Long Term
16 months on the S&P 500 with no gain–what’s it mean?
I have my theories about this--which I'll post tomorrow, Tuesday, May 28--and the facts certainly deserve an explanation. About 16 months ago on January 26, 2018 the Standard & Poor's 500 index closed at 2872.87. During the next 16 months, the markets would...Go how high would a carbon tax have to be to fight global warming?
It's interesting to me, as someone who works in a field (investing) where numbers are important much if the time and eventually have significance and consequences, that the big current argument against the Green New Deal is that it would cost too much. Let's ignore...
China’s stock markets re-open to dose of negative news
Welcome back! The Shanghai and other Chinese stock markets re-opened today after the Spring Festival/Lunar New Year holiday. And investors and traders were greeted with a dose of bad news. First, according to the official China Daily, China's economic growth rate will...
U.S. Treasury borrowing to double in 2018 to $1.34 trillion.
Amazing what important financial news can get pushed off the front page these days. On Monday the drop of even more U.S. indexes into correction territory and reports that the White House was teeing up new tariffs on another $250 billion in Chinese goods pushed truly...
U.S. Treasury sets borrowing record in first quarter–Treasury Secretary Steve Mnuchin–What me worry?
In the period from January through March, the U.S. Treasury borrowed $488 billion. That’s a record for the quarter and $47 billion more than the Treasury had earlier estimated. The Treasury finished March with a cash balance of $290 billion, up from an initial estimate of $210 billion.
This market indicator is signaling trouble ahead–in 2020 (Strange: That’s the same year the CBO estimates the annual U.S. budget deficit will hit $1 trillion.)
Earlier this evening I wrote about the unusual inversion in the VIX Fear Index which had futures for the CBOE S&P 500 Volatility Index (VIX) priced to show more risk in the near future than in the far future. Normally the price curve runs in the other direction since the near future is usually more predictable than the far future. Near future and far future are relative terms in the financial markets. In this case we aren’t talking about the difference between short-term 3 month Treasury bills and 10-year Treasury notes. The VIX curve stretches out from future contracts that expire in a couple of weeks to contracts that run for 40 days or more. But a market indicator that does focus on a longer time horizon is also indicating trouble ahead for 2019 or more likely 2020.
How to manage risk in this market when the traditional risk safe havens aren’t working
If you spend a significant part of your day staring at your computer to watch the markets, you know that, perplexingly, the traditional safe havens for mitigating portfolio risk haven’t been working very well. Now Goldman Sachs has put its computers and data crunchers to work and has reached the same conclusion as the anecdotal evidence suggested. Goldman has tagged this a period of “diversification desperation.”
Trump’s announcement of steel and aluminum tariffs sink U.S. stocks
This morning President Donald Trump announced that the United States will impose a 25% tariff on imported steel and a 10% tariff on imported aluminum “for a long period of time.” The President said he will sign a formal order next week. The timing couldn’t be much worse as far as global financial markets are concerned.
What we learned in this rout: This is what a late stage market looks like
Before this market rout and from the safety of the World Economic Forum in Davos, hedge fund legend Ray Dalio talked about the coming bear market in bonds and likelihood that we were near the end of this cycle of economic boom. Sometime in the next two years, he remarked, we were likely to experience a recession and that would put an end to one of the longest periods of economic growth in the United States. With the experience of the big market rout of January 26 through February 8 behind us–if it indeed is–when the Standard & Poor 500 stock index fell 9.03%, I’d like to make Dalio’s comments a little more explicit and apply them more directly to the stock market.
How much can Pioneer Natural Resources increase production?
When West Texas Intermediate crude was struggling to stay above $50 a barrel, the important issues for a U.S. oil shale producer such as Pioneer Natural Resources (PXD) were How much of production in 2018 was hedged above $50 a barrel? and How quickly the company...
So how long does China’s Xi intend to stay in power?
Chinese President Xi Jinping has centralized more power in his hands than any of his immediate predecessors. He’s certainly going to be able to pursue his goal of restoring China to its rightful place in the world economic and political order for the rest of his term–and beyond–without significant opposition. Expect an even more assertive China.
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