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September 2010

Recs

34

The US Treasury and the Federal Reserve: Redundant Institutions

September 27, 2010 – Comments (14)

These entities no longer have any real distinction, no longer serve the purposes that they did prior to 1971. In my post The Matter of Deficits, Sovereign Default, and Modern Monetary Theory I went through the process of showing why this was the case.  [more]

Recs

30

Why?

September 25, 2010 – Comments (21)

TMFSinchiruna writes a blog post dedicated to 100ozRound's excellent accomplishment: Homage to the #1 Optimist in CAPS. This is a great post whose only purpose is to celebrate an excellent accomplishment. Well done 100ozRound!  [more]

Recs

20

Gold / Equity Correlation

September 22, 2010 – Comments (11)

If you look at a short enough timeframe (maybe a couple of months) you can find negative or positive correlation between *ANY* two assets: Dollar/Oil, Oil/Gold, Salamanders/Twinkies, even Gold/Equities.

The more useful question is what are the long term correlations between two assets. This will let you know if they are moving together in the short term, is it a confirmation (they normally trend together), or is it a *divergence* (they normally trend oppositely)?  [more]

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8

John Hussman: Sequential Signals

September 21, 2010 – Comments (2)

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.   [more]

Recs

20

A bull market in amateur gold commentary

September 20, 2010 – Comments (7)

Here is a fantastic comment by Eric Janszen of iTulip. Janszen called the bottom in Gold back in 2001. Its safe to say that he knows a bit about macroeconomics. I did not call the bottom in Gold, I am a relative late-comer to the Gold party (I have been invested for a few years). But because people are noticing it, then it *HAS* to be a bubble! You want to call it a bubble and add to the rhetoric and confusion? That's great, I welcome that! I love misinformation and confused participants, it makes for good dislocations (corrections) so I can buy the dips safely and cheaply. But if you are *sure* it is a bubble and you are going to short it? Do yourself a favor and read this article and read others who have called the Gold market correctly a decade ago. Not some talking head just adding to the din with sound bites. Certainly don't listen to me. I am really just another amateur with an opinion. But I read much smarter people than myself and they can put these macro issues into perspective. (So I am an amateur who stays pretty well read).  [more]

Recs

19

Earnings and Equities: Diligent Cost-Cutting

September 19, 2010 – Comments (3)

In my last post The Big Picture: Technicals and Macro, one of my macro themes is that we had a failed inventory rebuild cycle. That is the "cycle" never took hold. The way an inventory cycle usually works is that businesses begin an inventory rebuild, consumers respond to the supply and real final sales pick up, businesses respond to the increase in demand and continue production, increase hiring, increase capex, etc. Throughout this "cycle" there has been a tepid increase in real final sales and the trend has been dropping significantly the last couple quarters. However the last few quarters earnings have been increasing. But there are two primary ways for earning to increase: a) organic growth based on a recovery (sustainable) and b) cost cutting / margin expansion (unsustainable). Notice what I said above, real final sales the last 2 quarters have been slowing considerably. Which means there has not been much of a). In fact most of the earning growth the last 2 quarters has been because of b).  [more]

Recs

20

The Big Picture: Technicals and Macro

September 18, 2010 – Comments (4)

Caps readers: This was originally posted on my other blog. As such it has quite a bit of Technical Analysis explanation in it. Since most everybody on this site dislikes/doesn't believe TA or EWP, please feel free to skip a few paragraphs down to observation 2. There I discuss the macro environment, which is probably of more interest to this group. That and my conclusion section right after the charts.  [more]

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14

More On The ECRI Leading Indicator

September 17, 2010 – Comments (8)

Like I have talked about in a number of posts recently, when you look at leading macro indicators, the sustainability of this recovery is called into question. Most headline indicators that the crowd is focused on are either coincident or lagging.  [more]

Recs

24

Breakout? Not yet

September 14, 2010 – Comments (21)

What am I talking about? Gold of course.

So even though we got a new all-time intraday and closing high of Gold in US Dollar terms, why don't I call it a breakout? Because it has still not closed above the trendline for the Large Cup and Handle formation that I have been watching. If we get a weekly close above that line, then I think we have an honest breakout.  [more]

Recs

17

Market still deluding itself that it can escape the inevitable dénouement

September 14, 2010 – Comments (13)

John Mauldin's newest Outside the Box is a very good one: an article by Albert Edwards. There are several analysts, such as John Hussman and David Rosenberg, who are paying attention to leading macro inidicators. This is another good post in that vein.  [more]

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27

My score is a skid mark on the underpants of the Caps society

September 10, 2010 – Comments (29) | RELATED TICKERS: CR , AP

What's my point? None. Self-deprecating humor is always funny. And I do have a 'crappy' score ... (yuk, yuk). Plus bastardizing a Dodgeball quote on a boring Friday just seemed to fit the bill.

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30

The Unfortunate Math Behind Our Economic Plight

September 09, 2010 – Comments (13)

The Pragmatic Capitalist has a great new post up. Discussed is the Output Gap (Potential GDP vs. Actual GDP) and the fact that every single stimulus program to date is a 'fix' to a misdiagonsed problem. Targeting bank balance sheets helps banks (which are your lobbyists and source of funding, this is called crony capitalism) but does nothing to help the real cause of the problem. I am not saying the stimulus was good or bad (... except I am, It was bad), but rather I am saying that if you wanted to 'stimulate' to help a) solve the problem or b) throw money down a black hole, then government has chosen b) every single time.  [more]

Recs

14

John Hussman: The Recognition Window

September 07, 2010 – Comments (3)

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.   [more]

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