Take Aways from US Data Dump

News that weekly initial jobless claims fell to their lowest level in six years, with new cyclical lows in the 4-week moving average, have overwhelmed the other US data reported today. A recent Bloomberg poll found a little more than 2/3 expect the Fed to begin tapering next month. The risk is that many are […]

Money-Financed or Bond-Financed Fiscal Stimulus?

Many governments are experiencing malfunctioning macroeconomic policies. There is growing recognition that the austerity policies adopted in Europe are not delivering lower public debt burdens, increased confidence, higher economic activity or sufficiently lower relative prices in the uncompetitive countries. Pressures are mounting on that continent for pro-growth macroeconomic policies. On the other side of the […]

Corporate AAA Yields vs 10 Year, 1857 – Present

Moody’s Corporate AAA bond yields vs US 10yr Constant Maturity Yield to 1857 Click to enlarge   There is a tendency to look at the S&P500 Dividend Yields vs US 10 year, but in many ways, that is a less than ideal comparison. Corporate Bonds are more of an apple to apple comparison. Note that […]

Euro or Drachma, or Both? A Temporary Parallel Currency Concept

“Dramatic scenes in the streets of Athens; strikes are paralyzing all of Greece.” “Greek prime minister considers leaving the euro.” “German parliament will decide tomorrow whether to reject the refinancing of the public Greek debt due next month.” “Greek bank deposits are disappearing rapidly.” Introduction Numerous voices describe such headlines as a plausible future scenario. […]

Dividend Yield vs. 10-Year Bonds to 1877

Equity Index Dividend Yield vs 10 yr Bond to 1877 click for larger graphic   With nearly every major developed country in the world and their central banks — FOMC, ECB, BOE BOJ, etc. — have driven their interest rates to zero, investors are hunting for yield. (Maybe someone can securitize risky mortgages or sumpthin’). […]

Tactical ETF Review

The punditocracy is calling it the great rotation—selling bonds and buying stocks in 2013. Just as this buzz-phrase went viral, so did the warnings that the trend isn’t long for this world. Perhaps, but the momentum in favor of equities is certainly transparent so far in 2013. Reviewing our set of ETF proxies for the major […]

The Most Common Error in Stock Market Research

There is a very common research mistake. It is pervasive in Wall Street research, even that presented by the big-name firms. My academic friends are not immune, partly because they have their own set of incentives. My mission in this post is fourfold: Explain the problem in a way that it can be readily understood; […]