I must say that it is discouraging how often I have to write about the Phillips Curve. The Phillips Curve is a very simple idea and a very powerful model. It simply says that when labor is in short supply, its price goes up. In other words: labor, like everything else, is traded in the context of supply and demand, and the price is sensitive to the balance of supply and demand. Somewhere along the line, people decided that what Phillips really meant was that low unemployment caused consumer price inflation. It turns out that doesn’t really work (see chart, source BLS, showing unemployment versus CPI since 1997). Accordingly, since the Ph...
Cycles pointing to a low near August 21 were successful. We now have cycles and Lindsay models pointing to a high this week. Middle Section forecasts point to a top this week. The high on 7/16/14 counts 575 days to the low of the basic decline on 2/11/16. 575 days later is 9/8/17. No middle section could be found centered on the low of the previous basic decline (10/4/11) that forecasts a turn this week. The high on 9/6/2000 counts 3,103 days to the low of the multiple cycle (3/6/09). 3,105 days later is Tuesday, 9/6/17. Lindsay’s 107-day count (107 days from a significant low to a high) also forecasts a high this week no later than Frida...
(Audio length 00:14:05) As we kick off a busier time of the year for investors we again have money moving into safe havens. Chris Temple and I discuss the ongoing debt ceiling debate (see stat below regarding how silly this debate is) and the recent North Korea H bomb test. Depending on your investing strategy these news events are typically very short lived. Debt ceiling stat – Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents....
Digital currencies received a massive jolt on Monday when China’s authorities issued a notice declaring that initial coin offerings (ICOs) were illegal. Following this announcement, the price of bitcoin declined from $4,584 to nearly $4,350 per bitcoin. By Tuesday morning, the virtual currency was hovering just above the $4000 mark, nearly 20% lower than the record level of $5,000 it had hit over the weekend. Bitcoin’s fall has prompted some commentators to state that the virtual currency is entering a new phase of price discovery. However, most market watchers are characterizing this three day slide as a short term phenomenon. Bitcoin is...
Chubb (CB) is one of the best managed insurance companies in the world and has increased its dividend for more than 20 consecutive years. Prior to the 2016 merger of Chubb and ACE (the largest merger ever in the history of the insurance industry), these companies had raised their dividends for 33 and 22 consecutive years, respectively. Chubb was even a member of the dividend aristocrats list. The insurance business can be a lucrative one, which is why Warren Buffett’s Berkshire Hathaway owns several of these businesses, including a couple in Buffett’s dividend portfolio here. Let’s take a closer look at Chubb to see if its future r...
Today is going decently so far. I’ve got three October put positions (XRT, AMZN, IWM) which are doing decently, and my short equity portfolio is overall showing a profit. I’m quite light right now, having started the day with 25 positions and currently at 39 (for me, “heavy” is like 80 positions). The uptrend on the ES seems quite plainly broken, and we are obediently remaining beneath the now-broken trendline. Overall, a mellow day. Norm MacDonald Live released its latest weekly interview, and this one is with, of all people, Caitlyn Jenner. It’s getting a lot of downvotes due to the “ewww” factor, I guess (and I can understan...
Following the Boeing-driven spike, July is landing with a thud back to reality as final data today confirms a 3.3% MoM tumble in factory orders and 6.8% plunge in durable goods orders. In fact, it gets worse as aggregate factory orders are now back at their lowest level since February… As goes Boeing… so goes America? (or to put it another way, we’re gonna need moar war, baby)....
USDCAD is now in downtrend from 1.2662. Range trading between 1.2339 and 1.2500 would likely be seen in a couple of days. Near-term resistance is at 1.2500. As long as this level holds, the downside movement could be expected to continue and next target would be at 1.2050 area. Only break above 1.2500 resistance could bring price back towards 1.2778....
Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? At this point, over eight years later, the S&P 500 has set a series of inflation-adjusted record highs based on monthly averages of daily closes. Let’s examine the past to broaden our understanding of the range of historical trends in market performance. An obvious feature of this inflation-adjusted series is the pattern of long-term alternations between uptrends and downtrends. Market historians call these “secular” bull and bear markets from the Latin word saeculum “long period of time” (in contrast to aeternus ...
Earlier today, the U.S. dollar moved sharply lower against the yen as demand for safe-haven assets increased after yesterday’s South Korea’s Defense Ministry commentaries. As a result, USD/JPY slipped under important support line once again, invalidating the earlier breakout. What does it mean for the exchange rate? EUR/USD From today’s point of view, we see that the overall situation hasn’t changed much in recent days as EUR/USD remains in the blue consolidation under the previously-broken 127.2% Fibonacci extension, the early August peak and the upper border of the brown rising wedge. This means that an invalidation of the breako...