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Manufacturing-Led US Economy At Last, But Don't Count On It!
Monday, May 02 2011 | 03:45 PM
NEWOAK CAPITAL LLC
|Be careful what you wish for, you might just get it. Most economists prefer a more manufacturing-based US economy vs. a service and consumer dominated one. Well, it took a credit bubble, economic crisis and Dollar falling to get there. While we all feel poorer, manufacturing growth has been a positive factor keeping the economic recovery alive. However, this has been primarily driven by foreign demand, a cheap Dollar and some increased corporate spending,
Japan's natural disaster has introduced a few bottlenecks but China and Brazil have helped to more than balance that. If this continues, the general hope is gradually the unemployment will adjust to a more normal range. We may even get back some of those folks that had given up on the job market. Of course, the residential and commercial real estate markets will be key to the ultimate health of the economy. By then, we may even be tempted to regain some of our old bad habits and let others produce and save while we enjoy consumption.
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Action and Reaction
Wednesday, March 30 2011 | 06:30 PM
|The Japan event of March 11, 2011 is probably going to be stimulative. Japan unlike Haiti is a large modern economy and the re-build will be a priority for the Japanese people. We know that Japan will need a lot of “stuff” – commodities, machinery, and infrastructure along with complicated transportation needs.
Technical analysts tend to believe that for every negative event there is a positive event somewhere else – sort of like Newton’s laws of motion – one being action and reaction. The negative Japan event should boost the price of coal, copper, wood and natural gas. Now the one big commodity laggard over the past several years has been the price of lumber – likely due to the depressed U.S. housing starts. We need to watch lumber closely. Note the weekly chart displaying lumber’s intermediate cycle along with a very slow %K and %R stochastic. Note the current down cycle and the bullish flat price, a sign that the intermediate cycle will turn up above the zero line. If we break above that 5-year level we need to buy the beneficiaries – action and reaction
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0 Comment | Add Comment(s) | Japan, Commodities, Infrastructure, |
Black Swan Hype
Monday, March 21 2011 | 03:01 PM
|I don’t know about you but I grow weary of being regarded as stupid by these “Black Swan” guys who use scare tactics to influence normally sane investors.
A Black Swan is the latest buzz word which is a metaphor that encapsulates the event to be a surprise with major impact. In the “old” days we used the term “exogenous event”. An exogenous event in the capital markets is a one-off variable that is not resultant from any of the usual market drivers such as earning releases, employment data and industrial production numbers. The exogenous event (in this case Japan) is an external event that is large enough to affect markets and because it is change that comes from outside any model or analysis, there is no way to anticipate the event
The black swan buffoons tell us “this time it’s different, something is wrong.” The idea here is to have you believe that what ever worked in the past, won’t work anymore. We are to reject traditional stock analysis and to fear the current environment because it always the wrong time to invest.
They will tell you that buy-and-hold is dead because the equity markets have delivered zero returns over the past twelve years, just like the 1968 – 1980 period. What they don’t tell you is that during these long congestive periods there is great opportunity because “the next big thing” can emerge from these periods. The next big thing that emerged from the 1968 – 1980 zero return period was the new economy and the related components. To-day start-ups like Intel Corporation, Cisco Systems, Inc. Microsoft Corporation and Apple Inc. are household names.
The current 2000 – 2011 zero return period introduced the global economy and the related commodity boom. I do believe the Black Swans which is a large waterbird found mainly in the southeast and southwest regions of Australia missed this great investment opportunity.
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