Like many young boys who were raised in the mid-1950s, my initial values were “flag, motherhood, and apple pie” . . . and in that order. (I was raised to be fiercely patriotic and suspect my military record supports that.) However, I later learned my three primary values: love of democracy, love of privacy, and the rule of law. Readers know I have been struggling…
Worldwide, stock markets are up this morning, on news that the EU agreed on something. Working late into the night, national leaders of Europe browbeat Angela Merkel into doing something. My first thought was “thank God, they are not completely useless and can actually do something.” The something is that the European Stability Mechanism (ESM) can put money directly into bank capital. (This is what the…
Today, Americans stand transfixed, waiting for the Supreme Court to determine the fate of ObamaCare. As it directly impacts as much as one-sixth of our economy, it is a very important decision indeed. But, note that it has long-term economic importance. Today, stock markets around the world are transfixed, waiting for tomorrow’s announcement from the 20th European Summit on the European financial crisis. That crisis…
Many Americans get all riled-up when they read about the thousand dollar commode seats, etc. bought by the Federal government. To me, that always seemed like “chump change” compared to the stupidity of paying people who are living longer . . . to retire sooner. Or, even worse, to borrow billions from China, so we can spend unlimited amounts of money on terminal patients?? However,…
It is time-well-spent for me to read the perspectives of other investment advisors, such as Goldman Sachs or Wells Fargo. Locally, I enjoy reading the perspective of Palladium Registered Investment Advisors, whose newsletter is aptly named Palladium Perspectives. Their summer issue makes the point that the European financial crisis is “the most over-examined debacle in financial history . . . which, by the way, has…
The weight of uncertainty is crushing. The stock market abhors uncertainty. I’m surprised it is not at least a thousand points lower. It seems spring-loaded to go up, but I don’t see that happening anytime soon. The weight of uncertainty is just too heavy. The Supreme Court will rule this week on one-sixth of the economy. That ruling is likely to increase uncertainty even more.…
On Wednesday, the Fed left the world markets with a lollipop instead of a box of chocolates. The market was hoping for another round of quantitative easing. This is a way of injecting money into the market, because the Fed then buys either Treasury bonds or mortgage bonds. These bonds were already in the market. Think about “supply and demand.” When demand increases, the price…
Readers know the only thing I like about Goldman Sachs is their research. Here is a recap of their latest research analysis, which was released today: 1. While GDP growth was 1.9% in the first quarter, it will drop to only 1.6% this quarter and average 2.0% the rest of the year. They stated that “fiscal policy remains the biggest source of uncertainty in the…
Have you ever watched a kid’s face when asking him if he wants to go to the candy store? His eyes get big, and his enthusiasm increases. He even smiles. That’s the reason the stock market has been rising lately. While there has been no good news out of Europe, the flow of bad news has slowed. Also, the economic data on jobs over the…
Congratulations to the voters of Greece! Yesterday, they voted to accept severe austerity, thus preventing a bearish attack on stock markets worldwide. Of course, their only alternative to severe austerity was a severe depression . . . a terrible choice between the Devil and the Deep Blue Sea! Still. the world is celebrating, not because the war to end the European financial crisis is…
This Sunday, the slow-motion train wreck known as Greece makes a momentous decision. They will go to the polls to elect either a pro-bailout party or an anti-bailout party. The pro-bailout party or New Democracy will continue the ongoing severe austerity program. Assuming they win, Europe will continue the bailout program. The anti-bailout party or Syriza will ask for a two-year window before resuming the…
It was only twelve years ago — that most investment advisors still believed that bonds, especially U.S. Treasury bonds, were a safe investment. It was only twelve years ago — that the U.S. had a balanced budget (ignoring some off-balance sheet entitlements). The Berlin wall had recently fallen. America clearly dominated the world. Investment advisors expected the supply of U.S. Treasury bonds available for investment…
There were two important news reports out of Europe this weekend. The first one is a report that Merkel is holding serious discussions about a genuine fiscal union, whereby no nation would be permitted to run a budget deficit without consent of a panel of European finance ministers, plus consent of a new pan-European finance minister for all of Europe. This is news because it…
Last Friday, the Dow dropped 275 points, and the world was ending. Today, it was up 286 points, and the world just yawned. Situation normal . . .
Yesterday, I was asked what the likely outcome of the European debt crisis would look like. Will the Cavalry save us? And, how will we recognize the Cavalry when they arrive? Reporters chase politicians . . . because that’s what reporters do. Politicians think about politics . . . because that’s what politicians do. It is not surprising that the current perception of the crisis…
Last year, I read a book called Currency Wars: The Making of the Next Global Crisis by James Rickards. It was interesting — because it changed my historical perspective of the last century from two World Wars to two Currency Wars instead. But, in the end, I felt this book was just another ambush from a “gold bug.” Technically, a currency war occurs when one country…
Some wars never end. One battle just follows another. That is the world of the investor, who is in a never-ending battle to manage risk and protect his or her portfolio. Like all battles, there is fog everywhere, which makes it difficult to see reality. There is the sudden eruption of loud things requiring immediate attention . . . but sometimes not. There is always…
The all-important monthly Jobs Report was released this morning, and it was terrible. While economists were expecting 155 thousand jobs were created in May, we learned it was only 69 thousand instead. The unemployment rate rose from 8.1% to 8.2%. Dow futures indicate the market will drop about 200 points at the open. Interest rates on Treasury bonds are sinking to historic lows as investors…