 (based on today’s durable goods report). This will be the final adjustment before the BEA’s advance GDP estimate is released next week (on April 29th). Since this is the first time the Atlanta Fed has attempted this, it will be interesting to see how accurate it proves to be (the model supposedly mimics the methodology of the BEA’s calculations). Of course we all know there was some snow…in winter…in the northeast, so that explains everything. Let’s raise rates!

  • Reply to

    Victory lap

    by robinfamily1818 Apr 16, 2015 9:29 PM
    merenkov merenkov Apr 20, 2015 12:22 PM Flag

    The strategy you describe is occurring in the toy space, but by Hasbro, not Mattel, which is why I sold my MAT last October and bought HAS. I think the two could be complementary holdings in a way (MAT for girls' toys, and HAS for boys' toys), but I ultimately lost confidence in MAT's ability to execute. Maybe the two companies should merge, and see what HAS management could do with MAT's assets.

  • Reply to

    Why aren't people popping champagne over here?

    by merenkov Feb 9, 2015 12:46 PM
    merenkov merenkov Apr 20, 2015 10:56 AM Flag

    It's deja vu all over again... :)

  • Reply to

    Atlanta Fed’s Q1 GDP estimate back up to 0.2%

    by merenkov Apr 15, 2015 3:28 PM
    merenkov merenkov Apr 17, 2015 2:21 PM Flag

    I just tune them all out. They each have their own indecipherable, contradictory agendas, but they have little control over the long end of the yield curve anyway. The algos will make rates bump up or down for a few hours or days after they each speak their nonsense, but the underlying economy trumps all.

  • Reply to

    Atlanta Fed’s Q1 GDP estimate back up to 0.2%

    by merenkov Apr 15, 2015 3:28 PM
    merenkov merenkov Apr 16, 2015 1:11 PM Flag

    …aaaand the GDPNow forecast for this quarter is now back down to 0.1%, updated to reflect this morning’s weak housing data release. Not great, but at least not negative! Let’s raise rates!

  • I thought the spambots that have taken over this board might like to know that the Atlanta Fed has bumped its GDP forecast for the current quarter back up to 0.2%, an improvement over the 0% from a week ago, but still well below Wall Street consensus of 1.8%. Their real-time GDP model will be updated again tomorrow once the housing data is released…

  • merenkov merenkov Apr 8, 2015 8:13 PM Flag

    I've traded RIG in the past, and there is absolutely no comparison between Shell, a fully integrated oil powerhouse with a market cap of nearly $200 billion (and a long and reliable dividend history), and RIG, which currently has a market cap of around $6 billion (and sketchy dividend history). Shell dramatically reduced its dividend during the financial crisis, but for only four quarters, and it came back stronger than before.

  • It hasn't been $3.44 in years, not sure what Yahoo's problem is there. So based on the current price of around $61.40, that $3.76 results in a yield of 6.1%, pretty juicy. And I've yet to run across an analyst who thinks that the announced acquisition will affect the dividend policy.

  • merenkov merenkov Apr 8, 2015 2:59 PM Flag

    And the dividend yield at the current price ($61.35) is 6.1%. (The annual dividend is $3.76/share, not the $3.44/share that the Yahoo summary page shows.) I'm a long-time RDS holder, not happy about the price drop today, but I bought more shares this morning because that dividend yield is hard to resist.

  • merenkov merenkov Apr 7, 2015 1:37 PM Flag

    In answer to your original question, the Atlanta Fed updated their GDPNow model within hours of the trade data release (they bumped the 1Q forecast by 10 basis points, to 0.1%). I'd guess the uptick in bond yields yesterday was due to dollar weakness, but who knows? The factors that can influence bonds in the short term are too numerous to mention. I think the longer term trend in yields is still to the downside. Eventually the deflationary pressures in the economy will get the Fed talking about QE4, and that will be the time to short bonds.

  • merenkov merenkov Apr 2, 2015 10:49 AM Flag

    It will, but I don't know how long it will take them to update. You can go to their website and download their working spreadsheet, which shows all the inputs and calculations. As far as I know, this is the first quarter they've done this, so it's all a little experimental (which is probably why it doesn't seem to get a lot of attention, at least for now). It'll be interesting to see how accurate their forecast ends up being.

  • The Atlanta Fed just lowered its projected Q1 GDP growth rate to 0.0%. For those not familiar, the Atlanta Fed has a real-time model for estimating the current quarter’s GDP (called GDPNow), which mimics the methodology used by the BEA to calculate quarterly GDP. As recently as mid-February, the model was forecasting 2.3% GDP growth for the quarter, but has since dropped every few days as new data was released. Consensus on Wall Street is still around 1.8%, lol…

  • Reply to

    like i was saying....

    by barc37000 Apr 1, 2015 9:55 AM
    merenkov merenkov Apr 1, 2015 10:52 AM Flag

    I actually think we’ll see the yield on the 10Y dropping to as low as 1.4% this summer, and even lower if we experience a real stock market crash. The 30Y will eventually find its way to the 2% level, and linger there until the Fed announces QE4.

  • Reply to

    Uptrend slightly busted.

    by ironcladirony Mar 30, 2015 3:26 PM
    merenkov merenkov Mar 30, 2015 4:22 PM Flag

    I have my own theories. I think the "sell in May and go away" crowd tends to rotate into bonds after they sell their stocks. Also, we've seen overly optimistic forecasts from the Fed (and most mainstream economists) every single year since the financial crisis. Optimism seems to flourish in the first quarter of the year, and when the numbers start to come in and disappoint, bond yields respond to the newly appreciated weakness. And it's happening again. The Atlanta Fed's GDPNow forecast for this quarter has dropped to 0.2%, while mainstream consensus is still around 1.8% (it was 2.5% just a few months ago). And just this morning, Goldman dropped its Q1 GDP forecast to 0.8% (while just a few months ago, Goldman was predicting 3% growth in Q1).

  • Reply to

    Uptrend slightly busted.

    by ironcladirony Mar 30, 2015 3:26 PM
    merenkov merenkov Mar 30, 2015 3:48 PM Flag

    I like still like long-term bonds for fundamental reasons, but I've also noticed a definite seasonality to them - rates tend to peak for the year around this time, begin dropping sometime in April and then continue dropping through the summer. Take a look at a chart for the past 5 years. This pattern repeated itself each year except 2013, the year the Fed started the ridiculous "temper tantrum". You're more of a technical analyst - what do you make of that pattern?

  • Reply to

    I just laugh and laugh and laugh

    by neodinium1978 Mar 6, 2015 8:37 AM
    merenkov merenkov Mar 27, 2015 5:39 PM Flag

    Every time you post here, an angel gets his wings and bonds go into rally mode. So thanks for that! Bonds have rallied about 5% since I got back in, so the only thing making me cranky today is the fact that Villanova lost in the second round of the tournament. You can’t imagine how beautiful my bracket would be if Nova was still in it…

  • Reply to

    I just laugh and laugh and laugh

    by neodinium1978 Mar 6, 2015 8:37 AM
    merenkov merenkov Mar 27, 2015 11:16 AM Flag

    When you began beating your chest and started this thread, the yield on the 30Y was at 2.84%. Yet here we are at 2.55%. There's really nothing more to say. But keep bumping this thread - it makes you look like an idiot. :)

  • Reply to

    Bonds in tulip land

    by the_invisible_hand2010 Mar 22, 2015 8:52 PM
    merenkov merenkov Mar 26, 2015 3:09 PM Flag

    Just curious, what in particular made you decide to go the sidelines for now? It wouldn't surprise me to see yields creep up over the next few weeks, and then resume their slow death spiral in May-August. There's a proven seasonal trading pattern there for those with the time and inclination to do take advantage (which I don't).

  • Following today’s durable goods report, the Atlanta Fed lowered its projected Q1 2015 GDP growth to 0.2% (an annualized number). For those not familiar, the Atlanta Fed has a real-time model for estimating the current quarter’s GDP (called GDPNow), which basically mimics the methodology used by the BEA to calculate quarterly GDP. As recently as mid-February, the model was forecasting 2.3% GDP growth for the quarter, but has since dropped every few days as new data was released. Consensus on Wall Street is still over 2%, lol…

  • Reply to

    Bonds in tulip land

    by the_invisible_hand2010 Mar 22, 2015 8:52 PM
    merenkov merenkov Mar 23, 2015 12:56 PM Flag

    With YoY inflation in the US either flat or negative for 2015, a 2.5% yield on the 30Y is right in line with historical norms (actually a little on the high side, as the rate has averaged 200 basis points over inflation for over a hundred years).

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