I regard Mish of Global Economic Analysis as the best economic bloggers out there, and well worth a daily read over any other blog, including mine!
Next up is Karl Denninger of Market Ticker.org, who is better than Mish in his activism stance against corruption and other market distortions. Mish tends to cover a wider, more even view of topics at hand. Karl is next blogger I place in high regaurd.
Then comes Gary of Smart Money tracker. For the most part, Gary focuses on making money, and positioned at the precious metal sector.
A few great rants recently I highly recommend reading.
Mish yet again has a great post listing great news sources. I encourage everyone to read the blogs and find one they like. If you have time to read only one blog, read Mish and stop reading mine. This post is a great follow up to "The Media News Bias"
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Some excellent commentary and analysis out, I picked some highlights.
Hussman Funds
Rich Valuations and Poor Market Returns - Last week, the S&P 500 Index ascended to a Shiller P/E in excess of 24 (this "cyclically-adjusted P/E" or CAPE represents the ratio of the S&P 500 to 10-year average earnings, adjusted for inflation). Prior to the mid-1990's market bubble, a multiple in excess of 24 for the CAPE was briefly seen only once, between August and early-October 1929. Of course, we observed richer multiples at the heights of the late-1990's bubble, when investors got ahead of themselves in response to the introduction of transformative technologies such as the internet.
A Blow Against Monetary Rectitude - Germany ECB president, a staunch believer central banks role should be to protect the value of money, has resigned. A good rant about the implications as yet another force to guard fiat currencies is gone.
Bernanke Warns of "Rapid and Painful Response to a Looming Fiscal Crisis" - Make no mistake, the financial debacle the US and the world faces was magnified 10 times by loose monetary policy of the US Federal Reserve Bank combined with legislation changes and deregulation. I am disgusted that Mr. Bernanke is already trying to position to pass the pending issue as congress, with no responsibility.
Fed Excess Reserve Cumulative Deficiency Hits Record - Some pretty scary graphs here, but the Federal reserve could buy 2 trillion, 20 trillion, 1,000 trillion and the US dollar can't be broken.....or maybe not? ;)
I can't stress enough to readers that best time spent is reading MISH'S Global Economic Trend Analysis blog on a daily basis. Mish does an excellent job of cutting to the root economic facts on a wide variety of topics. Mish' of course isn't 100% right, but I'll take his spin vs mainstream news outlets any day. A roundup of some of Mish's greatest rants recently, click a few and read!
Images lifted from various blogs, with links back to the full story. I find this format great for generating interest in various financial topics. The take away should be this is not a normal recession. I believe history will revise this period as a depression.
Chris Puplava on Financial Sense has an article "Fool Me Once, Shame on You. Fool Me Twice, Shame on Me", shows how "leading economic indicators" are being DWARFED (if not outright manipulated) by The Federal Reserve & US Treasury monetary policies. This is NOT normal folks, and it a distortion of reality.
Mish in his article Overly Optimistic Consensus Plays Greater Fools' Game Once Again quotes David Rosenberg in Report: A “V”-Shaped Recovery. While we will not belabour the point, when all the write-downs are included, the trailing P/E on “reported” earnings just widened to its highest levels in recorded history of nearly 140x, which is three times the levels prevailing during the height of the tech bubble. S&P 500 corporate earnings multiplier vs S&P 500 valuation, INCLUDING write-downs
I have mentioned many times, Mish, of the blog "Mish's Global Economic Trend Analysis" to me is by far the best financial blogger on the internet hands down. His blog is a must read for everyone. If you don't have enough time to read Mish and this blog, just read Mish.
Some highlights in recent weeks.
Hussman on Post-Crash Dynamics - Great analysis on Hussman (another blogger) summarized by Mish. This shows through history of bubbles bursting, there the stock market is likely headed.
Manhattan Commercial Real Estate Sales Plunges by 91% - ouch! "Rep. Bachus: Social Security Could Face Default Within Two Years" - After reading these two articles, ask yourself, where in main stream media is this being discussed? Manhattan Real Estate plunge 91%? SS nearing default soon? Granted the SS story is just a politician pontificating, but I have to imagine the public thinks SS is fine until +20 years from now. That is plain wrong. Thankfully we now have the internet to get around the public media for information and discussion of issues.
Mish on why inflation is not a threat - My spin is I agree EXCEPT with loose money from the government will cause inflation in certain sectors, like resources Oil, Gold, etc. However, at this time, I agree, deflation across the board....for now.
Collapse Of The "Ownership Society" - Obama has come to the realization, for the banks to "sell" the properties they have, they will recognize losses and fail. The solution? Have the banks own the houses and RENT to the public. Ahhh, the American Dream, have the Banks own land, and the citizens rent from them.
Or just MAYBE The Founding Father, Thomas Jefferson was very wise when he said "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." -- Thomas Jefferson, Letter 1802 to Secretary of the Treasury, Albert Gallatin
Wouldn't be great if the US media would trumpet warning signs from our Founding Fathers about current events? Oh well, back to the Today Show........
This blog entry will be updated as needed, to revise my view of the US economy and the world economy. You will see text colored (blue). Click on these words to see a blog post or other material to provide detail of the basis of my view. This blog entry will be linked at the top of my blog for future new readers. If you are new to my blog, this post will help get you up to speed to better follow my current entries.
Welcome to my blog, my name is Mike Murphy, a Computer Consultant/Programmer turned arm-chair financial blogger, with help from other bloggers and friends (John Chinnock). The goal of this blog is to serve two purposes, one is to help me continually focus and articulate current thoughts of the Financial Market & US economy for my own trading. A second is to hopefully help those who know me to safeguard their savings from buy and hold mentality in this historic economic problems the US faces.
Video of various economic forces the world faces This video series gives a great synopsis of many global and US economic issues. It is a MUST for anyone new to this blog. This video was created by Chris Martenson, a pay-for-blogger. CLICK HERE TO WATCH THIS GREAT VIDEO SERIES. Short take The US Stock market and the US economy will see substantial pressure from a massive deflationary collapse that will not end until the US government enforces honest accounting and loses by US banks are realized. Current target for S&P500 and DJIA for a "bottom" is 550/5000 respectively or lower. The US economy will be in a recession/depression that will span 5 to 10 years from the initial downturn in Dec 2007.
During the economic turmoil storage of wealth in stocks, bonds, cash, real estate, or natural resources (gold) all involve risk. In my opinion, physical gold/silver or natural resource based companies such as gold/silver miners are "safer" investments than most others in the time frame between 2009-2012+. A MUST read for new users is this blog entry (click) on buy and hold as a bad strategy.
Therefore I strongly advise against keeping money in general stock funds, better off in US short term treasury notes (cash), and/or natural resource based investments. There will come a time where US cash will have turmoil (devaluation). However this is likely to happen after 2010, but it could be triggered at any moment due to US government actions. Please read the next section, my verbose view, to better support this view.
Where US (and the world) went wrong What we are witnessing unfold before our eyes is the deleveraging of INSANE amount of money/investment leverage that was allowed during the last 10+ years. The leveraging was done at all levels, citizen, corporations, states, and the US with debt represented as an asset. (Click for good video on current leveraging as of 7/18/09) Much of the over-leveraging was "pulling forward" demand (demand today, pay tomorrow) for profit taking today. Over leveraging accelerated with the repeal of Glass-Steagall act from 1930, designed specifically to prevent banks from taking part in high risk investments. Unfortunately, America created a new "investment vehicle" called Mortgage Backed Securities. Normal investments are valued at what others pay for it, called Mark to Market accounting. For example, a 2 year old Honda Element car may be valued at $9,500 because that is what people will pay to purchase it. Mortgage Backed Securities are NOT valued by what they are worth on the open market. They are valued by a "computer model". Basically, the banks can state their worth without proving it. This worked until the MBS where losing money instead of gaining, uncovering the reality behind the curtain. To this day (7/18/09) the US and the world refuses to value MBS and other securities according to their true value. This has created distrust and prevents normal lending. The problem ISN'T banks won't lend as much as they used to back in 2007. The problem is that banks can't tell WHO is fiscally sound to lend to or they actually now have some standards (where they didn't before). Politicians are trying to force the banks to lend, which will only repeat the act of debt faulting and causing more banks to fail. This fraudulent accounting was expanded, in April 2009 existing FASB rules on Mark to Market accounting where SUSPENDED, expanding the fiscal fantasy beyond MBS to the entire banking system, creating a second equity bubble starting immediately.
A secondary problem is "Credit Default Swaps". Credit Default swaps is basically Company A "insuring" Company B for potential risk (fiscal loss) for a premium. This is an INSURANCE POLICY. But banks have worked with politicians to classify CDS as NOT insurance polices. By doing so, CDS contracts can be written with NO regulation on risk taken, or even the ability to PAY if the policy becomes activated! This is what AIG faced, large losses from CDS contracts they wrote that required payment. Also, many companies still write HUGE CDS contracts "assuming" they won't fail, so they can take the premiums today as profit. If they are wrong, AIG is small time stuff compared to a CDS market collapse. The Bank for International Settlements estimates outstanding derivatives total $592 trillion, about 10 times global gross domestic product!
Both the above issues, combine with the issue that the US does not follow international accounting standards and is falsely representing valuations of corporations by not valuing "debt" properly. (level 3 assets) Until the US achieves honest accounting and proper valuation for debt, and enforces CDS contracts to follow similar risk-management as insurance policies, the world economy cannot return to normalcy.
US Banks Many large US Banks are taking losses from MBS investments, CDS, residential, and soon commercial real estate investments. Hundreds of US banks will fail in 2009/2010, as of 7/16/09, about 120 US banks have imploded since 2007. ONLY 22 banks failed between 2001-2006! Unfortunately, the FDIC does not have the money to cover bank accounts. However I believe the US government will cover "at any expense" personal accounts, so I am not panicking about safety of US bank accounts (under 250K per couple per bank). Further, banks refuse to sell foreclosed houses, since the price they would get would trigger write-offs. Therefore many banks are solvent on paper, but insolvent based on true value of assets.
NOTE: I will post on my blog when this entry post is "done", to allow regular readers to check back. Please feel free to add your own comments to help improve this page.
I would like to take the time to list out the blogs I read, and my spin on what they offer for information. You could spend 24 hours a day trying to keep up on all the streaming information on world politics, 10,000's of graphs, company news releases, etc. I frankly barely have the time to spend an hour a day (I shoot for 2-3).
Bloggers are an amazing resource that everyone should use to help digest what needs your attention. The goal is to find bloggers that do the daily footwork of digesting information provide a non-partial coverage of the highlights that need your attention. This provides you the tools tools to assess what trading actions are appropriate.
The bloggers listed here are also listed on the right hand side of this blog. I no longer provide the blogger roundup, do your own homework. Please post other blogger suggestions in the comments on this post.
Mish's Global Economic Trend Analysis Blog A Must Read Daily Mish is the best general financial realated news source on the web period. If you have one blog to read, this is it, not mine. However, Mish does little to no trading advice. He sticks to taking the spin out of the news, and constructing the reality behind it.
The Market Ticker Recommended Read Karl Denninger is a great American who cares passionately about the USA, and it's current crisis. Karl not only provides his insight to current events, he does it with great passion and colorful language at times. Karl supports efforts to mobilize the readers to influence politics and is associated with FedUpUSA.Org. Karl is the "next best" to Mish's blog to read, and definitely more entertaining than Mish. Karl speaks on blogtalk radio, as well as posts videos on youtube.
The Market Ticker forums Karl hosts a news/posting forum for the public. You can read some of the forums without registration, some areas require you to have donated to support his efforts. For up to date news worth reading, click this link and browse the titles daily. Its one of the best news sources for what new information is being released. Try to take any spin the other readers post with a grain of salt, but many provide key insight to the news releases. The Market Ticker Gold Member Area If you donate to the Market Ticker, Karl provides a daily breakdown of the market action in the form of a 20-40 minute video. I watch this video daily religiously. Karl unfortunately is a true day-trader, so his immediate market spin does not help me. But his decade+ experience of trading helps me put in perspective market likely direction. Karl on occasion in the video makes a stock recommendation.
The Smart Money Tracker A must for precious metal investing Gary of the Smart Money Tracker provides expert insight into the direction of precious metals and sometimes other resources. Gary's blog provides minimal information compared to his pay service. If interested in purchasing Gold Miners or other resources, I highly recommend donating to Gary's blog (click for examples) and start gaining access to his pay only blog and email service. As a warning, Garys "day to day" advice to me is not accurate, but his month over month advice seems to me to be extremely accurate. And his long term vision matches mine exactly, so he must be good. :)
The Slope of Hope Recommended for day to month trading Tim Knight of the Slope of Hope provides day-trading advice. He on occasion does provide week-month plays, but usually in shorter timeframes. Tim provides volumes of chart analysis, with trading recommendations, that is great to review. Tim also has a twitter post to allow you to easily follow his activity. Tim plays both long and short, and is pretty much not attached to any sector to trade. Best part, Tim's free! :)
The Chart Store Recommended for overall picture of market sector trends Ron Reiss of the Chart Store has over 5,000 charts dating back as far as the 1800's. Ron offers the same data from different perspectives, including adjusted for inflation, which is key to value resource stocks. I find Ron's blog worth the purchase currently, to get an overall impression of the market direction, and sectors that are in play, as well as trading ideas. Because Ron's site has so many charts, I don't believe I would find it useful to pay for the site access without paying the Premium fee for his blog analysis.
McHugh's Technical Index Worth a 1 month trial I have mixed emotions on McHugh's magic stock chart analysis. This pay service provides pontification of market direction using it's own formula for market trend prediction. This is worth paying for if only to see what many people use as a trend indicator. McHugh is very popular in the blogger world, and I believe extends into the professional trading world.
The McClellan Oscillator is the difference between the 5% and 10% Indexes, which are a 19-EMA and 39-EMA of daily advances minus declines. It reflects the short-term strength and direction of market liquidity. A longer-term view is provided by the Summation Index, which is the cumulative total of the daily McClellan Oscillator values. These indicators move within a trading range and also help determine the overbought/oversold condition of the market.
Other blogs Shadow Stats - Alternate economic statistics from the USA government, adjusted to be more "Truthful". Also has a pay service. Mises Institute - Great for general independent economic analysis. Hussman Funds - I have only started reading this blog, great general financial market analysis Financial Truth Blog - Good for videos from Jim Rogers, John Stossel, Marc Faber, Peter Schiff and Ron Paul Sudden Debt - posts on market thoughts, and chart analysis.
*NOTE* I may update this entry without warning, to add additional resources I follow
I added to this blog on the right hand side, a Google search box tailored to the Bear Market blogs I tend to follow. I expect I'll continue to add to this search box as I find new blogs that are interesting. Please check back to this post to see what I have setup to search.
Please post on this entry comments of blogs to add, and if this search box is useful. Also I added google ads. I'm lucky if Google pays me 50 bucks in 2 years. I added it to "play" and learn Google's tools for websites. By day I'm a techie.
Many more great blogs can be found on the right of this blog, do your own reading. The internet has given us common folk a great gift of unprecedented access to information. If this was 20 years ago all of us would have had NO IDEA of the pending collapse of the market. With the internet many of those reading blogs knew the storm was coming. Continued reading I am hoping will help prepare us for what is still yet to come.
Well worthwhile speech from Karl of "The market ticker" at award ceremony for
"AIM's 2009 Reed Irvine Award for Grassroots Journalism".
Since the stock market is closed monday, figure I would highlight some great blog entries by other bloggers. All of these blogs are worth looking at daily.
