Global Market Commentary, Analysis and Investments
“Barakalypse Now,” the Drudge Report declared yesterday, in reference to the plummeting stock market…and Barack Obama’s responsibility for it.
The headline is not entirely fair, of course. Barack Obama is not solely responsible for the nation’s skyrocketing federal debt, moribund economy or tumbling stock market. But he does have the best seat in the house from which to watch the carnage unfold.
[Read more...]Forget the government nonsense about the U.S. debt ceiling “deal.” All the posturing, scolding and cajoling ignored an important point.
The fact is, even with the President’s and Congress’ agreement to increase the government’s borrowing limit, America is still in deep financial trouble. And this reality will affect investors much more than they expect.
[Read more...]The European financial markets are unraveling faster than a Donald Trump presidential campaign. Most of the stock markets in the Old World tumbled 2% to 3% yesterday, as bond yields soared. The 151-point selloff of Dow Jones Industrial Average seemed like nothing by comparison.
The euro fell to its lowest level since May, the Italian stock market fell to its lowest level since 2009 and Spanish bond yields jumped to their highest level since 1997. This small sampling of distress in the European financial markets would suggest that a credit crisis is beginning, not ending.
[Read more...]The currencies tried to mount a mini-recovery from Friday’s bloodletting, all day, with some success, but not a whole lot… Then overnight, the risk dial was turned to “ON”, as China reported that not only Retail Sales were strong (see more signs of domestic demand), but that Industrial Production was also strong… You know, it seems about every time the “Chicken Littles” come out of the woodwork to tell anyone that will listen that global growth is going to falter, China prints an economic report that refutes that claim by the Chicken Littles, and the risk meter is turned to “ON” once again.
[Read more...]As we go to the cyber presses this morning, the global equity markets are wobbling a bit. The Dow Jones Industrial Average is down 130 points – its biggest drop in three weeks. Commodities, likewise, are adding to yesterday’s losses. The CRB Index of commodity prices is down more than 3% during the last 24 hours, led by a steep 7% drop in the price of crude oil. The bond market, on the other hand, is enjoying the fleeting popularity of “flight to safety” buying.
[Read more...]Currency investors started to move back out of their ‘safe havens’ yesterday with most of the currencies moving higher versus the US dollar. The Japanese yen (JPY) was the biggest mover, setting a post-World War II high as money was repatriated back into the country. The biggest losers were the other side of the carry trades, the New Zealand dollar (NZD) and Australian dollar (AUD). The kiwi was down over 1%, and the Aussie dollar was down just .2% versus the US dollar. Things are still a bit dicey in Japan, and it looks as if at least one of the damaged reactors is going to meltdown. The Japanese are doing everything they can to cool the reactor complex, but radiation levels continue to hamper their efforts.
[Read more...]Charts from contraryinvestor.com show that, as of right now, there is going to be almost $1.8 trillion in US Treasury debt maturing this year, and all of it will need to be “rolled over” by issuing new debt.
Perhaps it is also instructive that they also note that “Just shy of 50% of UST debt ‘rolls’ within three years.”
[Read more...]US bonds fell yesterday. The feds borrowed more. The deficit for January was nearly $50 billion. The record for January was hit two years ago $63 billion.
This puts the US on track for a record deficit of $1.5 trillion.
Wait a minute. This is the 5th year after the crisis began. Youd think federal finances would be getting back to normal. And normal means deficits of 2% or 3%, not 10%.
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Dividends Are Sexier Than You Think
Last month, the dividend yields on American AAA corporations moved above the yield on 30-year Treasury bonds! That had never happened before.
Even after last week’s stock market rally (which pushed dividend yields lower), the stocks of America’s four AAA companies still yield about 3%, on average, which is not quite as high as the yield on 30-year Treasury bonds, but still much higher than the yield on every Treasury bond of 24 years or less.
[Read more...]