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The Last Boomer

The Last Boomer
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  • 10-year Treasury yield tumbles back below 2% [View news story]
    I started building a position in TLT when the 10yr went above 2.1%. I hoped that it would keep climbing to maybe 2.5% so I can build a full position. Unfortunately it dropped too fast so I barely have a starter position. My second best trade last year was in TLT that I bought in 2013 and sold late in 2014. I aim for a replay this year.
    Feb 24, 2015. 03:10 PM | 1 Like Like |Link to Comment
  • Why I Am Buying AK Steel [View article]
    Today there is a good article from Morningstar on the American steelmakers.
    http://seekingalpha.co...
    Key point: the steelmakers are undervalued and the current stock prices will look like a bargain 2-3 years from now. Their favorite is Nucor.
    I started rebuilding my position in AKS when it fell recently under $4.
    Feb 23, 2015. 01:43 PM | Likes Like |Link to Comment
  • Talking Points On 'America's Imminent Budget Crisis': Focus [View article]
    I have been thinking though how predictable a GOP administration and a GOP president would be: cut government spending, but cut taxes more than that, so the outcome is actually more debt, not less. Paradoxically, Brad's call for more debt would be better served if Republicans win all elections.
    Feb 21, 2015. 04:31 PM | 1 Like Like |Link to Comment
  • Going Long Wal-Mart [View instapost]
    I also bought today for the same reason as you, Tom. I read the string of comments in the Wallstreet Journal and most bloggers there condemned the wage increase. They thought it is a bad idea to pay people living wages, or I guess, any wages whatsoever. I think though it makes a lot of business sense to properly incentivize your employees. This is a good move by Walmart.
    Feb 19, 2015. 12:26 PM | Likes Like |Link to Comment
  • Housing starts inline in January [View news story]
    Calculated Risk has a good overview of the trend in housing. Housing is finally recovering after moving sideways for 2.5 years. Still housing starts are very low by historic standards and have a long way to go. I am long XHB and NVR (been long for a while now). Looking for undervalued housing stocks to invest more; I'd appreciate your suggestions.
    Feb 18, 2015. 09:43 AM | Likes Like |Link to Comment
  • Negative Volatility In Long Bonds Surges [View article]
    In the last few months the inflation hawks finally capitulated and we saw the spike in long treasury prices. That was overreaction. Now the market is correcting and it will overreact again in the other direction discounting a little too much the real threat of deflation. It is hard to say when the next turn will happen towards lower yields. My guess is somewhere between 2.5% and 3% on the 10yr. Given the weak growth prospects, it is hard to believe the 10yr will go higher than 3%.
    Feb 18, 2015. 07:52 AM | Likes Like |Link to Comment
  • U.S. And German 10-Year Yields [View article]
    Yes, the spread is the highest since 1989. I wonder if it is possible to get even higher given the divergence in the economic fortunes of Europe and US. Europe has the worst fundamentals of all regions: shrinking and aging population, anti-business climate, inflexible labor markets, a monstrosity of a currency system, non-functioning or non-existing European institutions. All this implies sclerotic growth and persistently low inflation for years to come.
    Feb 17, 2015. 07:42 PM | Likes Like |Link to Comment
  • Still Fishing For The Bottom [View article]
    "I know many do not like my argument that the return of an factor of production--land, labor, or capital, is a function of supply and demand..."
    Actually I like it a lot. This makes a lot of sense. There is also this smart blogger, Philosophical Economics (he calls himself Jesse Livermore), who makes a very good case that stock prices can also be explained by the supply/demand dynamics rather than traditional fundamental analysis.
    Feb 13, 2015. 08:54 AM | Likes Like |Link to Comment
  • Still Fishing For The Bottom [View article]
    Angel, thanks. I was afraid that this could be the answer to my question. I wonder then, how do I navigate the current environment? I can't just drift with the market without having a bigger picture understanding of what is happening with the economy and the financial system. Any advice?
    Feb 13, 2015. 06:22 AM | Likes Like |Link to Comment
  • Still Fishing For The Bottom [View article]
    Marc, is there another period in history when something like this has happened? What can we learn from it?
    Feb 12, 2015. 10:15 PM | Likes Like |Link to Comment
  • Inflation Remains Weak: What's Going On? [View article]
    "Gosh, not sure what you're saying, Boomer. The crisis arguably had it's roots in large (dollar) capital inflows..."
    Asbytec, this is exactly what I am saying. Without the capital inflows that resulted from the large trade surpluses of the surplus countries, which resulted from their policies of suppressing internal consumption and drive growth through investments and exports, without this, the housing bubble would have been impossible or at least would have not been that big.
    US consumers have generated now for decades the demand that drove the world economic growth. That is why US is the real engine of growth, not China, or Germany. Whoever generates incremental demand is the one creating growth. The problem is that this demand has all been exported through the trade deficit from the US to the surplus countries (call them China) who refused to stimulate their internal demand.
    Feb 10, 2015. 08:14 AM | Likes Like |Link to Comment
  • Inflation Remains Weak: What's Going On? [View article]
    Tack, the trade deficit is the real problem. As Jason C explains here, the trade deficit is by definition a net import of capital into the US from abroad. To grow US consumption further, as you suggest, means that we need to increase the trade deficit and import even more capital and create further imbalances. There are only two ways in which US can balance this: increase US unemployment or increase US external debt. Both are unsustainable.
    Actually, I think we need new consumption taxes to slow down the consumption growth in the US. The surplus countries (Germany, China) have suppressed their internal consumption growth for decades now and this resulted in the current global imbalances that I believe are ultimately responsible for the financial crisis. These are the countries that have to encourage their consumption growth. China has an absurdly low share of consumption in GDP. US cannot forever be the demand engine of the world. China and Germany have to step in.
    Feb 10, 2015. 06:50 AM | 1 Like Like |Link to Comment
  • Greek defense minister outlines Plan B [View news story]
    Just default already! I am tired of all this Greek drama.
    BTW, why is the defense minister making economic policy? What is going on over there in Greece?
    Feb 10, 2015. 06:31 AM | 4 Likes Like |Link to Comment
  • Is It Time To Fade The Deflation Trade? [View article]
    The three points made by the Morgan Stanley's analyst make sense: oil prices are finding their bottom, US economy and labor market are in good shape, Europe shows some signs of life. Energy stocks and industrials outperformed utilities in the last couple of days. It feels that there is some rotation from utilities and treasuries to more cyclical stocks. Maybe other people are making the same conclusion as Cullen.
    Feb 9, 2015. 09:01 PM | Likes Like |Link to Comment
  • Germany, ECB take tough line against Greece [View news story]
    Greece will more likely default. The access to capital may be limited in the short term but in the long term every country that has defaulted gets access to the financial markets again. Germany defaulted in 1932. Mexico in 1982. Russia defaulted in 1998. In subsequent periods each one of these countries regained its access to foreign capital.
    Feb 1, 2015. 04:34 PM | 1 Like Like |Link to Comment
COMMENTS STATS
988 Comments
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