Prior to the Federal Reserve’s policy decision on Thursday we took some preemptive action. Here are our thoughts on the economic backdrop, possible paths for the economy and implications of the Fed’s actions announced on the 13th. At his speech in Jackson Hole, Ben Bernanke signaled likely policy intervention forth coming from this past week’s FOMC meeting. Anticipation of this [...]
This past week was a big week for commodities. Immediately following the announcement of the Federal Reserve's 3rd quantitative easing program, commodities, especially precious metals, shot up as the value of the US Dollar crumbled. Apparently the only path to economic growth and eventually full employment is by continuously printing money, because the Fed's $40 billion-a-month program to buy assets [...]
In 1935 Friedrich A. Hayek presented the following diagram of the productive stages of an economy's production. The insights drawn from this depiction of an efficiently allocated economy form the basis of Austrian Business Cycle Theory. A voluntary decrease in consumption and commensurate increase in savings lowers the slope of the hypotenuse, thus the real rate of [...]
The S&P 500 hit its highest levels since 2008, thanks in large part to the ECB's unlimited bond buying plan and the expectation of further easing from the Federal Reserve. The index is comfortably above both its 50-day moving average and its 200-day MA, but might be a bit oversold in the very short-term. The S&P 500 has returned 13.67% [...]
I have to call this out. Representing this move as an intelligent, strategic corporate decision looks, from the other guys point of view, like you're spitting in his face. Via Reuters: Facebook has crystallized its blunder of an initial public offering with a stock buyback. Mark Zuckerberg’s social network will essentially cut its outstanding share count by about 101 million, [...]
The Standard & Poor's 500 is a stock market index based on the common stock prices of the biggest 500 publicly traded American companies. The index, which is up 13.67% for the year, looks ready to retreat to the 1390 level, and maybe further down to 1375-1380 level after a slight rebound following Bernanke's Jackson Hole speech. The S&P 500 [...]
A trend or perhaps out-performance can sometimes be deceiving. You've heard me say it before, you must be wary of time horizon. Know what you are analyzing and then look from a different perspective, discern the necessary details. We tend to like visual analysis and it will often paint a very vivid picture. Take, for instance the performance of a [...]
The S&P 500 Cap-Weighted Index hit a new 52-week high this week before correcting back to the 20-day moving average. While it did bounce off the technical level on Friday, look for the index to test support at the 1390 level and then at the 50-day MA in anticipation for Bernanke's Jackson Hole speech this coming week. The index is [...]
The GSCI Commodity Index ((GSG)) consists primarily of Energy (71%), but also contains Agriculture (14%), Industrial Metals (7%), Livestock (4%), and Precious Metals (4%). The Dow Jones-AIG Energy Total Return Index ((JJE)) consists of Natural Gas, Crude Oil, Heating Oil, and Unleaded Gas. The DJ-AIG Grains Total Return Index ((JJG)) consists of Corn, Wheat, and Soybeans. The DJ- AIG Industrial [...]
Is there an interest rate bubble? Has the bond market topped? It is something that has been on our mind for the past year and especially at the long end of the curve during Operation Twist. If and when bond yields normalize, the capital risk to investors is large, about 8.25-8.5% risk per 1% increase in interest rates at the [...]
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