We were recently asked in a handful of emails about the importance of emerging market bonds (PCY) relative to the S&P 500. The basic question was “should we be tracking the emerging market bond ETF (EMB) to monitor the health of the S&P 500 (SPY)?”
The recent CBO minimum wage study has sparked a lot of headlines because it concludes that if the US moved to a $10.10 minimum wage, the increase would cost the economy about 500K jobs, most of which would be those of low-wage workers.
Expectations of future shortages in quality liquid bonds in US debt markets continue to persist. These shortages however are likely to be more acute for short-term paper. As a percentage of total government debt for example, treasury bills outstanding continue to decline.
The real problem is monetary inflation artificially jacked up the prices of assets (homes, cars, equities) upon which unsustainable loans were made. Rather than admitting that simple and obvious fact, Monetarists prose the solution is still more monetary printing which will do nothing but create even bigger asset bubbles.
The spread between natural gas prices in the United States and Asia has many U.S. producers salivating at the prospect of shipping LNG overseas. Japan, the largest importer of LNG in the world by far, is seen as the biggest prize.
Gold has so far enjoyed a terrific start to the New Year, most recently closing at its highest level late October 2013. It has even succeeded in closing above its psychologically significant 200-day moving average for the first time in over a year.
The markets were able to eke out a further week of gains with small cap stocks leading the charge as the Russell 2000 rallied 1.47% for the week while mega cap stocks like the S&P 100 lagged, falling 0.13%. Energy was the top performing sector (+1.78%) while the telecommunications (-0.89%) and financial sector (-0.53%) were the worst performing sectors.