Category: Analysis & Strategy
The news items published under this category are as follows.
Monday, May 12, 2008
New Diamond Rated Articles / sitenews / Analysis & Strategy
By: Sarah_Jones
The Market Oracle announces our new Diamond
rating for the real one in fifty article gems.Read full article... Read full article...
Tuesday, March 06, 2007
More Central Banks diversify away from the US Dollar- Forex Crises to follow / Currencies / Analysis & Strategy
By: Julian_DW_Phillips
For years now we have warned of tsunami like capital waves crossing the globe bringing financial drama with it. We have pointed to the structural problems that could give rise to the damage these waves will cause. We have warned of the Central Bank's moves away from the U.S.$. We have also warned of the damage the Trade deficit is doing to the U.S. We have also warned of global foreign exchange and rates crises.
We coined the expression "Live now, Pay later" syndrome that has been all-pervasive in the U.S.A. Add this to the "so far, so good" attitude and what happened this week in global markets has been long overdue. It signals that globalization and the free flow of capital across this globe of managed foreign exchange rates, plus the interdependency of global economies will undermine all paper currencies to some extent. This week saw that begin . Probably a group of global funds thought the time was ripe in many markets to rattle some cages and down the markets went. That they should have this ability and power is the frightening thing and the situation can only worsen as other speculators and fund powerhouses get the scent of this action.
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Tuesday, March 06, 2007
Uranium Investing - In Situ Recovery Mining: A New Method for Uranium Mining Explained / Commodities / Analysis & Strategy
By: James_Finch
In Situ Recovery (ISR) uranium mining is responsible for nearly all U.S. uranium mining (except for recovery through phosphates). More than 20 percent of global uranium mining now comes from the in situ recovery method, predominantly through In Situ Leach (ISL) mining in Kazakhstan and in Australia. Because of the large number of ISR uranium projects on the horizon within the next ten years, both in the United States, Kazakhstan and Australia, the in situ (ISR) uranium mining method will provide U.S and global utilities with tens of millions of pounds of newly mined uranium by 2020.
Monday, March 05, 2007
Stock Market Manipulation - The secret maneuverings of the Plunge Protection Team (PPT) / Stock-Markets / Analysis & Strategy
By: Mike_Whitney
The Working Group on Financial Markets, also know as the Plunge Protection Team, was created by Ronald Reagan to prevent a repeat of the Wall Street meltdown of October 1987. Its members include the Secretary of the Treasury, the Chairman of the Federal Reserve, the Chairman of the SEC and the Chairman of the Commodity Futures Trading Commission. Recently, the team has been on high-alert given the increased volatility of the markets and, what Hank Paulson calls, "the systemic risk posed by hedge funds and derivatives.”Last Tuesday's 416 point drop in the stock market has sent tremors through global system. An 8% freefall on the Chinese stock exchange triggered a massive equities sell-off which continued sporadically throughout the week. The sudden shift in sentiment, from Bull to Bear, has drawn more attention to deeply rooted “systemic” problems in the US economy. US manufacturing is already in recession, the dollar continues to weaken, consumer spending is flat, and the sub-prime market in real estate has begun to nosedive. These have all contributed to the markets' erratic behavior and created the likelihood that the Plunge Protection Team may be stealthily intervening behind the scenes.
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Monday, March 05, 2007
Un-winding of Yen Carry Trade Likely Cause of China's Stock Market Crash / Stock-Markets / Analysis & Strategy
By: Adrian_Ash
A BOWL OF RICE topped with chicken and egg, oyakodon translates literally as "mother and child" – a tasteless joke for the chicken and its babies, perhaps. But add a dash of soy sauce and it makes for a very tasty meal.The chicken-and-egg question of Japanese carry-trades, on the other hand, is rapidly making investors sick the world over. Which came first – the end of carry, or the collapse of share prices in Shanghai? The newswires blame Beijing's threat of higher interest rates...new restrictions on stock market IPOS...even a tax on financial speculation!
But what if the sudden unwinding of the carry-trade caused Shanghai to collapse instead? If you think that oyakodon has got little to do with the S&P losing 5% since this time last week, take note. For the chicken and egg question also applies going forward.
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Monday, March 05, 2007
The Trading Doctor - What do You See When you Look in the Mirror ? / InvestorEducation / Analysis & Strategy
By: Dr_Janice_Dorn
The way we perceive our actions or the consequences of our actions is, often, entwined closely with the way we identify who we are. We traders often define ourselves in terms of our trading...our actions and inactions, our triumphs, our gains and our losses. As a result, it is easy to merge so strongly with a decision that has resulted in unexpected negative consequences that we actually become that decision.
The disappointment and shame we feel when we make what we perceive is an error, grows until it becomes a dominant part of our identity. We rationalize our "poor" decisions by labeling ourselves incompetent decision makers, or, in the trading vernacular "idiots." Imagine walking around all day telling everyone that you are an idiot? Why are you doing that? What gain are you getting from that, and what message are you giving to those around you?
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Sunday, March 04, 2007
The Trading Doctor - TIME TRAPS - Learn to Manage your Time / InvestorEducation / Analysis & Strategy
By: Dr_Janice_Dorn
Time is the substance I am made of. Time is a river which sweeps me along, but I am the river; it is a tiger which destroys me, but I am the tiger; it is a fire which consumes me, but I am the fire. The world, unfortunately, is real; I, unfortunately, am Borges... Jose Luis Borges, Essay: "A New Refutation of Time," 1946
We react and respond to the following: data, information, knowledge and wisdom. My vision is to bring you knowledge and wisdom which will enrich your life, challenge you and propel you to higher and higher levels of evolution of your brain. I want each and every one of you who who reads what I write to be--not on the cutting edge of the curve-- but far ahead of the curve. My wish for you and for myself is that we retain and remain imbued with a personal value system that enriches and nourishes every aspect of our lives.
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Sunday, March 04, 2007
US & UK Housing Market - How (Not) To Fix the Subprime Mortgages Collapse / Housing-Market / Analysis & Strategy
By: Adrian_Ash
As always, the market's way ahead of the Fed...BEN BERNANKE told politicians in Washington this week that the collapse of subprime mortgage companies had been "contained".
Perhaps Dr. Ben was just thinking of Fremont delaying its fourth-quarter results...or New Century Financial (NEW) having to restate its earnings for the first nine months of last year.
Yes, that little nugget of news knocked NEW's stock 30% lower in one session last month. But the damage was still "contained", right? It's not like Bernanke had to revise GDP thirty per cent lower as a result.
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Saturday, March 03, 2007
Weekly Financial Markets Review - China Plunge, Dow Jones Index Errors and US Recession / Stock-Markets / Analysis & Strategy
By: Nadeem_Walayat
The week was dominated by Tuesdays sell off in China's Shanghai Index by 9%, and its ripple effect across the Worlds Stock Markets, which saw falls of more than 4% across the board by the end of the week.
We had been warning of the likely hood of a sell off in China for much of February. Several articles preceded the sell off in the stock markets including Mondays US Subprime Mortgages Fallout and Declining Housing Market likely to hit the Stock Market.
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Saturday, March 03, 2007
The Real Reason for the the Stock Market Falls - Cheap Money from the Bank of Japan / Stock-Markets / Analysis & Strategy
By: Money_and_Markets
If you think stock markets were the only ones that went haywire this week, look again:
The dollar fell sharply, especially against the yen ... Treasury bonds soared, with the long bond gaining almost a point and a half on February 27 alone ... and gold prices swung all over the place.
In other words, volatility went off the charts in almost every market I track. A volatility gauge maintained by the Chicago Board Options Exchange, for example, exploded 63% in a single day, the biggest increase in U.S. market history.
What single force links all this action? What little (or big!) beast could possibly be behind so many seemingly disparate market moves? Here's my answer …
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Saturday, March 03, 2007
Spike in VIX Stock Market volatility - The End Of Complacency? / Stock-Markets / Analysis & Strategy
By: John_Mauldin
This week we look at the recent upspike in volatility, see if we can connect some dots with the recent slew of earnings downgrades and the problems in the subprime mortgage world, and follow the money as risk is being taken off the table. I don't "buy" the China problem, but there may be an Asian connection. Let's try and keep it simple as we try and see what's behind curtain #3 labeled "Which direction is the stock market headed?"
But first, if you have not signed up for my Strategic Investment Conference in La Jolla, California, April 19-21, this week's market action is a perfect reason why you should. Want to get the real lowdown on China? Come listen to one of the premier Asian investment experts, Louis-Vincent Gave, give us his on-the-ground view of Asia.
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Friday, March 02, 2007
Yield Curve Inversion and Inflation - Consumer Price Index (CPI) / Economics / Analysis & Strategy
By: Adam_Oliensis
While many argue that the Consumer Price Index is a flawed indicator (some claim it understates inflation and others claim it overstates inflation), it does generate heated debate and can act as a catalyst for stock-market activity. In the context of Fed Chairman Bernanke's relatively dovish comments before both houses of Congress last week, a surprise on the CPI data could easily spur market volatility this coming week.
Currently the consensus estimate is for a +0.1% M/M on the CPI, which is below trend, and would be bullish for stocks. The most recent Y/Y reading stands at +2.61%...
Friday, March 02, 2007
Larry's take on the wild Stock Market and Gold action / Stock-Markets / Analysis & Strategy
By: Money_and_Markets
For months, I've been warning you that U.S. stock markets looked overbought and were headed for a tumble.
And just last week, I said that a Dow close below the 12,242 level “will be your signal that the recent economic strength is rolling over, that investors think corporate earnings have peaked, and that the weakness in the housing sector is really hitting home.”
Friday, March 02, 2007
Inflation in the pipleline not Deflation - Stock Market is Correcting. / Stock-Markets / Analysis & Strategy
By: David_Petch
According to deflationists, we are at the cusp of a collapse in the money supply. There are two articles I previously published titled "Diatribes of a Deflationist" and "Diatribes of a Deflationist II". I do not like to spew information contained in prior research articles because unless I see any change to an argument it is pointless to regurgitate the same information. As such refer to the archives section of this site under my name to review these and other prior material mentioned below.Read full article... Read full article...
Thursday, March 01, 2007
Stock Market Shocks, Money Supply Liquidity and the US Dollar / Economics / Analysis & Strategy
By: Jim_Willie_CB
Events in the last week have certainly caused a stir. Just what precipitated the broad global selloff. Was it the unwind of the Yen Carry Trade, a week delayed? Was it only attributable to the Chinese and their more stern stance against adolescent credit abuses in the Middle Kingdom?
Was it Al Greenspan's comments on an economic recession looming near on the horizon? Was it caution on risk pricing in view of the insane Iran vs USA posturing in the Persian Gulf? Was it Goldman Sachs orchestration with collusion from Beijing, after massive short positions were put in place? Were the GSax powers motivated by the alarms going off in the gold and silver markets, as gold neared $700 and silver passed $14? Methinks all the above, never just one factor in an increasingly complex financial world. The global markets have become a tangled web.
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Thursday, March 01, 2007
Stock Market Meltdown shows Greenspan's 'invisible hand' / Stock-Markets / Analysis & Strategy
By: Mike_Whitney
Tuesdays stock market freefall has Greenspan's bloody fingerprints all over it. And, no, I'm not talking about Sir Alan's crystal ball predictions about the impending recession; that's just more of his same circuitous blather. The real issue is the Fed's suicidal policies of low interest rates and currency deregulation which have paved the way for economic Armageddon. Whether the Chinese stock market contagion persists or not is immaterial; the American economy is headed for the dumpster and it's all because of the wizened former fed-chief, Alan “Great Depression” Greenspan. So, what does the stumbling Chinese stock market have to do with Greenspan?
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Thursday, March 01, 2007
First Inflation then Deflation? - Financial Markets Crash / Economics / Analysis & Strategy
By: Christopher_Laird
With gold up at $680, it looks like $700 is around the corner. So then, if a big gold surge is around the corner, one may ask, what is a longer term prognosis for not only gold but financial markets? Answer: first inflation and then deflation.
Right now, the world is inflating like mad. Money growth in most of the major world economies is near or exceeding 10% a year, and China is the biggie at 18% plus. That, combined with historically low interest rates is causing huge finance and asset bubbles. Central banks are way behind the inflation/interest rate curve right now, and are basically stuck in that rut because if any of them combat inflation by raising interest rates, they find their currencies strengthen, and lose market share.
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Thursday, March 01, 2007
US Economy and Dollar Balancing Act / Economics / Analysis & Strategy
By: Michael_Pento
Economists are now arguing over whether it will be a hard or soft landing for the U.S. economy. The fact that a landing will occur is no longer debatable. Empirical evidence demonstrates that the fragile U.S. economy is growing weaker with each passing piece of government data. Anemic GDP, durable goods, Chicago PMI, ISM-Manufacturing, and Factory orders, along with rising unemployment claims are suggesting that the Fed will stimulate the economy with yet more liquidity this year. The Fed and the economy/market may find itself in a box next year—a Bernanke Box—one that puts the economy squarely at odds with the dollar.
The Fed's mandate is to maintain dollar stability. However, they may have to decide whether to rescue a falling currency by hiking rates or to lower rates in order to stave off a recession. Which posture they take will have major ramifications for the bond, stock market and the economy.
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Thursday, March 01, 2007
Gross Analysis - How to create an even bigger mess of the US Economy / Economics / Analysis & Strategy
By: Michael_Pento
When the most esteemed market strategists espouse questionable economic theories, they should not be able to do so without being exposed to critique. Recently, two revered men of finance, Bill Gross and John Rutledge, made some pretty extraordinary comments, remarks which haven't gotten the attention they deserve.
Let's Make Nothing!
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Thursday, March 01, 2007
Bernanke May Have To Break From The Greenspan's Interest Rate Cutting Script / Interest-Rates / Analysis & Strategy
By: Brady_Willett
Although subprime blowup fears continue to make for enthralling reading, the financial markets have yet to be seriously impacted. Rather, while some repositioning away from financial stocks and into utilities is suggestive of a developing defensive trend in the marketplace, this theme has yet to really get running. For that matter, the tightness in subprime is showing little evidence of spawning widespread restrictive credit practices.
Of course, this could, and likely will , change quickly, and the situation is certainly worth monitoring as we await the ?Greenspan Recession' to start later this year.
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Wednesday, February 28, 2007
What's behind the Global Stock market Shake-out? / Stock-Markets / Analysis & Strategy
By: Gary_Dorsch
In a keynote speech on February 2nd, in the northern Italian city of Turin, Bank of Italy chief Mario Draghi, warned global stock market operators not to assume that present favorable conditions would last. “It is not realistic to expect that the current orderly market conditions will last forever, we do not know where the next crisis will come from, we must do everything to be prepared,” he said.“Market pricing does not currently incorporate the full range of potential risks. Financial market participants need to take into account in their risk analyses, the full implications of a possible reversal of the current benign conditions, including the possibility of less liquid markets,” he warned.
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Wednesday, February 28, 2007
US Inflation - The Medical Care Component of Personal Consumption Expenditure Price Index (PCE) / Economics / Analysis & Strategy
By: Paul_L_Kasriel
Among the several economic reports due for publication this week -- new home sales, existing home sales, consumer confidence measures, durable goods orders, preliminary estimate of fourth quarter real GDP, and ISM manufacturing survey results for February, construction outlays for January, and the personal income and outlays report for January-- the Fed's preferred inflation measure will garner a great deal of attention.
The core personal consumption expenditure (PCE) price index, which excludes food and energy, advanced 2.22% in December, representing a deceleration from the 2.44% peak seen in August. This improvement is important because core inflation is heading in the direction of the FOMC's comfort zone of 1%-2%. However, after the January Consumer Price Index (CPI) was reported, there were concerns about the January core PCE price index because it is largely based on the CPI.
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Wednesday, February 28, 2007
Stock Markets crash! Here's what to do / Stock-Markets / Analysis & Strategy
By: Money_and_Markets
Yesterday's market crash struck Wall Street like a bat out of hell — the Dow down 416 points, the S&P 500 off 50 points, and Nasdaq pummeled by a whopping 97 points Virtually every investment under the sun — blue chips and tech stocks ... large caps and small caps ... domestic stocks and international stocks — even gold and silver — got hit hard.
But the most dramatic event came at about 3 o'clock in the afternoon Eastern Time: Just when many Wall Street traders figured the worst was over and started packing up to go home, Dow Jones was running into a technical computer glitch. It lost track of the averages and had to catch up suddenly. Result: One moment the Dow was off 200 points; the next it was off another 200 points, and soon, down 546 points!
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Tuesday, February 27, 2007
Why there has been No US Recession / Economics / Analysis & Strategy
By: Michael_Pento
Following up on today's lackluster durable goods report, tomorrow's 4th quarter GDP report may be significantly lower than the 3.5% advanced number due to inventory and trade data revisions. The new figure will be closer to my assessment that today's economy remains anemic.
Some market pundits -- myself included -- had predicted the U.S. economy would be in recession by the second half of 2007. It now appears unlikely the economy will reach recessionary levels by the predicted timeline since a recession is defined by two consecutive quarters of negative G.D.P. growth. Despite the lower figure we're likely to see today (which could be revised down to near 2%), it is my view that the economy would have shown as being even weaker if not for two factors: the war in Iraq and increased stimulus from the Fed.
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Tuesday, February 27, 2007
US Interest Rates - The Effect of Globalisation on the Inverted Yield Curve / Interest-Rates / Analysis & Strategy
By: Hans_Wagner
The inverted yield curve has been a good predictor of a recession in our economy according to several studies. Many investors seeking to beat the market consider the inverted yield curve a good indicator of economic problems in the future. They reason that long-term investors will settle for lower yields now if they expect the growth of the economy to slow or go negative in the future. I have been concerned that the inverted yield curve was an important indicator of a recession in the U.S. that would begin later this year.
However, so far the forecast recession has yet to show itself. Could it be that the global economy is negating the impact of the U.S. inverted yield curve? Let's take a look at this idea.
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Tuesday, February 27, 2007
US Subprime Mortgages Fallout and Declining Housing Market likely to hit the Stock Market / Housing-Market / Analysis & Strategy
By: Nadeem_Walayat
The continuing fallout from subprime mortgages is starting to weigh on the Stock Market as the consequences of failures continue to ripple out into the financial and home building market sectors. Already sharp sell offs have occurred in the shares of subprime lenders such as New Century Financial Corp, falling by more than 40% in less than a week. As well as major banks such as HSBC issuing statements on the impact of defaults.
Sunday, February 25, 2007
Uranium: The New Precious Metal / Commodities / Analysis & Strategy
By: James_Finch
A record number of uranium bidders competing for a small amount of uranium drove up the price by a record dollar amount to the highest price in history. Uranium has now become a precious metal.Newly mined uranium remains ‘highly sought after' maintains Nuclear Market Review (NMR) editor Treva Klingbiel in the February 23rd issue of the weekly trade magazine, servicing the utility and nuclear fuel industry. It was no more evident than at this past week's spot auction for U.S.-mined uranium.
The record $10/pound price increase, reaching a new spot uranium record of US$85/pound, was, according to Klingbiel, “the single largest (dollar) increase recorded since prices were first published in 1968.” TradeTech posts the weekly spot uranium price, as reported in NMR, on the consulting service's website.
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Sunday, February 25, 2007
Investment flow defict New threat to the Dollar - The Mike Tyson Economy / Economics / Analysis & Strategy
By: Jim_Willie_CB
Don't look now, but a new emergent monster is growing, this one a close cousin to the trade gap. We have all been subjected to the steady deterioration in the trade gap, from gargantuan imported product sales from Asian (mostly Chinese, but also Pacific Rim) finished goods, worsened by oil imports (MidEast, Canada, and Mexico).
The source of trade deficits used to be primarily electronics from the Pacific Rim and oil from the MidEast. Now it is a cornucopia of finished products from China like furniture, housewares, furniture, garden items, and a mix of pirated products like car parts.
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Saturday, February 24, 2007
US Federal Reserve Study points to 51.9% Chance of Recession this year / Economics / Analysis & Strategy
By: John_Mauldin
What are the odds of a recession? According to a recent Fed study, they may be 51.9%. Close enough to 50-50 for government work. We analyze this study, look at a few graphs which show a major disconnect between the housing market and the US manufacturing and services sectors, and then close with some comments on yet another proposed rule change. But let's start with a few housekeeping items.
The latter half of this letter will be written primarily to my colleagues in the financial services area, and to managers, entrepreneurs, and businesses who anticipate the need to raise capital in the future. There are some proposed rule changes at the NASD that will significantly limit the ability of a registered representative to communicate with clients about private offerings, ETFs, venture capital, DPPs, and other offerings. In some cases, it will effectively prohibit communication on the items. This is not just about hedge funds. I think these rule interpretations will have the unintended consequence of the potential to severely impact capital formation in this country. This is under the radar screen of 99% of my colleagues.
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Saturday, February 24, 2007
Positive Outlook for Euro-zone and German Economic Growth / Economics / Analysis & Strategy
By: Victoria_Marklew
As generally expected, German business sentiment slipped a little further in February, with the Ifo research institute's business climate index dipping to 107.0 from 107.9 in January. As Ifo's economists pointed out, some fall was expected after the three percentage point hike in the VAT rate that took effect in January (taking it to 19%), and a slide of less than a point is hardly dramatic. Overall, the level remains well above the long-term average.
Saturday, February 24, 2007
US Housing Market Cracks Extend to Major Banks / Housing-Market / Analysis & Strategy
By: Jim_Willie_CB
Words from older European sage economists are as welcome to the mainstream financial circles as welcome as leisure suits and hot pants are to the fashion set, as eight track tape sets are to the home music systems, as old Model T Fords are to the classic car vogue (see the Chevy Powerglide).
Yet the wisdom of economist teachings from Old Europe has never lost its meaning. Almost half a century ago, Rothbard warned of booms and busts, noting the inevitability of a dissipated bubble whose occurrence is assured like night follows day. Advising against bubbles is so passé these years. Try telling a PhD Economist from a top US university of the dangers from excessive monetary inflation, the attendant risks for making asset bubbles, and (s)he will think you are crazy. On a couple of occasions, such has been my pleasure and disconcerting experience.
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Saturday, February 24, 2007
A Dangerous Central Bank Party - The World is Awash with Easy Money / Economics / Analysis & Strategy
By: Money_and_Markets
Mardi Gras 2007 just wrapped up. The revelers have gone home. The garbage is being swept up. The Big Easy won't be hosting another one of its famous parties until next year …
But the world's central bankers? They aren't putting away the party beads or the booze. Instead, they're still doling out the easy money and saying, “Laissez les bon temps rouler!” (“Let the good times roll!”)
Now, there's nothing inherently wrong with a party. But there's also a time and place for a celebration. And in a moment, I'll tell you how the parade could careen out of control.
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Saturday, February 24, 2007
Is the US Federal Reserve finally losing its Inflation Credibility as Gold Soars / Economics / Analysis & Strategy
By: Peter_Schiff
With Wednesday's data release that showed that the increase in “core” CPI in January was higher than expected, the price of gold soared by over $20 per ounce to just shy of $680 per ounce, a new nine-month high. As this is the reaction that most market watchers would have expected, it is not surprising that these movements failed to inspire much interest.
After all, gold is an inflation hedge, so any sign that inflation is worsening should be positive for gold prices. However, what is surprising is that this is one of the few recent occasions when the gold market has actually behaved logically in this regard. Could it be that some whiff of sanity has arrived on Wall Street?
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Friday, February 23, 2007
UK: BOE MPC Minutes and Data Point to One More Rate Hike / Interest-Rates / Analysis & Strategy
By: Victoria_Marklew
The minutes of the February 8 meeting of the Bank of England's Monetary Policy Committee (MPC) showed a 7-2 vote to leave rates on hold this month. The two members in favor of another hike thought that the 75bp of tightening since last August was too modest given the rise in inflation. The majority were concerned that a closely-spaced series of rate increases could lead to "excessive tightening."
However, the members seem still to be concerned about medium-term inflation risks, a concern also underlined in last week's Inflation Report (see Daily Global Commentary, February 14: " Bank of England Says One More Rate Hike Will be Necessary "). All told, the minutes, along with data releases of the past few days, point to another rate increase - but probably not until the April 5 or May 10 meeting.
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Friday, February 23, 2007
Economic Summits, China Trade War, and the Gold Bull Run / Economics / Analysis & Strategy
By: Jim_Willie_CB
Numerous international events took place within the last month. The Economic Summit was held in Davos Switzerland. It convened a large collection of world renown economists, corporate chieftains, and some financial market kingpins. The G8 Meeting of finance ministers was held in Germany. Back home, USFed Chairman Bernanke issued a grave warning to the US Congress on the shattered US financial balance sheets. My commentary on money supply explosion comes next.
Lastly, the Chinese trade disputes have taken a big step toward outright trade war and protectionism. Few see how the trade war will affect gold yet. They will soon enough. Restricted trade flow always results in higher prices. It is always accompanied by a scramble for resources in today's context. This trade war will include a massive bidding war and staggering battles to build stockpiles of all critical commodities.
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Friday, February 23, 2007
US Housing Market Crash to result in the Second Great Depression / Economics / Analysis & Strategy
By: Mike_Whitney
This week’s data on the sagging real estate market leaves no doubt that the housing bubble is quickly crashing to earth and that hard times are on the way. “The slump in home prices from the end of 2005 to the end of 2006 was the biggest year over year drop since the National Association of Realtors started keeping track in 1982.” (New York Times) The Commerce Dept announced that the construction of new homes fell in January by a whopping 14.3%. Prices fell in half of the nation’s major markets and “existing home sales declined in 40 states”. Arizona, Florida, California, and Virginia have seen precipitous drops in sales.
The Commerce Department also reported that “the number of vacant homes increased by 34% in 2006 to 2.1 million at the end of the year, nearly double the long-term vacancy rate.” (Marketwatch)
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Thursday, February 22, 2007
The New World Economy Part 2 - A Rejoinder to Mohamed El-Erian / Economics / Analysis & Strategy
By: Douglas_V_Gnazzo
This is the second article in a series of three papers, which collectively comprise the complete rejoinder to Mr. Mohamed El-Erian's article: Complex Finance and the Brave New World Economy .
The same format used in the first paper will be utilized again. The article will be broken down into paragraphs, followed by a synopsis of the main points of each paragraph, and then comments. This focus on each individual paragraph separately, facilitates an easier understanding and discussion of the complex issues involved.
Once again I would like to emphasize that this rejoinder is to what was said - not to who said it. Mr. El-Erian is a great scholar recognized and respected around the world. This is not personal, it is simply business.
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Wednesday, February 21, 2007
Housing Market Subprime Mortgages Timebomb waiting to Explode / Housing-Market / Analysis & Strategy
By: Michael_K_Dawson
Remember when a 20% down payment was expected when purchasing a house. Sometimes with stellar credit and maybe a special situation, like a first-time home buyer, you could get in with a 10% down payment. I recall a few weeks after my wife and I purchased our first home - both cars broke down.
Saving for your first home is one of the few times, from a financial perspective, that both husband and wife are clearly on the same page. Everything takes a back seat to saving for that down payment - shoe shopping, night out with the boys, everything. That's exactly why both of our cars broke down. We had neglected maintaining the cars and everything else while saving for our down payment.
Saturday, February 17, 2007
US Recession - Gold, Housing and the Inverted Yield Curve / Economics / Analysis & Strategy
By: John_Mauldin
I have often written about the high probability of a recession following an inverted yield curve (where short-term rates are higher than long-term rates), based upon research which suggests the yield curve is our most reliable indicator of future recessions.
I am often asked whether a yield curve causes a recession. The (very) short answer is no. But then what is the mechanism that makes it so reliable? Is it different this time? How can we believe that the economy has a few bumps in its future when things are just so darn good? We ponder these questions in today's letter, as well as peruse the "shocking" housing data released this morning, and look at a very interesting chart on gold.
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Saturday, February 17, 2007
Investing in the Stock Market - Signs of Trouble ? / Stock-Markets / Analysis & Strategy
By: Hans_Wagner
When investing in the stock market it is important to balancing the risks with the potential rewards, if you want to beat the market . Today, we face a world of low yields and relatively high valuations. Most of the stock markets in the developed world are near their long-term highs in terms of valuation. As many investors know and numerous studies have shown stocks offer lower than normal returns after reaching high valuations.Read full article... Read full article...