Commentary: 10-part test: rational investing in irrational markets
By Paul B. Farrell, MarketWatch
New record? Yes. Dow 14,165, “almost there” says Barron’s in its latest Big Money poll. Still, hedge your bets: “After three years of handsome returns for U.S. stocks,” optimism about 2013 is “waning as the list of things to worry about grows longer.”
The big worries: “Corporate earnings growth is slowing, there’s the threat of war in the [...]
ANAHEIM, CALIF. (CNNMoney) — After four straight months of declines, consumer price inflation has finally edged up in China.
China’s annual inflation rate rose 2.0% in August, the government’s National Bureau of Statistics reported Sunday, up from 1.8% in July — a two-and-a-half year low.
Food prices, which account for more than a third of the inflation
calculation, rose 3.4% during the month.
Household finances in China are especially susceptible to fluctuations in food [...]
By Craig Stephen
HONG KONG (MarketWatch) — China may have reassured investors it has avoided a collapse in growth, but corporate profits and prices are increasingly taking the strain.
There was some relief as GDP growth came in at 7.6% in the second quarter, but the economy is showing new signs of falling into deflation. Some analysts argue China will now need much more aggressive interest-rate cuts.
In April, [...]
At this point, pretty much all of the big econ data out of Europe (especially ex-Germany) is just totally horrible.
Here are some bad datapoints we’ve seen this morning.
In other news, #Italy construction -20% y/y, -9.9% m/m – ANSA
18 Apr 12
Euro area construction output plunged -7.1% on a monthly basis in Feb, equates to -12.9% drop on the year #eurozone
18 Apr 12
Spanish bank bad loans up to 8.2% in Feb – [...]
This is Jim O’Neill in about the most pessimistic light that his genetic
makeup, not to mention GSAM employment contract, will allow him:
What Was the Most Important Thing This Week?
So once again, what a week. To most people, there has only been one thing that has mattered, Italy. I have been conducting a small poll throughout the week as I went about my usual crazy schedule. Since Wednesday, at all the [...]
Unexpectedly, the Bank of England has just announced 75 billion pounds of more QE.
The pound is getting crushed, not surprisingly, while other “risk” assets are rising.
The full announcement is here.
UPDATE: The European Central Bank did not follow suit, keeping rates unchanged.
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to increase [...]
Update: CDS now over 200 bps, or over 7 bps since this artice was posted.
This is an emergency announcement for bubble watchers: China CDS has soared to 194.5 bps, +14.5 in the past few hours (a trend first noted here about a week earlier), the biggest relative mover in the sovereign realm, which has just hit the widest it has been since March 2009. Ironically the incremental [...]
Tom McClellan, McClellan Market Report
I’ll bet you did not know that housing makes up 42% of the Consumer Price Index (CPI). All the rest of it, food, energy, clothing, recreation, education, transportation, toys, cosmetics, etc. makes up the other 58%. So whatever housing prices are doing has a big effect on the headline CPI number.
The softness of housing prices continues to artificially suppress the growth of [...]
Asia Policy Watch: Another 50-bp RRR hike by the People’s Bank of China
The People’s Bank of China (PBOC) announced today that the reserve requirement ratio (RRR) will be raised by 50 bp, to be effective June 20. After this hike, the official RRR for large banks will be 21.5% and 19.5% for small and medium banks. However, given the usage of the Dynamic Differentiated RRR, [...]
“They were all on the verge of jacking up their prices,” he said. Price increases are not always seen as bad though. When companies have pricing power, it often means there is some traction in the economy, but it’s a fine balance.
The threat of inflation is even more worrisome now that oil has crossed above $105 per barrel and looks set to stay high due [...]
It seems at least UK retailers have reached their margin breaking point and have no choice but to hike end prices at this point. From Goldman: “CPI inflation rose from 4.0%yoy to 4.4%yoy in February (vs. Cons. and GS: 4.2%). This is the highest rate of inflation since 2008 and was driven by a sharp increase in clothing price inflation (from 1.3%yoy to 2.8%yoy). [...]
We were wondering how long the Goldman economic koolaid team would continue living in a pretend “priced to perfection” reality. The answer is just 2 under months. After ignoring the topic of surging food prices, head economist Andrew Tilton finally decides to discuss the issue (following 5 countries with violent riots demanding to learn much more about the issue). Not surprisingly the conclusion is [...]
One of the most fascinating aspects of the current debate about monetary policy is the belief that changes in the money stock are tightly related either to GDP growth or inflation at all. Look at the historical data, and you will find no evidence of it. Simply put, monetary policy is far less effective in affecting real (or even nominal) economic activity than investors seem [...]
Even though every libertarian bone in my body recoils at the thought, the USA must also implementÂ E-Verify on a national level, made compulsory through IRS, OSHA, and other Federal regulators, regressive penalization upon employers, and massive increases in funding and manpower at the ICE. Â AND MANDATORY LOCAL STATE AND COUNTY LEO ENROLLMENT IN THE 287(g) PROGRAM…. remove all Federal funding of any municipality that [...]
Anyone with any savings are getting near to zero interest and prices even by CPI inflation are rising 3.4%, with RPI inflation around 5.3%, which is the one the affects people the most, especially low earners and retired, combined with wage cuts and wage freezes in many companies and also government and local government jobs. Increases in VAT will also push inflation up higher in January as it affects not [...]
Scared that 9% inflation might return? ItÃ¢â‚¬â„¢s already here. The statisticians are just fiddling the numbers
By Phil Green
The Bank of Canada declares on its website, Ã¢â‚¬Å“One indication of the success of CanadaÃ¢â‚¬â„¢s monetary policy is that inflation Ã¢â‚¬â€ the rate of change of consumer prices as reflected in the consumer price index (CPI) Ã¢â‚¬â€ is much less newsworthy today than it was during the 1970s, when it was often a [...]
Yes, we hit 11,000. Propaganda. Yes, we’ll quietly sneak past 11,722 (Dow’s 2000 peak). Yes, we’ll happily climb to 14,164 (Dow’s 2007 peak). Maybe. But you’re being conned: Even a new record of 14,165 barely equals CPI inflation the past 10 years.
Get it? Wall Street’s lost more than 20% of your money the past decade. Now they’re blowing a new bubble, filled with more toxic costly hot air.
The manager, who lives in my neighborhood (donÃ¢â‚¬â„¢t know her personally though), asked me how much my house was worth. I told her $2,500,000.
She said Ã¢â‚¬Å“That canÃ¢â‚¬â„¢t be. I live in that neighborhood and I know the houses are going for around $250,000.Ã¢â‚¬Â
I said Ã¢â‚¬Å“the value based on Ã¢â‚¬Å“Mark-to-WETFISÃ¢â‚¬Â at which point she inquired Ã¢â‚¬Å“What is Mark-to-WETFIS?Ã¢â‚¬Â
I said Ã¢â‚¬Å“Mark-to-ModelÃ¢â‚¬Â is a sophisticated financial model that is used to estimate value. [...]