The talk of inflation has never been this high. Bernanke and company are trying very hard to keep the markets up while keeping inflation lower than the key 3%, doing so is problematic. Trying to infuse billions of dollars without making prices rise universally is against the laws of economics. So far, that extra cash has only been seen in products high in demand: sugar, corn, oil, gold, silver. Read more…
It’s hard to imagine the scale of the losses that the credit market and the overall market in general have seen over the past year. Certainly this credit crisis is larger than most of us have seen even in the duration of our lifetimes. Looking back at the past year we’ve seen plenty of negative news but very little to actually compare the size and scale of our current credit crunch to anything in history. Read more…
Even with generous government subsidies and a growing market for ethanol and alcohol fuels, the profit margins for ethanol producers are their smallest ever. The possibility of profit has been wiped away by corn and natural gas prices. Natural gas is very important in the process and is where the majority of the energy input comes from. Read more…
Stocks inflows are generally what keeps the market afloat. High inflows mark times of good markets, outflows the opposite. While stocks don’t inherently rise and drop with money flow, mutual funds and hedge funds generally have to liquidate assets to afford withdrawals.
The financial sector is doing an interesting run around to bring in capital. Rather than issue debt, financial companies are issuing more common stock and preferred shares to bring in cash. The problem is that these new shares are like IPOs and diminish the shareholder value. This action is what creates stock inflation, something you rarely hear about but you’ll feel it when it happens to you. Read more…
The worst part about this is that the 15.3% loss represents a hefty piece of American consumerism. Its now safe to suggest that people who purchased homes in the last few years have $0 in equity, and are even upside down on their homes. While this may seem to be a microeconomic situation, the macroeconomics are beginning to show through. People don’t have spending money nor do they have the HELOC to fall back on. Read more…
It was interesting to look over the newswire today and see that Barack Obama is speaking out against oil speculation and threatening to tighten “loopholes” in the oil trading industry that keep the government from investigating the effects of speculation. The market to Senator Obama: speculation is just a natural part of the business cycle. Read more…
Today the DJIA fell below the crucial 12000 and even the 11900 mark. The good news is that we’re not yet below a very important trendline and the market looks like its ready to bounce. Fundamentals like the economic stimulus package have yet to add to earnings, that we may see in the fall, but for now it appears that the market is weak until a new catalyst appears. Read more…
China released news today that it planned on raising its nationalized gas prices by 18 percent, perfect news for only oil company struggling with maximizing profits due to these set prices: Petrochina. Petrochina is the world’s largest oil company, it’s a nationalized product of China and at its highs had a market value of nearly $1 Trillion. This thing is huge. Read more…
2008 should have solidified the belief in international funds. Domestic funds look terrible, they’re beaten down by the perma-oil bear and an economic downturn. But overseas things are looking on the up and up, actually they look great. Why? Developing nations practically control the world’s commodities, we buy their oil, their metals, their food. We used to produce the world’s food, but take a look at how much we’re sending into creating energy. Food for energy, ethanol, yuck. Read more…
America as a whole has had a long disagreement with CEO pay, amongst a wide array of other high paid members of society. The baseball player, the entertainer, and the corporate executive, the million dollar a year salaries are abound and even higher in 2007. With the economy lagging, businesses failing, and severance pay higher than ever for failed CEOs, is America justified with its hatred for the corporate elite? Read more…
Gaps are often underrated for their ability to decide market direction and show movement in stock prices. Just yesterday I was looking at the market trying to decide how to trade the next days movements. Looking at a short term NASDAQ composite chart I decided that the gap through the 2430 support line was too dangerous to trade today, there was no way I was going to make any money as either the market would open up and I would buy into a top or the market was likely to drop heavily due to overhead resistance. Read more…
Warren Buffett has long been a critic of the hedge fund industry and their high fees that eat into profits. Buffett made a bet with Protégé funds for a $1 Million charitable donation. Buffett said that the S&P 500 will return better than hedge funds over the next 10 years, highlighting their expenses of 2% of capital plus a 20% fee on returns. Read more…
We’re talking about some serious money, and I mean in Sirius stock. The merger between Sirius and XM as one satellite radio company might be a complete fallout, but the potential profits from a quick position look great. Read more…
If Steve Jobs announces a new iphone as many expect, the next generation phone should bring some amazing marketshare. The apple way is to produce shiny, exciting products but lapse a bit on core features. The original iPhone was said to be the best smartphone though it lacked features like 3G, email support for business users, GPS, and came with only a modest selection of software because of the monopoly Apple imposes over its devices. Read more…
Trendy brands and teenage products go in and out of fashion in what seems like just a few months. Now the best investment may be against these brands, not because they are going out of style but instead a short against the disposable income of America. When parents are feeling the pain at the grocery and gas pump, its certain that teenage America will be feeling the same squeeze in disposable income. Read more…
Washington Mutual announced today that Kerry Killinger will no longer serve dual role as chairman of the board and also as CEO. He will instead become a regular board member and retain his title as Chief Executive. The problem isn’t in the executive lineup or in the restructuring of “corporate governance” these loan companies are just trying to avoid pressure from average Joe investor and his opinion on subprime investments. Read more…