02 Jun 2006

Posted at 16:20h in The Friday Brief by
May was very unkind to investors.  The S&P 500 declined 3.1% making it the worst monthly decline since 2004.  The Dow Jones 30 fared a little better, declining by 1.6%.  The NASDAQ has been on its longest decline since 1994.  With inflation fears running high, uncertainty about how close the Fed will come to ruining the economy, high energy and commodity prices, and fears of what will happen in Iran, Iraqall piled on after the Fed’s May 10th meeting to send many to the exits.  The biggest losers were the emerging markets as investors feared that investors’ capital would leave these risky markets as interest rates rise. 

19 May 2006

Posted at 12:23h in The Friday Brief by
Last week we discussed the abundance of global economic growth and how, so far, it had not been accompanied by excessive inflation.  Even in the face of commodity prices rising straight up, record oil prices, rising wages, and tight supplies in almost all raw material category.  The pressure relief valve is productivity.  It has been rising steadily all over the world, keeping a lid on inflation. 

21 Apr 2006

Posted at 12:36h in The Friday Brief by
The Fed may be near the end of its long-term tightening process according to minutes released from their last Open Market Committee meeting.  Since the release the equity and commodity markets have soared. The CRB index of commodities was up 5% in the following two days, led by petroleum, gold, copper, and platinum.  The stock market gains were boosted by materials, energy, and industrials.  Extra lift came from some superb earnings reports from individual companies in the groups just mentioned, as well as from some leading technology companies, banks, brokers, and pharmaceuticals. Is the return of “irrational exuberance” in our future?  One could argue that it already exists in the commodities and metals markets as well as the related company stock prices.  They are up huge this year following a two-year bull market. 

24 Mar 2006

Posted at 12:48h in The Friday Brief by
The airplanes of September 11th, the tech-bust of 2000, the corporate scandals of 2001, the wars in Afghanistan and Iraq, the relentless credit tightening of the Federal Reserve, spiraling oil prices, and increasing global Islamic unrest, separately or combined have failed to stop this economy of ‘steel.’  Will virus infected birds finally accomplish what the prior challengers have been unable to wreak?  The predictions range from not at all, to a total global depression.