What Deleveraging?

What Deleveraging?

What deleveraging? China, the nation that helped bull the global economy out of the last financial crisis, is slowing markedly. China is also facing a debt problem. From 2002 to 2008, China’s total debt/GDP ratio was fairly stable and remained below 150%, but is now about 250%. It is possible that China’s debt issues may […]

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November Economic Indicators

November Economic Indicators

The market has been on a tear, so what do November’s economic indicators tell us? J GDP beats: On November 7th we learned that 3rd quarter GDP was better than expected at 2.8%, which of course pushed stocks lower in today’s good is bad and bad is good upside down market. K Unemployment beats, but […]

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The Federal Reserve and Equities

The Federal Reserve and Equities

My regular readers have seen me discuss for some time the impact of monetary policy on the stock market. The chart at right illustrates how prior to the financial crisis and its resulting series of quantitative easing programs, there was no correlation between the assets of the Federal Reserve and the S&P 500. In August […]

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Déjà vu all over again?

The market has now risen five days in a row and we’ve been predicting a downtrend. What gives? After a 20% decline in the markets, some sort of temporary uptrend is not surprising. We note that the rise has been on declining volume, evidence of the lack of conviction. Don’t be fooled by the recent […]

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How and Why of Greek Debt

How and Why of Greek Debt

When a nation has more debt than it can manage, it has two options (1) inflate its way out by printing more money or (2) restructure the debt. Typically the most politically feasible solution is to inflate.  Generally wages tend to keep up to some degree with inflation, so the employed feel as if they […]

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Inflation vs. Deleveraging

Inflation vs. Deleveraging

The majority of the developed world is currently dealing with one whopper of a liquidity hangover.  Across the world households, businesses, and government got themselves hooked on the drug of cheap and easy debt.  When the markets inevitably cut the supply the liquidity drug, the Fed quickly stepped in to keep at least the U.S. […]

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