Category Archives: Investment outlook

Speculative Herd Behavior?

Michael Panzner of Financial Armageddon is the source of this very interesting chart, which he depicted as possible speculative convergence. If his observation is correct, his label is way too polite.

Mervyn King’s Lonely Struggle

Ah, the thankless task of endeavoring to uphold sensible principles when events conspire against you. Mervyn King, the governor of the Bank of England, had to eat quite of a bit of crow in the Northern Rock bailout, when a mere two days after a submission to Parliament in which he criticized other central bankers […]

Corporate Chiefs Uncertain About Economic Outlook (And With Good Reason)

Even though members of the Adminstration and the financial media keep insisting that the economic fundamentals are sound, executives at major companies, who see what is happening in the real economy (admittedly through the window of their comany’s activity) before it is captured in statistical releases, are finding it hard to read the trajectory of […]

George Magnus: We’re Not Out of the Woods Yet

George Magnus, the UBS economist who popularized the term “Minsky moment,” has a thoughtful comment, “The credit crisis: why it is still too early to relax,” in today’s Financial Times. The article expresses doubts about the beliefs that undergird the current optimism in the financial markets, namely that the credit crisis is pretty much over, […]

Signs of improvement in Commercial Paper Market

Bloomberg reports today that commercial paper outstandings rose for the first time in eight weeks. However, the increase was a very modest $4.5 billion (by contrast, the decline in the first two weeks of the fall was roughly $90 billion per week, and the third week’s decline was just shy of $60 billion). Upcoming weeks […]

On the Fragile State of the Credit Markets

Despite the evidence of some recovery in the credit markets, such as the sale of some formerly-hung LBO debt (at admittedly lower prices) and the return of buyers to the structured credit market, the patient is far from healthy. An article “Is the storm over? Credit market conditions look changeable,” by Gillian Tett in the […]

Existing Home Sales Fall; MIlken Says Recovery a Long Way Away

Two gloomy sightings on the housing front at Bloomberg. The first was the release of wretched existing homes sales data for August, which followed a July that also showed serious deterioration. The only possible positive spin is that the rate of decline was lower in August than in July, but the August figures were an […]

Mirable Dictu! The Journal is Skeptical About the Stock Rally

The normally cheerleading Wall Street Journal, contrary to its usual form, voices considerable doubts about the near-200-point runup in the Dow yesterday: Stocks soared to a new all-time high….suggesting that investors already are shrugging off the problems that rocked global financial markets only weeks ago….. The scamper to new highs comes despite surging mortgage defaults, […]

Bill Gross: Does the Fed Understand the Brave New World of Finance?

Bill Gross. chief investment officer of bond investment giant Pimco, uses his monthly newsletter to tackle the question of whether the Fed and the Treasury really understand what they are up against. Although he reaches no definitive conconclusion, he suggests they have a bank-centric, and therefore badly outmoded, view of the world. We’ve raised this […]

Credit Markets Still Shaky (And Don’t Think It Doesn’t Matter)

The prolonged disconnect between the debt and equity markets is bizarre. Historically, credit market corrections precede equity downturns; once in a while, as in 1997-1998, they send a false positive, so equity investors feel justified in not taking every blip in the credit markets to heart. (And we aren’t the only ones to think along […]

Why So Little Focus on the Unwinding of Global Imbalances?

It seems peculiar indeed that a sea change in the world economy, namely, the decline of the international funds flow generally called “global imbalances,” has gotten so little attention. “Global imbalances” refers to capital flows from high savings countries such as China, Taiwan and Japan, funding current account deficits (meaning consumption) in the US. They […]

Money Markets Still Fragile

A couple of stories confirm that, despite the peppy response of the equity markets and the return to more-or-less upbeat reporting in the financial media, the Fed’s 50 basis point cut has not restored normalcy to the sector most in need of aid, namely, the money markets. Central bankers have limited and for the most […]

Housing Market Continues to Deteriorate

As the housing numbers come in, they keep getting worse and worse. From Bloomberg: Sales of new homes in the U.S. dropped more than forecast in August and prices plunged by the most since 1970, underscoring the Federal Reserve’s concern about the broader economy. Purchases declined 8.3 percent to an annual pace of 795,000, the […]

Nouriel Roubini, Optimist

You know things are bad when famed permabear Nouriel Roubini’s forecasts turn out to have been cheery. In today’s post, he reviews his calls on housing starts and home price declines and finds them to have been too rosy. From RGE Monitor: This author is well known as one of the biggest bears about the […]