Le French

The Seduction of America

I agree with the author, however, wealth or personal income shouldn't be taken out of context.

what people seek is comfort. That's what money buys.
if you compare a car from the 60's and a car from the 90's, you would agree that the last one is more technologically advanced.

I think we should put into perspective wealth growth over the years with a discounted technological progress.

Could the Dow Fall to 1600?

I think you made a good point by looking at the corrolation between GDP growth and price-to-earnings / valuation growth. However, you didn't take into account the devaluation of the dollar. Same as the commodity bubble, the equity markets have been fuelled in part by the weak dollar in the last few years. The price of your stock can go up but if the overall value of your investment goes down proportionally then you barely break-even. As a foreign investor, to make money buying US equities I had to outperform the market. The US dollar is mainly dependent on 3 factors:
(1) the level of US debt
(2) the US trade deficit
(3) Fed interest rates

The reason stock market has been like a slow motion train wreck and didn't crash is simply because of the recent political decisions which have strenghten the US dollar by leveraging temporarily consumer purchasing power and overvalued toxic assets, besides increasing rates of savings from people getting out of the capital markets in cash.

taken from an economic survey on crude oil prices:

"It is also of interest to note that the average nominal price for the OPEC basket of $24.36/B for the year 2002 was equivalent to only $6.53/B in 1973 dollars. The nominal price was more than eight times as much while the real price was only just over double. The main culprit was inflation and not the dollar."

source:
www.mees.com/postedart...

The Next Crisis Is on the Horizon

Great "textbook" style explanation of the pros and cons of the Federal Reserve policy. Know I get it. Thanks.

does this mean buyers should get into oil and other commodities in 6 months to get ahead ?

Here's How This Week Could Unfold

Fluffff.....

Recession Season - Cramer's Mad Money (7/7/08)

Cocaine is recession-proof as well, unfortunately the FARC don't wanna go public.

Google Should Deliver Its YouTube Data to Viacom in Paper Form

AWESOME IDEA !!

Time to Short Both Long-Term Bonds and Crude

Sorry ---- I meant ECB will raise rates ---

Time to Short Both Long-Term Bonds and Crude

What do you do if you are UltraShort Oil & Gas, and Iran gets smashed earlier than anticipated ? It's tempting but no thanks.

Besides, the ECB will cut rates before the Fed does, and traders will buy more "black gold futures" to hedge against a falling dollar. Dangerous gamble if Japan raises bank rates, knowing that they borrow yen to purchase dollars and speculate.

When Central Bankers Clash, Stock Markets Can Crash

BTW, Very complete article. Thanks.

When Central Bankers Clash, Stock Markets Can Crash

Could a rate hike by the ECB in July trigger a worldwide pullback in the stock market (and therefore hijack the Fed role) ?

Recent World Events Are Bullish for Metals

One thing I know best is aluminium.

The best positionned company in this industry is RioTinto, as they just acquired Alcan, one of the leading aluminum firms. The reason is that global demand for aluminum is expected to grow at a faster pace than all of the main iron-ore commodity types (copper, steel, ...) for the next decade. I don't have the source link, but it was on one of the last annual reports, you can find that on their website.

The major expenditure in producing aluminum is energy cost, and that where RioTinto-Alcan makes a difference.

What gives RioTinto Alcan a competitive advantage other its competitors, is that they own the most advance smelter technology that reduces energy consumption. Secondly, 2/3 of their energy comes from hydroelectric power in Quebec whereas Chinese competitors use coal-fired electricity generators. On a cost curve chinese competitors energy costs seem on average twice as expensive.

I don't know if this is going to make a difference on the stock, but clearly I would go with the leader in the long-term. Otherwise, Alcoa is poised to be bought or merge in the next two years.

Check out my final report for more information which I made for a class presentation this semester on RioTinto Alcan.

www.nicolasmurcia.com/...

The Brightest Stars in the Commodities Boom, Part I

To support my previous comment on uranium, I guess my comment was a bit too narrow by only mentionning the US.
"Uranium Soon Fetches $90 as India Leads New Reactors Driving Global Demand"

www.bloomberg.com/apps...

High Likelihood of a Market Crash

I believe that the smart political move that carry on the geopolitic agenda would prefer a crash in october or after the election. Enough time for short-sellers to get squeeze and trigger a late rally this summer. What's gonna happen next? a not-so-unexpected raise in interest rates in september on top of a world food crisis which will crash the stock market.

My bet is on the table. The game is on.

Now the question is for you guys, do you want to stand on the sideline for the next six months, or do you want to grab that last rally to the summit?

U.S. Markets: A Ton of Doubt Calls for Caution

I think we need a good "last breath" rally for july, then when earnings suddenly show up worst than expected, after the Olympic games, then the market will sink 20%. Sentiment is way too bearish for such thing to happen now.

Illustrated Lessons from Financial Cycles and Trends

Knowing what other people don't know is certainly great, but unless you are an insider or great at anticipating future trends you won't bridge the knowledge gap. Even IF you are able to transcend today's world of constant ambiguous news' flow and think ahead of the crowd, well you will still lose your shirt betting against the big crowd (not in number but the one with the money) because there are the ones moving the market.