by Dino

On March 19 – a few days after the Bear Stearns bailout – I explained why I thought that Bear failed while Lehman will survive. I’m afraid I have to revise that assessment. Today I will argue that Lehman has veered down a path of Enron-like practices that will threaten its existence as an independent [...]

by Gregory

Paul Volckers’ recent call for a return to conservative central banking practices, emails discussions with James’ and the last inflation figures lead me to clarify the situation on the links between monetary policy, money supply, liquidity and inflation. According to conservative central bankers, there is a strong link between changes in money supply and changes [...]

by James

As most of us realise, the Russian economy (and its stock market) is heavily weighted towards oil and hydrocarbons. All things being equal, the market usually tracks US futures throughout the day, but when something dramatic happens in commodities markets, oil prices tend to take precedence. In recent weeks the Russian market has rallied quite [...]

by Dino

Let us try to figure out if the recent rally in the S&P 500 index is supported by an improving earnings outlook – the inveterate question Are stocks cheap? When studying corporate earnings, you have to understand that there are two kinds: the earnings that companies have actually reported, and what analysts think those earnings [...]

by James

Markets finally began a correcting phase last week. The S&P500 lost 3.5%, the RTS dropped 1.8%. It is good to see the markets are beginning to act as I expect. It has taken a long time for the US to turn down. But as Chart 1 shows, over the time I was waiting, the broader [...]

by Gregory

Co-staring with the Kondratiev cycles, the hero of my previous stories (1, 2) was the entrepreneur of Schumpeter. In his Theory of Economic Development, Schumpeter argues that the entrepreneur, via innovations and innovative activities, is the main cause of economic development, which proceeds in cyclic fashion along several time scales. But what if each of [...]

by James

With oil prices knocking on $130/bbl, up over 100% year on year, inflation concerns are returning to the fore. The dollar is holding relatively stable but, nonetheless, gold looks an increasingly attractive hedge. The Fed may be correct to prioritise growth – as an international phenomenon, inflation would be tough to contain at the national [...]

by James

Last Week The US market continued to climb last week, with the S&P 500 rising an impressive 2.6%, even as the price of oil continued to hit repeated records. Again, the gains were not easy though, and lacked the strength of the market’s conviction. We have been nervous while the market has rallied for several [...]