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HSBC or Homebuilders: who are you listening to?

Today, the Home Builders Federation came out to ask Mervyn King and the BoE to cut rates 50 beeps. The Telegraph reports: Housebuilders are urging the Bank of England to cut interest rates when it makes its monthly decision tomorrow, warning that the market is slowing at a faster rate than it did during the housing slump of the early […]

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Chart of the day: Dow Jones vs. Treasuries

Chart of the day: Dow Jones vs. Treasuries

Knowing when to invest is just as important as investing at all. When one analyzes the returns in the market over longer periods (5+ years), it becomes obvious that certain periods of investing are much less lucrative than others. We are living in one of those times. Since the late 1990s, in the wake of the Asian Crisis and the […]

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De-leveraging redux

Yesterday, in a post entitled “De-leveraging,” I argued that credit writedowns and the resulting deleveraging are highly deflationary. This is the core of the problem with the global financial system. I want to expand a bit on that conversation. Yesterday, I kept it simple to illustrate the problem with leverage and the need for companies to de-leverage. My discussion of […]

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Soros says commodity bubble echoes ’87 climate

Are we headed for a crash in commodities like the one in 1987 in equities? I doubt it. But, I am concerned that the commodities bubble is getting well out of hand. Certainly, the rationale for commodities as an inflation hedge and in a world of scarce resources is well-founded. However, the rise of late is downright frightening. George Soros […]

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Climate Findings Were Distorted, Probe Finds

Because of the potential end to the long Democratic primary season, a monster admission is getting zero play in the press: Bush spun climate findings. After Scott McClellan’s damning allegations on Iraq, this seals the deal, showing the Bush White House to be untrustworthy by every definition. An investigation by the NASA inspector general found that political appointees in the […]

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Chart of the day: Buy and Hold?

Chart of the day: Buy and Hold?

Remember when you used to hear pundits say “‘Buy and Hold,’ that’s the ticket to shareholder wealth?” Is that really true? I have put this thesis to the test over a number of years and it just doesn’t hold water. Bear markets are always so extreme, they wipe out gains for decades. So, if you think a bear market is […]

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News Round-Up: 03 June 2008

Financial News Soros: Oil Is a Bubble, But Crash Not Imminent Toll Brothers (TOL): Another Lousy Quarter, But At Least Bob Toll Stopped Blaming Media Merrill’s Rosenberg: Stagflation Talk is "Utter Nonsense" Three Investment Opportunities High Inflation Creates Barton Biggs and Bob Brinker Are Both Bullish Bill Gross: Prepare for Coming Inflation Yahoo Redefines ‘Fail’ – Again Iowa Farms Harvested […]

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The Mean Season

John Mauldin is an economic pundit I have been following for a number of years. He not only writes a weekly newsletter that is very informative but he also has many guest writers of equal note. Yesterday, he had Michael Levitt of HCM write for him and what he said about the U.S. economy should give one great pause. “While […]

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Is Lehman the next Bear Stearns?

The Globe & Mail is reporting that Lehman Brothers might have to go back to the capital raising trough again in order to shore up a leveraged and risky balance sheet. In the face of yesterday’s credit downgrade by S&P, this sounds like a wise idea. Lehman Brothers Holdings Inc. may raise billions of dollars of fresh capital, suggesting the […]

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What’s a central bank to do?

Global financial institutions are deleveraging because they can’t build enough equity capital any other way except by going to Asian and Middle Eastern sovereign wealth funds, cap in hand. So, the Fed and the Bank of England (BoE) have both cut interest rates. Yet, LIBOR remains stubbornly high. The TED spread is still 85 beeps. Banks just don’t trust each […]

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De-leveraging

The term deleveraging is one bandied about a lot in the press recently. But, what does it actually mean? De-leveraging is the process by which financial institutions and investors reduce the relative size of their assets to equity ratio. Generally, it means shedding assets in the financial sector, thus reducing credit and slowing the economy. Intro The basis of my […]

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News Round-Up: 02 June 2008

Has Oil Production Reached a ‘De Facto’ Peak? Read It Here First: States’ Impact on Economy States and Cities Impact On GDP Taleb’s Harsh Assessment of Bankers, Economists, and the Fed Housing Woes Hit Affluent Middle-Class Homeowners UBS CDS Lawsuit: Harbinger of Things to Come? The Opinionator: Enraged and ‘Confused’ Alt-A Borrowers Looking More Like Subprime Than Prime S&P slashes […]

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