Don't look now, but the Bureau of Economic Analysis at the U.S. Department of Commerce has revised their advance estimate upward and now estimate that the real GDP growth in the second quarter of 2008 was an above-average 3.3%.Commentators who for one reason or another are invested in putting a negative spin on this blatantly positive news will no...
Monday, August 25, 2008
The Fed drops the mask
Back in early March, we noted a troubling quotation indicating that the Chairman of the Federal Reserve, and possibly many other members of the board, believed that slower growth reduces inflation and faster growth increases it.We noted that this discredited notion held sway through the inflationary 1960s and 1970s until Paul Volcker put into practice...
Friday, August 22, 2008
The long shadow of the Y2K bug
Remember the concerns during the years before the end of the twentieth century about the "Y2K bug" that threatened to cause airplanes to drop from the sky, nuclear plants to melt down, and electronic data systems and power grids around the world to fail, leading to riots, confusion, and chaos?It seems almost laughable now, but if you were a bank employee...
Tuesday, August 19, 2008
"Win and keep your uniforms clean . . ."
Today, the producer price index (PPI) came in up 1.2% for the month of July, twice the increase expected by economists in general.At the same time, economist Brian Wesbury this morning has an excellent piece in the Wall Street Journal entitled "Inflation is a clear and present danger."In it, Mr. Wesbury decisively explains why those who argue that...
Friday, August 15, 2008
The Fed is NOT in a "tight spot"
Here is a graph of the Consumer Price Index, from economic and business database specialists Haver Analytics. The graph shows better than words the stark reality that the Fed's excessive easing has introduced unacceptable inflationary pressures into the economy.According to the July data released by the U.S. Bureau of Labor Statistics yesterday, the...
Wednesday, August 13, 2008
Drawbacks of sector rotation
Here is a diagram showing the composition of the market, as represented by the Standard & Poor's (S&P) 500 companies, and divided into the ten sectors categorized by S&P's Global Industry Classification Standards (GICS).The sectors are shown in their relative size, by the combined market capitalization of the companies which make up each...
Monday, August 11, 2008
Return of the 1970s?
We argued in our previous post that the paradigm-shift coming in technology is more important for investors than the continuing turmoil from the financial sector.However, there are advisors out there who believe that the recent bear market (defined as a 20% drop in the market averages) is just part of a "secular bear market" -- fifteen to twenty years...
Wednesday, August 06, 2008
"Video is clearly the killer app here . . ."
Yesterday afternoon Cisco Systems* gave an earnings call which underscores several major points we have discussed on this blog previously, points which are very important for investors to understand right now.Firstly, Cisco's earnings beat analyst estimates, continuing a trend of earnings growth by bellwether companies we have pointed out previously...
Monday, August 04, 2008
Give the traders a break!
We have previously written about the folly of short-term trading and speculating on rumor and innuendo with respect to how "investors" deploy their hard-earned capital. This time, however, we are coming to the defense of traders and speculators. Much has been made of the move in oil prices this last year. Many have blamed "speculators" as being...
