Posts Tagged ‘Graphsandlaughs’
Vicious Volatility
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 participants are unconvinced that the economy can withstand higher interest rates without slowing. And that…
Read MoreFractious Fed
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 when it comes to forecasting. Thus, I still think tapering commences no earlier than November.…
Read MoreCars in Neutral
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 in part why manufacturing growth is weakening. Yet automakers are cranking out more cars than…
Read MorePump it Up
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 oil comes from hundreds of small wells, with high production costs. If prices fall, pumping…
Read MoreDarling Deflation!
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 for a record $3.5 million; this year, just $1,000,100, a stunning 71.4% decline! At that…
Read MoreWorkless Policy
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 less than 30 hours/week. But employers will have to compensate by hiring more workers to…
Read MoreHot Houses
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 housing inventory, which is exceptionally low, has probably hit bottom and will now rise and…
Read MoreMaking Bank
The key problem holding Europe back isn’t high interest rates, it’s the weak condition of their banks and thus their unwillingness to lend. Exacerbating the problem is that in Europe banks are the basically the only source for money and as a result, they hold 80% of financial assets. Here, by contrast, banks hold just…
Read MorePolitics and Pipelines
In an upset, the British Columbia Liberal Party narrowly won re-election over the left-leaning New Democratic Party. Importantly, the biggest plank in the Liberal’s platform was backing pipelines to transport oil and gas from Alberta through BC to the Pacific coast, as well as the building of tanker terminals. Now, since oil from the tar-sands…
Read MoreDisappearing Inflation
Adding to the low inflation environment we’re in, is Japan’s central-bank bond buying. By reducing the value of the Yen by about 20% in just a few months, it has made buying Japanese cars and other Japanese goods cheaper. And that puts downward pressure on prices of substitute goods. For example, to hold domestic market…
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