As we noted on May 31, bad things tend to happen when interest rates spike as they did in 1994. Rising rates made the first half of 1994 difficult for both stock and bond investors, something that is relatively rare over longer periods of time.
The bond market selloff after the FOMC meeting and Chairman Bernanke's surprising specifics about exiting QE was quite stunning. However, his hawkish position was supported by today's release by the Bank for International Settlements (BIS) of its annual report.
Ralph Nelson Elliott proposed the theory of the Grand Supercycle, which represents a period of relatively steady growth in the financial markets punctuated by a collapse.
Chinese stocks suffered the biggest sell-off overnight in more than four years as the short-term funding issue in that country’s banking sector is morphing into a cash crunch for the economy.
Gold collapsed over 14 percent in two days in the sharpest tumble since 1983 raising fears that the twelve year bull market is over. Some blame the collapse on the fear that Cyprus and other weaker European countries would have to dump their gold reserves. Wrong.
In this week’s Q & A, National Numismatics’ Tom Cloud updates his near-term precious metals price targets and explains why silver will rise faster than gold once the bottom is in.
In contrast, the Labor Force Participation Rate discussed in this commentary is based on large enough numbers that historical revisions are quite small. For example, if we study the revisions of the 16-and-over LFPR since 1948, the earliest changes date from 1994.
It's easy to spot a Fed-sponsored housing bubble if you look in the right places. The best place to start is an analysis of price inflation as measured by the BLS as compared to a CPI-variant that takes actual housing prices into consideration instead of rent.
Just recently the April employment report was released by the Bureau of Labor Statistics (BLS) which showed a surprise jump in employment for the month of April of 165,000 jobs. The general consensus for the report was 153,000 jobs so the "better than expected" news was credited to the surge in the financial markets.
The two major US core inflation indices have diverged. The explanation for this divergence has to do with the difference in relative importance of housing in the indices. And recent increases in the cost of shelter accentuated these differences.