Financial Sense Blog

We lay out our Strategy set in the context of our updated semiannual Overview of Cartel Intervention. We identify the Sectors with the Greatest Profit Potential and Greatest Risk in what promises to be a very Volatile 2011.

My biggest complaint in regards to the current economic expansion is that it hasn't been standing on its own two feet but rather hanging completely on the twin shoulders of Uncle Sam and Uncle Ben. Without the massive fiscal stimulus from the Obama Administration and two rounds of quantitative easing by Fed Chairman Ben Bernanke, it is highly unlikely that we would have had much, if any, recovery; the current expansion has been entirely artificial.

A year ago, my colleague David Kotok wrote a Commentary entitled “2010: The Year to Focus on Sovereign Debt.” That has certainly proved to be correct. The year that is drawing to a close witnessed a welcome recovery in the global economy that was overshadowed by a fiscal crisis in the periphery of the eurozone that periodically undermined investor confidence worldwide.

Wall Street may be getting overly concerned about bullish sentiment.

Though Detroit and other American manufacturing centers have suffered as jobs have been outsourced in recent years, that trend may be coming to an end and evening reversing.

During the twentieth century long-term U.S. treasury bond yields experienced 4 major cycles. As the century opened yields were just coming off of a secular bottom that occurred in the 1890s. The above monthly closing chart of the 30-year yield picks up just before the end of the first cycle (up) in August 1920 (vertical cyan line) when yields hit 7.22%. Following the chart across the page, we can see a cyclical low at 1.98% in July and October 1941, the prolonged 40-year cyclical advance to an October 1981 high at 14.68% and the ongoing down cycle to a December 2008 cycle low-to-date at 2.691%.

Don't you love this time of year? No, I'm not referring to the joyous time with family, the shopping, the decorations, or the holiday celebrations. No, I'm talking about the generalizations toward the market offered up by the talking heads on T.V. when referencing the upcoming calendar change.

I want to start out with some reassurance that there will not be any extensive math in this piece. Rather, I will attempt to use general macro economics to describe how I believe that the world has definitely reached a point of massive change from an industrial economy to a technology and post industrial economy.

One of the founding myths of the modern global financial system was that governments, especially of the developed democracies, could borrow endlessly without consequence. But, with sovereign debt crises erupting across the globe, it appears that the umbrella of perceived safety has gotten smaller, exposing some benighted countries, like Greece and Ireland, to severely rough weather.

A breakdown of individual sector and industry performance for components of the S&P 500 along with forward guidance in terms of the business cycle and sector rotation.