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    Gold Remains Range-Bound Ahead Of Fed

    The market started the week on the back foot but remained well within the consolidation that we have seen for the past four sessions. Gold prices fell $6.19 an ounce yesterday as the prospect of a September rate hike by the Federal Reserve continued to depress the demand for the precious metal. In the latest economic data, core durable goods orders jumped 0.8% in June. The Federal Open Market Committee begins its two-day policy meeting today, with the markets awaiting clues on the timing of any move by the central bank. The drop in gold, despite the weakness in the dollar and global equity markets demonstrates that market players have limited...
    On July 28, 2015 / By
  • Finance 0

    A Bright Spot Amongst The Chaos In China

    Conditions in China appear to be going from bad to worse. On Monday, another bloodbath ensued in Chinese stocks. The Shanghai Composite Index nosedived 8.5% – the largest single-day decline in eight years. For every stock that rallied, 75 plummeted. So much for all those government stimulus measures! I’m afraid the latest news on the economic front isn’t much better. Once the poster child for GDP growth, China’s economy is now decelerating – and at a faster rate than many expected. After decades of double-digit growth, we can now expect, at best, 7% growth moving forward. Believe it or not, though, there’s one Chinese trend on t...
    On July 28, 2015 / By
  • Finance 0

    Commodities Carnage Will Hurt These 10 States Most

    As we’ve seen in Louisiana and West Virginia, the commodities downturn has had a real impact on state budgets.  Back in April for example, we explained how a sharp decline in oil tax revenue helped push LSU to the brink of bankruptcy and in West Virginia, the impact of falling coal prices has put significant pressure on the state’s books.  The commodities rout can be at least partly explained by a combination of two factors. Slumping demand from China (i.e. a cessation of the bid which, in the pre-crisis world, producers assumed would exist in perpetuity) and easy access to capital markets (thanks to ZIRP) have helped create a globa...
    On July 28, 2015 / By
  • Finance 0

    Does “Creative Destruction” Include The State?

    When do we get to exercise democracy and fire every factotum, apparatchik, toady and lackey in the state who has abused his/her authority? Everyone lauds “creative destruction” when it shreds monopolies and disrupts private enterprise “business as usual.” If thousands lose their middle-class livelihoods– hey, that’s the price of progress. Improvements in productivity and efficiency can’t be stopped, and those employed making buggy whips and collecting horse manure from fetid streets will have to move on to other employment.This raises an obvious question few dare ask: does this inevitable process of ...
    On July 28, 2015 / By
  • Finance 0

    The Only Remaining China-Based Trade I Like

    The Shanghai Composite Index (SSEC) plunged 8.5% to start trading for the week. The ripple effects were wide and far-reaching even as arguments continue floating that the collapse in China’s stock market matters little outside of China and does not truly reflect on economic conditions in the country. Apple (AAPL) CEO Tim Cook summed up a lot of the soothing words to-date during last week’s earnings conference call (from the Seeking Alpha transcript of AAPL’s Q3 2015 earnings conference call): “…we remain extremely bullish on China and we’re continuing to invest. Nothing that’s happened has changed our fundamental view that Chin...
    On July 28, 2015 / By
  • Finance 0

    Is Gilead Sciences About To Make An Acquisition?

    Gilead Sciences (GILD) reports its FQ2 ’15 results after the closing bell today. Both Estimize and Wall Street are predicting a fall in EPS and revenues QoQ. Estimize are forecasting an EPS figure of $2.77 and a revenue target of $7.540B. Wall Street estimates EPS to come in at $2.64 and revenues to be $7.360B.   The success of Gilead over the past 36 months can be attributed to the company’s strong revenue growth figures which have blown expectations out of the water consistently over the past 2 years. However, this metric has recently experienced a slowdown and is expected to only further decline. As payers begin to balk at the high p...
    On July 28, 2015 / By
  • Finance 0

    The Economic And Financial Problems In Europe Are Only Just Beginning…

    Right now, the financial world is focused on the breathtaking stock market crash in China, but don’t forget to keep an eye on what is happening in Europe.  Collectively, the European Union has a larger population than the United States, a larger economy than either the U.S. or China, and the banking system in Europe is the biggest on the planet by far.  So what happens in Europe really matters, and at this point the European economy is absolutely primed for a meltdown. European debt levels have never been higher, European banks are absolutely loaded with non-performing loans and high-risk derivatives, and the unemployment rate in the eur...
    On July 28, 2015 / By
  • Finance 0

    The U.S In Recession? The World?

    This headline “US Recession Imminent – Durable Goods Drop For 5th Month, Core CapEx Collapses”, following on “Forget Recession: According To Caterpillar There Is A Full-Blown Global Depression”, impelled me to check to see if I’d missed something. Term Spreads The first thing that I wanted to inspect was the term spread, in this case the 10 year-3 month spread. Figure 1: Ten year-three month term spreads, as of 7/27/2015 (blue bar). China observation is Five year-three month term spread. Euro ten year rate is for Germany. Source: Economist accessed 7/27/2015, and author’s calculations. Interestingly, the US spread is larger...
    On July 28, 2015 / By
  • Finance 0

    What About Diamonds?

    The diamond market has never came close to the insane levels reached during the investment boom which peaked in 1980. Diamonds entered a 37 year bear market, which often follows such a major Phase Transition. This warns that we could yet still see the final major low unfold in 2016 on an annual closing basis and 2017 perhaps even intraday. We did see diamonds reach a reaction high in 2011, yet that high should stand right now as prices move back to retest support. Keep in mind that this is correlating with gold to a large extent. Likewise, gold did not exceed the 1980 high either when adjusted by inflation. The 1980 high is about $2300 in cur...
    On July 28, 2015 / By
  • Finance 0

    Will ‘Brexit’ Fears Make London Think Twice About The Euro?

    When we talk about the euro, we usually don’t consider the United Kingdom as a dominant presence in the discussion. After all, despite being a member of the Eurozone group, London has opted to keep the Pound Sterling as her local currency. When it came to the latest ongoing Greek crisis, nary a word was heard from voices at the City of London financial center. Looks are deceiving however. London’s dominance of the $5.3 trillion-a-day foreign exchange market exists in force and surprisingly the financial center sees more activity in buying and selling euros than the whole 19 member Eurozone together and more dollars than the U.S. Brexit Po...
    On July 28, 2015 / By