Thursday, March 17, 2011

Is nuclear dead?

With the disaster in Japan continuing to unfold the consensus seems to be that nuclear energy will not go forward in this country. I watched President Obama's speech today. He reassured the audience that he did not expect radiation to be a major problem. I was struck by his lack of hostility toward nuclear power. In fact, at the start of his speech he referred to nuclear as valuable. Obama stated that he was going to appoint a commission to look into the safety of U.S. nuclear reactors. It is to be expected that the president will appoint a commission to look into the nuclear energy industry. That is what presidents do, and it is what the American people expect. I was struck by his tone though. I believe he will come out in support of the nuclear industry in weeks to come.
On a trading note here is a chart of Cameco Corporation. They do uranium. It has been a bad week for this stock. I noticed the new lows today were made on relatively low volume. While I don't recommend that amateurs try to catch falling knives, this stock may start to bottom here somewhere....

Tuesday, March 15, 2011

U.S. Dollar weakness

With the latest selloff around the world over the last week one would expect the U.S. Dollar to be a safe haven. That has not happened. Barely a little rally, and down hard today, even as the stock market was down. Admittedly, the U.S. stock market did not look as weak as I expected it to look after the selloff in Tokyo overnight. Silver and gold were down sharply today, but seemed to hold up well. I expect them to regain strength as the dollar looks set to plunge through the floor. A weak rally in the U.S. long bond also.  It will be interesting to see how the stock market holds up in the coming days as the dollar will surely plunge.
Here is the chart of the dollar:

Tuesday, March 8, 2011

reagan, the man, the myth.

Here is the story of the man who started the government debt snowball rolling. And of his legacy......

The wealth gap

Here is a couple of graphs that say so much of what is wrong with the U.S. economy.
As more of the fruits of the productivity gains over the last 20 or so years have gone to the top of the wealth pyramid, so the money has come out of the productive economy and ended up in financial instruments.
Would it have been so bad for wages for working people in this country to have kept up? Maybe the middle class would not be in such a debt hole. Maybe both parents wouldn't have to work to make ends meet. And maybe the kids would do better in school with one parent home after school

. Here is a book that is a good read and gives an eye opening contrary look at the "liberation" of women...

Sunday, March 6, 2011

A must listen from Puplava

The following link is a must listen segment that further illustrates the problem that the world is having and will continue to have in regards to the energy situation. I believe that energy is the fundamental driver of all modern economies. And economics is the expression of that energy input. I urge all to listen to this from the Financial Sense Newshour.

Saturday, March 5, 2011

US Govt income vs. spending

Here is an interesting chart of the U.S. Govt revenue vs. expenditures.
Particularly interesting is the small sliver of corporate tax paid on the left.
And then look at the Social Security tax bite. 40%. The payout for Social Security on the right side is 20%.
But where do our good friends on the right side of the political spectrum look to cut the federal budget. They look at Social Security.

Here are some interesting links to read:

Corporate profits are at all time highs. In a time of the government going broke and millions out of work. If low taxes stimulate job growth, just where in the hell are the jobs?

Wednesday, March 2, 2011

Safe haven?

Here is a chart of the Pimco Real Return Fund. This fund is an inflation indexed bond fund. They invest primarily in U.S. Govt bonds that are indexed to inflation. As long as high oil prices are weighing down the stock market with the threat of inflation, maybe not a bad place to be. Of course, "we report, you decide".

Just for comparison, the S & P index.

Tuesday, March 1, 2011

Inflation or deflation?

The higher prices that we have seen in the commodity sectors lately has, in my opinion, been due to a perception that the amount of money in the economy will rise. The amount of money in circulation is a function of demand for money. As long as the velocity of money remains low however, the volume of money will not rise. So the rise in commodity prices is in great part an expectation of  improvement in the general economy. Weak wages for employees, and the general political and social climate in this country does not bode well for a sustained ability to pay these higher commodity prices. I believe that a period of demand destruction is in store. The difficulty of merchandisers to raise prices, and the subsequent margin pressures will cause stock valuations to fall. This will be the onset of general demand destruction, similar to the events of two years ago.
I am underweight (to use a wall st. phrase) the stock market at this time. And I believe is only a matter of time before the precious metals correct. Oil is a different story, as I believe that the high price of oil is actually deflationary for other sectors.
On a related note, technically, keep an eye on SKF, the short financials ETF.
Huge volume today, and up so far...