Posts filed under “Think Tank”
On the heels of higher than expected earnings from Alcoa, a much better than expected jobs report in Australia helped to carry Asian stocks higher and Europe followed. Australia unexpectedly created 40.6k jobs vs a forecast of a drop of 10k and the news definitely substantiates the decision earlier in the week by the RBA to raise rates. The Australian $ is at a 14 month vs the US$, the dollar index is at a fresh one year low and gold is at another record high in response. The BoE left rates unchanged and said they remain on course with their previously announced asset purchases. The ECB also left rates unchanged and at 8:30am we’ll hear from Trichet on his thoughts of what and when their next move might be. Jobless Claims are expected to total 540k, down 11k from last week. Wholesale inventories are also out. The Treasury auctions off the 30 yr bond this afternoon. Sept retail comps look better than expected.
Consumer Credit outstanding on a seasonally adjusted basis in August fell by $12b, $2b more than expected but July didn’t fall as much as initially reported by $2.6b. It’s the 10th month in the past 11 that has seen declines. Revolving credit (mostly credit cards) fell by $9.9b and nonrevolving fell by $2.1b, a sharp…Read More
Bob Lefsetz is a music industry observer, and publisher of the Lefsetz letter: ~~~ I rented a Hyundai. They pulled up this eggplant colored piece of shit, with the Coke-bottle flairs over the rear wheels, and I winced. A Hyundai? Wasn’t there anything else? This was it. We’d already waited in line for twenty minutes…Read More
Warren Mosler, economist, perturbed by the misunderstanding of monetary policy by the current and past administrations, is running for President in 2012. He has been speaking at the Tea Parties, explaining to taxpayers that Washington is either at best ignorant of economic policy or at worst deceptive. ~~~~ Federal Reserve Chairman, Ben Bernanke, has indicated…Read More
Category: Think Tank
With the RBA raising interest rates (because the need for emergency low rates has ended in their opinion), the US$ under major pressure and gold rallying to record highs, the Fed’s credibility is on the line in terms of how easy they are and for how long that will be. Last night non voting Fed…Read More
Today’s Fusionomics report on Gold: ~~~ Gold jumped to above $1039 on dollar weakness, a Bank of America supportive report and strong Indian jeweller demand. That’s above the previous record intra-day high of $1034, hit on 17th March 2008. Indeed, factors that could still drive the gold price higher: 1. An increase in inflation fears,…Read More
> Citigroup and BAC jump on Friday afternoon; JPM and then the S&P 500 followed: > > Stocks tanked on Friday with the ugly employment report. But stocks rebounded, led by a big rally in major banks stocks. Yesterday Goldie touted the big bank stocks. Did you get a Friday afternoon call? The S&P 500…Read More
Lakshman Achuthan is co-founder and managing director of the Economic Cycle Research Institute (ECRI), an independent organization focused on business cycle analysis and forecasting in the tradition established by ECRI’s co-founder, Geoffrey H. Moore. ECRI maintains business cycle chronologies for 20 countries around the world other than the U.S. Lakshman is the managing editor of ECRI’s forecasting publications and regularly participates in a wide range of public economic discussions.
He is a member of Time magazine’s board of economists, the New York City Economic Advisory Panel and serves as trustee on a number of non-profit boards. Lakshman is the co-author of Beating the Business Cycle: How to Predict and Profit from Turning Points in the Economy.
For decades, the prevailing wisdom held that the way to sleep at night was to buy and hold stocks for the long term while ignoring market gyrations. But investors who had implicit faith in this philosophy of long-term investment had a rude awakening during the Great Recession.
Even the remarkable rally from the March 2009 market low has not repaired all the damage to their investment portfolios. In despair, many have concluded that the investment climate is just too uncertain to trust their hard-earned dollars to the vagaries of the stock market. That is a great pity, because managing the risk to a stock portfolio is not as hard as most believe.
The simple fact is that the worst bear markets are normally associated with recessions. Therefore, if possible, you should sell your stocks in anticipation of a recession, and buy stocks ahead of a recovery.
Fortunately, good leading indexes are designed to flag recessions and recoveries before they arrive. (See our comments from April of this year). Not all leading indexes are created equal, but the best of them can help avert much of the damage that recessions wreak on stock portfolios. ECRI’s leading indexes are a case in point.
We can put into perspective the asset inflation we are seeing in many different asset classes that has been achieved in part due to a depreciating US$ by analyzing the returns in the S&P 500 and DJIA for 2009 in terms of gold (real money as opposed to fiat). This highlights again the nominal gains…Read More