by Andy BebutSaturday, July 19, 2008
I’m just back from vacation and I’d like to publish something lite as a warm up, before I catch up with the news. I would like to make some trivial observations on the junk bond market.
(Continued)
by Andy BebutFriday, July 11, 2008
Bernanke had spent June by draining the outstanding credit of Federal Reserve (check WSE for details). Maybe it was to punish hedge funds for oil speculation, maybe to scare investors from stocks to bond. The economy is suffocating from very expensive credit. By moving the yield on “risk-free” (explanation later) credit down the Feds are forcing investors to take some risk and unzip some pockets.
But something unforeseen happened today.
(Continued)
by Andy BebutTuesday, July 8, 2008
Today’s run confirmed that yesterday was a well- [or not too well] set short-term bottom. The financial stocks that strongly indicated a possibility of a top back in May led the way today with 7.6% run in $BKX.
(Continued)
by Andy BebutSaturday, July 5, 2008
After the introduction of the seasons of the Kondratyev wave we’ve proved the existence of the extra-long secular cycles that manifest themselves as the periodic swings in the relative debt level, monetary base, and stock market. But the more complicated task is to actually analyze the causation of those cycles.
(Continued)
by Andy BebutThursday, July 3, 2008
There are lies, damn lies and statistics. Always be careful when looking at what the government says. At the turning points the patches and adjustments do not work properly and previous months’ numbers are routinely revised in the direction of new trend.
(Continued)
by Andy BebutWednesday, July 2, 2008
The human mind is a very curious thing. People say one never learn something on someone else mistakes. The same way the human mind apparently just can’t grasp a pure concept until it’s experienced from the first hands. You can watch in the movies, read, talk about wars, inflation, flooding, fire, civil disorders, raising kids - but it doesn’t help. That differs a person who read books from a really experienced person.
Let’s examine this on a simple example - hyperinflation.
(Continued)
by Andy BebutTuesday, July 1, 2008
Drew Matus, economist at Merrill Lynch, is throwing more kaka into our forecasting potion (here is the podcast):
- Q2 ‘08 GDP positive, stimulus checks are fading
- Q3 ‘09 GDP negative
- Inflation remains very elevated all this year, Bernanke is stuck with 2% Fed Funds rate
- Finally, inflation is dropping sharply down to 1.6% core rate in Q1 ‘09
- Bernanke’s hands are finally free, he will immediately cut another 50 bps down to 1.5% before March
- Nominal GDP growth for the whole 2009 is below 2%
- Unemployment up to 6.4% in 2009
(Continued)
by Andy BebutMonday, June 30, 2008
The previous two posts on the Kondratiev Wave discussed the debt cycle and monetary base as the basis of the K-wave cycle. The goal of those articles is to show that there is nothing magical in the fact that the economy is experiencing secular cycles with the duration of 50+ years. In fact it’s not more magical than the Galileo pendulum in Pisa and is also no less practical. The same way as the good knowledge of Scriptures saved Galileo from having his heels burned, the good understanding of K-wave can save the investor from burning his money betting against the trend.
In this article I will introduce the K-wave seasons and their effect on the economy and stock market.
(Continued)
by Andy BebutMonday, June 30, 2008
Many economists are closely watching China as the primary driving force behind the world economic growth and the commodities bubble. The alarm that this last bubble is about to pop was ringing several times in the last two years, but so far it proved to be a false alarm, and the commodities bubble resumed its inflation.
Now the alarm is ringing again and who knows, this time it could be for real.
(Continued)
by Andy BebutThursday, June 26, 2008
In the previous article we’ve established the existence of the extra-long debt cycle, which consists of the accumulation and unwinding phases. The next step is to evaluate the trends in monetary aggregates and interest rates.
For reference, let’s repeat the Great Debt Cycle, i.e. debt/GDP cycle chart that we saw before:
This credit cycle is called Kodratieff Wave, named after Russian scientist Kondratieff.
(Continued)
The Yellow Brick Road
