Financial Sense Blog

Joseph Schumpeter once explained that many Marxists and Keynesians never read a line of Marx or Keynes. According to Thomas Sowell, "They have gotten their ideas second- or third-hand from the intelligentsia." One might say that Marxism and Keynesianism bear a resemblance to disease. If Bubonic plague is carried by flea-infested rats, Marxism and Keynesianism are carried by intellectuals. In the first instance, we are dealing with dangerous bacteria; in the second instance, we are dealing with dangerous ideas.

Palladium had the most tumultuous decade of all the precious metals.

Today’s commentary lacks a central theme and instead really is a “Market Observation.” Often at times it is useful to remove one’s opinions from the investment equation and instead listen to what the market is saying, gleaning useful information in the process, rather than having a preconceived notion of how the markets should be acting. Below are of few items that should be of interest on a range of topics. Let’s dive in.

In this article I provide an update on the Fed "exit strategy" (from an earlier article) and also discuss why the federal funds rate is impotent as a tool of monetary policy in the current environment.

Nearly 14 years ago U.S. officials became interested in a 1995 planning document from a Russian defense think tank. The so-called "Surikov document" was put together in October 1995, with the title "Conceptual Provisions of a Strategy for Countering the Main External Threats to Russian Federation National Security." It was used to brief the Russian defense minister and top generals...

The idea behind this newsletter originated in early 2009, following the spectacular financial market developments of the previous year. Although by end Q1 risky assets had begun to bounce back—a trend that would continue more or less uninterrupted through the year—it was clear that this had been made possible by a number of unprecedented monetary and fiscal policy actions around the globe.

This past week the Dow Jones Industrial average lost 55 points on the week while the S&P 500 lost 7.68 points, both, very minor losses. Does this suggest a real turn in the stock market? Many pundits are suggesting a turn and are touting the drop in the headline Unemployment Rate to 9.7% from 10% in December. We say it was a statistical anomaly and believe the Unemployment Rate is headed towards 11%.

Long expanding triangle in natural gas.

To end 2009 I penned a piece titled, “2010: A Good Year for the Economy and a Mediocre Year for Stocks?” Essentially, looking towards 2010 my assumption was that the stock market had already priced in much of the economic improvement that is to come in 2010 and would not react as favorably to good economic news releases, a “buy the rumor sell the news” story if you will. The question is, if 2010 will not be an extremely impressive year for the stock market, will it represent a pause in the cyclical bull market that began at the March 2009 lows or a top?