I’ve really enjoyed watching the Lakers over the past few years, but there really isn’t a contest (via Daily Infographic)
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click for larger graphic
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By the time Case Shiller drops today at 9am, I will be very busy (lounging on the beach). Expections are for the biggest drop in home prices a year.
In the meantime, you can check out this cool interactive Housing map, via Trulia. As you click around in this map, keep in mind the 4 key factors that determine the advantages of Renting vs Buying: Home Prices, Rental Prices, Mortgage Interest Rates, and RE Taxes. We can also add Personal Income and Inflation as the 2 wild cards.
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click for interactive graphic
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Previously:
Cost of Ownership: Buy vs Rent (June 2010)
NYT: The Housing Bear Case (September 2010)
Probable Outcomes by Ed Easterling.
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Crestmont Research’s Ed Easterling is a fellow traveler — a student of long term secular bull and bear markets.
If you are interested in valuation, sentiment, historical data and sound principles, Easterling is your guy. I have repeatedly referenced his first book, Unexpected Returns: Understanding Secular Stock Market Cycles, over the years as a solid explantory of how markets cycle over decades.
A combination of investment science and art, Probable Outcomes describes the common approach of irrational hope versus a more rational view of the stock market in this book. And, I am a sucker for all of the full-color charts and graphs it contains.
Reviews:
Easterling has done it again. In an investing world obsessed with short-termism, Ed reminds us that the long-term matters, and that investors can prosper – handsomely – by recognizing that valuation and long-term secular trends have an immense impact on our own long-term investment success. Swimming against the current is for heroes and idiots, not for sensible mortals.
-Rob Arnott, Chairman & Founder, Research Affiliates, LLC; Former Editor, Financial Analysts JournalAs a practitioner and a teacher of finance and economics, I am captivated with Easterling’s insights and quantification of the important and critical role of price stability in producing superior investment returns.
-Harvey Rosenblum, Executive Vice President and Director of Research, Federal Reserve Bank of Dallas; Adjunct Professor of Finance, Southern Methodist UniversityEd Easterling has hit another home run! Probable Outcomes is a brilliant follow-on to Unexpected Returns and masterfully explains, in an understandable way, the most likely directions for the stock market over the next decade. This essential resource prepares investors to succeed in volatile and challenging times. You will profit from the many valuable insights that are much more effective than hope.
-John Mauldin, Thoughts from the FrontlineProbable Outcomes makes a strong case that the stock market over the coming decade at best will deliver only average returns to buy-and-hold investors. Once again, as in his splendid earlier book, Unexpected Returns, Ed Easterling tells investors not what they would like to hear, but instead what they need to know.
-Richard Sylla, Henry Kaufman Professor of the History of Financial Institutions and Markets, NYU Stern School of Business; coauthor of A History of Interest Rates
Full chapter after the jump.
click for updated futures
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As prophesied on Sunday, my travel plans have once again caused a dislocation in the global balance of market forces. In other words, the futures are getting whacked, and it look like the day will start pretty ugly.
SPX is down about 20; Dow off over 120. Oil rocket up nealy 10% after 250 protesters were killed in Tripoli, the Libyan capital, by government forces. Witnesses described “an obscene amount of gunfire. They were strafing these people. People were running in every direction.” In addition to the Libyan army, Qaddafi deploys mercenaries to facilitate killing the citizens of Libya.
More later . . .
The S&P 500 is off to its best start of the year since 1997 and ranks 11th with respect to the highest return for the first 34 days of trading in all years from 1950-2011. This is, surprisingly, only the fourth year since the start of the new millennium where the index has had a positive return in the first 34 days of trading.
The table ranks the Top 15 best yearly starts since 1950 and shows that every year the S&P 500 has finished with a positive return, averaging 21.92 percent with a high of 31.55 percent in 1975 and 1987’s low of 2.03 percent, even including the record October crash. We found 1980 interesting , starting up 6.17 percent, then falling 10.92 percent through the end of Q1 only to rally 18.46 percent in Q4 on the election of Ronald Reagan.
There are so many uncertainties this year, especially given the recent increase in geopolitical risk, the path to year end is impossible even to guess, much less project. The table does show, however, that the average return for the Top 15 from Day 34 to the end Q1 is flat. We’re willing to bet history will at least rhyme in the next five weeks and that market momentum takes a rest to digest recent gains and price in the higher geopolitical and inflation risks. It does feel the market is, and, should be heading into to some choppy trading. Watch carefully how the market reacts after the first bounce. ( click here if table and chart are not observable)
This
Via The Chart Store, this chart shows trough to peak gains in the Bush and Obama rallies.
Discuss:
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Global Imbalances: Links to Economic and Financial Stability
Chairman Ben S. Bernanke
At the Banque de France Financial Stability Review Launch Event, Paris, France
February 18, 2011
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By facilitating the allocation of the world’s savings to the most productive uses, the free flow of capital across national borders confers substantial economic benefits, including the promotion of economic growth. That said, we have seen a number of episodes in which international capital flows have brought with them challenges for macroeconomic adjustment, financial stability, or both. Such challenges have tended to arise in two situations: first, when the “rules of the game” of the international monetary system–the policy responses that countries are expected to take to help foster a balanced global economy over time–are either poorly articulated or not observed by key countries; and second, when the financial systems of nations receiving strong capital inflows have not been up to the task of investing those inflows productively.
These issues are hardly new. In the late 1920s and early 1930s, the U.S. dollar and French franc were undervalued, with the result that both countries experienced current account surpluses and strong capital inflows. Under the unwritten but long-standing rules of the gold standard, those two countries would have been expected to allow the inflows to feed through to domestic money supplies and prices, leading to real appreciations of their currencies and, with time, to a narrowing of their external surpluses. Instead, the two nations sterilized the effects of these capital inflows on their money supplies, so that their currencies remained persistently undervalued. Under the constraints imposed by the gold standard, these policies in turn increased deflationary pressures and banking-sector strains in deficit countries such as Germany, which were losing gold and foreign deposits. Ultimately, the unwillingness of the United States and France to conduct their domestic policies by the rules of the game, together with structural vulnerabilities in financial systems and in the gold standard itself, helped destabilize the global economic and financial system and bring on the Great Depression.
The Asian financial crisis of the late 1990s illustrates a somewhat different type of risk associated with large cross-border flows of capital. During the 1990s, strong capital inflows helped support robust growth in many Asian economies. But Thailand’s devaluation in mid-1997 triggered closer scrutiny of developments in the region. Investors began to recognize that the financial systems of some Asian economies–because of institutional weaknesses, inadequate regulation, or other deficiencies–had not effectively channeled the surge of incoming funds into productive investments. As foreign investors lost confidence, capital flows into the region reversed sharply, and the credit-driven boom came to a precipitous end. The Asian crisis imposed heavy costs in terms of financial and macroeconomic instability in the affected countries. In this case, capital inflows posed a problem because of weaknesses in the financial systems and regulatory oversight in countries receiving foreign capital.
Now this looks like some complex music!
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Ken sends in this toon:
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Thanks!
"Markets can remain irrational longer than you can remain solvent." —John Maynard Keynes
After 3 quarters in a row that averaged just 1.2%, Q4 GDP grew 2.8%, a touch below expectations of 3.0% BUT Nominal GDP grew well below forecasts. Because the price deflator was up just .4% vs the estimate of 1.9%, Nominal GDP was up 3.2% vs the estimate of 4.9%. Personal Consumption rose 2.0% vs the forecast of 2.4%. Fixed Investment rose 3.3% helped by a 5.2% increase in equipment and software spending and residential construction rose by 10.9%. Trade was a slight drag on GDP growth and government spending was as well led by a 12.5% decline on national...
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