The Solution to Deflation

Posted on October 14, 2014 by MN Gordon

The stock market laid another egg yesterday.  We won’t dwell on it much.  Only enough to make the observation that change is in the air.  You can see it.  Feel it.  And even smell it.  Nonetheless, being prepared for it – both for profits and protection – is the real challenge.  Here’s what we mean…

The United States dollar has strengthened against other currencies over recent months.  The dollar index – a measure of the U.S. dollar relative to a basket of foreign currencies – was around 80 for the first half of the year.  But since July it has run up significantly.

Currently, the dollar index is around 86.  That means the dollar has increased in value by 7.5 percent on the foreign exchange market over the last three months.  What are the consequences of a stronger dollar?

Naturally, there are both advantages and disadvantages to a stronger dollar…depending on how you look at it.  A more valuable dollar is a good thing for the typical saver and consumer alike.  In general, it means imported goods become cheaper. Continue reading →

Posted in Inflation, MN Gordon | Tagged , , , , , | Leave a comment

Buyer’s Remorse

Posted on October 10, 2014 by MN Gordon

The stock market was clobbered on Tuesday.  The DOW sold off 272 points.  What did it mean?  Was it an indicator the market is finally rolling over, as we’ve anticipated for some time?  Or was it just another head fake on the way to new highs?

On Wednesday we thought we had our answer.  The DOW ran back up 274 points…recovering all of the prior day’s losses, plus two points.  It was the market’s best day of the year.  Wall Street was euphoric.

Even gold stocks rose.  Junior mining stocks, as measured by the Junior Gold Miners ETF (GDXJ), jumped up 9.61 percent.  Fixed income investors also joined in on the fun.  Yields on the 10 year treasury note fell to just 2.32 percent, nearly to their 52 week low of 2.30 percent.

What was the cause for the elation?  Is GDP soaring?  Are incomes finally rising?  Is Putin packing up Russian troops and vacating Ukraine?  Was a vaccine for Ebola discovered?

Nope.  It was nothing of the sort.  What produced the buying frenzy was something we call worshiping utterances. Continue reading →

Posted in MN Gordon, Stock Market | Tagged , , , , | Leave a comment

An Autumn Encounter with the Headless Horseman

Posted on October 7, 2014 by MN Gordon

A pleasing land of drowsy head it was,
Of dreams that wave before the half-shut eye;
And of gay castles in the clouds that pass,
Forever flushing round a summer sky.

CASTLE OF INDOLENCE

Apple Country

Oak Glen, California, located just past the outer limits of Southern California’s sea of concrete, is a world apart.  The air is clean and crisp at its mile high elevation.  The pace of play is slow and relaxed…not frenetic and mad.

There are no stoplights or franchise drive-throughs.  Billboards and transmission lines do not blight the landscape.  These, and other aesthetic lacerations to the eye, remain with the wide Euclidean Boulevards in the valley below.

The built milieu hardly scars the natural environment.  Just a windy and narrow mountain road extends upward.  Apple orchards fill the gentle slopes that are nestled between the larger and steeper topography. Continue reading →

Posted in Economy, MN Gordon | Tagged , , , , , , | Leave a comment

Pouring Buckets of Ice Water on the Fed’s Delusion

Posted on October 3, 2014 by MN Gordon

Just two weeks ago President Obama said it would be unlikely if we had a case of Ebola virus in this country.  On Tuesday the Center for Disease Control and Prevention confirmed the first known U.S. Ebola virus case.  No doubt, it didn’t take long for the unlikely to happen.

From what we gather the infected adult traveled from West Africa to Texas on September 19.  Several days later, on September 24, he started developing symptoms.  After first being turned away from the hospital and sent home on September 26, he was finally admitted for treatment on September 28.

During this time he came in contact with a number of others…including five schoolchildren.  Enterprising individuals used the occasion to buy shares of biotech companies working on Ebola treatments.  Tekmira Pharmaceuticals Inc. surged over 30 percent.

Speculating on Ebola treatments could be a profitable bet.  Perhaps it’ll also bring about a vaccine in short order. Continue reading →

Posted in MN Gordon, Stock Market | Tagged , , , , , | Leave a comment