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  • Forecasting Q4 GDP: A Look At The WSJ Economists' Collective Crystal Ball [View article]
    Some good arguments here as to why Q4 2014 will probably come in under consensus - even if not initially, probably after later revisions.
    Jan 30, 2015. 12:03 AM | Likes Like |Link to Comment
  • Is GDP Wildly Underestimating GDP? [View article]
    Asymptosis, I think the flat line is due to demographics, population getting older, birth rate started to level out in 1975, birth rate declining since 1990.
    This is another red flag for expecting continued asset elevation as boomers at some point need to start cashing out.
    Jan 30, 2015. 12:00 AM | Likes Like |Link to Comment
  • Q4 2014 US GDP Estimate: +3.6% [View article]
    Quite a bit of divergence here from this estimate:
    I expect something between this and 0 (1.8% ?) but that negative revisions in later quarters will take this to below zero. It is becoming obvious that reports measuring the economy are not keeping with the pace of downward impacts - i.e. the jobless claims ridiculously low today despite thousands of layoffs announced in the energy sector. The negative impact of higher USD on multinationals, lower consumer spending in December, and large revenue losses in energy exploration from the lower crude price don't seem to be making their way into the reporting.
    Jan 29, 2015. 07:33 PM | Likes Like |Link to Comment
  • A Steep Drop In Oil More Likely Forecasts The Bottom, Not Beginning, Of Any Global Recession [View article]
    The problem is that the little bit of recovery that the US has had has been mostly based on the resurgence in US oil production via fracking/shale, which has been a highly leveraged venture. The effects on employment, decreased valuations, loan defaults, and investment are just starting to be felt. The fact that the sequence of cycles including the lower copper prices is out of sync with prior recessions is probably due to excessive central bank manipulation, i.e. QE, currency pegs, excessively low interest rates. It seems there is quite a bit more downside including a real recession measured by two quarters of negative GDP growth before a bottom will be formed. The decline in oil is a fundamental demand issue related to slowing global economic growth.
    Jan 28, 2015. 09:57 PM | 2 Likes Like |Link to Comment
  • Domestics Outperforming Internationals In 2015 [View article]
    The valuations of domestics are still farther out of line than the large international stocks. It's only a matter of time until the cascading effects start hitting these as well.
    Jan 28, 2015. 09:47 PM | Likes Like |Link to Comment
  • GDP Model Update: Q4 Now Looks Negative [View instapost]
    Wow, I think this would be a mini-black swan event as far as the stock market behavior on Friday which seems to be teetering between further decline and yet another bounce. What is being missed by the other estimates - are they not adequately factoring in the impact from lower crude on the oil industry, the rise of USD or something else? Do you expect that the announced GDP will be announced on Friday at this low of a value or only after revisions several months down the road?
    Jan 28, 2015. 01:39 AM | Likes Like |Link to Comment
  • Why The U.S. Dollar Is Declining [View article]
    The problem with trying to predict the strength of the dollar is that it is very much affected by foreign currencies including policy decisions such as the European QE that are outside of US control. The correlation of the dollar to the actual US economy has been pretty inconsistent for a while. I'd bet on a collapse of the yen and the euro before the dollar significantly devalues even with a faltering US economy, especially since the global economy is faltering along with it.
    Jan 28, 2015. 01:32 AM | 1 Like Like |Link to Comment
  • Why S&P 500 Companies Are Exceeding Earnings Expectations While Falling Short On Revenues [View article]
    Fasten the seat belts, we are just beginning to see the cascading effect of lower oil prices on the economy. Most of the benefits over the last few years that have registered in the US economy have been a consequence of the booming shale and energy industry with the majority of higher paying jobs in that sector. Bottom line is that consumers are still mostly strapped and lower oil prices is not going to inspire a big boost to the economy, but rather towards paying down some of the overextended debt. On the other hand, there are looming bankruptcies and failed junk bonds tied to firms that cannot profit with crude oil prices at this level.
    Jan 23, 2015. 10:28 PM | 1 Like Like |Link to Comment
  • Is GDP Wildly Underestimating GDP? [View article]
    I think it's clear the answer is #1 - asset prices are inflated well above their justifiable value if you look at the underlying data including such metrics as wage growth, PCE, and actual realized income growth (rather than paper wealth growth). It's clear this is a bubble that will pop once interest rates no longer have any room to drop and measured economic activity catches down to the lower demand being registered across virtually all commodities.
    Jan 23, 2015. 10:23 PM | 3 Likes Like |Link to Comment
  • The Rise Of Semiconductors: Why Copper Is No Longer A Bellwether For Growth It Once Was [View article]
    I don't know about that. Copper has been correlated to GDP at a 39% level which is considered a moderately strong correlation going back to 1986 - The lack of correlation since 2011 may be an anomaly due to QE. The large decline of copper, the lowest growth rate in China GDP since 1990, the drop in crude oil price at least in part due to lower demand, the lowering estimates of global GDP growth, narrowing of the yield curve, and crash of the euro may not be totally conclusive that a global recession is coming, but they are worth seriously considering. I don't think the semi-conductor stock performance has predictive value as it is in inflated by stock buy-back and other non-capex schemes that raise P/E multiples without underlying growth. The same type of argument was used in late 2007 with the S&P peaking to deny the likelihood of a recession in 2008. We have asset bubbles all over particularly in stock market valuations and yet to see what will happen to the economy when these pop.
    Jan 23, 2015. 10:14 PM | 3 Likes Like |Link to Comment
  • A Little Post-Election-Day Economic Balm [View article]
    I appreciate the insights regarding the US economy, but this is a global economy and US is affected. You mention none of the global macro factors in play. Exports are declining and US dollar is rising which are negative for corporate earnings. US Growth is severely hampered with Japan monetizing debt and Europe going into a recession. Also, the labor participation is lowest in a generation and the unemployment statistics cited are misleading and do not factor in that most new jobs being created are part-time and that wage growth is practically nil. Your expectations for the next 2 years seem overly optimistic. Thank you.
    Nov 5, 2014. 12:22 PM | Likes Like |Link to Comment
  • The Experiment That Will Blow Up The World [View article]
    YCS looks like no-brainer easy money with the next USD/JPY target probably at least 120 although I'm sure there will be dips along the way and not straight up, JGBD probably will creep down even more until this blows up at which time it will likely go up by multiples. I see YCS as the medium-term play and JGBD as the long-term. Also, it looks like the dollar is going to rise again for a while - UUP could be used.
    Nov 2, 2014. 01:51 PM | Likes Like |Link to Comment
  • What Should Gold Investors Do Now? [View article]
    As far as the Japan action, gold is actually up relative to the decline in Yen that came as a result. I think the fundamentals are saying that deflation is the future for the US with the dollar also going up and non-US QE from Japan and Europe which will devalue their currencies relative to the US dollar and thus be deflationary for the US. I don't doubt that Gold starts to increase in value from here forward, relative to value of all currencies. It points out the importance of physical gold over paper gold such as the GLD ETF which is priced in dollars. The gold trade requires that it be purchased relative to worldwide currencies rather than just US $.
    Nov 2, 2014. 01:10 PM | Likes Like |Link to Comment
  • The Experiment That Will Blow Up The World [View article]
    The problem with the 1930's analogy is demographics. Japan has a dying and aging population which was not the case in the 30s. There is no way to grow out of the situation. Japan has removed all incentives for holding JGBs and will be the only buyer and in so many words has announced this with cutting GPIF holdings in half while increasing it's buying of the bonds correspondingly. When they become the only owner of their own debt, nobody will want the currency. This is the last stage in a very slow process. The fact that they have lasted this long without a major crisis does not mean that it is working. Demographics prevent the can from being kicked down the road for more than a generation. We are down into the final minutes of the clock - probably within next couple of years.
    Nov 1, 2014. 05:55 PM | 3 Likes Like |Link to Comment
  • The Experiment That Will Blow Up The World [View article]
    The BOJ will buy up all of the treasuries if they have to in order to keep interest rates low, but as you said they can't stop the yen from plummeting. The end of this may be hyperinflation and the yen decline going parabolic. Japan will ultimately be forced to raise interest rates and default to restore a functional economy. It's just a matter of how long it takes.
    While all this unravels, it will generate deflationary forces around the world. The default of Japan will swing the pendulum back to hyper-inflationary scenarios in a domino affect - first the Euro zone, and then the US - both of which will also ultimately default. We are seeing the start of a global economic apocalypse that will wildly swing between deflation and hyperinflation leading to sovereign defaults - deflating equities around the world by 50% and then deflating the value of money. The whole system is slowly being reset.
    Oct 31, 2014. 07:28 PM | 4 Likes Like |Link to Comment