No wonder the Red Ponzi consumed more cement during three years (2011-2013) than did the US during the entire twentieth century. Enabled by an endless $30 trillion flow of credit from its state controlled banking apparatus and its shadow banking affiliates, China went berserk building factories, warehouses, ports, office towers, malls, apartments, roads, airports, train stations, high speed railways, stadiums, monumental public buildings and much more. If you want an analogy, 6.6 gigatons of cement is 14.5 trillion pounds. The Hoover dam used about 1.8 billion pounds of cement. So in 3 years China consumed enough cement to build ...
AUD/USD: Having the pair extended its upside pressure to close higher on Monday and was seen following through higher on Tuesday, further strength is envisaged. On the downside, support resides at the 0.7600 level where a breach will aim at the 0.7550 level. Below that level will set the stage for a run at the 0.7500 level with a cut through here targeting further downside pressure towards the 0.7450 level. On the upside, resistance lies at the 0.7700 level. A cut through here will turn attention to the 0.7750 level and then the 0.7800 level where a violation will set the stage for a retarget of the 0.7850 level. On the whole, AUD/USD remains...
There are three highlights to the foreign exchange market today. First, the yen is marginally softer. The yen’s strength this month has been the main development. After making a marginal new high yesterday, some semblance of stability emerged in North America yesterday, and this has carried over into today’s activity. The greenback largely held above JPY107.90 and rose to JPY108.40 in late Asia. It has been consolidating in the European morning. Japan’s Finance Minister appeared to ratchet up the rhetoric a notch, warning that if the moves are extreme and one-sided, officials will take action. Yet the fact that there...
As technology advances, new companies and industries rise up, offering unique solutions, services, and products. Not every new tech company makes for a promising investment though. Startup companies are especially risky to invest in because there’s no telling how they’ll perform. Before gauging how well a company can do, it’s important to see how well it has done in the past. For investors who want a lot of growth going forward, it’s important to see that there has been some significant growth in recent history as well. Below, we outline five tech stocks that have done just that. Each of these companies saw their earnings grow by at l...
I have known oil industry expert Daniel Yergin since working for the Senate Foreign Relations Committee in the 1970s. Yergin attended our hearings on OPEC’s quadrupling the oil price and then turned out readable versions of the revelations, forecasts, and strategies the Senators had extracted from their witnesses. My then-boss, Sen. Clifford P. Case, R-NJ, called Yergin a “terrible simplificateur.” Dan Yergin is still at it. This week, he managed to be quoted at the top of the financial second section of the Financial Times saying: “the era of OPEC as a decisive force in the world economy is over. It is clearly a very divided orga...
When I initiated the dshort web page in late 2005, one of my routine topics was equity valuations, initially inspired by Nobel laureate Robert Shiller’s book, Irrational Exuberance, the second edition of which was published earlier that year. I gradually expanded my focus from his cyclically adjusted price-to-earnings ratio (CAPE) to include Ed Easterling’s Crestmont P/E, Nobel laureate James Tobin’s Q Ratio and my own monthly regression analysis of the S&P 500. A few years ago I began posting a monthly update featuring an overlay of the four. Here is a chart that shows the average of the four valuation indicators fr...
The phrase that leaps to mind when one hears that the EU is to demand that major corporations must become transparent about their tax affairs is “poacher turns gamekeeper”. The EC is already engaged in examining whether so-called “sweetheart” deals between some EU member states (including Luxembourg, Holland and Ireland) and corporations trading within the EU breach EU rules. Leaders of the nations involved, including former Luxembourg PM and current EC President Jean-Claud Juncker, have been quick to point out that they have done nothing illegal, but then neither have the corporations. Tax avoidance is a perfectly legal, and, if we a...
As dividend growth investors we seek to continually add to our income producing portfolios in an effort to generate an ever increasing passive income stream. Central to this occurring is finding the perfect balance of high enough yield that is sustainable versus the lower yielding dividend stocks that exist. While yield cannot be the only focus a dividend investor pays attention to, it is the butter to our bread as all distributions come from that yield. But what happens when a portfolio starts to contain an increasing number of lower yielding or no yielding stocks as a result of spin offs, mergers or buyouts? This is the question I’d like ...
Back in October 2014, just after the BOJ drastically expanded its QE operation, we warned that the biggest risk facing the BOJ (and the ECB, and the Fed, and all other central banks actively soaking up securities from the open market) was a lack of monetizable supply. We cited Takuji Okubo, chief economist at Japan Macro Advisors in Tokyo, who said that at the scale of its current debt monetization, the BOJ could end up owning half of the JGB market by as early as in 2018. He added that “The BOJ is basically declaring that Japan will need to fix its long-term problems by 2018, or risk becoming a failed nation.” Which is why 17 mo...
Better than expected inflation figures in Britain: headline inflation is up to 0.5% y/y with a monthly rise of 0.4%, both better than expected. In addition, core inflation is up to a level of 1.5%, and that’s already 0.2% better than the 1.3% that had been anticipated. GBP/USD is rising above 1.43, extending the gains. These are the highest inflation reads since December 2015, a 15 month high. The early Easter holiday is pinpointed as the reason for this positive surprise. The early shopping season impact is reflected in a nice rise in the Retail Price Index (RPI) to 1.6%. Is UK inflation gaining real momentum? Or is it just an Easter bunny...