The Mark Zuckerberg Indicator

Posted on February 28, 2014 by MN Gordon

Spotting absurdities is both enjoyable and entertaining.  Can you imagine a more agreeable vocation?  For what could be more flattering than pointing and laughing at a mob of your peers as they stomp and pant in unison like boobs on parade?

Markets, of course, offer ample opportunities for otherwise intelligent individuals to behave like utter blockheads.  Visions of easy riches and luxury accommodations are nearly more powerful than love.  They soften the brains and warm the hearts of the most unlikely suspects.

Soon even the most intolerant curmudgeon’s willing to beat the drum for a load of bull if he thinks it’ll make him rich.  Take bitcoin, for instance.  Several short months ago the crypto-currency was flying high…trading for over $1,000.

Early buyers were becoming overnight millionaires.  A new era had come into existence faster than a New York minute.  That’s when true believers and suckers alike went all in.  They wanted to get their share too.  The sky was the limit. Continue reading →

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Shattering the Fed’s Hall of Mirrors

Posted on February 25, 2014 by MN Gordon

“We will develop ambitious but realistic policies with the aim to lift our collective GDP by more than 2 percent above the trajectory implied by current policies over the coming 5 years,” declared the G20 statement.  The communiqué was released Saturday following a two-day meeting of Group 20 finance ministers and central bankers, representing about 85 percent of the global economy, in Sydney, Australia.

“We are putting a number to it for the first time — putting a real number to what we are trying to achieve,” said Australian Treasurer Joe Hockey.  “We want to add over $2 trillion more in economic activity and tens of millions of new jobs.”

What to make of the enthusiastic words?  Here we’ll defer to German Finance Minister, and all around killjoy, Wolfgang Schauble for a thoughtful assessment of the G20’s plans…

“What growth rates can be achieved is a result of a very complicated process,” noted Wolfgang Schaeuble.  “The results of this process cannot be guaranteed by politicians.”

In other words, prosperity cannot be legislated into existence. Continue reading →

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Total Abandonment of the Rules of Common Sense

Posted on February 21, 2014 by MN Gordon

U.S. consumers are doing what they do best.  After a six year hiatus, they’re back at it.  Consumers are eagerly borrowing money.  What’s more, they’re spending it!

According to the Federal Reserve Bank of New York, U.S. consumer debt rose during the fourth quarter of 2013 by the most in six years.  “Household debt increased 2.1 percent, or $241 billion, to $11.52 trillion,” reported Bloomberg, “the biggest gain since the third quarter of 2007.”  Evidently, consumers went in hock to buy homes, cars, and pay for education.

Economists applauded the news.  ‘“Signs that consumers are starting to releverage again and take on more debt is consistent with the idea that we’re turning a corner on the recovery,’ said Tim Duy, a professor at the University of Oregon in Eugene and a former U.S. Treasury economist.”  Naturally, this consumption is a big part of what propelled fourth quarter GDP to a 3.2 percent growth rate.

But is increasing household debt really something to get excited about?  Not from our unobstructed viewpoint…located far away from the clouded brains that comprise a college economics department. Continue reading →

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Price Rebound Speculating for the Calculated Profit Seeker

Posted on February 18, 2014 by MN Gordon

Markets grow stranger by the day.  The more you follow them the more befuddling they become.  When it comes to the stock market’s day to day movements, there’s no sense to be had at all.  It ambles about however it may, without much rhyme or reason.

For instance, stocks closed out last week with a second consecutive week of gains.  In fact, the NASDAQ ended the week at levels last seen in 2000 – nearly 14 years ago.  On top of that, the S&P 500 is now just a hair way from its all-time high.

Was it a “risk on rally?”  Quite frankly, we really don’t know.  It could be any number of factors converging and diverging to compel investors to buy and sell.

We could come up with a whole host of reasons why the stock market could tank.  For one thing, prices seem a little out of whack.  The S&P 500’s price to earnings ratio, based on trailing twelve month reported earnings, is 19.48 percent.  The historic average is around 15.51 percent.

While not at nose bleed levels, stocks aren’t all that cheap either. Continue reading →

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