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Finance 0
E A World Gone Negative
Japanese Negativity: Apparently, the world of investors and economists were surprised of Japans (worlds third largest economy) recent decision to cut interest rates negative, except me. It was not an “if” they would ever go negative, but a “when”, and it appears the time has come that many large economies embrace it (as previously written). And as of the end of January 2015, there is a record $5.5 trillion of government bonds with negative yields. What was once a hypothetical,improbable, and dire situation is now reality for 1/4 of the index of government bonds. This means that investors for the first 7 years are lit... -
Finance 0
Shale Shock: Another Leg Lower In Oil Coming After Many Producers Found To Have Far Lower Breakevens
One of the great unknowns facing the US shale industry, and threatening the recurring rumors of its imminent demise, is how it is possible that despite the collapsing number of oil wells, and despite the plunge in crude prices which supposedly are well below all-in shale production costs, does production not only refuse to decline, but in fact has been largely increasing in the past 6 months, with just a modest decline in recent weeks. The answer may come as a surprise not only to industry pundits, but certainly to Saudi Arabia, whose entire strategy has been to keep pressuring the price of oil low enough for long enough to put as many ... -
Finance 0
Why Most Investors Fail In The Stock Market
Throughout the past 30 days of wild volatility, here’s what I didn’t do. Panic. Worry. Sell. In fact, the best I did was add to a couple of positions yesterday. The world was already in an uncertain state for the past 3+ years. It’s just that with the market rising, we pushed the issue to the back of our mind and ignored it. If you read Howard Marks latest memo, On the Couch, he explains the problems and the psychology side better than I ever could. (Go read it) But here’s a quick summary of how to succeed in this market, and why most people fail. In order to be successful, an investor has to understand not just finance, accountin... -
Finance 0
How The Blizzard In The US Affected Markets
Winter storm Jonas has wreaked a lot of havoc, not just in the east coast of the United States, but in the financial markets as well. Here are some of the effects of one of the worst blizzards in history on the US economy and market price action. Business Activity It’s no surprise that business activity has been in a standstill for days in a number of US cities in New York, Virginia, and DC. Roads had to be closed while several modes of transportation were inaccessible, leading some businesses to pause operations and employees to take time off work. Macroeconomic analysts estimated that the storm probably cost around $350-850 million in ... -
Finance 0
Dollar Retreat Extends
The US dollar remains under broad pressure after yesterday’s sharp decline. Neither dovish comments by ECB President Draghi, nor the Reserve Bank of New Zealand have managed to reverse the gains of their respective currencies. Similar, the rise in US yields and firm equities have failed to push the yen lower. Investors and policymakers are trying to link news developments to the price action, but it seems to be a bit of a stretch. It is true that NY Fed President Dudley, who had suggested in late-August that a rate hike in September was less compelling, warned that financial conditions had tightened considerably since the December... -
Finance 0
How Do You Deal With Impact Of Currency Now?
Canadians are now more confused than ever as to whether or not they should invest in the US market. There are many factors playing in the investor’s mind at the moment. Before we tackle the currency challenge, let’s take a look at how both the US and Canadian markets did over the past 10 years: source: Ycharts As you can see, while the Canadian market had its moment of glory between 2008 and 2012, the US market easily crushed the Canadian market since then. The reason is quite simple; the US economy is more diversified and not dependant on natural resources. This becomes even more obvious when we look at the past 12 months: source: Ychar... -
Finance 0
“It’s Probably Nothing”: January Truck Orders Collapse 48%
We have previously shown just how bad the situation in the US heavy trucking space – trucks with a gross weight over 33K pounds – was most recently in “US Trucking Has Not Been This Bad Since The Financial Crisis” in which we looked at November data and found, that “Class 8 truck net orders at 16,475, were 59% below a year ago and the lowest level since September 2012. This was the weakest November order activity since 2009 and was a major disappointment, coming in significantly below expectations. All of the OEMs, except one, experienced unusually low orders for the month.” For those who missed the p... -
Finance 0
Can A Country Without A Currency Have A Currency Crisis?
Fixing the Economists Article of the Week by Philip Pilkington It is often the case that whole debates rest on a misunderstanding or lack of clarity over the definition of key terms. Take the ongoing debates between the group I label as the Kaldorians and the Modern Monetary Theorists (MMTers) over whether or not the Eurozone crisis is a balance-of-payments (BoP) crisis. A good example is a 2013 paper by Sergio Cesaratto. Cesaratto’s understanding of the debate is well summarized by the following quotation: If one looks at the EMU through European lenses, one sees it as a collection of independent states with a currency in common and t... -
Finance 0
EU Session Bullet Report – USD Drops The Most In A Day Since 2009
EUR/USD Intraday: further advance. Pivot: 1.1 Most likely scenario: long positions above 1.1 with targets @ 1.115 & 1.12 in extension. Alternative scenario: below 1.1 look for further downside with 1.094 & 1.09 as targets. Comment: technically the RSI is above its neutrality area at 50. Gold spot Intraday: the upside prevails. Pivot: 1131 Most likely scenario: long positions above 1131 with targets @ 1148 & 1151 in extension. Alternative scenario: below 1131 look for further downside with 1123 & 1115 as targets. Comment: the RSI is mixed to bullish. Crude Oil (WTI) (H6) Intraday: rebound. Pivot: 31.29 Most likely scenario: lon... -
Finance 0
Apple Is So Cheap, It’s Actually Ridiculous
The following is an excerpt from an article I originally wrote for InvestorPlace. There is nothing more dangerous than an “obvious” investment. Markets being what they are, by the time an investment “obviously” looks good, most of the good news is already priced in … and any whiff of less-than-perfect news can be enough to send the share price tumbling. I really believe that. So I’m choosing the words I’m about to say very carefully: At current prices, Apple (AAPL) is quite possibly the most obvious buy I’ve ever seen in my lifetime. I would go so far as to say that Apple is so cheap right now, it is actually ridiculous ...
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