RSS Feed
Twitter
Facebook
Email
HomeAmerica Needs to Stop The Lies and The Liars
Posted by Larry Doyle on February 19th, 2011 12:20 PM |
Real long term success and greatness are founded upon the principles that people do not lie, cheat, or steal. Our nation is neither succeeding nor is great at this point in time because we have allowed these vices to grow and spread throughout our society. Shame on us.
Our nation does have the potential to be a fabulous nation again; however, let’s stop kidding ourselves in thinking that we are a great nation currently. How is it that America has lost its greatness? Where are the aforementioned vices on display? (more…)
The Reflation Bill Is Outstanding and Growing
Posted by Larry Doyle on April 5th, 2010 11:13 AM |
If we are to believe the markets are predicting a rebound in the economy (I do not blindly accept that to be the case), then it is high time we address the next enormous question facing our country. That is? The bill that has been accruing for the ‘so-called’ saving of our economy.
Whether the economy has been saved or not is a relative question. Please be careful as to how to use that phrase in light of the fact that there are 6.5 million people out of work now for at least 27 weeks (long term unemployed) and close to 17% of our labor force is underemployed.
The biggest question facing our country now is how do we pay for cleaning up this mess that was created over the last number of years? (more…)
Greenspan: U-Shaped Recovery
Posted by Larry Doyle on February 8th, 2010 11:30 AM |
Alan Greenspan is certainly not viewed in the same light now as he was during a large part of his tenure as chairman of the Federal Reserve. That said, when the former Fed chair speaks, people do listen. What is he saying now? Greenspan is throwing some cold water on the topic of a V-shaped economic recovery. Bloomberg highlights his views this morning in writing, Greenspan Sees ‘Slow’ Recovery, Is ‘Concerned’ if Stocks Drop:
Former Federal Reserve Chairman Alan Greenspan said a U.S. economic recovery is “going to be a slow, trudging thing,” and that he “would get very concerned” if stock prices continue to fall. (more…)
Will Geithner ‘Walk the Walk?’
Posted by Larry Doyle on November 18th, 2009 9:35 AM |
Do you have any confidence that Washington even knows how to properly address our massive and growing fiscal deficit? Rahm Emanuel, Tim Geithner and others understand that from a political standpoint they need to start talking about deficit control, but will that talk lead to action?
Do you think Congressional leaders, specifically Harry Reid and Nancy Pelosi, have the character and fortitude to ‘tighten the belt?’
The first real test for this crowd is already upon us. How so? The TARP, with a $700 billion commitment, expires on December 31, 2009. Of that $700 billion, $400 billion has actually been spent. Why wasn’t the other $300 billion spent? Well, don’t forget that Obama’s Stimulus Bill totaled $770 billion and assorted other programs implemented by Treasury have run into the trillions. As a result, Geithner did not immediately need to allocate those funds.
The question begs as to what will happen to that $300 billion. While Emanuel and Geithner are starting to ‘talk’ the fiscal discipline ‘talk,’ will they ‘walk the walk?’ (more…)
October 24, 2009: Month to Date Market Review
Posted by Larry Doyle on October 24th, 2009 7:32 AM |
Did the market merely take a breather this week or is the ‘little engine that could’ getting tired? Are we distinguishing the winners from the laggards? Are the cracks in our economic foundation repairing or are some just too large to hold back the flow of red ink, i.e. embedded losses? Perhaps we are experiencing all of the above as we continue our journey along the new and varied trails of our economy. Let’s review the major economic statistics for the week, along with the month to date returns across a wide array of market segments.
I thank you for reading my work, and now let’s collectively ‘navigate the economic landscape,’ the mission of Sense on Cents. If you have any questions, please do not hesitate to ask.
ECONOMIC DATA
I largely discount positive news on the housing front as I view them largely manipulated by Uncle Sam while delinquencies, defaults, and foreclosures move ever higher. This may be an oversight on my part, but so be it.
Aside from that, I believe the most meaningful news this week was the GDP report from the UK. Please see my Friday morning commentary highlighting how the UK remains mired in recession.
Let’s move along to market performance. The figures I provide are the weekly close and the month-to-date returns on a percentage basis:
U.S. DOLLAR
$/Yen: 92.08 versus 89.68, +2.7%
Euro/Dollar: 1.500 versus 1.4635, +2.5%
U.S. Dollar Index: 75.44 versus 76.72, -1.7%
Commentary: the overall U.S. Dollar Index declined marginally this week. The dollar has improved versus the Japanese yen, but remains decidedly weak versus the Euro. The U.S. Dollar Index did break below 75.00 at one point early Friday. The correlation between the U.S. Dollar Index and the equity markets remains quite high. Both markets ended the week close to unchanged. Have too many people bought equities and commodities while having sold the U.S. greenback? I have been asking that question for the last month so no reason to stop now. The biggest impact of the weak dollar is seen in the commodity markets and long term interest rates. Commodities continue to trade with a firm tone while interest rates move higher.
I reiterate my comment from previous weeks: while I think Washington is not disappointed in a relatively weak dollar, although they should be (“Dollar Devaluation Is a Dangerous Game”), other countries are not overly keen about further dollar weakness. Why? A weak dollar puts those countries in a marginally less competitive position in international trade. On this topic, please read “Brazil Wants A ‘Real’ity Check.”
COMMODITIES
Oil: $79.65/barrel versus $70.39, +13.1% REMAINS VERY FIRM
Gold: $1055/oz. versus $1008.2, +4.6%
DJ-UBS Commodity Index: 137.32 versus 127.683, +7.5%
Commentary: I repeat from last week, unless you grow your own crops or have your own source of energy, you should expect to get increasingly squeezed as prices at the supermarket and gas station are likely to head higher. While Washington will not address this development, these price moves are directly correlated with Washington’s weak dollar policy. The banks and others able to borrow cheap money for trading and investing benefit from the weak dollar. American consumers and savers get stuck with the bill.
The Baltic Dry Index once again moved higher and got back above the 3000 level. Is the improvement in the non-Japan Asian economic bloc for real? Certainly the economies in Europe and North American remain decidedly challenged.
I continue to believe these commodity tea leaves are an indication of inflationary expectations in these ‘inputs,’ while we encounter deflationary pressures in wages and real estate. (more…)
Dollar Devaluation Is a Dangerous Game
Posted by Larry Doyle on October 8th, 2009 9:24 AM |
Can we ‘devalue’ our way back to our days of economic ‘wine and roses?’
Many debt-laden countries throughout economic history have chosen to implicitly or explicitly pursue a devaluation of their currency as a means of improving their economies. Are the ‘wizards in Washington’ taking this approach? Aside from a few perfunctory comments in defense of the greenback, Washington has been largely silent on the topic of the declining value of the dollar. Many believe Washington very much favors a weaker currency as a means of supporting our economy. I believe this of Washington, as well. Let’s navigate.
Going back to the G20 in London last Spring, the Obama administration has attempted to curry political favor with emerging economies, especially the BRIC nations, by ceding dollar sovereigncy as the preeminent international reserve currency in return for support of global economic stimulus programs. Why does Washington believe a weak currency serves our economic interests? A weak currency generates and supports the following:
1. Promotes inflation as imports decline. Washington would like some inflation, given the massive deflationary pressures presented by falling wages and declines in the value of commercial and residential real estate.
2. Promotes exports for corporations with a multi-national presence.
3. Supports labor by making it more attractive for companies to keep jobs here as opposed to opening factories or sending work overseas.
So, in light of our current economic crisis, why wouldn’t we want a substantially cheaper dollar to maximize these benefits?
Recall that economists always need to keep certain variables static in order to study the impact of a change in another variable or multiple variables. This approach, known as ‘ceteris paribus,’ is not quite as easy as some may think. Why? Variables are NEVER static, or ‘ceteris is NEVER paribus.’ (more…)
Turbo-Tim Gets Defensive About Deficit
Posted by Larry Doyle on May 22nd, 2009 6:00 AM |
After the biggest one day selloff in U.S. government debt in a long time, U.S. Secretary of the Treasury, Tim Geithner, got very defensive this afternoon about the explosive growth in the U.S. deficit. Bloomberg reported, Geithner Pledges to Cut Deficit Amid Rating Concern.
Well, perhaps Secretary Geithner could help Barack and team find more than .5% of his $3.5 trillion budget to cut as a start if he is serious about his pledge. Over and above that, Tim asserted:
that the rise in yields on Treasury securities this year “is a sign that things are improving” and that “there is a little less acute concern about the depth of the recession.”
Benchmark 10-year Treasury yields jumped 17 basis points to 3.37 percent at 4:53 p.m. in New York.
With all due respect to the Secretary, perhaps he may want to review the fact that the overall Treasury funding needs in calendar 2009 will likely exceed the funding needs of 2006, 2007, and 2008 COMBINED. Additionally, he may want to have a chat with the governors of the Federal Reserve. In the minutes of the most recent Fed meeting, the consensus forecast for growth, unemployment, and inflation is worse than what the governors foresaw in January. Perhaps the Secretary may want to reconcile his statement with those forecasts.
Tim did hedge his bets and cover his flank by commenting that:
it’s still “possible” that the unemployment rate may reach 10 percent or higher, cautioning that the economic recovery is still in the “early stages.”
I do not pretend to think that Geithner has an easy job, but ultimately the market and investors will more value a secretary, spokesman, or analyst who is truly credible than merely an administrative mouthpiece. In my opinion, Tim has a lot of work to do on this front.
LD
February 2009 Market Review
Posted by Larry Doyle on February 28th, 2009 10:13 AM |
Prior to going to the comments section of my son’s report card, human nature dictates that I first look at the grades. In that same vein, let’s see how the markets performed for the month of February:
Let’s review my specific projections from the January 2009 Recap: (more…)
