Gold barrelled thru $1,800 an ounce again today, setting yet another new record.  Gold has long been considered a safe haven during tumultuous times, which these times certainly are.  Gold has long been considered a hedge against inflation (see blog earlier today).  With the continuing depreciation of the dollar and the downgrade of the U.S. credit, central … Continue reading What’s Up with Gold?

What went wrong overnight in Europe to cause such a major sell-off? First, there was concern that the Greek bailout could fall apart, if Finland requires additional collateral from Greece. More importantly, there is a rumor that some bank had to borrow $500 million from the ECB overnight, paying a high 1.1%, compared to the normal … Continue reading The Cost of Rumors

Today, we learned that core consumer prices (CPI) have risen 3.6% over the last twelve months, way above the Fed’s stated goal of 1.5% to 2.0%. Tuesday, we learned that core wholesale prices (PPI) have risen 7.2% over the last twelve months. Monday, we learned that import prices have risen 14% over the last twelve months. … Continue reading Bad = Good ??

It looks like Europe will trash the U.S. stock market again today, with futures indicating a loss of about 190 points on the Dow at the open.  All their markets are down substantially, with banks hammered the worst.  (Banks are the largest holders of sovereign debt of European countries.) If you feel anger toward the … Continue reading Another Day, Another European Thrashing . . .

There is no 12-Step Program for Wall Street junkies!  Therefore, it is good to simply get away from it occasionally.  Over the weekend, I remembered what I’ve been missing, i.e., the interplay between economics and investment strategy.  A change in the Index of Leading Economic Indicators tells me something.  So does a change in inventory levels … Continue reading Longing for Fundamentals

As I was scrambling to make a quick road trip last Thursday, I was contacted by a reporter for Inside Business about the impact of the U.S. credit downgrade on commercial real estate.  When I got home late last night, it was amusing to see I was quoted so extensively.  For your snoozing pleasure, you … Continue reading While I Was Gone . . . .

After four historic, horrifying days of at least 400 point moves, the week ended down an insignificant 1.5%.  When you try to estimate how many millions of people lost how many billion minutes of sleep over the week, you must remember the post-traumatic impact of 2008.  Investors looked death in the eye three years ago and still … Continue reading Sound & Fury Signifying . . . 1.5%

Since 1900, there have been 26 major stock market corrections ( at least 15% loss) or once every 4.3 years.  The vast majority (62%) dropped less than 40% and lasted less than 400 days, increasing to 78% since 1950.  The trend is clearly toward more frequent but less severe and less lengthy market corrections. So, … Continue reading Market Corrections 101

Today, the Dow closed UP 423 points.  This is the first time the market has moved more than 400 points in each of four consecutive days.  It is somewhat exciting but even more exhausting! So, does it give us any indication of where the market is going? There are three related dynamics playing out in the market right now.  … Continue reading Historic Week

This is no fun!  Here is the Dow over the last seven trading days:                                                                          August 2nd . . . . down 265                                     August 3rd . . . .  up 29                                     August 4th . . . .  down 512                                     August 5th . . . .  up 60                                     August 8th . . … Continue reading Whipsawed Again

European authorities are considering a ban on the short-selling of financial stocks, just as U.S. authorities did in 2008.  Short selling is the practice of selling stocks you don’t own at today’s price, with the expectation you can buy the stocks at a cheaper price on the delivery date, putting the difference in your pocket.  Although … Continue reading Blood in the Water . . . Across the Atlantic

I just read the latest economic commentary from Wells Fargo.  While the tone was somewhat downbeat, expecting the economy to grow slowly and inflation to rise slowly, they still expect GDP growth this quarter will increase to 2.2% from 1.4% last quarter. They also chastise the complainers.  Finding somebody to blame for our economic mess is … Continue reading A Word from Wells . . .