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The Type of Selling I Hate
This morning the Dow Jones Industrial Average is in free fall and in an information vacuum. This is the type of selling I hate. Why? Because as I read the various quotes from traders that are in the business press they are all saying that the selling is triggered by a lack of good news and a preponderance of bad news. However, there is no new bad news today. So why didn’t the folks who are selling today, sell yesterday, when there was actually bad news (increased jobless claims)? This type of selling activity is something that...
read moreIntuitive Assessment of Investment Climate update
On 17 May, 2011 I wrote a piece entitled, “Intuitive Assessment of Investment Climate” where I used the intuition skills I teach in my book “The Intuitive Investor: A Radical Guide for Manifesting Wealth” to make a prediction as to the direction of the financial markets, specifically the Dow Jones Industrial Averages. Then I said: “[I]f I had to place a probability on a 500+ point decline it would be around 30%. If I had to place a probability on a 300+ point decline it would be 45-50%. Declines of less than...
read moreFed’s Bernanke Sees More Robust Second Half 2011
Yesterday the Federal Reserve Chairman, Ben Bernanke, stated that current U.S. gross domestic product (GDP) growth is slower than the Federal Reserve had anticipated, but that nonetheless, he expected a more robust GDP growth in the second half of 2011. Analysis: I am not sure what data Ben Bernanke is looking at that lead to certainty of a more robust second half of 2011 GDP growth rate. We still have: rampant unemployment and underemployment; consumer confidence which is flat to slightly down; slowing manufacturing growth, which is usually...
read moreGeithner Proposes Global Derivatives Rules
Just last week in my post entitled, “Top 5 Problems Facing the Economy 3,” I stated that business frequently throw off the threat of increased regulation by claiming that they will take their business to a friendlier country with more lax laws and regulations. The focus of the post was the lack of transparency in financial markets. I also said, “Unfortunately, because there is no set of comprehensive and uniform set of international business laws or regulations, countries and international businesses act in cahoots with one...
read moreEmployment Growth is Stagnating
The Bureau of Labor Statistics announced this morning that the economy created 54,000 jobs in May. This compares to economist expectations for 160,000 jobs created. Separately, the unemployment rate rose to 9.1%, while economists had expected a decline to 8.9%. Private sector jobs grew by 83,000, while government jobs shrank. Analysis: That the economy added jobs is a good thing. However, it’s obvious that employment growth is stagnating, so let’s not put lipstick on this pig. Job creation in the previous three months...
read moreTop 5 Problems Facing the Economy 5
The final problem among my “Top 5 Problems Facing the Economy” is endemic unemployment. By “endemic,” I mean that the Great Recession seems to have created a permanent change in the employment landscape of the First World. During the deep and sustained economic downturn of 2008-2009 many millions of employees in the United States and other countries lost their jobs. Now that the economy has not only actually recovered fully, but also grown past pre-recession gross domestic product (GDP) figures, most of those lost...
read moreTop 5 Problems Facing the Economy 4
Among the top five problems facing the economy is politics trumping what needs to be done. In the government space, I consider the following to be big problems: Continued deficit spending and growing national debt Lack of a coherent foreign policy – including fighting two Asian wars Lack of financial support for financial regulators In this series I have already talked about the Federal government’s inability to run a balanced budget. As of 2 May, 2011 this inability to balance a budget has resulted in a total national debt of:...
read moreTop 5 Problems Facing the Economy 3
This is part 3 in a series of 5 posts all part of the same headline, “Top 5 Problems Facing the Economy.” I feel that the number 3 problem facing the economy is the lack of financial market transparency. Given the first two problems, lack of ethics in society – especially in business, and chronic fat – that is, consuming beyond our means, it is very important that there be a proper regulatory framework in place to provide ground rules for the operation of the economy. I have likened poor economic laws and regulations...
read moreTop 5 Problems Facing the Economy 2
Today I will write about what I feel is the number 2 problem of the top five problems facing the economy: chronic fat – that is, consuming beyond our means. This problem manifests itself throughout various levels of society. Governments around the world, like the United States, Japan, Greece, Argentina, and so forth are all nations that issue gigantic amounts of debt and run chronic budget deficits. That is, these nations spend more than they collect in taxes. The difference is financed by issuing debt, presumably secured with future tax...
read moreAwesome Statistic About Derivatives slight return
Yesterday I wrote a post entitled, “Awesome Statistic About Derivatives” and I wanted to post a few additional comments to help create a better context for understanding the information. First, in the comments section of the blog I was asked if I could corroborate the data as reported by Mark Möbius of Templeton where he claimed that the total value (i.e. the notional value) of all over the counter derivatives contracts was ten times larger than worldwide gross domestic product. The answer was “yes.” The Bank for...
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