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Investment Research Since 1978

Archives for April 2011

What we’re Reading 4-29-11

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Heard: Counting the Cost of China's One-Child Policy- WSJ For Lean Factories, No Buffer- WSJ Small Party Gains Clout in Canada- WSJ Does Unreal GDP Drive Our Policy Choices- Fundamental Index Newsletter April 2011 … [Read more...]

The Bernanke Show

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The Federal Reserve made history this week by holding its first-ever post-meeting news conference. Not surprisingly, it was an anticlimactic event. Chairman Bernanke was well prepared, which can’t be said of the journalists who were present. For the first time in 98 years, the press was given the opportunity to question a sitting Federal Reserve chairman about monetary policy. Instead of asking hard-hitting questions, the press lobbed softballs at Bernanke. It was a disappointment. There wasn’t much news that actually came out of the conference. We did learn that the Fed’s “extended period” … [Read more...]

Dow in Dollars and Gold

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This week the Dow Jones Industrial Average surged to 12,700, about where it was three years ago. You’re back to even, right? Not really. Over the same period Gold has risen 68%. It’s true the Dow in dollar terms is about the same over the last three years but when comparing it to the Dow in terms of gold — or real purchasing power — it’s another story. Based on this chart it would appear the Fed is a little late in protecting your dollar, wouldn’t you say? … [Read more...]

Home Prices Back at Recession Lows

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The February Case-Shiller home price indices were released today. The 20-city composite fell 1.1% for the month and is down 3.3% over the last twelve months. Home prices are now back at their April 2009 lows. The average home price is no higher than it was in 2003—that’s 8 years without a gain in most Americans’ largest investment. In inflation adjusted terms, home prices are no higher than they were in 2000. Since the Case-Shiller 20-city composite peaked in July of 2006, the worst performing markets are Last Vegas (-57%), Phoenix (-54%), Miami (-50%), and Tampa (-45%). Those markets that … [Read more...]

Low Fliers

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The airline industry has predictably been hit hard by recently elevated oil prices. AMR and Delta Air, along with jet leasing company Air Lease all hit 52 week lows last week. Jet fuel alone could represent 40% of airlines’ operating costs when oil prices are above $100/barrel. Jet fuel kerosene closed at a price of $3.3067/gallon last Thursday. According to airline industry group, IATA, sustained high fuel prices will drive a decline in airline industry profits of nearly 46% in 2011. IATA reports that “In this economic environment business travel and air freight demand will be more robust … [Read more...]

The Raging Bull Market in Silver

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Silver hit a new all-time high this morning. Silver has risen over 144% since August 31. Why are we measuring from August 31? The end of August is when the esteemed Mr. Bernanke signaled that the Federal Reserve would print another $600 billion in Federal Reserve Notes. The money-printing campaign ignited a stampede into hard assets. Silver has been the big winner among the precious metals. Silver tends to be a more speculative metal than gold. The silver market is small and easily influenced by speculative capital. In 2010, total silver demand was 1.05 billion ounces or $21 billion dollars at … [Read more...]

Dollar Crashes to Record Low

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Scott Pelley: “You have what degree of confidence in your ability to control [inflation]?” Ben Bernanke: “100%” – 60 Minutes 12/5/2010 The U.S. dollar took another beating this week. The greenback fell 1% vis-à-vis the euro, 1.1% against the Swiss franc, and 1.7% against the Australian dollar. The Federal Reserve’s continued ultraloose monetary policy in the face of both emerging global inflation threats and a more hawkish tone from almost all of the world’s other major central banks has contributed to the slide.  On an inflation-adjusted basis, the broad trade-weighted dollar index is … [Read more...]