A bounty of housing data was released this week. Housing starts fell in February (though they were still near an unimpressive three year high), permits increased slightly, existing home sales fell, and home builders’ sentiment remained steady. In sum, despite some positive news, the housing market malaise continues. It can’t be called a comeback yet. At first blush, the cause of the housing malaise seems mystifying. The Pew Research Center says there are more young adults living with their parents than at any time since the 1950s. And our chart of the Case-Shiller Index shows that housing … [Read more...]
Archives for March 2012
VIDEO: Gas Prices Rise, But Obama’s Plan to Tap the SPR Is the Wrong Solution
"Douglas Holtz-Eakin, the former Chief Economist on President George W. Bush's Council of Economic Advisors and former head of the Congressional Budget Office, rejects the idea that the President controls gas prices, at least in the short term. But he argues that President Obama could have done a better job of about addressing the global oil supply crunch by more aggressively drilling for oil and other fossil fuels instead of focusing on alternative energy."-Henry Blodget … [Read more...]
Top 10 S&P 500 Stocks: 2012
Valuable insights on the character of a bull run in stocks can be gained by investigating the companies leading the rally. The table below lists the 10 best performing S&P 500 stocks since the October 3,2011 low. My table shows the market’s biggest winners are among the most speculative—homebuilders, distressed financials, and tech companies. What does that say about the 28% rally in the S&P 500 since the October 3 low? Speculative sentiment is the dominant force in the stock market today. Invest accordingly. … [Read more...]
A Treasured State
You want to stretch your dollars like silly putty when you’re retired. It’s the name of the game. And you want to be able to have some fun while you’re at it. One place where you can do both is Montana. SmartMoney’s “Retire Here, Not There: Montana” gives you a good starter on the state. Here’s an excerpt on Bozeman (read the whole article here): The first thing Bozeman has going for it: Its proximity to Yellowstone, only 90 miles to the South. (In sparse Montana, 90 miles is considered “down the road.”) But there are many other, more local charms. The town, which sits in the Gallatin … [Read more...]
VIDEO: James Grant Says Bond Market Is ‘Desert of Value’
March 13 (Bloomberg) -- James Grant, publisher of Grant's Interest Rate Observer, talks about Federal Reserve monetary policy, the bond market and investment strategy. Grant, speaking with Deirdre Bolton on Bloomberg Television's "Money Moves," also discusses the Chinese economy. (Source: Bloomberg) … [Read more...]
‘Subdued’ Inflation Fastest in 10 Months
The CPI report released today by the Labor Department recorded the increase in consumer price inflation at 0.4%, the fastest rate in 10 months. But on Tuesday, Chairman Ben Bernanke and the Federal Reserve referred to inflation as “subdued.” The Fed also said that “Longer-term inflation expectations have remained stable.” Despite rising inflation, the Federal Reserve is unlikely to act. The Fed’s favored inflation measure, Core CPI was 2.2% year-over-year, only slightly above the target level of 2%. But pushing headline inflation higher was an uptick in the price of energy, with gasoline … [Read more...]
What We’re Reading 3-16-12
Chinese Companies Forced to Falsify Data, Government Says, Bloomberg Watch Bernanke’s ‘Little’ Inflation Capsize U.S., Amity Shlaes, Bloomberg Why Stocks Are Riskier Than You Think, Zvi Bodie and Rachelle Taqqu, The Wall Street Journal The High Cost of the Fed's Cheap Money, Andy Laperriere, The Wall Street Journal … [Read more...]
VIDEO: Can You Trust Chinese Data?
John A. Allison: Roots of the Financial Crisis
Since the start of the financial crisis in 2007, much of the air between New York and Washington D.C. has been used up trying to define what happened, how it happened, and who is to blame. One person saw the crisis firsthand as the Chairman and CEO of BB&T, one of the nation’s top financial-holding companies, was John A. Allison. Allison has no doubt who is at fault. In a recent letter he wrote, “The regulators used fair lending laws—designed to eliminate racial discrimination in lending—and the Community Reinvestment Act to force banks to make loans to unqualified borrowers in order to … [Read more...]
The Fed’s Fiat Flood a Dud
The Fed is flooding world markets with excessive liquidity, but the turnover of money (velocity) has collapsed, indicating a frightening level of concern. Velocity today sits at 1.59, well below the average of 1.79 since 1959. Velocity is calculated by dividing nominal GDP by money supply as measured by M2. With slow GDP growth, and rapid expansion of M2 spurred on by the Federal Reserve’s loose monetary policies, the velocity formula (GDP/M2) has resulted in smaller values. Slow money turnover is a sign of an anemic economy. Today’s levels are the lowest ever recorded. … [Read more...]