So much for any hopes for quick appreciation in China's currency
Day 2 isn’t nearly as positive as Day 1. A day after the Chinese government announced that it would end its policy of keeping its current strictly pegged to the U.S. dollar, the world is getting an object lesson in exactly how slow any appreciation in the Chinese...Time to rethink assumptions about interest rates–and income investing strategies
Reality has a nasty way of throwing investors’ assumptions onto the rubbish heap. Take this one: The massive stimulus packages, central bank interventions, and government budget deficits will lead to a surge of inflation and rising interest rates. That may still turn...Looking for deals on the frontier of argiculture? How about these three from Brazil
International credit markets may still be tight for companies in the developing world, but Brazil’s domestic bond market looks ready to pick up the slack. As of June 15 five Brazilian companies have bond sales worth $2.2 billion on tap. That’s a huge shift from the...Companies are sitting on the highest percentage of cash since the 1960s
Want to know why the U.S. economic recovery isn’t producing more jobs? For part of the explanation, look at where companies are putting their cash. With record levels of cash on company balance sheets U.S. companies aren’t putting it into expanding production, buying...China reverses another policy and starts new buying of U.S. Treasuries again
China’s decision to end a strict yuan-dollar peg is getting all the headlines today—even though the likely appreciation of the yuan versus the dollar is in the vicinity of 3% or so in 2010. That’s hardly a game changer. But the bigger China-U.S. news dates back a few...China gets a big bang for a tiny change in its yuan-dollar peg
Score it “Stability” 4, “Flexibility” 3. That’s the count for how many times China used each word in announcing that it would end the peg that kept the price of its currency fixed to the price of the U.S. dollar. China made it very clear, I think, that an end to the...Bullish or bearish? It depends on …
Question: Jim, are you bullish or bearish? Answer: It depends on what time period we’re talking about. In the very short-term, say the next 4 to 6 weeks, I’m bullish. I think the market is gradually inching its way higher after breaking through resistance at 1108 on...Gold hits another record
Gold for August delivery climbed to $1,258 an ounce today, June 18, breaking the record set yesterday. Yes, gold is being propelled to record after record by investors looking for a safe haven from worries about the euro and about global economic growth, and by...Spain sells bonds–at least the market is still buying
$4.3 billion down. Just $62 billion to go. Yesterday, June 17, Spain sold $4.3 billion in bonds at auction at surprisingly low yields of 4.86% for the 10-year notes and 5.90% for the 30-year bond. Both rates were slightly below the yield on existing Spanish bonds in...Three bombs that could still wreck the recovery from the global financial crisis
I’d love to believe that the global financial crisis is over. But I can’t. I just see too many unexploded bombs in the road ahead for me to believe the danger is past. And I’m not talking about the big bombs ticking away and set to explode in decades. You know the...Whoops–and so what happens to those European banks who fail their stress test?
Stress-testing European banks and then releasing the results is no cure for the euro debt crisis. Investors will be rightfully suspicious that bank regulators and sovereign governments are trying to sell them a bill of goods by setting up tests that banks are sure to...Core inflation up at just a 0.9% annual rate in May keeping the Fed on hold
No inflation in May. The headline Consumer price Index fell by 0.2%. That’s the second monthly drop in a row after April’s 0.1% decline. Nobody needs to worry about the Federal Reserve raising interest rates to fight inflation any time soon. No deflation in May...Buy or wait in China? My indicator edges toward buy–ever so slightly
One step back and one step forward on the IPO (initial public offering) for the Agricultural Bank of China. I’ve repeatedly tabbed this IPO as the indicator I’m watching to figure out the health of China’s stock market in particular and its financial system in...$342 million real estate sale collapses in Hong Kong–more to come?
This is what China’s real estate and stock markets are afraid of. On June 16 Henderson Land Development (Listed in Hong Kong as 0012.HK) announced that the sale of 20 luxury apartments had collapsed as buyers pulled out. The company said it had cancelled $342 million...Bond buyers demand higher interest rates from Spain adding to the financial pressure
Spain took another step closer to becoming the next Greece yesterday, June 15. In case you’ve been on vacation for the last six months or so that’s not a good thing. An auction of 12- and 18-month Spanish government bill raised $6.4 billion but the interest rate on...Subsidies end and housing starts plunge even more than expected
Hard to find a silver lining in this data. Housing starts in May fell to a 593,000 annual rate, according to numbers released this morning, June 16, by the Department of Commerce. That was a 10% drop from April’s annual rate of 659,000. The April rate itself was...Did the summer rally begin today–and will it be more than just the Return of Son of Bounce II?
The Standard & Poor’s 500 finally broke through the 1108 barrier that had stymied stocks for the last few days. The June intra-day high was at 1105 and the index’s 200-day moving average was at 1108 so today’s close at 1115 is definitely a positive sign. In...Looming political crisis in Germany threatens the euro
The government of German Chancellor Angela Merkel faces a critical vote on June 30. If it loses the vote, the country will be plunged into new elections just as German opposition to the euro debt bailout is near a peak. There’s some chance that a government opposed to...Could the Fed keep rates at 0% into 2012? Some at the Fed think it should
The Federal Reserve will hold its short-term interest rate target at 0% to 0.25% until 2012, according to a new research paper by economist Glenn Rudebusch. That’s a much longer delay than Wall Street now anticipates. Estimates there for when the Federal Reserve will...Faster growth and cheaper too–what's not to like in emerging market stocks?
The big picture, macro reasons for putting more emerging market stocks in your portfolio are compelling enough. But you don’t need to buy into the top down macro argument. The micro, stock-by-stock reasons are just as compelling. Put a developed economy stock up...Cloud computing is the future–here's how to buy a piece at a reasonable price
Psst! Mister. You wanna buy some cloud? Cloud computing that is. It is the wave of the future in the delivery of everything from computer software to media products to computer services. Market researcher The 451 Group estimates that revenue for infrastructure as a...Finally Moody's decides that Greek government bonds are junk
I’m sure the Greek government today is saying “Better never than late.” Moody’s finally got around to lowering its credit rating on Greece to junk today, June 14, just a month-and-a-half after Standard & Poor’s lowered the country’s credit rating to junk or...Stocks won't give in but they can't break out to the upside either
Stocks refuse to give in but they have been unable to move out of the danger zone either. The U.S. stock market could still swing either way. Take a look at the New York Stock Exchange Composite Index, for example. At the beginning of last week the index fell through...Get ready for a flood of economic news beginning Wednesday that's strong enough to move stocks
On the economic front, Monday and Tuesday of this week are the calm before a storm of reports with market-moving potential hits on Wednesday. The biggest news in the first two days of the week is the June Empire Manufacturing Index, a survey of manufacturers in New...So virtue is its own reward? Not when it comes to budget cuts
Ah, somebody finally spelling out the trade-offs if the world’s developed economies move now to cut government spending or to raise taxes. This isn’t another one of those exercises that says healthcare spending and welfare payments will get cut if governments adopt...A new deal creates a healthcare software pick for my watch list
A deal out of the United Kingdom this week has created an intriguing pure play in healthcare information technology. I’d like to let the dust settle a bit on the deal but I’m adding one party to Jim’s Watch List today. Here’s what happened this week. (Pay close...May core retail sales growth stays positive–barely
Bad news in this morning’s U.S. retail sales number but not as bad as it seems. The all-in, headline number showed retail sales plunging by 1.2% in May from April’s levels. If you discount the downturn that resulted when the cash for clunkers program ended, this is...The next rally won't be like the last one–here's how to make sure you find the next leaders
If the bull market that ended in 2000 the bear market that began in 2000, the bull market that began in 2003, the bear market that began in 2007, and the possible bull market that began in 2009 and that may or may not have ended in 2010 teach investors anything, it’s...That's a whole lot of supply that stock markets are being asked to digest
In the short-term news about ephemera can drive stock prices—and that’s what’s happening today and this week. In the longer term the stock market isn’t any different from the markets for chickens or Las Vegas real estate: it’s supply and demand that counts. And one of...Jim’s Daily Email Alerts:
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