Our April 6 post entitled “Three Reasons to Scrap GDP” considered what’s wrong with drawing too many conclusions about the health of the economy based on this one highly fretted-over number. This week it’s the inflation indexes, PPI and CPI, that will be in the news, along with the tidily trimmed down “core” readings. And what, exactly, does “core” mean? Why, it means we don’t count food or energy prices, of course. So how and why did we start caring about…
Friday, March 28, 2008
By the first half of 2006, before the Federal Reserve had even stopped raising interest rates, economists were beginning to recognize where things could very well be headed: monetary policy easing, forced by a slowing economy and tightening credit, would both put downward pressure on the dollar (which already had resumed its decline by the end of 2005) and cause yields on U.S. Treasury bonds to plummet. The inflation risk was obvious to any educated consumer watching the news, but what…
Sunday, March 16, 2008
You don’t have to be a grizzled value investor to agree with Warren Buffet’s two key rules of investing: “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” Since we opened our first trade for March expiration, the S&P 500 index is down almost 100 points - that’s a loss of over 6.6% in a little over one month, and the index is now off 12% from it’s January open. Continued weakness in the U.S. dollar means that the…
Sunday, January 6, 2008
Yes, it’s time for our list of predictions for 2008. Economy. GDP growth in the United States will slow to 1.5%, prompting an annoying number of articles on the decline of the US and lots of analogies to the Roman Empire. The Fed will bring discount rates all the way down to a futile 4.25%, in an attempt to put out an economic grease fire with a fiscal bottle of Evian. Which, as everyone knows, spells “naive” backwards. Oil will pull…
Tuesday, December 4, 2007
Yes, after awhile John Hussman really starts sounding like a permabear. But when we seem to be teetering on the brink of recession, it’s increasingly tough to paint that as a fault. From his weekly market comment: Pop Quiz How much “liquidity” has the Federal Reserve “pumped” into the $12.7 trillion U.S. banking system since March 2007? a) $1.2 trillion, which banks have used to firm up their balance sheets b) $600 billion, which banks can now use to make new loans c) $16 billion,…
Tuesday, April 15, 2008
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