Industrial production contracted again last month. That makes 10 out of the last 12 months down. The industrial economy is now solidly in recession territory. … [Read more...]
Worthy Reads: Gold Going to $1,300?
Why Gold Could go to $1,300 by Year-end (MarketWatch) Yup, putting the professors in charge of the economy was a brilliant idea see Negative Rates are Lethal, The Bomb Ticking Inside Today's Bond Market, Where Home Buyers are Paid to Borrow. Obama Finally Finds Common Ground: America's Hatred for Cable Set Top Boxes! (NYTimes) China Reverts to Old Playbook to Steady Economy for Now (Bloomberg) Hedge Fund Hotel Collapses (WSJ) The Wall Street I Have Known (WSJ) Video: Fed Should Do Less of What They Do (Bloomberg) … [Read more...]
What’s Driving Equity Markets?
In case you needed more evidence that the Fed is playing an outsize role in equity markets, I present to you the following chart. This shows the relative performance of banks and utilities versus an interest rate expectations proxy (bottom pane). When rate expectations go up, utilities fall, and banks rise. When rate expectations go down, utilities soar, and banks fall. … [Read more...]
Worthy Reads: Misguided Mutual Fund Tax Policy
Quotable: "The United States is one of only four markets among the 27 covered by Morningstar that taxes realized internal gains in a fund annually, rather than when the investor actually sells the fund. This short-sighted policy imposes unneeded complexity and costs on investors, lessens retirement security, and tilts the marketplace in unanticipated ways. At the same time, it provides little to no long-term benefit to the tax coffers. It simply exchanges richer future sums for more immediate, but smaller gains today. This inability to grasp the benefits of deferred gratification has, sadly, … [Read more...]
Transportation Stocks Offer No Hope
The Dow Transport stocks are up big today, partly on news that China’s economy isn’t headed into the tank. The source for that relieving news comes via the Chinese government’s famously accurate statistics bureau which reported a surge in exports in March. Despite the jump in transport stocks today, the medium-term trend of the Transports to the industrials remains down. Transportation stocks tend to be a leading indicator of U.S. growth. If growth was picking up, we would hope to see confirmation in the relative performance of the transports to the industrials. We don’t, leaving one to … [Read more...]
Is Housing in Another Bubble?
Housing prices relative to income are moving back toward bubble highs. In the case of new homes, the ratio exceeds its prior peak. Existing home sales are not there yet, but fast approaching. Easy money, as always, the fuel feeding the fire. … [Read more...]
Worthy Reads: The Hottest Housing Markets of the Future
The Hottest Housing Markets of the Future (Money) Sanders Takes Aim at U.S. Shale (ABC News) Oil Price Remedy Finally Starting to Work (WSJ) Mom-and-Pop Investors Wiped out by China's Shadow Banks (WSJ) Despite Massive Subsidies, U.S. Importing More Corn (WSJ) … [Read more...]
S&P 500 Now and Then
With S&P operating earnings up about 10% from their June 2007 levels and prices up more than 35%, investors are either A.) counting on a powerful profits recovery or B.) betting on many more years of ultra-low interest rates to justify today's prices. … [Read more...]
Worthy Reads: How the Junk Bond Bubble Will Burst
How the Junk Bubble Bubble Will Burst (Bloomberg) Dividends better than Buybacks (Bloomberg) Central Banks Running Low on Firepower (WSJ) M&A Crackdown Limiting Corporate Bond Supply (Financial Times) Why Bashing Free Trade is Paying Off (Fortune) New Competition for Amazon Cloud Services (Fortune) … [Read more...]
Worthy Reads: Why Interest Rates Must Rise
Why Interest Rates Must Rise (Barron's) The Ugliest Earnings Season since 2009 (Marketwatch) Will Politics Stop the Yen Rise? (WSJ) Mainstream Economists Start to See Problems with Negative Rates (Bloomberg) OECD Says Global Growth Slowing (Fortune) … [Read more...]
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