Everyone is nervous about Europe. Me too. I have no way of knowing how much of this is already priced in the market. You’d have to say a lot based on the violent reaction in the oil patch, some European markets but I don’t see any positive outcome from this weekend vote in Greece. If they vote to keep the austerity demands in place, brief rally and the market will soon say the economy is just going to at best muddle along and at worse, be right back at the bread line. On the other hand if they abandon austerity, there is likely to be some kind of Euro shock although it could be brief followed by a very sharp rally if Germany agrees to tighter fiscal ties. From what I can gather the Germans are done with the Greeks and might be willing to be more cooperative with the ECB if they’re gone. A lot of what ifs and no way for me to have any edge. If it’s 2008 redux, there is one big difference. It’s Summer not Fall.
Zillow’s data suggests that, while down 29% as a nation, home values haven’t bottomed out quite yet:
Another 3-5% decrease in values can be expected based on foreclosure back logs, this decline will most likely be spread out over the course of 2012.
While shadow inventory is dwindling due to the majority of 2005-2007 loans that ran the risk of default having done so, a slow and relatively jobless recovery will continue to put a damper on home demand further restrict appreciation.
After a 3-5% reduction, home values are expected to stay flat for several years before any real appreciation starts
Red’s POV on all of this Noise about a Gold Bubble
Gold may be a bit over extended in, but it is not a place to make a Bearish call IMO.
The Gold Bears had a shot the Gold price last week, when Gold put in a temporary Top at 1911 oz and began it healthy correction. It tapped 1709 three days later.
That 10.5% fall did not drive the Gold Bulls away, the Gold players saw the dip as technical mark to start buying again, and Gold’s has rallied 7.3% off that low. And during the rebound the CME raised the margins for the 2nd time in less than a month
If a player/investor is in Gold, and the wisdom is that all portfolios should have at least a 10% stake, the Big Q, and the only Q that matters is this; are the majority of other traders convinced about the upside of Gold that they are going to keep buying it.
I believe that the Big A to that Big Q is; Yes.
Remember this, Crude Oil, Real Estate, and Tech stocks may have all seen “bubbles” at one point, but there was very good money to be made while the price was inflating because traders believe in the action
So, now it is Gold’s turn to run and run hard North.
IMO the reason the market’s been buying Gold since the end of Y 2008 is here now.
And that reason, as I have been saying in my reports since then is Inflation, a word that no one seems to want to hear but is essential to growth in any economy as I see it.
As of April 2011, the average annual inflation rate in the USA has come in above 3.0%. Since May it is in above the long-term average annual inflation rate of 3.43%, so let us face facts, the US government’s calculation of inflation is optimistic.
Friends, that fact by itself bolsters Gold’s biggest buyers (the central banks), and that means that the Gold story is a long way from over.
Once inflation kicks in, it will last for some time. And now, in that US Fed Chairman Ben Bernanke is not planning to raise the Key interest rates off of Zero, inflation is a given. Raising the interest rates will normally dampen the inflation rate brakes.
All that said, how high can Gold go? Technically based on the Fibo numbers the big picture is targeting about 2,747 or so.
I write a Gold, Silver and Crude Oil Report twice weekly and lay out the overall fundamentals and technical’s.
From that report a player can make calls for entry and exits depending on their Plan and their tolerance for risk.
I am staying Bullish on Gold as long as the Key support at holds, and see Gold moving into to and past 2000, the psych mark.
This is from my Mid-week Report, as follows;
It was a uneventful session for Dec gold, which settled slightly lower at 1831.70 oz,… 1766.4, the minor support intact, Gold’s rebound from 1705.4 is in favor to continue North. I expect Strong resistance at 1917.9 to limit any upside, and bring another fall to continue the consolidation. A clear break below 1766.4, the minor support, will turn the bias back to the Southside for a target of 1705.4, Key support, and possibly lower. But, a clear break of 1917.9 targets 2000, the psych mark, next.
Just because people are hearing and reading lots of stuff on Gold that has a negative tone the fact that it has charged North on strong data for some time now IMO will continue to do so as it may be just the beginning.
Knowledge is Power.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
NEW YORK/SYDNEY (Reuters) -They are a rag-tag bunch, often working from home
or tiny offices scattered round the world, from rural Texas to Beverly Hills and
a suburb near Australia’s Bondi Beach.
Some have never even been to China; most don’t speak or read
Chinese. And yet in the past nine months, this small group of “short sellers”
has published research exposing accounting fraud at a series of Chinese
companies listed in the United States and Canada, and made as yet unproven
allegations against a whole bunch more.
As a result they have scuttled a once hot sub-sector of the American capital markets.
In a number of cases they claim to have made a killing by shorting those stocks – placing a bet that the
shares would fall in value – before publishing the research. They insist they
operate independently but are clearly influenced by one another’s ideas and
Altogether, they have been the catalyst that has wiped more than $21 billion
off the market value of Chinese companies listed in North America. The sell-off
has led to big losses for some very prominent investors, including hedge fund
manager John Paulson and former AIG CEO Maurice “Hank” Greenberg.
If you’re new here, you may want to subscribe to our RSS feed or follow us on Twitter and Facebook. Either way, thanks for checking us out!
What’s up with all these social media companies filling for IPO’s lately? I guess the spark was lit with LinkedIn which went public just 2 weeks ago now. Since 2 other major social media tech companies have filed the paperwork for additional IPO’s – both Groupon and now Zynga.
Coming Social Media Bubble?
I hate to say the “B” word so early but of just the 5 companies that are planned to go public, the combined market value is north of $71 Billion. As you can see from the chart below, on a per company basis that is a extremely high even when compared to 1999 bubble levels.
Facebook does clearly make up the lion’s share, but even LinkedIn is now worth more than the initial $2 Billion estimate on this chart – $7.6 Billion as of last Friday’s close.
LinkedIn LNKD IPO Dud
LinkedIn, which went public last month, revealed that it earned just $15 million in 2010. Prior to that, LinkedIn was in the red every year since its 2003 inception — except for a slight profit in 2006. Really it’s no wonder why the stock has basically
Next In Line Please…Groupon
We have already had some heated discussions about Groupon on our Facebook Fan Page this weekend…
Groupon’s river of red ink is even deeper than LinkedIn’s and yet the buzz is already swirling. Groupon filed for its IPO on Thursday, revealing that it lost $413 million in 2010 and lost almost $114 million in the first quarter of 2011. Yet current predictions are that the company will be valued at more than $20 Billion on it’s IPO day?
What Do YOU Think?
Do you think we are in another “bubble in the making?” Add your comments below – irronically via Facebook – on whether you think we are in the early stages of a Social Media bubble?
I’m starting to get some of the mania. You have to think of it in different ways. For example, who would every pay monthly fees to Ancestry.com. Evidently there are growing numbers of people who can’t complete their curiosity in an evening. Zynga and online games I sort of understand. I raised two kids addicted to them. I can’t wait until they can start paying for them themselves. But then again, time away from Call of Duty is expensive to get.
Linkedin, well I personally use that one a lot but I don’t think I’d spend any more money there except to advertise for employees. Everyone is trolling for work. Groupon, I’m a customer of that too. I’m about to block it. Getting one deal a day I don’t want is starting to annoy me. Let’s see oh, yea, that little something called Facebook. Ok, half the people I know are on it constantly, the other half hate it. The question is can they charge for usage? I’m sure they can and will. Advertising is ultimately a game of taking share from Google since they have most of it. And that wont’ be easy. You can ask a few companies that had the share or all the money in the world. Even then a lot of the eyeballs on Facebook is time away from Google. But based on the deals coming public, everyone wants in. If this is a bubble, I want in. That’s in and out.
I found this article by Sarah Lacy on TechCrunch revealing. Prepare for a lot more Internet IPO’s. If history repeats itself, a lot of other companies stock will get bid up too. Any suggestions for tag along candidates?
In Silicon Valley the terms of venture capital deals, the prices of valuations and the real stories of ousters are routinely dished, whether they always show up in the press or not. Sure it’s all off the record or on background or whispered at a coffee shop, but people who live here love what they do and when companies and valuations grow this quickly, it’s hard to keep the juicy details under wraps.
WSJ May 7th : The article states, “The Class of 2011 will graduate this spring from America’s colleges and universities with a dubious distinction: the most indebted ever.”. The reason the class of 2011 is the most indebted ever is the policy of the government has been to provide government guaranteed student loads for almost anyone that applies. This reckless indiscriminate policy is identical to the same kind of thinking that thought everyone should own a home, aka Fannie Mae and Freddie Mac. It’s nothing wrong with everyone owning a home or getting a college degree but someone besides the taxpayer has to pay for it. We know how that ended. How will the education bubble end? It’s almost certain to end badly for the profit education companies like the University of Phoenix, APOL. It’s not that I think non-profit education is better or more justified than for profit. I don’t. But when the shit hits the fan, state schools have more friends and big privates have endowments. Besides the most important reason is that for-profits have no football teams. When it comes down to it, the Arizona Sun Devils wills outlast the University of Phoenix alumni. Go ahead short APOL,DV,COCO,UTI, and STRA
WSJ May 7th reports SAC Capital Advisors LLP, one of the nation’s most prominent hedge funds, is facing heightening regulatory and legislative heat. This could go a long way to explaining the squirrelly behavior of the market last week. Normally I can predict short-term price movement but many charts and indicators were trash last week. I’ve seen this before when there is wholesale liquidation. It sure felt like someone was getting out. SAC manages $12 billion and if investors decide they don’t want to risk having profits disgorged if SAC is charged there will be a stampede to the exits. My guess is this is going on now. I don’t know how to play this other than keep a cool head on your shoulders. Take advantage of price anomalies. This is when you must have a reason to own something besides it’s chart pattern or favor with analysts.
Financial Times May 8th reports Athens seen as facing difficulty over raising money in markets. The Euro Trust (FXE) was down 1.17% on Friday, hardly a significant move considering its recent rise against the U.S. Dollar. None the less this headline bothers me because it seems inevitable to me that the Euro as a currency will go through an incredible turmoil as one by one weaker countries . I’m afraid the way you make money on this is to ride a roller coaster. FXE will come tumbling down then reverse as markets perceive a smaller but stronger Euro currency bloc made up of the Franco German trading bloc countries.
Reuters May 8th reports: Reuters – The tantalizing prospect of finding the next Facebook, Groupon or Twitter is driving the biggest rush of venture capital into the Internet start-up arena since dot-com mania first boomed and then fizzled more than a decade ago. I started one of the first publicly traded Internet companies, HomeCom, so I know something about Internet bubbles. What people are failing to realize is that Facebook, Linkedin, and the rest are creating silos trapping traffic not adding to the pie. This is somewhat of a zero sum game at some point everyone is wired and you are just choosing where to advertise. The time spent on Facebook is the time away from Google search. The astronomic growth rates will not continue. Short Google. GOOG. Don’t short the new arrivals unless you want your head handed to you. I wouldn’t buy them either.
Here’s some perspective: history, demand and supply.
Brief history of gold price: Gold had sold for $35 an ounce, then shot up to $675 during the last bubble, peaking in January 1980. (I’m using monthly averages throughout this article.) That’s cool, buying at $25 and selling at $675. However, as gold was shooting up, plenty of new “investors” were buying, and there were plenty of people who got in on the boom at above $600.
Within two and a half years, gold had lost half its value. It finally hit its trough in 1999, 19 years after the peak, at $257 an ounce. That would have been a good time to buy, but who would have thought? Gold had slumped for nearly two decades. It appeared to be a stupid time to buy.
Now we’re up over $1500 an ounce (I’m writing on April 28, 2011). Isn’t that great? Let’s stay with the history for a bit. Let’s go back and adjust that 1980 peak for inflation. In terms of dollars with 2010 purchasing power, that peak was $1,892 per ounce. Another 23 percent upward and those old investors will have recovered all their purchasing power. Whoop de do. Just for comparison, if you had bought stocks in January 1980, you would have a total inflation-adjusted return of 316 percent. But we were headed into a recession in 1980, with fed funds at 13.8 percent, mortgages at 12.8 percent, and everyone knew it was an awful time to buy stock.
Demand for Gold: The big surge in gold demand recently has been speculative, but first let’s cover usage. Jewelry is a major use, and the expanding economy in the (more…)
Subscribe to our FreeNewsletter you are automaticlaly entered to win a free copy fo the Alpha MastersA
Finance Week Ahead: Earnings Season Kicks Off By Rebecca Stropoli | The Exchange – Fri, Apr 5, 2013 8:39 PM EDT What a difference a few days makes: On Tuesday the S&P 500 was a mere three points away from busting past its all-time intraday high, set in 2007. Now the index has closed its worst [...]
U.S. Ups Its Show of Force in Korea By JULIAN E. BARNES Agence France-Presse/Getty Images The U.S. sent F-22 fighters like this one to South Korea for exercises. The U.S. flew F-22 stealth fighter jets to South Korea Sunday for joint exercises, a further demonstration of advanced military capabilities meant to deter provocations from Pyongyang. [...]
Stockman Warns of Crash Of Fed-Fueled Bubble Economy By Richard Rubin – Mar 31, 2013 2:42 PM MT The U.S. economy, fueled by “phony money” from the Federal Reserve’s quantitative easing policies, is headed for an inevitable crash, likely “within a few years,” warned David Stockman, who was budget director for President Ronald Reagan. [...]
As the market creeps higher and higher, the chances of sharp pullbacks increase. At this time, I’m looking for non-correlated returns. Risk arbitrage is one place where you may find them. Take this excellent analysis from David Merkel author of the The Aleph Blog » Blog Archive » On Merger Arbitrage. ” Merger arbitrage is a [...]
Wall Street Hates YouI have a saying, “Don’t buy what someone wants to sell you. Buy what you have researched.”And so I would tell everyone: don’t give brokers discretion over you accounts, and don’t let them convince you to buy unusual bonds, or obscure securities of any sort. By unusual bonds, I mean structured notes, [...]