Category Archives: Investment outlook

UBS Posts Loss After $14 Billion Writedown

$14 billion? I thought I’d be inured to big negative numbers coming from investment banks by now, but I caught my breath when I read the headline of the Bloomberg story reporting that UBS is taking a further $14 billion in writedowns, resulting in a $11.4 billion loss for the fourth quarter. Remember, when UBS […]

Ben Stein Tells Us It’s All the Traders’ Fault

Here we go again. We have another Ben Stein column, “Can Their Wish Be the Market’s Command?” which says, I kid you not, that we have a bear because a whole bunch of traders got together and made it so. Since undue contemplation of Ben Stein logic is bad for anyone’s mental health, I will […]

"Welfare for Wall Street, Federal Reserve-Style"

Thomas Palley posts only occasionally, but just about everything he writes is first rate, and today’s offering is no exception. Palley argues one of our favorite views, that the Federal Reserve interest rate cuts have had more to do with trying to prop up asset values than with stimulating growth. He points out that this […]

Willem Buiter Heaps Scorn on Fed’s 75 Basis Point Rate Cut

Willem Buiter’s immediate reaction to the Fed’s emergency rate cut earlier this week was sharply negative, and upon reflection, his view has become even more critical. Buiter sees the reason for the cut as a “knee jerk” response to the prospect of a sharp fall in equity prices. He looks at the proximate causes of […]

Some Very Blunt Warnings from Soros, El-Erian, Setser, and Other Sensible People

Sentiment has gotten so bad even among CEOs that there is reason to expect a bounce in equities in the not-so-distant future once frayed nerves have calmed a bit, particularly given the report in Bloomberg that Bernanke & Co. are much more sanguine about inflation and therefore are perceived to be ready to make further […]

Less Than Respectful Commentary on the Fed Put and Fiscal Rescue Efforts

It wasn’t enough that the Administration’s fiscal stimulus plan announced last Friday was sufficiently off beam so as to precipitate a global stock market rout. The Fed then put its credibility and some of its remaining firepower on the line to try reverse the gap-downward stock market opening with the in-panic-mode pre-session 75 basis point […]

The Rout in Japan Continues

Another very bad open, and no reason to expect much improvement. From the related Bloomberg story: Japan’s stocks plunged, with the Nikkei 225 Stock Average set for its worst two-day drop in more than a decade. The yen strengthened while commodities prices and European shares plunged, adding to concern world economic growth is faltering. Honda […]

Nikkei is Tanking

Normally I don’t go for intra-day fever charts, and the Nikkei was down considerably on Friday before rallying and winding up in positive territory. Nevertheless, the current state of play gives cause for pause: Update 3:00 AM. Yikes: That’s down nearly 4%. Back to the original post: The related Bloomberg story attributes the decline to […]

Inflation or Deflation?

Mere mortal investors and their professional colleagues are (at least if they are honest and have a modicum of sense) a bit confounded as to what to do at this juncture. By all measures, inflationary pressures are gaining strength, and yet recessions lower aggregate demand and with it, price pressures. Ah, but what about the […]

Sentiment Indicators, Sort Of

One thing that market mavens will tell you is that any measures of investment sentiment need to be read with considerable care. For instance, high short interest is considered bullish. Why? If stocks move upwards (and remember, just due to daily noise, stocks move around quite a bit), shorts will have to buy stocks if […]

Markets Want Christmas in January (Rate Cuts Edition)

Although a good deal can happen between now and January 31, the date of the next Fed Open Markets Committee meeting, a 50 basis point rate cut looks more consistent with present economic conditions than do deeper cuts. Most important (and widely ignored) is that the seize-up the money markets is largely a thing of […]

High Volume of Options Trades Reveals Market Nervousness

Every cloud has a silver lining, and one in this market downturn is option trading. Bloomberg reports that stock option volume has increased considerably. And in another sign of market stress (or maybe just random stupidity), jck at Alea reports a “mass order error” on Globex led to a big order imbalance, a lot of […]

The Economist’s "R-Word Index"

Believe it or not, I found this less downbeat than most economic news du jour. Things are not yet as bad as they have been in past downturns, at least according to the Economist’s house measure: The Economist’s informal R-word index is also sounding alarms. Our gauge counts how many stories in the Washington Post […]

Is a Bear Psychology Taking Hold?

One of the features that distinguishes a bull market from a bear market is how participants react to news. In upswings, investors either shrug off discouraging information, or at worse show an initial negative reaction, then pile back in. You see the reverse in corrections: securities prices don’t respond to good news, or do so […]

Munis Post Worst Results Since 1999

A Bloomberg story reveals that municipal bonds have lagged other fixed income investments, mainly because important investors, namely hedge funds and banks, are directing capital to other uses (as in saving their hides). Due to their tax-deductible status, munis trade at a lower yield than Treasuries, but that differential has narrowed markedly. Are munis a […]