So much for the idea that the bailout bill would produce a relief rally. Overseas equity markets are taking a beating. No word yet on how the credit markets are faring. Investors are finally waking up to the notion that it isn’t just the US financial system that is in trouble, but that pretty much […]
Read more...We have a certain fondness for Marc Faber: he knows financial history, he is refreshingly direct, not attached to conventional thinking, and has a record of generally good investment calls (and admits to his mistakes). Reader Dean provided us his latest newsletter, plus a story covering recent interviews (no, Dean is not his PR agent, […]
Read more...Markets continue to be roiled by the upset of the effort to pass the touted Paulson bailout bill. As of this writing, the FTSE and Dj Stoxx 50 are up slightly, but money markets took a beating, the reaction worsened by end-of-quarter factors. From Bloomberg: The cost of borrowing in dollars overnight surged the most […]
Read more...Conventional wisdom has been that Treasuries have been the yet another bubble as cash exited equities and other risky investments, first feeding a commodities spike, then seeking a better home in Treasuries. But Merrill’s David Rosenberg, who was in a decided minority in seeing deflation as the likely outcome for the US (he has for […]
Read more...Nouriel Roubini predicted that hedge funds closures would be the next leg of the financial crisis. Large scale redemptions force hedge funds to sell assets at a time not of their choosing. More assets being dumped at a time of risk aversion is likely to lead to distressed prices, putting pressure on other players, since […]
Read more...Swiss investor Marc Faber, known for a long track record of good calls (he was a commodities bull until late this spring, for instance, when he reversed his view) and a fine grasp of financial markets history, confirms the estimate earlier in the week by Ken Ohmae that the US needs a salvage operation much […]
Read more...The latest sightings: Money market rates doubled overnight: despite considerable central bank intervention: The cost of borrowing in dollars overnight more than doubled as banks hoarded cash amid speculation more financial institutions will fail. The overnight dollar rate soared 333 basis points to 6.44 percent today, its biggest jump, according to the British Bankers’ Association. […]
Read more...The action overnight has been dramatic. The number for equity markets overseas seems to be four or more, as in declines of 4%-5%, with developing nation instruments suffering more.. The theme was a flight from risk and worries about further economic slowing The dollar fell, particularly versus the yen the preferred vehicle of the carry […]
Read more...Reader Vijay pointed us to an op-ed today in the Washington Post by Don Luskin, “Quit Doling Out That Bad-Economy Line.” Some of its priceless wisdom: Things today just aren’t that bad. Sure, there are trouble spots in the economy, as the government takeover of mortgage giants Fannie Mae and Freddie Mac, and jitters about […]
Read more...This tidbit from the Wall Street Examiner came via reader Scott: Once upon a time, when faced with a market meltdown the Fed would have pumped a wad of cash nto the market and it would have been good for a rally of a couple or three hundred points. Today the Fed added a whopping […]
Read more...From the Nattering Naybob: Shares in the S&P 500 have climbed to an average 25.8X reported profits…. The last time that happened in 2001, the S&P 500 fell 38%. As they like to say, past performance is no guide to future return, but be warned.
Read more...We had written in mid July that money supply in the US, as measured by M1 and M2, had been contracting for several month s . Eurozone M1 growth had also fallen to near zero growth levels, and M4, the broadest measure of money in the UK, had actually dipped into negative growth territory. As […]
Read more...A colleague, who is close to a number of fund manager talking heads, observed that there was an uncharacteristic, gaping disparity between what many of them are saying on TV (“it’ll be over in a quarter or two”) and their far more downbeat private views. He did not offer a reason for their lack of […]
Read more...Despite the resurgence of the dollar, Ambrose Evans-Pritchard remains unconvinced that things in the US are now as rosy as the new found (albeit guarded) optimism suggests. He comes by his view without disputing the view that the dollar rally has legs. I’m not very optimistic about that. Why? A drinking buddy with amazing connections […]
Read more...Reader Saboor was kind enough to send me an August 1 report by Stephen Roach, former chief economist of Morgan Stanley, now chairman of its Asian operations. It’s noteworthy in two respects. First, although Roach remains a long-term dollar bear, he made a well timed call that it was oversold, due for a rally, and […]
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