Market Commentary

Is the Housing Sector Making a Comeback?

by Glenn Busch December 30, 2011
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Some big hedge funds and asset managers are putting their money to work in real estate: Caxton Associates, SAC Capital Advisors, and Blackstone (BX). Bob Johnson and Jason Stipp of Morningstar (MORN) discuss in the video below some of the key housing market indicators that are pointing towards a better tomorrow for real estate.

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S&P 500 Real Returns and Tobin’s Q

by Glenn Busch December 16, 2011
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The recent third quarter Flow of Funds report allowed us to update Tobin’s Q. The ratio created by James Tobin and championed by Stephen Wright and Andrew Smithers came in at 0.82. A Lower reading than the previous quarter but still above fair value. Using Professor Robert Shiller’s data I can overlay annualized total real returns for the S&P 500 with Tobin’s Q. The first chart is 10 year annualized total real returns for the S&P 500 and Tobin’s Q.

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Dr. Copper’s Economic Outlook

by Glenn Busch December 15, 2011
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What are Professors Copper and Gold saying about the outlook for 2012? Copper is the metal that is renowned for having a PhD in economics. Yesterday’s 4.7% plunge to $3.27 per pound was a bad break, though it remains above the most recent low of $3.05 on October 20. It suggests that global economic growth is weakening.

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Kyle Bass on Why Japan is Far Worse than Greece

by Glenn Busch December 14, 2011
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Kyle Bass, founder and manager of Hayman Capital, has been making the rounds again on the financial news networks. Margin of Safety posted a great interview with Kyle on the BNN during which Mr. Bass explained his views on the European end-game and why Japan’s debt problem is far worse than Greece. Then CNBC had their turn with Kyle in the video embedded below, “Before a default you’re going to see capital flight”.

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The Losers from the Declining Cost of Data Storage

by Glenn Busch December 7, 2011
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The industrial revolution was helped by the declining cost of engines and power. The 90s tech boom was helped by the declining cost of silicon transistors and integrated circuits. Today we have the rapidly declining cost of data storage and transmission.

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Avoid the Yield Trap

by Glenn Busch December 5, 2011
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Safe income that covers the cost of inflation is tough to find these days. The Federal Reserve’s zero-interest rate policy is hurting those who need their retirement savings to generate a livable income. To earn more income retirees are leaving the relative safety of CDs, U.S. Government Bonds, and high grade corporate debt for higher yielding equities. This is a little worrisome. To paraphrase a famous quote, more money has been lost in the reach for yield than at the point of a gun.

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Jim Chanos on the Chinese Banking System

by Glenn Busch November 23, 2011
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Jim Chanos the hedge fund manager made famous for identifying the fraud at Enron appeared on Bloomberg’s “In the Loop” with Betty liu to discuss China and it’s “fragile” banking system.

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Is Inflation Really a Non-Issue?

by Glenn Busch November 17, 2011
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Inflation is 3.9% and core inflation—inflation net of the basic things that dominate the spending of working families—is 2%. Compounding matters, inflation is calculated in a way that produces figures 2–4% lower than in the past. So, 3.9% inflation probably means 6–8%, using the old fashioned method. The difference? The old fashioned method simply asks how much prices are rising or falling. The new method asks how much quality-adjusted prices have risen or fallen.

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4 Key Liquidity Charts ~ October 2011

by Glenn Busch October 7, 2011
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Most economic measures, like profits, employment rate, sentiment, and manufacturing are coincident or lagging indicators. These measurements can be volatile and are often revised frequently. Most financial indicators of money, credit, and liquidity have leading characteristics and are less susceptible to revisions.

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Real Median Incomes are Down & Poverty is Up

by Glenn Busch September 14, 2011
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Incomes are down, poverty is up, and health care coverage is lacking according to the Income, Poverty, and Health Insurance Report released by the U.S. Census bureau yesterday.

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