Lioness Associates, Inc.

Economic & Corporate Risk/Yield Reports

MJ's New & Noteworthy
November 23, 2012 -- It's all about content ...

The next month or so promises to be .... interesting... but, as the new year comes in, investors will turn to what will likely provide the best return in 2013. There are astrophysical indications that both the global and USA economies are likely to have yield momentum for some part of the 2013 year (updated graphs will be posted in Global Economies in the next week or so).

The rage seems to be "Apple" and while we think it's a good company, we also see that it has lost the innovative edge, it's competitors are catching up if not already surpassing it in designs; industry standards could complicate their goals (as it did decades ago); and all the pricy patent litigation is taking their eyes off the goalpost.  They have good products but, they are slipping behind and maybe not evident now to the masses, the ones reading the financial statements and keeping up with the industry will not be surprised as funds start to slowly exit. This of course is years away and in the interim, it will be a trader's dream.

If not Apple, then what? ....   Content is king.

Mobile hardware devices have made significant progress over the last decade and whether it be a phone, tablet or laptop - we carry these devices with us and use them more frequently during the day. The question then becomes, what do we use them for? Facebook is one application that keeps us connected to our friends but, that is becoming a little "passe" - after all, posts about our friends going to a store and buying boots are really not all that interesting.   Map applications are great but, how often do we need directions in a day? Restaurant reservations are great but how often do you need them.  Searching for information is one that might be needed multiple times a day but, that is getting annoying with all the "paid advertisements" and multiple entries for the same website.

The next shift (which is already occurring) is that the devices start being used for work.  Cash registers that are no longer bolted to the desk (could a tablet become your own personal cash register), nurses using tablets to monitor patients, doctors being able to examine patients in another country, your car sending maintenance diagnostic information to your mobile device,  your house sending you a flash that an outside door has been opened.  This is phase II - it's not about the hardware, it's about the apps.

What's missing here ... entertainment ... the content.  As more time is available for using mobile devices, more content will be needed — much more.  More news and articles, more movies, more games, more books just to name a few.  The providers of these services are likely to find multiple outlets for their products. 

Some companies that might be interesting in the first half of 2013 —DIS, CMCSA, DISCA, TWX, TWC, and providers like S, T, VZ (and maybe GOOG). These companies might start "perking up" in February of 2013 and might peak around the summer timeframe.

June 12, 2012 Update - The last waves of social networking

The last 13 to 14 years have been noted by the emerging social phenomena of internet applications which started with finding things to buy (Amazon), finding information (Google), and now ending with finding friends (Facebook). This has come full circle.  It seems that this was the "all about me" period.

As the astrological configurations change, the next period of a dozen years or so will change how we want our lives to be fulfilled ... in other words, what we looking for.  One area that will be impacted is what we seek for entertainment.  Subtle changes have already started to occur with current movies featuring "comic heroes" that are larger than life. Fantasy and/or science fiction is likely to have more interest at the box office as well as "long movies" like the HBO special Game of Thrones.  As our tastes change, the "reality shows" will be the losers.  Depending on their subject, talk shows could also experience lack of interest. 

The goals & dreams of nations and societies will also change.  The phrase that might sum it up the best is  "imagine the limitless boundaries of space".  It will be about nations making large steps in connecting with the outer limits of our existence and expanding them so they become integrated with our lives. Along this line, there was a huge step recently with a commercial company (SpaceX) making a successful test docking with the space station. With these steps, can there be any doubt that colonization of the moon will become a reality in the coming decades. 

It's no small wonder that the "human mind" will also become another frontier to conquer.  With the aging "baby boomers", it will become imperative that more research is done to determine the causes of diseases like Alzheimer's.  More people will be living into the 80s and beyond and will not want to spend their last years in nursing homes. People will expect the quality of life at the end of their life to surpass their parents.

Final words - the last time this astrological configuration occurred was in the 1850s which was noted for the book Uncle Tom's Cabin by Harriet Beecher, Nurse Nightingale's good works, and the Pony Express linking the nation.

September 1, 2011 Update -- Is it time yet?

Gold is still tracking too high indicating that markets are either still too scared or there are fears that the dollar will lose more value and thus increase values of other currencies like gold.

Events that occurred over the last few years in September are likely to dredge up nasty memories and have the market jittery but, if stocks can make some steady progress over the first two weeks then there may be some buying opportunities after that.

August 10, 2011 Update -- Buying Opportunity?  Are we at the bottom?

 These are the predominant questions being asked by most TV commentators in the last few days.  The answers from the “experts” range from “it’s the time to buy up stocks because in 10 years you’ll be glad you did” or “we’re headed down and there is no end in sight and the only real asset that’s worth anything is gold”.

In my humble opinion it’s not a buying opportunity unless you are a very well-seasoned trader and can spot those minor shifts and take profits quickly and only plan on being in trades for minutes or hours.  We are not at the bottom yet and probably won’t see bottom until there is an indication that the “surprises” have finished and investors can appraise the economic situation in a calm and collected manner.  Right now there is panic.  It is one thing to be in a market where you’re not sure if the market will close up or down 50 points and it’s quite another to be in a market that could move up or down 500 points. This market is risky and while major profits could be made, the risk is too great for the rewards. Sit by the sidelines and wait for both the fundamentals and technicals to indicate stability by giving the credit downgrades time to work through the markets and for the graphs to start showing more buying of stocks at rising prices. 

You also want to hope that the Federal Reserve stops helping the economy because in my humble opinion, it’s helped too much by keeping interest rates too low for too long.  The market is addicted to low rates like a drug addict to heroin and it’s about time that interest rates are allowed to rise up slowly so that banks can make money on loans and buyers (like home buyers) would realize that cheap money is not going to be here for too long and they might feel a little bit more urgency to close the deal and not wait for “cheaper rates”.

 So where do I think the market is heading ------

The graphs tell the story, there is more “risk” until early fall and then it evens out.  But, before it can move steadily into the “yield” area, the time deadlines are hit that were set up by the Congress for the budget reductions.  My opinion is that there will be “rosy pictures” (spikes in the yield area) coming out of Congress on agreements that are being made but, like the debt ceiling, when it comes to the deadline it will be obvious that Congress has not been able to act decisively and rationally.


2/1/2011 Walter Energy - Valentine's Day Favorite?

We are looking forward to Walter Energy’s (WLT) earnings expected to come out February 14th, Valentine’s Day.  Having spent time tossing away any non-energy holdings, this company is focused on energy and is expected to have stellar returns.  While we like this company in the short-term because of client base, recent commodity price increases, and good products — long-term we has qualms that the company could be put in a position of not being able to deliver it’s products to market. The Mobile Alabama port is used extensively by this company and if something occurs at this port (such as a hurricane) what would happen to day-to-day operations of the company.  The company also appears to rely on a certain railroad to bring product to the waterways.  In addition (yes, there is more), operations are based primarily in one state and all the operations could be subject to the same weather, environmental, and regulatory issues.  Having operations all together could be a “good thing” when it comes to managing. But, we now diverge too much from the primary subject…. Mobile Alabama port and waterway.

While touring through the 10k, it doesn’t appear that any provisions have been made for alternate travel paths for product although the report does mention that this is a problem.  This is a big issue that needs resolving for this company to move forward.  Disruptions in delivery of product could cause the most loyal customers to look elsewhere for product. It doesn’t matter how good the product is if it can’t be delivered.

All told, a thunbs up for this company - they have made all the good moves. Let’s see if they can deliver a “contingency plan” for alternate travel.