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O. Young Kwon

 
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  • Rising VIX May Trump Bullish Volume [View article]
    Dennis954

    (1) You’re comparing Greece (whose economy is much smaller than New York State) with the U.S.? Greece also doesn’t have its own currency so that they don’t have its own money printing machine while the U.S. has the dollar which is the reserve currency. The Fed does its independent monetary policy while Greece cannot. For example, Greece cannot depreciate its own currency to improve its competitiveness to increase its exports even though currency depreciations are badly needed now!

    (2) The Fed’s policymakers are not politicians. They use various indicators of economic (NOT POLITICAL) activity and set a stance of monetary policy. The decision of whether QE3 is appropriate or not depends on these indicators. The decision is made mainly by looking at the output gap and the growth rate of real GDP in REAL TIME.

    yk
    Jun 22, 2011. 04:53 AM | Likes Like |Link to Comment
  • Change Is the Status Quo: Likely Outcomes for Greece [View article]
    Hi, IT. Actually the tail (Greece) has wagged the dog (the world market) for several days. It’s a time to change our focus from Greece to Us. Your inflation insight is a great news. yk
    Jun 21, 2011. 08:11 AM | 2 Likes Like |Link to Comment
  • Rising VIX May Trump Bullish Volume [View article]
    Dennis954 – (a) QE3 is out of question now because the recovery weakened and the headline inflation rose due mainly to a hike of import prices.

    (b) The end of QE2? The Fed is going to be away in the Treasury primary market, but she will continue to stay in the Treasury secondary market, doing daily routine POMOs (Permanent Open Market Operations by the New York Fed).

    (c) Therefore, even if yields of Treasuries would rise in the primary market due to the Fed’s being out, yields would quite possibly decline in the secondary market if other things being equal..

    yk
    Jun 21, 2011. 07:09 AM | Likes Like |Link to Comment
  • Weighing the Week Ahead: Bernanke Meets the Press, Round 2 [View article]
    Jeff – “Economic recovery trends are very modest…’continued slow growth’ conclusion.”

    It’s a right call because not only leading indicators say the same story, but the Japan effect is reversing its contribution from as a forceful negative factor to now as a positive factor for the ongoing economic recovery.

    yk
    Jun 20, 2011. 10:52 AM | Likes Like |Link to Comment
  • The ECRI Weekly Leading Index: Eight Weeks of Declining Growth [View article]
    Freddy Hutter – Thank you for your clarification. Your prediction on GDP is plausible because the Japan effect is reversing in the opposite direction. For instance Toyoda in the U.S. is going to resume the pre-crisis level of production in September. yk
    Jun 19, 2011. 05:52 AM | Likes Like |Link to Comment
  • Summer Reading Primer: Books and Blogs for Investors [View article]
    Jeff – It’s a well-balanced recommendation for investing as well as just leisure. Thanks. Have a good summer. yk
    Jun 18, 2011. 04:00 PM | Likes Like |Link to Comment
  • Leading Economic Index Points to Ongoing Growth [View article]
    Both Mark J Perry and Doug Short – The ECRI Weekly Leading Index: Eight Weeks of Declining Growth – posted side by side to report the prospect of the economic recovery with two different leading data – the Conference Board (monthly) Leading Economic Index (LEI) and the ECRI Weekly Leading Index (WLI) growth indicator.

    Both MJP and DS report the same message that the economic recovery is expected to slowdown for a while, say not 3.5% nor 3% but 2% or so, according to both the LEI and the WLI. Anybody has a different idea by reading these two? For instance, MJP’s sounds somewhat optimistic while DS’s pessimistic? The words of “Point” or “Ongoing Growth” in MJP’s and the words such as “Eight” or “Declining” in DS’s lead you to think that way? If it’s the case, DS’s is misleading.

    My view is we are better to look at the LEI rather than the WLI because the former is more reliable and less noisy even though the former is not available weekly.

    yk
    Jun 18, 2011. 01:01 PM | Likes Like |Link to Comment
  • The ECRI Weekly Leading Index: Eight Weeks of Declining Growth [View article]
    Both Doug Short (seekingalpha.com/symbo...) and Mark J Perry (seekingalpha.com/symbo...) – Economic Index Points to Ongoing Growth – posted side by side to report the prospect of the economy with two different leading data – the ECRI Weekly Leading Index (seekingalpha.com/symbo...) growth indicator and the Conference Board (monthly) Leading Economic Index (LEI).

    Anyone has a first impression that the former is somewhat pessimistic while the latter is a bit optimistic like me? The words such as “Eight” or “Declining” may push us to being pessimistic while the words of “Point” or “Ongoing Growth” may lead us to being optimistic. In this sense, the former is misleading.

    In fact, both DS and MJP report the same story that the economy is expected to continue to GROW BUT “less vigorously” for a while, according to both the WLI and the LEI. The WLI growth indicator is not only weekly but a “growth rate” series, not a “level” series like the (monthly) LEI. The NBER and the CIBCR research works showed that in general, turning points of growth-rate series (not only weekly but monthly) turn to be unreliable, compared to turning points of level series.

    I don’t know what benefit we can have by looking at a weekly but less reliable one (seekingalpha.com/symbo...) instead of a monthly more reliable one (seekingalpha.com/symbo...).

    yk
    Jun 18, 2011. 12:46 PM | Likes Like |Link to Comment
  • Leading Economic Index Points to Ongoing Growth [View article]
    Mark – It’s a rare good news at a time when lots of bad news and uncertainties have been piling up. Thank you for your lighting up.

    A 0.8% gain of the LEI is encouraging because S&P 500 (one component) declined by 1.8% in May. If the market is getting out of the current correction this month, the LEI will pick up more. What about the end of QE2? It will not dent the “ongoing growth” significantly.

    yk
    Jun 17, 2011. 08:04 PM | Likes Like |Link to Comment
  • Here's Why the Bond King Has Gotten Desperate [View article]
    Jack – It’s an excellent call, clarifying the repeated misguides of Pimco.

    What Pimco has done since Dec. 2010 is somewhat dramatic as follows:

    (a) Sold off Treasuries and then Shorted them until April.

    (b) Bought Internal Treasuries with the proceeds of U.S. Treasuries.

    (c) Took “May Shower” by covering shorts of U.S. Treasuries.

    Pimco must be desperate this time because U.S. Treasuries are advancing while International Treasuries are just topping. Pimco may think they have a muscle in the market but this is an illusion. The long-run bull bond market (over 30 years) is about over – that means there is no easy way to make big money. That’s why Pimco tries to influence the market.

    Even if there are so-called Pimco effects as we observed, they are short-lived. In the five-trillion-plus-dollar Treasury market – the largest in the world and extremely efficient – a tiny muscle of Pimco is a baloney. What I’m concerned about is many followers of Pimco may lose money from misguided Pimco effects.

    yk
    Jun 17, 2011. 09:09 AM | 5 Likes Like |Link to Comment
  • Situation Delicate, To Say the Least [View article]
    mdw70 – Thanks. You got a point. My point is that history can be a guide, but we should not lean history too heavily when we make our INVESTMENT decision because any CURRECT situation is unique in a strict sense. yk
    Jun 17, 2011. 08:57 AM | 1 Like Like |Link to Comment
  • Situation Delicate, To Say the Least [View article]
    Hi, IT. It’s absolutely an excellent timely Pitch (not a sweet Peach you gave us with wilted Roses yesterday!) at a critical time when most investors seem to be LOST.

    IT – “…history is moving forward…some parts of that history in our future…To call the situation delicate is perhaps an understatement.”

    Are you a historian? History doesn’t repeat and connecting dots from history to future is almost impossible?

    Yes, it’s true that the CURRENT situation is “super-delicate.” That’s why all I have been doing last seven weeks is just digging dirt in my vegetable garden where the expected return is far greater than the market.

    yk
    Jun 17, 2011. 05:15 AM | 2 Likes Like |Link to Comment
  • How Vanguard Total Bond's Low Tracking Error Is Achieved [View article]
    David – Thank you for your informative analysis on BND which I own its mutual fund too.

    BND has shown a momentum, compared to other nineteen ETFs (e.g. VTI, TIP, VNQ, VAW, QQQ, PZA, PGF, etc.) which I am following daily. As a result, my allocation on BND has increased this year. A low tracking error of BND makes me more confident on BND.

    If anybody asks me two ETFs, I will pick BND and VTI (Vanguard Total Stock Market ETF), without any hesitation.

    yk
    Jun 16, 2011. 12:51 PM | 1 Like Like |Link to Comment
  • The Bloom Is Off All Roses [View article]
    HAPPYCAPITALIST – Thanks. Keynes didn’t tell us how long the long run is, but I presume it is five years or so. On the other hand, we live a bit longer on average than his era. Please cheer up, and make a profitable investing yk.
    Jun 16, 2011. 09:00 AM | Likes Like |Link to Comment
  • Is the Greek Crisis a Buying Opportunity or a Serious Risk to the Financial System? [View article]
    Jeff – It’s another lucid discussion and agreeable conclusion.

    Yes, it is a buying opportunity in a near term, say, in one to six weeks. I’m watching the progress in our debt-ceiling resolution, which is due before August 2.

    yk
    Jun 16, 2011. 06:36 AM | 3 Likes Like |Link to Comment
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