There are two charts shown below that should give some pause to the recovery story. The first is the Consumer Metric Institute's Daily Growth Index vs. BEA's Quarterly GDP (which can be found here: http://www.consumerindexes.com/commentary_2010_dailygrowthindexvsgdp.png and the second is the Consumer Metric Institute's Growth Index vs. the S&P 500 which Doug Short put together here: http://dshort.com/articles/Consumer-Metrics-Growth-Index.html. [more]
If you ever wanted proof that government economists have an overly-optimistic bias, here is a nice piece of supporting evidence. [more]
binve is back below 20 :(
John Hussman of www.hussmanfunds.com puts out a Weekly Market Comment (which I highly encourage you to read every week). Per usual, this is another good article. This WMC discusses most importantly the ECRI data, and the fact that contrary to most claims, there is a substantial downturn in the index, not simply a slowing of the growth rate. This, taken with other leading economic indicators, is the reason why he issued a recession warning. The combination of indicators have only ever been seen during or just before the onset of a recession. Hussman also discusses current overvaluation of equities. This line here is a gem:
"We certainly know of many valuation indicators that suggest that stocks are "cheap" here. Unfortunately, they don't demonstrate any reliability in historical tests. It is almost mind-numbing to observe how many analysts confidently make valuation claims about the market on CNBC, evidently without ever having done any historical research. If you don't require evidence, you can say anything you want. "
Priceless :) [more]
Story from Minneapolis. This situation is hardly isolated to Minnesota. [more]
An absolutely fantastic article by Steve Saville [more]
Here is another great Eric Sprott interview on KWN.
Eric Sprott is Chairman, Chief Executive Officer & Portfolio Manager of Sprott Asset Management - Eric has over 35 years of experience in the investment industry and manages roughly $5 billion. Eric has been stunningly accurate in his writings for over a decade, and is one of the highly respected industry professionals who was able to foresee the current crisis. He chronicled the dangers of excessive leverage as well as the bubbles the Fed was creating, while correctly forecasting the tragic collapse we are all enduring. Sprott Asset Management is one of the top firms in the world. The firm has become well known not only for its performance, but also for creating a gold and now silver trust.
It is no secret that I agree with Eric Sprott quite a lot. I have written several posts that feature Sprott's viewpoints
- SqueezePlay: Sit-Down with Eric Sprott - http://caps.fool.com/Blogs/squeezeplay-sit-down-with/396617
- Eric Sprott Interview on CNBC - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=377859
- Eric Sprott Interview on King World News - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=360939
- Is Sprott in the Market Trying to Buy 10 Tonnes of Gold? - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=348703
- Five Questions About Gold The IMF Refuses To Answer - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=384031
- IMF Is Now Rejecting Prospective Buyers For Its Gold Stash - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=360779
---- LISTEN TO FULL INTERVIEW HERE [more]
The first article is pretty cool, it decribes a small device that is able to draw power from ambient ubiquitous radio waves. Which is indeed a very clever gadget. You can find that story here: Bye-Bye Batteries: Radio Waves as a Low-Power Source - http://www.nytimes.com/2010/07/18/business/18novel.html?_r=1.
But it also prompted me to remember another article I had read awhile ago. This is another invention that is deriving power from an unlikely source :) - Victoria's Circuit, Harnessing the untapped power of breast motion. - http://www.slate.com/id/2193827 [more]
Well this is very cool! Capturing ~one-quarter of the available terrestrial solar flux* and turning into electricity is an excellent achievement! [more]
Well this is very interesting. It looks like mainstream money managers are starting to take gold seriously as an investment. It is not just restricted to us wacko-crazy-nut job-gold bugs anymore. Of course the "brilliant" retort will be Texas A&M money managers are just a bunch of wacko-crazy-nut job-gold bugs too. Maybe. But I tend to think of myself as a pretty reasonable guy (I know many of you probably take issue with this), and here's a shocker, these money managers are probably pretty reasonable too. I think public consciousness is changing about gold (and no, not just due to cash4gold commericals, and quite frankly that is a non-thinking cop-out retort). Gold is honest money. And as "radical" as this idea is, it is starting to catch on (I suppose being around for a few thousand years it might get a little respect, but that's okay) [more]
A lot of people have already written about Sprott's new Silver Trust, so I will not add to it substantially. I just really liked the title of this post by ZeroHedge :) - Will Sprott's Brand New Physical Silver Trust Become JPMorgan's Biggest Nightmare?
Very good post by Humble Student of the Markets. I have stated before that I am a mechanical engineer, and my job affords me the opportunity to work with a lot of very smart people in a lot of different industries. The amount of innovation and understanding of science by people in a number of fields is nothing short of astounding. This is a first-hand reason why I am very optimistic for the future. I do not buy the 'death of civilization' and despite my belief that the next 5-10 years will be very tough economically, I have a lot of long term optimism for the economy, the markets, human endeavors and humanity as a whole.
But I don't believe US policy is doing anything to fundamentally encourage America's continuation at the forefront of science and technology. The US economic policy is more concerned with propping up asset bubbles than building infrastructure (and yes that includes academic instiutions). The chart below showing tuition inflation says it all, as asset prices are all propped up tuition is rising faster, making less and less able to afford college. This trend has to change.
The erosion of American competitive advantage
Thursday, July 15, 2010
... The question is, can America retain its status as a leading economic power?
The news is grim. I have written before about the analytical framework of deficit reduction. That kind of macroeconomic adjustment is only effective if Americans retain their underlying competitive advantage. John Hussman wrote this week that the basis of American competitive advantage rests on superior physical capital and human capital [emphasis added]: [more]
This video is a week old, but extremely worthwhile. I linked to Hussman's WMC that he wrote 2 weeks ago (the one discussed in this video) here: John Hussman: Recession Warning (Unthinkability is Not Evidence) - http://caps.fool.com/Blogs/john-hussman-recession/413455. [more]
New post by The Pragmatic Capitalist [more]
This is a fantastic and fascinating interview [more]
checklist34 wrote an excellent post recently: The 210 year trend of the market and where we are at with respect to it. And (probably surprising to most) I agree with the theme of his post. While I disagree with the bulls regarding the direction of the stock market for the next 5-10 years, I am very much in agreement over the long haul. This is precisely why I wrote this post: Why I hold Gold: Why I am a Long Term Optimist and consider holding gold and Optimistic Endeavor, and Why I think the Stagflationary Scenario is more likely Macroeconomically in the Intermediate term (next several years) - http://caps.fool.com/Blogs/why-i-hold-gold-why-i-am-a/402614. [more]
This is just so cool. [more]
Geithner and Bernanke talk "investment grade", analysts say "nonsense!". Fed "misstates" about buying Toxic Assets, after it reassured the public that it would buy only investment grade debt. Interview with John Rubino on Howe Street Radio
LISTEN TO RADIO INTERVIEW HERE
If everyone is seeing a global recovery, the Baltic Dry Index sure isn't. I have written about the BDI a few times (This is Officer 1BDI, Requesting Backup. and If the BDI is a Leading Indicator ...). [more]
John Hussman of www.hussmanfunds.com puts out a Weekly Market Comment (which I highly encourage you to read every week). Per usual, this is another good article. This one goes along with the last WMC - John Hussman: Recession Warning (Unthinkability is Not Evidence) - http://caps.fool.com/Blogs/john-hussman-recession/413455. The entire thing is a very good read, but I have highlighted a few particularly good gems. [more]
John Rubino makes some very salient observations with regard to this topic. While they can't technically go bankrupt, it is looking more and more like they can effectively go bankrupt. This is looking quite bad :( [more]
A very good interview. Topics discussed: G20 meeting and Annual Report, viewed through the lens of Austrian economics. G20 quote: "Macroeconomic support has its limits. The limits to fiscal stimulus has been reached in a number of countries. Immediate front loaded fiscal consolidation is required", being banker-speak for austerity and cutting budget defecits. "Keeping intrest rates near zero for too long with abundant liquidity leads to distortion and creates risk for financial and monetary stability". This is very much in line with an Austrian economic philosophy. Interest rates are simply the price of money and when money is kept artifically cheap by central bank policy, misallocation of resources (asset bubbles) becomes prevalent. Views on reigning in the debt crisis from the European perspective, and how a debt crisis cannot be solve by more debt, but only by saving. Recognition of debt satuation within the G20 (at least by Europe, the US is still in denial). The ineffectiveness of the Financial Regulation Bill. Exemptions to the Volcker Rule. Swaps on commodities into subsidiaries (exemption being gold and silver, interesting). Bigger market share of the banks that are 'too big to fail'. Regulatory capture. Inflation vs. Deflation. Answer is both (which is my position), market forces are deflationary, policy decisions are inflationary, but this is not price stability. Severe deflation and QE. Realizing that gold is money helps to put the behavior of both into perspective. Discussion of ways to and stability to the money supply. The possiblity of a Depression. Another possibility of a loss of confidence in the currency. Economic and Financial attacks. The instability of the US Dollar being a National Security issue. [more]
Another great post by Jake at Econompic. [more]
There is a lot of talk / speculation about a bounce here. "Everybody is bearish, including CNBC. The market loves to fake people out. Since a breakdown is expected, there is no way it will do that".
Quite frankly, I hear a lot more talk like that above instead of people calling for the breakdown. I think people are trying to get too cute calling everybody else a contrarian indicator.
I think the simple fact is: this move is real. [more]