US new home sales fell short of expectations falling by 9.4% to 571K. However, the fall is from 630K in June, an upwards revision from the original release. The fall in July is attributed to supply rather than demand. Nevertheless, the US dollar is falling across the board. Perhaps the publication serves as an excuse to extend the trend. Sales of new homes were basically expected to remain unchanged: an annualized level of 611K in July against 610K in June (before revisions. Earlier, Earlier, Markit released its preliminary PMIs: manufacturing missed expectations with 52.5 points for August, below 53.4 that was projected. The services PMI be...
As was widely reported yesterday, the huge surge in stocks was caused by excitement over the prospect of Trump getting major tax reform pushed through. Seriously… my query is this… are you out of your Vulcan mind? How does ANYONE think that the President, who in seven months has the single accomplishment of nominated a judge to the SCOTUS (an act any of us could accomplish), and who is completely estranged from Congress, could do something so unlikely? It is more likely that Yellen will announce the joyful news of her forthcoming delivery of a second child than it would be for the aforementioned tax reform to happen. You pe...
Gold price up over 100% in major currencies since financial crisis Has outperformed majority of equity and bonds Global debt continues to increase despite claims of ‘recovery’ Gold remains an important safe-haven in long-term Gold prices from August 9th 2007 to August 9th 2017 It has been ten years since the global financial crisis began to take hold. At the time few would have known that BNP Paribas’ decision to freeze three hedge funds was the signal for the deepest recession in living memory and a near-collapse of the financial system. As the French bank blamed a “complete evaporation of liquidity” on its decision the ECB floo...
Short-term USDJPY Elliott wave view suggests that the decline from 7/11 peak is unfolding as a double three Elliott wave structure. Decline to 108.71 low ended Minor wave W and Minor wave X bounce ended at 110.95 peak. Subdivision of Minor wave Y is unfolding as a Zigzag structure. Minute wave ((w)) of ((Y) ended at 108.59 low and Minute wave ((x)) of (Y) bounce is proposed to complete at 109.82. However, a break below 108.59 is needed to add conviction to this view. Until then, a double correction in Minutte wave ((x)) can’t be ruled out. Near-term, as far as a pivot from 110.95 peak stays intact, expect the pair to extend lower in Mi...
This is a second update on the economy with some thoughts on where we are in the business cycle. Yesterday, in my first update, I talked about monetary policy because of the upcoming Fed meeting in Jackson Hole. This time, I want to talk more about the political economy. I think the headline mostly gets at what I am going to say. We are only seven months into Donald Trump’s presidency. And I think we can call it a failure. I’ll have a lot more to say on that momentarily. But I want to flag this as not being a dealbreaker for the US or global economy. I think people put too much emphasis on the political economy in Washington. In some way...
Score one for the crowd who thinks that Mario Draghi is going to have a difficult time keeping a lid on euro strength. You’ll recall that there’s considerable debate about whether the ECB chief will use his Jackson Hole speech as an opportunity to try and jawbone the euro lower after the latest ECB minutes flagged “FX overshoot” as a risk factor that’s on policymakers’ radar screens. To be sure, the single currency has calmed down a bit this month after extending YTD gains in June and July as a combination of Draghi’s Sintra “hiccup” and reports of his upcoming Jackson Hole speech fueled rampant bullishness. But a brief re...
Jefferies analyst Philippe Houchois raised his price target on Fiat Chrysler to $19 from $14 citing his view of the increased probability of changes to the group’s structure given that China’s Great Wall and FCA “seem to be sizing each other up” and the idea of an independent Maserati/Alfa-Romeo is “growing on” him. Given media reports of Great Wall’s interest have put Fiat “in play,” the potential interest from other car-makers can’t be ignored, added Houchois, who keeps a Buy rating on the stock. ...
The S&P 500 re-took its 50-day moving average yesterday, but unfortunately, it did so without more than half of its index members closing above their 50-days as well. As shown below, only 48% of stocks in the S&P are currently above their 50-day moving averages. Bulls would like to see a much stronger reading than that based on where the S&P is currently trading. Below is a look at the percentage of stocks above their 50-day moving averages by sector. As shown, five cyclical sectors have breadth readings that are weaker than the 48% reading for the broad S&P 500. Energy is all the way down at 16%, while Industrials and Consume...
Yesterday, when stocks surged at the market open following Politico’s report that Trump is unexpectedly “making strides” on tax reform, we warned that “it can all be wiped away as soon as tonight, when Trump will deliver a speech to his “base”, in which he may promptly burn any of the goodwill he created with capital markets following his far more conventional Afghanistan speech last night.” That’s precisely what happened, because on Tuesday night, in another fiery campaign rally, Trump fiercely defended his response to violence in Charlottesville, made passing remarks from a teleprompter abou...
The Bank of New York Mellon Corporation (BK) has been a holding in Warren Buffett’s investment portfolio since the third quarter of 2010. Why is this important? Well, Warren Buffett is arguably the best investor ever. He has grown his company, Berkshire Hathaway (BRK-A) (BRK-B), to a ~$444 billion market capitalization through years of sound business decisions and intelligent investing. Accordingly, his investment portfolio is a great place to look for high-quality investment opportunities. You can see a full analysis of Warren Buffett’s investment portfolio here. Among Warren Buffett’s investment portfolio, the Bank of New York Mello...