That’s how investment legend Mohamed El-Erian described today’s Jobs Report, which was a pleasant change indeed. According to the Department of Labor, America produced 117 thousand new jobs in July, well ahead of the expected 60-80 thousand. Subtracting the continuing losses in government jobs, the private sector produced 154 thousand. Even better, the poor jobs report in May and June were upgraded by another 56 thousand. …
It is one of those long-time market truths that the market must hit the point of capitulation before recovering. Today, the Dow fell 512 points, the worst daily performance in 2 1/2 years. We are now down 10% from the April highs, which makes this an official “correction.” (An official bear market is a 20% decline from the top.) The volume was also very high,…
After getting her certification as a scuba diver, I took my daughter to Cozumel for some breath-taking reef dives. Although I’m not a person who normally reads at the beach, I packed a very small book on investing. While I don’t recall the title, it was one of those “the only thing you need to know about investing” type of books. It said if the…
One of my favorite Wall Street legends is Barton Biggs, who was the Chief Global Investment Strategist for Morgan Stanley compiling an impressive record over many years. I managed the portfolio of his father-in-law, who was a dear man that died at the tender age of 99, just three months short of the century mark. During that time, according to his father-in-law, Barton never criticised…
Something interesting is happening. Normally, the stock market falls when volatility increases or vice versa. It is not uncommon for investors to buy the volatility index (VIX), which would go up when the market goes down. But, that longtime relationship is not working right now, why? One thought is that the VIX moves quickly during the day, while most “hedge” buyers have VIXM, which has a…
For some reason, politicians always say the word “jobs” three times. Coincidentally, there are three jobs reports this week. Two of them were today, neither of them good. The Challenger report showed that job cuts are up 60% over last month. The ADP report showed that net job growth continued for the 18th straight month, with 114 thousand new private sector jobs in July, down…
The conservative estimate is $1.4 trillion, and the liberal estimate is $3.1 trillion for the cost of wars in Iraq and Afghanistan. That doesn’t include the nearly 7,000 dead and tens of thousands of wounded. An economist would also have to add to those totals the taxes the dead will never pay and the cost of caring for the wounded during their actuarial lifetimes. I…
One of the main purposes of this blog is to provide readers with the perspective of all three primary schools of economic thought in the United States. The first is the Austrian school, which argues a “tough love” approach to budgets, which must be balanced every year. The second is the Keynesian school, which argues that deficit budgets are fine when the economy is weak, as…
Suppose you buy a stock and sell it one year later for a 6% profit, including dividends. Was that a good investment or a bad investment? The answer is that it depends . . . on how much risk you took. If you took a lot of risk, it was probably a bad investment. If you took minimal risk, it was probably a good investment.…
The market opened up strongly this morning with a rally that lasted about thirty minutes. First, the ISM report came in weaker than expected but still expansionary. More importantly, as mentioned in this morning’s blog, the European sovereign debt crisis raised its ugly head again, with the rumor that the president of Italy (who faces embarrassing charges about younger women) has fired his finance minister…
You might re-read the July 2nd blog for the definition of a Relief Rally. The world markets have been terrorized (and I do mean terrorized) by linking the debt ceiling with budget negotiations. Now that a deal appears to be in hand, the world markets are rallying strongly. Does this mean it is party time? No, while there are still lots of details we don’t…
