A year ago, Greece narrowly avoided bankruptcy with a $156 billion bailout from the EU and IMF. The funds would be paid in various tranches as certain improvements were made in the Greek financial position. Since then, they have successfully cut their annual deficit by a third, to only 10.5% of budget. During this process, many thousands of protesters have taken to the streets, even leaving some…
A client sent me an article by Allan Sloan from Fortune dated May 2, 2011 entitled “The Hocus-Pocus Behind Paul Ryan’s Medicare Reform.” He is certainly no fan of Obama-care, calling it “long on regulations and short on common sense,” because it doesn’t penalize those who eat, drink or smoke too much nor deal with the malpractice lawyers. Yet, he calls the Paul Ryan plan unworkable as well,…
As sure as God made those sour little things, the Chinese are manipulating their currency, which makes it all the more puzzling when the Justice Department announced yesterday that China was not, in fact, guilty. Only lawyers could get so side-tracked by trees that they cannot see the forest. Economists can simply see the trade gap between China and the U.S. last year approached $300 billion and…
Today’s report on first quarter GDP growth was disappointing, coming in at 1.8% compared to an expected growth of 2.2%. Of course, 2.2% shows expectations were already low. This is not news. The real question is what will GDP growth be during the current quarter. My reading of it is that the economy is continuing to slow. Supporting this belief, today’s release of weekly jobless claims was…
Austerity is a safe, clinical-sounding word that doesn’t describe what is really being asked of the Greek citizens. Imagine yourself being told such things as: I know you’ve been planning to retire next year, but you’ll have to work another five years!I know you’ve been retired for several years, but we must cut your monthly check by 20%!I know you were expecting a knee transplant soon,…
There is an avalanche of bad news/uncertainty (which is the same thing to the stock market). What will happen when QE2 ends? What will happen if the Congressional children allow the U.S. to default? Why do Greece, Portugal and now Italy keep getting downgraded? Will the Euro survive? Will the over-built real estate market in China send them into a banking crisis, like what happened…
Every weekday evening, you probably watch some earnest newscaster telling you the stock market was up or down, quoting the Dow, the S&P, and the NASDAQ closing prices. But, he seldom mentions the much larger bond market. Jim Cramer of CNBC describes the world of investments as an ice cream sundae, with the cherry on top being the stock market and the much larger bowl…
As I expect the stock markets to be volatile for the summer and fall, my interest was piqued when I learned there was a lecture on the latest techniques in volatility management at the NAPFA Conference in Salt Lake City. I was hoping to hear the latest research on cash allocation per asset class of risk or affordable retail hedges or even volatility ETFs. Instead, it was…
Yesterday, I met with a person who was extremely critical of Ben Bernanke, Chairman of the Federal Reserve. He felt the balance sheet expansion of the Fed was un-American and was simply an effort to save a Democratic President. (Pointing out that Benanke was appointed by a Republican President seemed insignificant to him.) Thinking about it afterwards, I believe Bernanke did everything he could, including some very…
As a NAPFA-Registered Personal Financial Advisor, I am required to have at least 60 hours of Continuing Education (CE) credits for re-certification. This is the most demanding of any financial planning organization, and that’s why I’m attending their annual conference in Salt Lake City. So, why did I come so far and spend so much money, only to waste one hour on a class that doesn’t…
Long-time readers know I’ve been a long-time member of the National Association of Business Economics and have great respect for their research. Last week, they released their latest survey of members. Overall, they have decreased their estimate of GDP growth for this year from 3.3 percent to only 2.8 percent. I have to agree that economic conditions have weakened, and a decrease is appropriate . .…
Then, my computer owes everybody an apology. For some reason, I’ve not been able to sign into my own blog. My last entry has even disappeared?? But, as I just got into Salt Lake City and started using my netbook, instead of my laptop, I’m delighted that I can get back to work. So, stay tuned . . .
What a day Thursday was! There was lots of news, and none of it was good, darn it! First, the U.S. trade gap with other nations worsened. Despite a surge in exports resulting from our cheapening dollar, the cost of importing (think, oil) surged even more, also because of the cheapening dollar. The high level trade talks with China ended badly, with us complaining about…
Yesterday, I met with a person who was extremely critical of Ben Bernanke, Chairman of the Federal Reserve. He felt the balance sheet expansion of the Fed was un-American and was simply an effort to save a Democratic President. (Pointing out that Bernanke was appointed by a Republican President seemed insignficant to him.) Thinking about it afterwards, I believe Bernanke did everything he could, including some very…
Friday marked the first anniversary of the infamous Flash Crash, when the Dow dropped 900 points in a matter of minutes, before making a seemingly miraculous recovery. I was watching it “live” as it happened and knew it was a market malfunction, not a market correction. Since then, the Flash Crash has been studied and studied. The most common belief is that there was an innocent “fat-finger” input…
Late Friday afternoon, the market was doing fine but then suddenly dropped about 50 points and didn’t recover before the bell rang, closing the market. There was a rumor that Greece was dumping the Euro and replacing it with their old currency, the Drachma and leaving the European Union. Not only did the market sink, but so did the Euro, while the dollar rallied. What makes this interesting…
Yesterday’s Job Report was heralded by the bad news that the rate of unemployment increased from 8.8% to 9%. That’s bad news, right? Not really, because people re-entered the job force to look for work, creating a bigger labor pool. That’s actually good news, because the economy is creating jobs, and they see it. I’ve been writing for over a year that the unemployment rate…
Looks like the bear is returning to the market. This morning, the weekly jobless claims number came in substantially worse than expected. Considering yesterday’s ADP estimate of jobs created last month was also a disappointment, expectations for the big release tomorrow of the Jobs Report from the Department of Labor are falling and, of course, so is the market. When bears are roaming, many investors…
The first Friday in each month is often quite volatile, because that is when the most important economic data is released, i.e., the Jobs Report issued by the Department of Labor. The first Friday is coming up. Economists look forward to this day, so they can gain greater insight in the enigma that is our economy. Investors dread this day, because the market can over-react to…
I didn’t ask that question. It was Steve Cortes of Veracruz on CNBC, who also answered that question. Of course, as an old Special Forces officer myself, I was interested. The dollar has been sinking all year. However, he states that “history shows us that the country with the strongest military is always the reserve currency. I think the ability of those heroes, of SEAL…
Yesterday’s market was fascinating to watch, as I do all day, everyday on CNBC, FBN, or Bloomberg. In the early morning, there was euphoria over the killing of bin Laden. By the time the market opened, the realization that another terrorist attack was now inevitable had began to weigh on the market. Then, super-Reaganite, David Stockman who was head of the Congressional Budget Office for…
Maybe, not a trillion dollars but the world stock markets were certainly up hundreds of billions overnight; all in reaction to the news that Osama bin Laden had finally been killed. The whole world breathed easier and markets rose! Futures are now predicting the Dow will be up 70 points within minutes of it’s 9:30 AM opening. But, that is minimum cost of bin Laden’s…
After months of geo-political turmoil and natural disasters, the stock market threw caution to the wind and rose 4% in the month of April. If all twelve months were as good, we’d enjoy better than a 48% growth over a year. That will not happen, and that’s a good thing. Unsustainable increases experience sudden, dramatic reversals! First quarter earnings were good, beating expectations a whopping…