Global Market Commentary, Analysis and Investments
We went to our last summer soiree last night. It took place at a neighbor’s chateau, where a large, ancient stone barn had been transformed into a dining room for 100 people.
“We’re screwed…so are you…â€� said a friend.
First, an update from Wall Street: the Dow was unable to sustain a bounce yesterday. It fell 74 points. Gold dropped $3.
[Read more...]It’s always a little tricky to know exactly what an economic recovery looks like. But it’s usually pretty easy to know what it doesn’t look like…and it doesn’t look anything like the chart below:
As we were saying yesterday, there are several schools of thought regarding the present economy.
1) We’re recovering… (Geithner, Summers, et al)
2) We’re not recovering…we’re headed into inflation (Faber, Stansberry, Casey)
3) We’re not recovering…we’re headed into hard-core deflation (Prechter, Shilling)
This week was largely spent watching the recovery fall apart. Not a dramatic collapse. No market crash yet, for example. But the important indicators are giving way.
On top of the bad news from housing and employment over the past few weeks, Richard Russell’s famous PTI indicator finally dipped into negative territory – signaling a bear market. And the Baltic Dry Index – a measure of world trade – continued to fall.
[Read more...]Here’s a thought. The G20 meeting ended with a call to reduce deficits. The Obama team, on the other hand, warned that cutting deficits might undermine a very fragile recovery.
There seems to be no understanding of what is really going on. We are in a spell of debt de-leveraging in the private sector. There is no way to make the problem disappear. The only real question is who will bear the losses. We’ve seen what happened in Japan. That’s the alternative that most economists are urging (only they claim that this time the stimulus will work…if we keep at it).
[Read more...]Gold is still getting up. Hemlines are going down. That’s all you need to know.
Gold rose toward $1,230 yesterday. Why? Reports said investors were worried about Europe.
Well…yes…Europe…and Asia…and North America…
The problem in the world economy is debt. There’s too much of it. Investors who aren’t delusional know that too much debt spells trouble. And when government adds more debt it’s not really going to make things better. It’s going to make them worse.
[Read more...]The primary trend is down…
Stocks fell again yesterday. The Dow lost 66 points.
The big shakeout was in the gold market – with a fall of $21.
It is unusual for gold to fall more (proportionately) than stocks. So, what’s the gold market trying to tell us? And why didn’t it mention it before?
[Read more...]Yesterday marked the one-year anniversary of the rally. The Dow rose a piddly 11 points. Gold sold off $1.
This rally has gone on for so long most people think it is not a rally at all, but a new bull market. Worldwide, it has taken equities up some 73%…making it one of the greatest rallies ever.
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Lengthy Recession: The Real Contribution of Modern Economics
Why don’t people borrow?
Because it’s not a liquidity problem. It’s a debt problem. A solvency problem. And it won’t go away by making more cash and credit available. Instead, all those bad decisions, bad loans, and bad investments have to be cleaned up. And that takes time. And while the economy is de-leveraging, people are becoming more cautious…more risk-averse…more modest in their expectations.
[Read more...]