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  • Finance 0

    Inflation Expectations Plunge: What, Me Worry?

    Fed chair Janet Yellen keeps repeating the mantra “inflation expectations are well anchored”. They’re not, and I can prove it with a pair of chart on 5-year and 10-year “breakeven” interest rates. The breakeven rate is the difference in yield between inflation-protected and nominal debt of the same maturity. Falling breakeven rates indicate decreasing expectations of future inflation. 5-Year and 10-Year Breakeven Rates 2012-Present 5-Year and 10-Year Breakeven Rates 2006-Present What Me Worry? Earlier today, MarketWatch economic director Steve Goldstein posted a chart of breakeven rates and inflation swaps with the headline Here’...
    On February 10, 2016 / By
  • Finance 0

    With Inflation Well Below Targets And Interest Rates Near Record Lows, The Washington Post Wants To Reduce The Deficit

    Yep, we have such clear warning signs of imminent disaster. I should probably also point out that the interest burden measured as a share of GDP (net of money refunded from the Fed) is at the lowest level since before World War II. You can see we are imposing a terrible burden on our children. At least the Post is honest and says that its deficit reduction means cutting Social Security and Medicare. Oh well, here on Planet Earth low interest rates and low inflation are a very good market signal that the economy could use much more demand (i.e. larger budget deficits). The Post actually seems to support this, but tells us about the Congressi...
    On February 10, 2016 / By
  • Finance 0

    4 Consistently High Paying Dividend Stocks With Growth Potential

    The ‘holy grail’ of dividend growth investing is to find businesses that offer: Growth potential High dividend yields Consistent and safe operations This article takes a look at 4 businesses that have: High dividend yields above 4% Above average total return potential Consistent operations backed by a long dividend history. This combination is difficult to find in today’s low interest rate environment.Low interest rates increase the share prices of high dividend stocks, reducing their yields. Source:  Multpl.com You can see the effect of rising interest rates on the S&P 500’s dividend yield. Source:  Multpl.com The trade off b...
    On February 10, 2016 / By
  • Finance 0

    Can Twitter Say Anything To Please Frustrated Investors Tonight?

    Photo Credit: Joe Lazarus Twitter, Inc. (TWTR) Information Technology – Information, Software & Services | Reports February 10, After Market Closes. Twitter (TWTR) appears to be a company in search of their identity. Despite coming off two straight quarters of growth, share prices have taken a severe beating. This quarter the Estimize consensus is calling for EPS of $.013, just one penny higher than Wall Street, and revenues of $711.88 million, roughly $2.64M ahead of the Street. Compared to Q4 2014, this represents a projected YoY increase in EPS and revenue of 5% and 48%, respectively. That said, investors and users have lost fai...
    On February 10, 2016 / By
  • Finance 0

    Clueless Fed?!

    “The Fed doesn’t have a clue!” – I allege that not only because the Fed appears to admit as much (more on that in a bit), but also because my own analysis leads to no other conclusion. With Fed communication in what we believe is disarray, we expect the market to continue to cascade lower – think what happened in 2000. What are investors to do, and when will we reach bottom? To understand what’s unfolding we need to understand how the Fed is looking at the markets, and how the markets are looking at the Fed. The Fed and the Markets In our analysis, policies at the Federal Reserve Open Market Committee (FOMC...
    On February 10, 2016 / By
  • Finance 0

    China’s Missed Opportunities

    I remember the meeting of the Asian Development Bank’s board of directors way back in the spring of 1992 very well… Representing the United States during a review of a Chinese finance sector loan, I asked what I thought was a straightforward question, “Isn’t it time for China to begin privatizing state-owned banks and companies?” After a pregnant pause, the attack from the other board members began. “Why is America always so impatient?” “These things have to be done slowly and carefully.” “The Chinese will develop a privatization plan that suits their needs and culture.” Dealing With the Consequences Well, here we are,...
    On February 10, 2016 / By
  • Finance 0

    EUR/USD: Descending Trend Resistance Key

    EUR/USD is sliding on Yellen’s prepared statement, but remains on high ground. Here is the technical view from SocGen: Here is their view, courtesy of eFXnews: Having formed trough at cluster of supports near 1.0570/1.05, EUR/USD broke above a multiyear trend at 1.1060/1.10 last week and has accelerated the recovery. Weekly indicator still has a little room for upside before it hits a descending trend resistance suggesting a test of graphical levels at 1.1440/60 is not ruled out. However, only a durable move beyond this will mean next leg of rebound. Short term, the pair is testing upper limit of an hourly channel at 1.1330/90. At this lev...
    On February 10, 2016 / By
  • Finance 0

    As The Tide Goes Out, Effects Of Buybacks Are Exposed

    The ConocoPhillips Poster Child  “The words of men may temporarily suspend but they do not alter the laws of financial dynamics. The fundamentals always take precedence eventually”- 720 Global 11/30/2015 The quote above was from “Washington’s Warning” an article that scrutinized stock buybacks and the unforeseen impacts they may have. In that piece as well as an earlier missive, “Corporate Buybacks; Connecting Dots to the F-word”, we rebuked the short-termism stock buyback fad. Both articles made the case that corporate executives, through buybacks, promote higher short-term stock prices that serve largely only to benefit their...
    On February 10, 2016 / By
  • Finance 0

    The Double Fallacy Recovery

    Everyone knows the Titanic sank in April 1912, and if they didn’t they were reminded only a few years ago at its centennial. Less well known, for good reason, is the novel Futility, written by Morgan Robertson in 1898 years before Titanic had even been conceived. Robertson’s book includes the largest vessel ever constructed and he even offered it the name “Titan.” And much like the real Titanic, Titan carries only about half the lifeboats necessary for all the souls onboard and even strikes an iceberg in the Atlantic closing in on Newfoundland. The physical descriptions of the ship in the novel were eerily close to what Titanic would...
    On February 10, 2016 / By
  • Finance 0

    Coal Producers Rise After Supreme Court Temporarily Blocks EPA Order

    The shares of a number of coal companies are rising after the Supreme Court blocked the Obama administration from implementing a rule that would require a significant cut in power plants’ carbon emissions. What’s new: In a one page order, the nation’s highest court told the administration to refrain from carrying out the rule, which was issued by the Environmental Protection Agency. The court’s four liberal justices said that they did not support the court’s order, but none of the justices explained the rationale for their decisions. The order will prevent the rule from being implemented until the lawsuit against...
    On February 10, 2016 / By