QE and the Wealth Effect in the US

Events in Japan and Libya do not seem to have derailed the ongoing positive sentiment in the market, but it might just have alerted various Masters of the Universe that black holes (or was that swans?) are both invisible and unpredictable until they occur. It is precisely because of this that such events . . . → Read More: QE and the Wealth Effect in the US

Profit Margins, Down to Earth?

One of my good friends who runs a small investment boutique pointed me towards today’s chart of the day from Bloomberg showing the flight phoenix of US corporates’ profit margins.

I know that the chart is difficult to read but you only really need to look at the . . . → Read More: Profit Margins, Down to Earth?

Shutters Are Closed Up and Down Main Street but Wall Street is in the Money

Shutters are closed up and down Main Street but Wall Street is in the money. How could that be? The bull market in stocks has gone farther for longer than I thought possible.

Just surveying the salient points of the economic situation in 2009 led me to a more bearish view. The anti-business party . . . → Read More: Shutters Are Closed Up and Down Main Street but Wall Street is in the Money

Leading Indicators Now Up for 5 Straight Months

The Conference Board’s index of U.S. leading economic indicators rose for the fifth straight month in August. The streak represents the longest string of LEI gains in five years. The data further bolsters our view that growth likely began in June and will continue to strengthen through the end of the year. . . . → Read More: Leading Indicators Now Up for 5 Straight Months

What Is the Rate of Economic Growth Implied by Current Equity Prices?

There is a standard joke among economists that equity markets have predicted about 10 of the last 5 recessions. As the joke acknowledges, equity prices embody predictions of future earnings and this implies that they also embody predictions of economic growth rates.

So, what is the rate of economic growth implied by current equity . . . → Read More: What Is the Rate of Economic Growth Implied by Current Equity Prices?