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  • How high oil price may cut global GDP in 2011?

    Here is an in interesting illustration:



    Tags: oil
    Feb 27 7:19 AM | Link | Comment!
  • Why Demand Media may be going downhill?
    In an official blog post, Google announced a change to its search algorithm to reduce rankings for low quality sites which are "low-value add for users, copy content from other websites or sites that are just not very useful content". For those who have been following the story, the last definition would probably include Demand Media, though its CEO, Richard Rosenblatt, has been denying themselves a content farm or a site of low quality content.
    This could have a big impact on Demand Media's traffic and hence its revenue. So just how reliant is Demand Media on search engine traffic? According to Demand Media’s IPO filings, about 41% of its websites’ page views in the third quarter of 2010 came directly from referrals from search engines, mostly Google.
    It could take a few months to see how this actually affects Demand Media's financials. But for now, I would stay away from the stock.
    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Tags: DMD
    Feb 25 1:35 AM | Link | Comment!
  • Why strength in existing home sales may be a blip
    The January home sales report from the National Association of Realtors shows existing home sales rose for the third consecutive month by 2.7% month-on-month and 5.3% year-on-year to a seasonally adjusted annual rate of 5.36 million.

     existing home sales

    Courtesy of CalculatedRisk

    The headline number is encouraging but one thing to note is that a big chunk (37 percent) of those home sales were foreclosures and other distressed properties. There have been reports of widespread paperwork errors back in October and many major lenders had to temporarily halt foreclosures. It may be that some of those sales that would have normally taken place in October, November and December were delayed into January.

    As such the rise in sales might not reflect a very strong underlying demand, but a delay of which now got satisfied with the returned supply of foreclosures. And a rise in foreclosures tend to pull down prices, this does not bode well for market confidence. Median price nationwide fell 3.7% to US$158k in Jan.

    The housing market may have stabilized somewhat but the recovery is still slow and fragile.

    Feb 24 11:58 AM | Link | Comment!
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