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Monthly Archives: January 2011

US Housing Update

The Case-Shiller report on house prices (new + existing homes) came out this week. November was the most recent data period covered. It showed US home prices fell for the 5th month in a row. November’s prices on a national average were 3.3% above the trough set in April 2009. Odds are good we will come close to that point in February or March. […] Read the rest of this entry »

Do low interest rates justify a higher P/E?

There’s an old rule in investing that states higher price/earnings ratios (P/E for short) are justified when interest rates are very low. To this, let us say yes & no.  First, understand that at just about any time and for any reason you’ll see someone on bubblevision defending why the current price of a stock or stock market is low or at least justifiable. […] Read the rest of this entry »

Investing in Turkey

Leading emerging market economies – and Turkey may count itself in that group – have to battle opposing forces in managing their economies. Turkey is recently managing its economy via a slightly different approach to monetary policy than the BRICs.  Emerging market economies want foreign capital to help grow their economy. To do this, they offer higher interest rates than elsewhere. But if rates […] Read the rest of this entry »

2010 4Q GDP Analysis and 2011 GDP Estimate

GDP reports from the federal government are notoriously error prone and subject to wholesale revisions later. With that said, GDP reports from the Bureau of Economic Analysis is followed. The consensus expectation was for approx 3.7% growth in the final quarter of 2010. Granted, the fact that the UK fell back into economic contraction in 4Q rattled nerves this week. From independent data sources […] Read the rest of this entry »

State of the Union: Investor View

There will be no shortage of pundit comments on this week’s speech. We will focus on the impact on investing: Goal: freeze federal spending over the next 5 years ONLY on the 12% of the budget that makes up discretionary non defense spending. • This is woefully insufficient. Implementing a budget like that for the next 5 years guarantees we will be treated like […] Read the rest of this entry »

Weekly Short Economic Stories

• Chris Whalen is a widely respected analyst with an independent company that provides research on banks and the banking system. In a presentation he gave within the past two weeks, he said ” the largest US banks remain insolvent and must continue to shrink. Failure by the Obama Administration to restructure the largest banks during 2007 -2009 period only means that this process […] Read the rest of this entry »

Warning Shot in US Treasury Market

The US Treasury released data on November bond sales. China sold $11B in US Tbonds that month, leaving them with $895B of our Tbonds ($1T if you include Hong Kong’s reserves as well). Russia sold $9B, leaving them with $122B. We won’t hit the panic button yet. That was just 1 month. Apparently Caribbean banking centers (home to a lot of hedge funds) saw US Tbond positions rise […] Read the rest of this entry »

Interesting Short Stories from this week…

Here’s a fun quote from an Irish member of Parliament while addressing the European Parliament this week. This Irish Parliamentarian is (obviously) not from the the party in power (that is about to pass a brutal budget and then be wiped out in an election) ….          ” Far from being a bailout, your International Monetary Fund-EU intervention in Ireland is a mechanism to make vassals […] Read the rest of this entry »

More Technical Indicator Warnings of a top…

For the past 2 months, we’ve been tracking several technical indicators that have been displaying signals seen at market tops. More interesting observations about the US equity market were seen this week: the S&P500 had traded above its 10-day moving average every day for 30 days in a row until Wednesday this week. That is either an all-time record or very nearly. the S&P500 has gone up 7 weeks […] Read the rest of this entry »

Europe Update this week (PIIGS)

Ireland  Beware the ides of March…   This week, the Irish Prime Minister survived a leadership vote of confidence from his party. His party faces the lowest approval ratings in its history (14%) and will be trounced in a general election — now called for March 11th. Next month, Parliament will pass a budget with wholesale cuts and tax increases sure to be overturned by the party assuming power after […] Read the rest of this entry »