There are two market warning signs which have just recently been triggered and which have gotten a lot of press attention due to their catchy names. The Titanic Syndrome was created in 1965 by the late Bill Ohama.
The historical relationship between P/E multiples and earnings growth suggests, strongly, that growth revisions in the second half of the year will be positive ones.
I believe that in the past two to three years there has been a significant and welcome shift in Beijing’s attitude towards maintaining growth, and that this shift implicitly represents a shift from the capital frontier model of optimal investment levels to the social capital model.
Three factors – volcanic debris, more variable polar jet streams and increased human habitation in high-risk areas – are creating extreme weather and high insurance payouts. Some of these are temporary while other factors will last for decades.
Back in 2002 Warren Buffet famously proclaimed that derivatives were ‘financial weapons of mass destruction’ (FWMDs). Time has proven this view to be correct. It is difficult to imagine that the US housing and general global credit bubble of 2004-07 could have formed without the widespread use of collateralized debt obligations (CDOs) and various other products of early 21st century financial engineering.
If China’s historical consumption growth continues, and if demand remains relatively price insensitive, the growth in demand for oil will be ‘relentless’ according to Staniford.
The investor love affair with emerging markets is quickly fading. For much of the past decade, emerging markets – Asia being the largest – were the place to be, offering explosive growth compared to the meager offerings of the developed world.
In his book, Human Action, Austrian economist Ludwig von Mises wrote, “The idea underlying all interventionist policies is that the higher income and wealth of the more affluent part of the population is a fund which can be freely used for the improvement of the condition of the less prosperous.”
The major averages trended higher all day today after the May nonfarm payroll data came in prior to the open. The actual figure of 175,000 new jobs was viewed as a “just right” number relative to expectations.
The imminent arrival of Google Glass may be the tipping point for “wearable tech.” Mobile devices with micro-displays (think Glass or the fabled and elusive iWatch) face challenges on a number of fronts, both social and technical.
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