Well… Friday I took off and I guess the currency traders did too, for the bloodshed in the currency and precious metals on Friday was akin to Custerâ€™s Last Stand at Little Bighorn! I checked in late in the day, and had to turn the screen off, I couldnâ€™t bear to watch it! Iâ€™ve always told you that those kinds of days can be very volatile with wild swings in prices due to the low volume and not everyone being on the trading desks… Well, Friday was one of those days… The selling began when there was discussion that, while Ireland looked as if it could get their aid package/bailout, Portugal or Spain could be next in line… And then the you-know-what hit the fan, and before you could say pass the stuffing one more time, the selling begot more selling…[Read more...]
Want to know how to make money in this economy? You do it by selling things to markets that are growing. Exporting, in other words. Chinaâ€™s growing. Indiaâ€™s growing. Brazil is growing. Dozens of other countries are growing. Sales in the US arenâ€™t likely to go up. But sales to China? Sales to Brazil? Thatâ€™s where the money is.[Read more...]
Welcome to the Recovery!
Stocks rose 44 points on the Dow yesterday. Oil stuck at $82. Gold rose $8. No clear trend on Wall Street.
â€œWelcome to the recovery,â€� says the headline in The New York Times.
What is this? Some kind of joke? No, itâ€™s Americaâ€™s Secretary of the Treasury, Mr. Timothy Geithner…[Read more...]
Not much action in the markets yesterday. The Dow barely budged, but still ended the day in positive territory â€“ the 7th day in a row of gains. Gold fell $6.
Why? Because they are trapped. After 12 years without a real gain, they canâ€™t afford to miss a major rally. So, theyâ€™re inclined to take chances. But is this rally worth betting on?[Read more...]
The currencies are in rally mode again this morning, after a strong, but not as strong GDP report from China last night. Chinese second quarter GDP printed at 10.3%, which is quite a drop from the 11.9% they printed in the first quarter of this year… But, Iâ€™ve got two things to say about this…[Read more...]
When Gen. Cornwallis surrendered to Gen. Washington after the Battle of Yorktown, the British band supposedly struck up the tune â€œThe World Turned Upside Down.â€� After all, such an outcome would have been unthinkable at the start of the American Revolution.
That is in the nature of things, however. No one stays on top forever. Only recently, the mighty US consumer â€“ long the dominant force in world trade â€“ has lost its top seed. There is a brave new world emerging, and it has a brave new consumer. This time, itâ€™s Americans that might want to strike up that old ballad.[Read more...]
In the sushi again…just like we said!
The US stock market managed a weak rally yesterday. The Dow rose 56 points. Gold fell, closing the day below $1,200.
This morning, stocks are generally going down again all over the world.
Why does everything seem to be going down? Because itâ€™s a Great Correction, what else?[Read more...]
Time alone, yes time will tell
You think youâ€™re in Heaven but youâ€™re really in hell
â€“ Bob Marley
Yes, dear reader, time alone will tell.
Are we really in the heaven of a recovery…or the hell of a Great Correction?
Well, actually, we think we know the answer already. Itâ€™s a Great Correction. Thatâ€™s what we thought when it began in â€™07. Everything that has happened since merely confirms it.[Read more...]
We’ve opened earnings season with a market reaction more erratic than usual. Some stocks got pounded after missing earnings estimates by a hair. Other stocks drifted upward, despite nosebleed valuations and unimpressive earnings.
Banks are making out like bandits…at least on paper. They simply post whatever earnings they feel like reporting, because loans and securities no longer have to be marked to market. So why not mark down bad loans at a glacial pace? Doesn’t matter that they might be in non-performing status and aren’t producing cash flow. Some banks have even lowered their credit-loss provisions because they feel they’ve adequately reserved for what will be the biggest credit loss cycle in history. Such banks may surprise to the downside next quarter if they re-accelerate their provisioning.[Read more...]
Since 1946, at least in the US, the skies got a little bluer every day. Consumer spending increased nearly every year. At first, consumers spent what they earned. And then came the wonder years…when they spent more and more money they hadn’t earned yet.
Then, in the 20 years leading up to 2007, incomes scarcely rose. But standards of living went up anyway. How was it possible? Easy. Instead of saving 8% of their incomes, as they had for the previous 5 decades, they spent the money. The savings rate fell to near zero. Debt increased. Of course, you can only take a thing like that so far. In this case, the end of the credit expansion came three years ago. All of a sudden consumers were faced with a grim prospect. They could no longer spend money they didn’t have. Now they had to NOT spend money they DID have. It was pay back time…time to return the money they had borrowed during those carefree years.[Read more...]