I had just gotten home from arguing with the in-laws about how they were idiots for not buying gold instead of those stupid stocks and mutual funds, and their laughter was still ringing distastefully in my ears when Eric Fry here at The Daily Reckoning put up a chart of the P/E ratio of the S&P500 over the last 30 years since 1981.
[Read more...]China Reduces Treasury Holdings
August 17, 2010 By Leave a Comment
Front and center today, the TIC flows data from June was very interesting yesterday… Before we get into this, let me explain what I’m talking about for the new “kidsâ€� in class… TIC stands for Treasury International Capital, and it’s just a fancy way of saying that someone is tracking the net security purchases… Why is this important? Well, security purchases by foreigners is how the US finances its ever growing deficit. For example, the trade deficit and foreign direct investment makes up the current account… But just to keep this simple, the trade deficit in June was $49.9 billion… The net security purchases to finance that deficit in June was… $44.4 billion…
[Read more...]Digesting the Importance of Chinese Gold Investing
August 11, 2010 By Leave a Comment
Naturally, I started having pleasant daydreams about being rich, rich, rich after the Chinese government surprised me by announcing that it would finance the buying of foreign gold mines, and ordered their banks to set up big distributed systems for buying and selling gold at the retail and whole levels and all kinds of stuff like that. Wow!
[Read more...]FOMC Puts $2 Trillion Floor On the Balance Sheet
August 11, 2010 By Leave a Comment
The dollar is flying high this morning, as the knee-jerk reaction to the FOMC announcement yesterday didn’t last long. Let me explain… The FOMC statement was full of things that could be taken two different ways, but the first way it was taken was that the cartel would exit its reversal plans and implement a form of quantitative easing (QE)… I call it QE Light… Less filling…
[Read more...]Greenspan Believes in a Modest Recovery
August 2, 2010 By Leave a Comment
Chuck is headed down to Springfield with his family for their annual summer camping adventure, so he handed off the responsibilities of the Pfennig to me. But as usual, Chuck left me a good bit of information before heading out the door. Here it is:
Right after I hit “sendâ€� on Friday, and told you that the euro (EUR) had sold off 1-cent, and drug the other currencies (except yen (JPY) and francs (CHF)) with it… The euro turned around and headed north! I felt as though I had sent out some bad information! But there’s always a time to cut off, and when I did, the selling was going on…
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Mixed US Data Keeps the Dollar in a Tight Range
Chuck headed on a multi stop cross-country trek to get out to San Francisco today, so he left the Pfennig to me. I think he said he had to fly through Dallas to get over to San Francisco; just one of the joys of no longer being a ‘hub’ airport.
There was a plethora of data releases here in the US yesterday, but the numbers offset each other keeping the markets fairly stable. Surprisingly strong industrial production data was offset by weak housing starts. Other data showed that wholesale costs in the US increased in July for the first time in four months, throwing cold water on those warning of deflation. Commodity prices were the main driver of the increases of 4.2% versus last year. The core price index (ex food and energy) was still up 1.5%, slightly higher than economists’ projections. The data will quiet those who are warning about falling prices and will likely keep the boys and girls over at the FOMC on a “steady as she goes� course.
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