Posts
All Comments
\ABS\Auto Blog Samurai\data\How Gold Is Mined\themoneygame\PinExt.png "Pin It")
Here's an interesting chart for the chartists by chart guru Robert Sluymer, RBC Capital's top technical analyst.
"The S&P futures have reacted almost “too perfectly” to key technical levels," said Sluymer pointing to some recent moves.
For what it's worth, check it out.
RBC Capital Markets
Please follow Money Game on Twitter and Facebook.
Follow Sam Ro on Twitter. Tags: Technical Analysis, Futures | Get Alerts for these topics »
We’re finally starting to see the small investor chase equity returns. And they’re just in time for it all after a 150% rally. According to the most recent AAII investor allocation survey individual investors allocated their portfolios towards the highest equity weighting since September 2007. Meanwhile, bond allocations are close to the post-crisis lows and well off the 2009 highs when fear peaked
Here’s more via AAII:
“Equity allocations nearly hit an six-year high last month, according to the May AAII Asset Allocation survey. Cash allocations, meanwhile, fell to a level not seen since 2010.
Stock and stock fund allocations rose 3.5 percentage points to 65.2%. This was the largest allocation to equities since September 2007. It was also the fourth time in five months that stock and stock fund allocations were above their historical average of 60%.
Bond and bond fund allocations declined 1.6 percentage points to 18.1%. This was just the second time in the past 13 months with a fixed-income allocation below 19%. Even with the decline, bond and bond fund allocations were above their historical average of 16% for the 47th consecutive month.
Cash allocations fell 1.8 percentage points to 16.7%. Since hitting an 18-month high of 22.8% in March, cash allocations have declined by a cumulative 6.1 percentage points. May’s allocation was the smallest since November 2010. May was the 18th consecutive month with a cash allocation below its historical average of 24%.”
Chart via Orcam Investment Research:
PragCap
Please follow Money Game on Twitter and Facebook. Tags: Investing, Stock Market | Get Alerts for these topics »
To embed this post, copy the code below and paste into your website or blog. Early Saturday, China posted trade figures that were massively below expectations. Export growth of 1% was far below the 14.7% in the previous month.
What happened? Did the economy suddenly come off the rails?
No. Basically the old numbers were a sham.
From BofA/ML's Weijan Hu, Ting Lu:
In “The secrets of arbitrage and China’s inflated trade data” published on 10 May, we argued that “export growth in Jan-April 2013 was just around 5.0%, a far cry from the headline growth at 17.3%.” Export growth in May confirms our estimates that China’s “true” export growth so far this year could just be lower single digit. In that report, we list three evidences for inflated export growth caused by hot money inflows: exports to HK, exports to bonded area and exports of high unit-value goods such as IC products. In May, all of them slowed down sharply, suggesting these usual channels for hot money inflows were hit heavily by the regulatory storm in May. Export growth to HK slumped to 7.7% yoy from 57.2% in April. Export growth to bonded area and IC products also dropped to 45.8% and 99.0% yoy from 249.4% and 286.8%, respectively.
Basically, there's a lot of faux trade that happens, solely for the purpose of companies getting outside cash into the country, circumventing capital controls, which are designed to prevent a flood of money. One way companies have been gaming the system is by "exporting" to Hong Kong. These exports aren't real trade, just efforts to move goods offshore and move cash onshore. So China is cracking down on that, either the practice, or the inclusion in the statistics. So the numbers are unimpressive, but not indicative of total collapse.
Please follow Money Game on Twitter and Facebook.
Follow Joe Weisenthal on Twitter.
Ask Joe A Question » Tags: China, Trade | Get Alerts for these topics »
Whether it's the latest iGadget or a hot new car, as consumers, we're always scrambling for dibs on the "next big thing" in stores. But what if we put that money toward stock in the companies behind our favorite products instead?
That's a question recently explored by the Online Trading Academy.
With the benefit of hindsight, their team has taken a look back in time to see what might have happened if we'd ditched the supermarket and invested in the stock market.
Please follow Your Money on Twitter and Facebook.
Follow Mandi Woodruff on Twitter.
Ask Mandi A Question » Tags: Investing, Features, Stock Market, Smart Investor | Get Alerts for these topics »
The simplest way to value stocks or the stock market is to take its price and divide it by earnings (i.e. P/E).
There are many ways to apply the P/E. For the stock market, strategists often take the price of the index and divide it by the index's earnings.
In his June monthly chartbook, Morgan Stanley's Adam Parker considers the stock price against expected earnings (i.e. forward P/E). Then he compares that ratio to the stock's average forward P/E in the past five years.
Then Parker saw how many stocks were trading above its average historical forward P/E. That's what's charted below.
Simply put, this chart shows that more than half of the stocks in the stock market are trading above their own average valuations.
In other words, the stock market appears to be broadly expensive.
Morgan StanleyPlease follow Money Game on Twitter and Facebook.
Follow Sam Ro on Twitter. Tags: Valuation, Bearish, Adam Parker | Get Alerts for these topics »
CAMBRIDGE – The world’s major central banks continue to express concern about inflationary spillover from their recession-fighting efforts. That is a mistake. Weighed against the political, social, and economic risks of continued slow growth after a once-in-a-century financial crisis, a sustained burst of moderate inflation is not something to worry about. On the contrary, in most regions, it should be embraced.
Perhaps the case for moderate inflation (say, 4-6% annually) is not so compelling as it was at the outset of the crisis, when I first raised the issue. Back then, against a backdrop of government reluctance to force debt write-downs, along with massively over-valued real housing prices and excessive real wages in some sectors, moderate inflation would have been extremely helpful.The consensus at the time, of course, was that a robust “V-shaped” recovery was around the corner, and it was foolish to embrace inflation heterodoxy. I thought otherwise, based on research underlying my 2009 book with Carmen M. Reinhart, This Time is Different. Examining previous deep financial crises, there was every reason to be concerned that the employment decline would be catastrophically deep and the recovery extraordinarily slow. A proper assessment of the medium-term risks would have helped to justify my conclusion in December 2008 that “It will take every tool in the box to fix today’s once-in-a-century financial crisis.”Five years on, public, private, and external debt are at record levels in many countries. There is still a need for huge relative wage adjustments between Europe’s periphery and its core. But the world’s major central banks seem not to have noticed.In the United States, the Federal Reserve has sent bond markets into a tizzy by signaling that quantitative easing (QE) might be coming to an end. The proposed exit seems to reflect a truce accord among the Fed’s hawks and doves. The doves got massive liquidity, but, with the economy now strengthening, the hawks are insisting on bringing QE to an end.This is a modern-day variant of the classic prescription to start tightening before inflation sets in too deeply, even if employment has not fully recovered. As William McChesney Martin, who served as Fed Chairman in the 1950’s and 1960’s, once quipped, the central bank’s job is “to take away the punch bowl just as the party gets going.”The trouble is that this is no ordinary recession, and a lot people have not had any punch yet, let alone too much. Yes, there are legitimate technical concerns that QE is distorting asset prices, but bursting bubbles simply are not the main risk now. Right now is the US’s best chance yet for a real, sustained recovery from the financial crisis. And it would be a catastrophe if the recovery were derailed by excessive devotion to anti-inflation shibboleths, much as some central banks were excessively devoted to the gold standard during the 1920’s and 1930’s.Japan faces a different conundrum. Haruhiko Kuroda, the Bank of Japan’s new governor, has sent a clear signal to markets that the BOJ is targeting 2% annual inflation, after years of near-zero price growth.But, with longer-term interest rates now creeping up slightly, the BOJ seems to be pausing. What did Kuroda and his colleagues expect? If the BOJ were to succeed in raising inflation expectations, long-term interest rates would necessarily have to reflect a correspondingly higher inflation premium. As long as nominal interest rates are rising because of inflation expectations, the increase is part of the solution, not part of the problem.The BOJ would be right to worry, of course, if interest rates were rising because of a growing risk premium, rather than because of higher inflation expectations. The risk premium could rise, for example, if investors became uncertain about whether Kuroda would adhere to his commitment. The solution, as always with monetary policy, is a clear, consistent, and unambiguous communication strategy.The European Central Bank is in a different place entirely. Because the ECB has already been using its balance sheet to help bring down borrowing costs in the eurozone’s periphery, it has been cautious in its approach to monetary easing. But higher inflation would help to accelerate desperately needed adjustment in Europe’s commercial banks, where many loans remain on the books at far above market value. It would also provide a backdrop against which wages in Germany could rise without necessarily having to fall in the periphery.Each of the world’s major central banks can make plausible arguments for caution. And central bankers are right to insist on structural reforms and credible plans for balancing budgets in the long term. But, unfortunately, we are nowhere near the point at which policymakers should be getting cold feet about inflation risks. They should be spiking the punch bowl more, not taking it away.This article was originally published by Project Syndicate. For more from Project Syndicate, visit their new Web site, and follow them on Twitter orFacebook.
