by Andy BebutTuesday, June 23, 2009
Jim Cramer is the wisdom of CNBC, I love to citate him again and again.
(Continued)
by Andy BebutThursday, June 18, 2009
This is the follow-up after my post on the role of the dollar as the international reserve currency. I was arguing that the logic of the world trade was pulling the dollar out of United States to facilitate all foreign transactions and that had an adverse effect of forcing the huge trade deficit. I was also suggesting that the World is not ready to make any bold move on the dollar as long as the world is in recession and then in weak recovery. Nothing will happen until the recovery becomes strong enough to finally push the dollar away.
In the meantime, the only way for the second-largest economic force in the world, China, to avoid the dollar in its trades are currency swaps.
(Continued)
by Andy BebutSunday, May 31, 2009
All the last two years I’m writing about Kondratieff wave on the regular basis, and as a former scientist I’m trying to abstract from any particular economy as if K-wave just happens every time and everywhere with equal force. But it simply doesn’t work that way and again, as a former scientist I want to recognize that and introduce some international layer that makes US economy very special and it will make it all simple and dandy again.
There are many bubbles that inflated and popped all around the globe, but there is one bubble that rules them all, the dollar bubble.
(Continued)
by Andy BebutThursday, May 21, 2009
Back in 2007 I was writing that during the Kondratieff Spring, Summer and Autumn Treasury bonds and stocks are trading generally in the same direction, with bonds leading. During the Winter they are trading in opposite direction.
At this chart the black line is 10 year bond price and red line is S&P. You can observe that indeed the inverse relationship mostly holds, because we are in Winter.
However, which is more interesting, the medium-term fluctuations still follow an old rule, i.e. bonds slightly lead and stocks follow.
For each peak in bonds (black line) the peak in stocks follow few weeks to few months later.
The reason is simple. While the bonds are in the bull market each sell-off creates a buying opportunity. People sell stocks to move money into bonds.
But probably a bigger reason is that every decline in bonds price makes short-term borrowing more expensive and corporations have to slow-down the inventories build-up to keep costs at check. Any reduction in inventories creates a chain reaction through all stages of production and sale thus making the fundamental watchers to worry. That’s it.
Another example. I’m too lazy to plot it, but the relationship between fluctuations of the outstanding commercial paper and bond prices must be similar. Higher yields must trigger the reduction of CP, and CP is used for inventories, payments to suppliers, short-term commercial credit and stuff like that. Commercial paper is declining all April, while treasuries are declining sinse February, so there is a lag of 5-6 weeks.
by Andy BebutFriday, May 15, 2009
The official Obama’s budget is projecting a 1.9% GDP growth this year, in 2009. With the economy sinking at 6% rate this quarter one would say - impossible. I will say - let’s look at it.
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by Andy BebutSunday, April 26, 2009
This is not an investment advice, I’m not good at that, but rather an invitation for discussion. The pullback is due. The daytraders who watch the tape all the day know what to do. But what we should do, ordinary investors who check the charts after work, when the market is closed?
(Continued)
by Andy BebutThursday, April 23, 2009
Tomorrow the criteria of the stress test will be disclosed. What should we expect?I simply want to see some logic.
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by Andy BebutFriday, April 17, 2009
I have a habit of checking H8 Fed report of banking activity every Friday evening. For the week ending April 8 the outstanding banking credit fell by $62 bln. It is also down $278 bln from last October. Comparing with 6-month decline this weekly decline is quite significant. Of course I also check the commercial paper report, which declined by $59 bln for the week from April 8th to April 15th. I’d like to sum them together to get the combined $121 bln decline in one week.
(Continued)
by Andy BebutTuesday, April 14, 2009
Today we saw a spectacular fiasco of the “economist” community. The retail sales were expected to rise at 0.3% but instead fell 1.1%. The miss of this magnitude is rare.
(Continued)
by Andy BebutSunday, April 12, 2009
The recent surprise from Wells Fargo is probably reflecting the new reality of Fed-banks relationships. They needed some time to come with a plan and once the plan was executed the new funny money is to be found in the balance sheets. (Continued)
today
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