Investors Remain Optimistic in the Face of Declining Stock Market Prices

Last weekend, I said that risk assets were getting frothy, and showed that speculation was rampant in several financial sectors.  I also pointed out that essentially the entirety of the total return to investors for several years, and perhaps for several decades, might be able to be explained by the appreciation in price (decline in [...]


Demographic Changes and Surprise Weakening in Corporate Profits Might Support Even Higher Prices for Treasury Bonds

In an historical rarity, the Dow Jones Industrial Average and the S&P 500 Index are both below where they were five years ago.  In contrast, the price of gold and the price of Treasury bonds have each soared.  The combination of gold rising along with silver and many other commodities while at the same time [...]


JPM’s Whale of a Problem and Futures Market Scandals May Help Lead to Negative Rates on Bank Deposits

The Telegraph (U.K.) had a terse description of JPM’s Chief Investment Office that helped crystallize my thinking:

The bank stunned Wall Street when it disclosed that a series of bets made by the CIO on the health of major companies had triggered the . The CIO’s job is to invest deposits that the bank has yet [...]



“There’s enough bang in there to send us all to Jesus.”

- Anonymous commentator on the nature of JP Morgan’s Chief Investment Office credit exposure.

The most important attribute of any investment is the price you first pay for it. An attractive valuation can ultimately transform even the lousiest [...]


More Recessionary Market Signs

As  regular Daily Capitalist readers know, I have been observing a topping process for the U.S. stock market for a few months now.  Last fall, near the market bottom in late September, I suggested that despite their outperformance in the prior months,  tax-free municipal bonds looked pretty attractive.  That piece was titled Gold on Hold; [...]


Is the U.S. Stock Market Three-Peating Its Way To Yet Another Summer Downturn?

Three months ago, I posted The Fed Three-Peats, in which I led with:

Oops!  They’ve done it again.  Maybe.

Here’s the evidence that the Fed aborted a mini-recession with Operation Twist, which in association with enlarging its balance sheet by reinvesting dividends from its mortgage-backed securities portfolio was essentially the QE 3 that Jeff Harding [...]


Party On!

“The sea’s freezing. A man won’t last long in that. We’ve drawn a bad hand this time.”

“I’ve never been a good loser. I intend to get into a boat.”

- Conversation between two card-players on The Titanic, from Eric Ambler’s screenplay, “A Night To Remember‟.

The Titanic centenary [...]


More Deflation Pressures Seen

On June 28 last year, I wrote a post titled Important Battle at Four Dollar Copper.  Shortly thereafter, copper surged half a buck but then dropped by one-third to $3.  With global money-printing picking up  and hopes that only a minor European recession and mild Chinese growth slowdown would let the party resume, copper rebounded- [...]


Another Post-Depression Echo as U.S. Banks Become the New Japan and China and Buy Lots More Treasurys

Just as happened after WW II and for many years, the U.S. banking system is ramping up its holdings of Treasurys.  Bloomberg reports:

U.S. banks bought more government and related debt in the first two months of 2012 than they did in all of last year, an endorsement of Federal Reserve Chairman Ben S. Bernanke’s [...]


The Yankee Clipper and the Stock Market

We are within a few days of the twelfth anniversary of the NASDAQ peak.  Some readers will remember how the stock market suddenly dominated the national psyche.  All of a sudden, millenial fervor mixed with recurring stock market surges that supported the idea that we were #1.  U-S-A all the way and that sort of [...]


Our Problem Is Not Insolvency: It’s Infinite Solvency

Monetary policy is now sexy. The young are into it. “End the Fed” rings out at Ron Paul’s political rallies like “We Will Rock You” used to ring out at Queen concerts.

There is, indeed, a direct relationship between the popularity of economics and monetary policy among the under 30s and the overwhelming support of [...]