The capital markets of the last quarter century have been incredibly generous to us. Since
mid-1982, the S&P 500 index has advanced at a solid 13.9% annual clip, while 10-year
Treasury bonds have posted annualized returns of 9.8%. With annual inflation averaging
just over 3%, this means that investors have seen their real wealth double every seven
years in stocks and every 11 years in bonds.
But, past is not prologue.
Would a bond investor, looking at 25-year returns of 10% and current long bond yields of
5% be foolish enough to expect the next 25 years to deliver 10%? Of course not. They’d
recognize that yields started in 1982 at 14% and had plunged to 5% over the next 25
years, earning hefty capital gains on top of a yield averaging 7% over this span. With
current yields of 5%, they’d expect 5%....Complete Article
Well it’s national pork month (October), yet not the kind of “pork” served up inside the D.C. beltway that proposes $400 million “bridges to nowhere,” but rather the pork (read: pigs) that Smithfield Foods (SFD) serves up to the world.
Enter China, the world’s largest pork- consuming country, which ironically is celebrating the year of the pig! Ironic because of the vicious outbreak of Blue Ear disease that has wiped out 20% of China’s pig population, causing pork prices to jump some 70% over the past year. Because of the porcine respiratory syndrome, last month Smithfield agreed to supply 60 million pounds of pork to China, which could lead to additional Chinese purchases. Note that it takes almost two years to raise a pig for slaughter to sate the burgeoning pork demand created as Chinese per capita incomes rise and the desire for more pork increases geometrically.
Interestingly, pigs eat corn, as well as other grains, which is one of the reasons we have been steadfastly bullish on agriculture for years...
1) In an open economy, you can control your exchange rate or your interest rates, but not both. The first time I learned that was late 1986, when the Dollar crashed, then the bond market crashed (May 1987), then the stock market crashed(October 1987). This article from Morgan Stanley goes over the same idea. Pay attention to the investment implications at the end, though Hong Kong may have already rallied enough.
For a more bearish view, many Asian economies are facing the choice of slowing their economies, or importing inflation from the US. My sense is that we are in an uptrend for inflation globally. Few central banks are truly pursuing sound currencies.
2) Europe is no monolith here. Managing the ECB is some trick, because money is political, and there is monetary union without political union. The Swiss Central Bank continues to tighten, while the Bank of England effectively loosens, because of the recent panic there, involving Northern Rock.
3) One of my favorite observations about technical analysis is that slow moves tend to persist, while fast moves tend to mean-revert. Well, the US dollar is having a grinding, slow adjustment downward. To me, that is just another indicator that the decline will persist...
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Oct. 4, 2007 - Will Merrill Lynch be able to bounce back from its estimated $4 billion loss in the third quarter? If the wealth of management experience on the Board of Directors is any indicator, the answer seems to be “yes”. Merrill Lynch recently let go of Global Head of Fixed Income Osman Semerci, Co-Head of Fixed Income for the Americas Dale Lattanzio, and Co-Head of Institutional Securities Dow Kim. Merrill has also cut 3,400 jobs recently (see article from Bloggingstocks.com).
We created an IntellectSpace Knowledge Map to determine if the Directors at Merrill were experienced enough to turn the bank around. After reviewing the Knowledge Map we were surprised at the management experience held by the Directors in a variety of companies and industries. Examples range from 3M to Xerox to the UK government to the Pentagon.
posted on: September 20, 2007 | about stocks: OIL / USO / DBO
Oil's low close of $50.48 on January 18th, 2007 seems decades away as prices are up 62% since then.
With T. Boone Pickens forecasting $100 oil (thankfully not this year), we looked back at historical price moves for the commodity since 1986.
Bull and bear markets are defined as 20% moves. Notably, the average gain for oil in a bull market is 62.89% (we are up 62.32% right now); the average length of a bull market is 226 days (we are at 245 days right now). See Chart (Complete Story)
Posted by Prieur du Plessis under Business , Commodities , Economy , Equities , Finance , Gold , Investment , Markets , Money , Stocks , Wall Street [2] Comments
My bullish stance on gold is old hat by now, but that does not take anything away from my excitement to keep riding this profitable play.
I have also for a while been favoring gold bullion relative to US industrial stocks, actually relative to most mature-market equities. As a matter of fact, I took Richard Russell to task on July 25, 2007 on his argument that gold’s outperformance of the Dow Jones Industrial Index might have been reversing when viewing the ratio’s long-term trend line. Let’s see how this has panned out over the ensuing few weeks.
The chart below shows the gold price relative to the Dow. A rising trend line indicates gold outperforming industrial stocks, and vice versa...[Chart]
The yellow metal has undoubtedly had the better of the Dow since breaking out of a two-month sideways pattern in mid-July. Running a MACD oscillator on the relative chart still shows gold outperforming, but it is starting to look somewhat toppish and the yellow metal may first catch its breath near-term before the outperformance trend is continued.
