Say goodbye to the US dollar as the world’s reserve currency. Writing in the Washington Post, Nobel Prize-winning economist Joseph Stiglitz says America’s massive deficit means a new global reserve system is approaching.
Is this the beginning of a new bull market or just a last-gasp bear market rally? We just don’t know. We’ve got a hunch is all. According to value investing guru David Dremen, it doesn’t matter much, either.
Where are we now? Still in the Twilight Zone economy as far as we’re concerned. US stocks ended strongly on Friday. And they’re set to rise again today if Europe’s strong morning performance is anything to go by. Commodities are up too. Nymex crude oil futures are at $74.24 a barrel at writing. Gold is trading at $953.50 an ounce – not far off Friday’s one-week high.
Two years into our “Great Recession” (or “Greater Depression,” depending on who you talk to) gold is selling for $944 an ounce. But back in 1980 – against the backdrop of double-digit inflation in America and a prolonged economic stagnation – gold reached a peak of $850. That’s the equivalent to about $1,900 in today’s money.
Yesterday, we spent the best part of the day studying James’s latest dispatch to members of his Strategic Investment research service. Frankly, what we read shocked us. Because it made us realize just how flimsy the case for a quick recovery is.
This morning, MarketWatch tells us there’s been “a broad-based decline” of shares in Europe. Apparently, “capital adequacy worries” over banks are the cause. We presume this is a polite way of saying banks have no money.
Yesterday, the euphoria on Wall Street broke for a while as investors paused for thought to digest crappy July retail figures. Even with the feds funneling borrowed cash into the economy and high-profile government boondoggles such as the “cash for clunkers” program working, Americans are still doing the sensible thing and cutting back on spending. July retail sales dipped 0.1%, and the Dow, the S&P 500 and the Nasdaq all took lumps.
Is there a way to grab outstanding profit potential and generate income at the same time? As always, it depends where you look.
Yesterday, we drew your attention to the massive common sense disconnect between what’s happening in US equity markets and the economy. Maybe Mr Market was listening; the major US stock indexes suffered their biggest loss in weeks. The Dow shed 1%. The S&P 500 lost 1.3%. AIG also took lumps – the failed insurer dropped 13%.
The rally in US stocks that began on March 9, 2009 has seen a 49.4% gain. And despite our deep suspicions here at Notes, it’s lasted 22 weeks. Does this mean we’re tempted to buy into stocks now?
