Posts filed under “Think Tank”

Equity returns/REAL vs NOMINAL

With the possibility of inflation finally on many investor radar screens
and certainly in the context of the current era of quantitative easing,
looking at the current equity rally in terms of inflation is an
important perspective in determining what was real and what was
inflation induced. At 900 in the S&P 500, we’ve seen a 35% nominal rally off the intraday low of 666 on March 6th. Using the CRB index to measure commodity inflation, the REAL return, from that date, has been just 11.5% as on March 6th the S&P 500 bought 3.23x the CRB index and today it can buy 3.6x. There is no question that the economy has gotten less worse and considering the dramatic market declines year end ’08 thru March, a sharp rally was to be expected but the Fed’s money printing (among other central banks) is also helping to give the impression of health.

Category: MacroNotes

Meet the new regulator, Mr. Market

A new regulator has come to Washington, DC to oversee the Fed and the political class to make sure they abide by certain constraints. His name is Mr. Market (thank you legendary investor Ben Graham for the metaphor) and he is finally speaking up and has a very large presence. As with many govt actions…Read More

Category: MacroNotes

Rising Interest Rates Finally Start to Matter

Good Evening: After months of seeing equities get most of the headlines, the Treasury market has elbowed its way back into the spotlight during the past week or so. Today this attention reached a fever pitch, as yet another steep drop in long dated government bond prices finally started to impact not only the wire…Read More

Category: Markets, Think Tank

German Subprime Meltdown?? Interview With Achim Dübel

Foreign observers of Germany might be tempted to believe that the largest nation in the EU avoided the worst aspects of the crisis through a combination of prudent financial regulation and good old fashioned conservatism. But such a view is very far from the truth. In fact, Germany faces an financial crisis in its private and state sector banks that, relative to the size of that nation’s economy, could be every bit as serious as the US crisis.

Category: Think Tank

Existing Home Sales

April Existing Home Sales totaled 4.68mm annualized, 20k more than expected and up from a revised 4.55mm in March which was revised lower by 20k, so taken together it’s about in line with the consensus. The negative within the data was the months supply which rose to 10.2 from 9.6 and is now at the…Read More

Category: MacroNotes

Moody’s says we Aaa-ok

Moody’s said that the US govt’s Aaa rating is stable “even with a significant deterioration in the US govt’s debt position.” They said due to a diverse and resilient economy, strong gov’t institutions, high per capita income, and a central position in the global economy, “Moody’s expects that US economic strength will emerge after the…Read More

Category: MacroNotes

inflation

Coincident with the CRB index at its highest level since late Nov, the Baltic Dry Index rising for an 18th straight day to the highest level since early Oct and all in the context of the Fed’s policy of quantitative easing, the implied inflation rate in the 10 yr TIPS this morning is up for…Read More

Category: MacroNotes

Dollar’s slide hurting foreign investors

Dollar’s slide hurting foreign investors With the US dollar trading at a five-month low, spare a thought for non-US investors invested in US stocks and bonds. The graph below compares the performance of the US 10-year Treasury Note in US dollar terms (green line) with the same bonds from the viewpoint of a European investor…Read More

Category: Think Tank

Yesterday’s stock market celebration of the possible return of the US consumer to the world stage again after the better than expected consumer confidence data continued overnight in Asia as any maker of goods headed for US shores rose sharply. The Conference Board # was a written questionnaire that was filled out weeks ago. The…Read More

Category: MacroNotes

Confidence Rises Among Consumers of Equities

Good Evening: After a brief bout of depression last week, the bi-polar patient otherwise known as Mr. Market went a bit manic today. Helping the old gentleman during Tuesday’s session wasn’t a dosage change to his medication, but rather some uplifting news about consumer confidence. A rush into beta-heavy stocks ensued, and even some of…Read More

Category: Markets, Think Tank