Category: Markets
Technical Analysis: S&P500 Trendline Broken To Downside
This note from Andy Lee shows a potentially bearish trend developing in the US stock market, with the S&P500 breaking down below it’s long-term trendline since the Federal Reserve started its second campaign of quantitative easing
Some Thoughts On Italy’s Ratings
Here are some thoughts regarding the late Friday cut in outlook to negative for Italy’s A+ rating by S&P. While we remain negative on the ratings for peripheral euro zone, we don’t think a downgrade of Italy by S&P is clearly warranted. Our sovereign ratings model currently has Italy at A+/A1/A+ vs. actual ratings of A+/Aa2/AA-. Moody’s is most out of line but S&P appears to be on target and Fitch is off by one notch. If anything, we had expected a move by either Moody’s or Fitch, not S&P. With rating agencies still clearly on the warpath, we can’t rule out a downgrade here, but the case for a downgrade of Italy just isn’t as glaringly obvious as the others in the periphery
The Correlation between Currencies and Oil
The relationship between oil and currencies is no more stable that the relationship between the S&P 500 and currencies. As we noted yesterday in our look at the correlation between a handful of currencies and the S&P 500, it is not that there is no relationship, but rather that the relationship is far from stable. One cannot deduce the correlation from first principles, but investors should monitor the shift sands
Jim Chanos on China: ‘The Cracks are Spreading’
Jim Chanos sees a slowdown in residential property sales coupled with declining prices. Real estate companies are starting to close down. He argued on CNBC yesterday that this means the first signs of a Chinese slowdown are showing. Video below
This is why a global slowdown will hit by summer
So, the data are weakening. What does that portend for the rest of the year? Lakshman Achuthan of the ECRI thinks it means a serious global slowdown. Below is a recent interview he did on Yahoo’s Tech Ticker explaining why
The Correlation between Currencies and Equities
Many medium term investors are interested in the relationship between currencies and the equity market. There is also a sense among many observers that the market is moving in waves of risk on and risk off. To help shed light on the issue, we looked at the correlation between several currencies and the US S&P 500. From a methodological point of view we are looking at the correlations on the level of percent change.
Norges Bank Raises Rates
While many of our readers may not be particularly interested in Norway, two of our Casey Report investment picks are in the country – hence the quick update on the Norges Bank’s (the Norwegian Central Bank) rate decision
El-Erian on Investing in Periods of Financial Repression
Financial repression leads to investors’ leveraging up, moving abroad, moving out on the risk curve or moving into riskier asset classes. Apparently, Pimco is employing all of these strategies. Will it work, though? I say greater risk doesn’t always mean greater reward. That means leverage and risk-seeking strategies will result in underperformance and could lead to losses
Commodity Prices and Paradigm Shifts
People who are staring at a tsunami of demand for commodities from the developing world and predicting a doomsday of $400 oil and $4000 gold are missing the longer-term retreating tide of demand as citizens of the developed world actually demand decreasing amounts of energy, large goods, and heavy infrastructure. We won’t be packing up and moving to Mars, as the science fiction solutions to resource depletion propose. We will pack up and move into the virtual world
Why is Google issuing bonds?
Google is loaded o the gills with cash, yet today they are pricing up a bond issue. he Financial Times is reporting that Google will raise as much as $3 billion of 3, 5 and 10-year money. Here’s my question: why do this? Acquisition: Maybe they are pulling a Microsoft and preparing a debt-financed acquisition.
Pimco’s strategy for counteracting the end of a bond bull market
Arguably the 30 year US bull market in bonds is at a close. What’s clear is that yields are exceedingly low and real yields are now negative. In effect bondholders are often paying the US government to lend funds when inflation is taking into account. The question is what to do about this if you are a bond manager. Pimco’s Anne Gudefin, who is helping Pimco, the world’s largest bond manager, get into stocks, has some thoughts. She spoke to Fortune Magazine, outlining her strategy, which they summarized as “Bullish on cognac, yogurt, and gold”
The Gold-Silver Ratio – Another Look
The gold-silver ratio (GSR) measures how many ounces of silver one can purchase for an ounce of gold, on a certain date. Reference to the ratio has a long history. One of the first mentions was that upon the death of Alexander the Great, the ratio was 12.5 to 1. During the Roman Empire, the ratio was set at 12. By the late 19th century, the ratio had risen to 15. Interestingly, these historical ratios roughly reflect geologists’ estimates that silver is 17 times more abundant than gold in the earth’s crust. This gives many investors a reason to believe that 17 is the natural balance between these elements, and that eventually the GSR will return to it