Posts filed under “Investing”

Consumer Spending Slowdowns and Bear Markets

Yesterday (via Doug Kass), I noted that the Consumer had grown increasingly levered. Why is this so important? Because of the relationship between Consumer Spending slowdowns and Bear Markets:

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Bear markets begin when growth in real consumer spending (PCE) peaks and begins to slow

click for larger graphic

W0804_1

Source: Joseph H. Ellis, Ahead of the Curve

Ellis notes: 

The relationship between economic slowdowns (led by downtrends in year-over-year consumer spending) and bear markets (vertical yellow bars) is remarkably consistent, though not infallible, over many cycles. Most bear markets begin (see circles) when the year-over-year rate of growth in consumer spending is peaking, and investor and general business optimism are at their highest! Considerable courage is required to reduce investments at such times.

Category: Consumer Spending, Investing, Markets

Sourcing the Greenspan Chatter

This is the article that the Greenspan quote came from that popped the market today; I don’t know how accurate it is (holographic image?) but

Gold price riding high on fear of terrorism, says Greenspan
Leo Lewis, Tokyo
February 09, 2006
http://tinyurl.com/98gdp

Excerpt:

"ALAN Greenspan, who stepped
down last week as chairman of the US Federal Reserve after 18 1/2 years, has
blamed the threat of terrorism for the high gold price, in his first private
sector speech since being let off the leash of officialdom.

According to
members of his audience of international investors – watching a holographic
image in Tokyo as he spoke in New York – Greenspan said the high cost of gold
did not reflect inflation or the strength of commodities, but rather a fear
among investors of a major geopolitical conflict. There were people who believed
that a nuclear weapon could be detonated within five years, the former American
central bank supremo said.

The low probability of such an event occurring would not necessarily avert a
spike in the gold price, he added.

Greenspan went on to discuss a range of topics, including the problems
created by a lack of investment in refining capacity by the oil industry. He
said this failure by the oil majors meant that the era of cheap energy was
almost surely over.

The former Fed chairman is also said to have indulged in a moment of
self-criticism over the central bank’s failure to prevent the market bubble in
the late 1990s.

That may explain Gold’s $20 whackage yesterday, but what about all the rest of the metals and commodities?

Also, if you missed this, you MUST read it:

GREENSPAN SENDS MIXED SIGNALS IN FIRST DAY AT HOME
Former Fed Chief’s Inscrutable Statements Baffle Wife
http://www.borowitzreport.com/archive_rpt.asp?rec=1307&srch=

Its a hoot!

and on the chance the article disappears, I’ll archive it after the jump . . .

Read More

Category: Federal Reserve, Inflation, Investing

The Risk to Equities from Rising Rates

Category: Federal Reserve, Fixed Income/Interest Rates, Investing

It’s (Still) a Small (Cap) World

Category: Investing, Markets

Top Ticking Real Estate is Different Than Stocks

Category: Investing, Markets, Psychology, Real Estate, Trading

Bulls Looking for a Cinderella Scenario

Category: Economy, Investing, Markets, Technical Analysis

The Power of Compounding

Category: Investing

4th Year a Charm? A Look at Oversimplified Predictions

Category: Apprenticed Investor, Investing, Markets

The Bull’s Sheet

Category: Investing, Markets

New Column: CULT OF THE BEAR, part III

Category: Investing, Markets