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Investment Research Since 1978

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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...]

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...]

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...]

Still No Recovery in Housing

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March data for housing starts, building permits, and existing home sales came out this week. All three economic indicators continue to point to a housing market that has yet to enter a sustained recovery. New housing starts and building permits both ticked up in March, but failed to recover the ground given up in February. Existing home sales also ticked up in March, but remain subdued. Total existing home inventory at the end of March rose to 3.55 million homes—an 8.4 month supply at current sales rates. The median price of a single family was $160,500 in March—down 5.3% from March of last … [Read more...]

Bank Stocks Signal Trouble

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The KBW Bank stock index has a real troubling look. Bank stocks are rolling over. The bank index is down almost 10% from its February high. Bank of America, the fourth largest component in the index, is now trading below its pre-QE 2.0 price. Wasn’t the Fed’s money printing campaign supposed to inflate asset prices? Indeed it was ,and indeed it has, but if BofA’s price action is any indication of what is to come for the broader market, the Fed’s quantitative easing experiment has failed. And predictably so.  Temporary stimulus fueled stock market rallies don’t create sustainable economic … [Read more...]

What we’re Reading 4-15-11

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The Recent Surge in Global Commodity Prices – Bank of Japan Federal Reserve’s path of destruction – Marketwatch Alan J. Reynolds: Obama's Soak-the-Rich Tax Hikes Won't Work – WSJ THE MORE YOU MAKE, THE LESS YOU PAY - By Jesse Drucker … [Read more...]

Are Investors Expecting too Much From Earnings?

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Alcoa kicked off the first-quarter earnings season this week with a big thud. The aluminum producer reported strong earnings, but Alcoa shares dropped as much as 7% following the announcement. Earnings per share exceeded consensus estimates, but the top line came in below expectations. Has the two-year, 100% bull move in stocks raised investor expectations to unrealistic levels? I’m sure Jamie Dimon (the CEO of J.P. Morgan) thinks so. On Wednesday, J.P. Morgan reported first-quarter earnings of $1.28 per share compared to estimates of $1.15—that’s a huge earnings beat, but the stock is down … [Read more...]