If there’s a proverb that captures the outlook for the U.S. economy in the New Year, it’s the one that says: “It’s always darkest before the dawn.”
Gold hit two historic milestones in 2008. First, in early March, the “yellow metal” hit its all-time high of $1,030 an ounce. Just three months later, the price of gold for December delivery had plummeted to $681 an ounce, a 21-month low and 33.9% drop from its record high. Most gold bugs were equal parts puzzled and broken-hearted.
Currency markets stabilize (for now)… Data packed holiday shortened week… China cuts rates… Indian rupee falls… And Now… Today’s Pfennig!
We have almost made it to the Christmas break, but before we do, we have two days absolutely packed with reports. Tomorrow morning there will be five reports released, and Wednesday morning has three more.
Since gold has fallen so far, so quickly, for so little reason, the future for gold looks increasingly good, too, as the future of the dollar and the economy looks increasingly bad, and asset-type things (like houses and stocks) falling in value certainly looks deflationary, like the $30 trillion that has been lost in the world’s stock markets in the last year, which may have been what prompted Howard Ruff of the The Ruff Times newsletter to say, “It is axiomatic that deflation is the spawning ground for inflation, as the government doesn’t know how to fix deflation, depression or recession other than to throw money at it. The creation of all the money floating through the economy will eventually…
Warning that more pain will precede the positive, President-elect Barack Obama said in a weekend interview and press conference that he plans a massive investment in infrastructure to create jobs and stimulate grounded and long-lasting economic growth.
A spree of economic props dominoed across Europe today (Thursday) all sharing the same theme – stopping the global financial crisis from getting worse. The European Central Bank took a drastic step to protect the Eurozone economy from shrinking further by lowering its benchmark interest rate by three-quarters of a percentage point to 2.5%.
If there’s a proverb that captures the outlook for the U.S. economy in the New Year, it’s the one that says: “It’s always darkest before the dawn.”
Both the ISM Index and ISM Services reports come out this week, and it looks like the slide continues. The Index report coming out this morning is likely to show a drop to 42.0 from last month’s 43.5 reading.
Warren Buffett says buy. Jeremy Grantham says it will get worse. Both are celebrated value investors. Who is right? It all depends upon your view of the third derivative of investing. Today we look at valuations in the stock market. This is the second part of a speech I have given in the past few weeks in California and Stockholm. I am updating the numbers, as the target keeps moving.
