Among other things, Paul Krugman writes, recent events have amounted to a fairly clear test of Keynesian versus classical economics - "and Keynesian economics won, hands down." [View news story]
Krugman doesn't argue why Keynesian economics has won, only that the classical theory has lost.
To me it doesn't seem like many mainstream economists / policy makers have the correct solutions to our long-term, structural problems....Krugman being exhibit #1.
"Everybody is trading on the inside somehow or another," Matt Taibbi says, pointing out that it's also evident in high frequency trading. "The real issue here is that it's everywhere. And the fear is there's no end to it." [View news story]
Here is to hoping this leads to some sort of crack down on HF trading.
Among other things, Paul Krugman writes, recent events have amounted to a fairly clear test of Keynesian versus classical economics - "and Keynesian economics won, hands down." [View news story]
I can think of at least two recent and obvious examples.
"Everybody is trading on the inside somehow or another," Matt Taibbi says, pointing out that it's also evident in high frequency trading. "The real issue here is that it's everywhere. And the fear is there's no end to it." [View news story]
"Everybody is trading on the inside somehow or another," Matt Taibbi says, pointing out that it's also evident in high frequency trading. "The real issue here is that it's everywhere. And the fear is there's no end to it." [View news story]
Despite this inside access Mr. Market is still irrational at times a presents opportunities for profit, even for the average investor.
"There is a madness in crowds from which even the wisest, caught up in their ranks, are not immune. Stupidity and cruelty are the attributes of the mob, not wisdom and compassion." ~Bernard Baruch
What a joke; if the Fed was really trying to stimulate the economy they would buy the longer date bonds (7-10 year +) thus lowering rates for main st (think mortgages, auto loans, etc.). Instead it announced intentions to focus on shorter-term bonds, primarily 4-10 years (weighted avg maturity they are focusing on is 6.7 yrs), presumably to keep the yield curve steep and maintain NIM for banks.
The Fed is "better informed than anybody else," RBS strategist William O'Donnell advises; its "vast and highly accomplished staff in Washington exceeds anything else the Street can bring... go with the strength, go with the staff and go with the Fed." Is this is the same Fed that urged adoption of ARMs on the eve of short rates going from 1% to 5%, failed to see the housing bubble and said "subprime was contained"? [View news story]
O'Donnell's comment that its, "vast and highly accomplished staff in Washington exceeds anything else the Street can bring...." may be true but he forgets to mention that the Fed is the head of a banking cartel. When forced to chose, it chooses the banks. This has been proven time and time again.
Corporate Downsizing Is Essentially Over [View article]
Sentiment will need to improve greatly before we get any major expansion. Business of all size are worried, the lack of certainty about the future seems high.
I agree that most 'downsizing' is likely over but not sure this means boom in hiring. From Goldman: "Capacity utilization hovers at 74%, up from the March 2009 low of 68% but below the 81% long-term average, so firms are not compelled to fast-track new projects despite the availability of cheap financing. The U.S. has a demand, not a supply, problem."
We are growing but not fast enough to quickly ring out all the slack in the system.
Robert Shiller’s S&P 500 Forecast for 2020: Is He Overly Optimistic? [View article]
A confidence interval would be a good way to go about this but I also think the these longer term forecasts are more accurate then say, a 1 year forecast. We (or at least I) have no idea where the market will be in 1 year but you can make educated estimates about long-term, real returns based on current valuation level due to the markets long-term mean reverting fundamentals.
Robert Shiller’s S&P 500 Forecast for 2020: Is He Overly Optimistic? [View article]
I agree that 60 points over ten years is not a huge difference although it does workout to be .4% annually; I would take a .4% annual bump in returns if I could get it.
The main usefulness in the analysis, as I see it, is to confirm Shiller's 2020 earnings estimate via two different methods. While Shiller's estimate is higher than mine, as you point out they are somewhat close. The real key is what will the P/E multiplier be 2020; I think it is a better bet that it is close the the 15 historical average than the current level of 23.4 which is in the 87% percentile historically.
Gold will continue to rise until Ben Bernanke resigns some time in late 2011 amid broadspread deflation, Jim Walker, founder and CEO of Asianomics, predicts. On the euro: "I think there will be an exodus of countries from the euro that just can't stand the pain." [View news story]
Without a fiscal / political union the Euro is in trouble as simply a monetary union. Germany, the major exporter, benefits (minus bailouts to weaker countries) as the Euro is lower than the Mark would be and the peripheral countries and saddled with debt in a currency they cannot devalue and are not allowed to default on. Sooner or later the citizens of the peripheral country will realize this is in the bankers (lenders) best interest not their own.
"Everybody is trading on the inside somehow or another," Matt Taibbi says, pointing out that it's also evident in high frequency trading. "The real issue here is that it's everywhere. And the fear is there's no end to it." [View news story]
I have no problem with HFT per say but when they are able to get a sneak peak or preview in advance of large block orders and then trade on this data, that is blatant manipulation and should be banned.
The market had sufficient liquidity and price discover before HFT and it would continue to do so if HFT were banned or curtailed.
Since war is out of the question, one emerging markets pro sees the Korean kerfuffle as a buying opportunity, "both short-term for a 20%-plus flip and 200% for long-term investment." Since nearly all Korean firms don't trade or barely trade in the U.S., South Korean closed-end funds such as Korea Fund (KF) offer opportunities for U.S. investors. [View news story]
With KF selling at an 8.8% discount to NAV it may be a good time buy.
Corporate Profits: What the Current Level Tells Us About S&P 500 Returns Over the Next Five Years [View article]
Holding the P/E multiple constant I come up with a similar figure; a compound annual return near 4%. Any change in the multiple would obviously change the returns and I just see a higher probability this it contracts rather than expands. I hope to have another post up this week further expanding on potential S&P 500 returns based on likely scenarios for revenues, profit and P/E multiples.
In my mind, we are not in a new secular bull market. They tend to start with a CAPE below 10......at the March '09 the CAPE only fell to 11.40 and was only this low briefly...typically we see single digit PE's for a significant period before starting a new secular bull. Also, secular bulls tend to start with the inflation rate trending toward price stability.....with this in place currently it seems likely that we will be away from stability and towards either deflation or inflation.
Among other things, Paul Krugman writes, recent events have amounted to a fairly clear test of Keynesian versus classical economics - "and Keynesian economics won, hands down." [View news story]
To me it doesn't seem like many mainstream economists / policy makers have the correct solutions to our long-term, structural problems....Krugman being exhibit #1.
"Everybody is trading on the inside somehow or another," Matt Taibbi says, pointing out that it's also evident in high frequency trading. "The real issue here is that it's everywhere. And the fear is there's no end to it." [View news story]
Among other things, Paul Krugman writes, recent events have amounted to a fairly clear test of Keynesian versus classical economics - "and Keynesian economics won, hands down." [View news story]
Robert Shiller’s S&P 500 Forecast for 2020: Is He Overly Optimistic? [View article]
"Everybody is trading on the inside somehow or another," Matt Taibbi says, pointing out that it's also evident in high frequency trading. "The real issue here is that it's everywhere. And the fear is there's no end to it." [View news story]
"Everybody is trading on the inside somehow or another," Matt Taibbi says, pointing out that it's also evident in high frequency trading. "The real issue here is that it's everywhere. And the fear is there's no end to it." [View news story]
"There is a madness in crowds from which even the wisest, caught up in their ranks, are not immune. Stupidity and cruelty are the attributes of the mob, not wisdom and compassion." ~Bernard Baruch
The 30-Year Bond Gets Clobbered [View article]
The Fed is "better informed than anybody else," RBS strategist William O'Donnell advises; its "vast and highly accomplished staff in Washington exceeds anything else the Street can bring... go with the strength, go with the staff and go with the Fed." Is this is the same Fed that urged adoption of ARMs on the eve of short rates going from 1% to 5%, failed to see the housing bubble and said "subprime was contained"? [View news story]
Corporate Downsizing Is Essentially Over [View article]
I agree that most 'downsizing' is likely over but not sure this means boom in hiring. From Goldman: "Capacity utilization hovers at 74%, up from the March 2009 low of 68% but below the 81% long-term average, so firms are not compelled to fast-track new projects despite the availability of cheap financing. The U.S. has a demand, not a supply, problem."
We are growing but not fast enough to quickly ring out all the slack in the system.
Robert Shiller’s S&P 500 Forecast for 2020: Is He Overly Optimistic? [View article]
Robert Shiller’s S&P 500 Forecast for 2020: Is He Overly Optimistic? [View article]
The main usefulness in the analysis, as I see it, is to confirm Shiller's 2020 earnings estimate via two different methods. While Shiller's estimate is higher than mine, as you point out they are somewhat close. The real key is what will the P/E multiplier be 2020; I think it is a better bet that it is close the the 15 historical average than the current level of 23.4 which is in the 87% percentile historically.
Gold will continue to rise until Ben Bernanke resigns some time in late 2011 amid broadspread deflation, Jim Walker, founder and CEO of Asianomics, predicts. On the euro: "I think there will be an exodus of countries from the euro that just can't stand the pain." [View news story]
"Everybody is trading on the inside somehow or another," Matt Taibbi says, pointing out that it's also evident in high frequency trading. "The real issue here is that it's everywhere. And the fear is there's no end to it." [View news story]
The market had sufficient liquidity and price discover before HFT and it would continue to do so if HFT were banned or curtailed.
Since war is out of the question, one emerging markets pro sees the Korean kerfuffle as a buying opportunity, "both short-term for a 20%-plus flip and 200% for long-term investment." Since nearly all Korean firms don't trade or barely trade in the U.S., South Korean closed-end funds such as Korea Fund (KF) offer opportunities for U.S. investors. [View news story]
Corporate Profits: What the Current Level Tells Us About S&P 500 Returns Over the Next Five Years [View article]
In my mind, we are not in a new secular bull market. They tend to start with a CAPE below 10......at the March '09 the CAPE only fell to 11.40 and was only this low briefly...typically we see single digit PE's for a significant period before starting a new secular bull. Also, secular bulls tend to start with the inflation rate trending toward price stability.....with this in place currently it seems likely that we will be away from stability and towards either deflation or inflation.