Econ70
As the Fed flooded the US economy with cash, some of it ended up in emerging markets where risks and returns are higher than here. With US rates now rising, financial markets in those countries are being badly hit. Simultaneously…
While rising long-term interest rates will hurt banks by reducing the value of their bond portfolios, that will be a one-time hit and banks are exceptionally well capitalized and will easily withstand the losses. Conversely, a widening spread between short-term…
The Friday File: Retailers expect Britons to spend $100 million toasting the arrival the Duke and Duchess of Cambridge’s first child in July. Another $40 million will be spent on party food, $207 million on commemorative memorabilia and books and…
On days like today when stocks, bonds, precious metals, commodities and emerging markets all fall, portfolio diversification, doesn’t help. Remember that. Separately, financial markets have wiped out all of May and June’s gains not because QE3 will end, but because…
With the Fed (and everyone else) forecasting improved economic conditions in the second half of ’13, it’s not surprising that the Fed again reiterated that it MAY start tapering QE3 later this year. Interestingly, the Fed has been consistently over-optimistic…
Since hitting a low of 9 million in annualized auto sales in 2/09, strong demand has propelled new-car sales to 15.3 million as of 5/13. However, sales have flat-lined of late and are barely higher than in 1/13. This is…
Despite a US Energy Information Administration report that global oil reserves are 10% higher than in 2011, due to the discovery of 345 billion barrels of shale oil, don’t expect lower pump prices. This is because unlike Alaskan oil, shale…
The Friday File: With fear of inflation finally receding, the new concern is deflation. While high unemployment keeps wage growth in check, the price for sage business advice has absolutely tanked. Last year, lunch with Warren Buffet was auctioned off…
With the Obamacare requirement that most employers offer affordable health insurance to their employees soon to become law, expect total employment to rise and hours worked/worker to fall. This is because employers will force their employees, where possible, to work…
With house prices soaring by double digits and investors buying large numbers of homes, there is suddenly talk of another housing bubble. I doubt it. Affordability is still remarkably high, credit is being extended to only the best borrowers, and…