By: Daryl Montgomery
While the big Tuesday rally in stocks got all the media attention, the big selloff in U.S. Treasuries that accompanied it went largely unnoticed. Good news for banks apparently means much higher interest rates and bad news for consumers.
Yields on U.S. treasuries were not that far above historical lows before the boondoggle accompanying the Federal Reserve’s stress test announcements. When JP Morgan jumped the gun and other banks followed on March 13th, ...
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By: Daryl Montgomery
Greece is set to swap its privately-held government bonds today for new ones that will represent a three-quarters loss of the original investment. The deal will allow the country to receive 130 billion euros in funds from its second bailout. Like the money from the first bailout, those funds will eventually run out however.
The Greek bond swap is the biggest debt writedown in history. Over 85% of private investors (essentially banks, the deal does not ...
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By: Daryl Montgomery
As the situation in Greece deteriorates further, Moody’s announced today that it intended to downgrade 114 European financial institutions and 17 global banks. Hopes that China will buy up EU sovereign debt to help prop up the faltering eurozone may wind up costing the U.S. more than it does China.
The hostility between Greece and the EU/IMF/ECB bailout troika is palpable. Nevertheless, there are claims that a deal should be reached by Monday. Whether the ...
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By: Daryl Montgomery
The Greek bailout deal is once again falling apart. Whether or not it is patched together another time, the end will inevitably be an ugly default.
On Thursday, news sources around the world were trumpeting that the EU and Greece had come to terms that would allow Greece to receive a 130 billion euro bailout payment that would prevent the country from defaulting by March. But late in the day, EU finance ministers ...
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By: Daryl Montgomery
Investors make the most consistent money by following bigger trends and going long in uptrends or shorting into downtrends. Longer term trends are not unidirectional however, but subject to either sharp or intermediate term reversals. At those points, it is best to get out of the market until the uptrend or downtrend resumes. Of course all trends eventually come to an end and it is important to recognize this when it happens and to ...
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By: Daryl Montgomery
The current debt crisis that is now impacting the entire Euro-Zone started in Greece in late 2009. The problems there have yet to be fixed despite numerous mainstream media reports to the contrary in the last two years.
The EU’s debt crisis is not getting resolved because it is no more possible to solve a debt crisis with more debt than it is to sober up a drunk by giving him more alcohol.
By: Daryl Montgomery
While the EU is still reeling from S&P’s downgrade of the sovereign debt of nine of its members on January 13th and the latest talks to keep Greece afloat have hit a wall, there is an even bigger problem with the effectiveness of its stimulus programs — the money is just not finding its way into the economy.
Global markets were jubilant in December when the ECB (European Central Bank) pumped 490 billion ...
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By: Daryl Montgomery
Since the 2008 Credit Crisis, deflation has been the primary worry of mainstream economists and monetary and fiscal policies that utilize various forms of “money printing” have been implemented throughout the world to try to stop it. Unfortunately, money printing combined with deflation can potentially lead to hyperinflation.
Hyperinflation is a little understood and little studied phenomenon. Even inflation itself is only partially understood and traditional university economic programs devote minimal attention to ...
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By: Daryl Montgomery
While gold and silver are in long-term secular bull markets, they have experienced price weakness in the last few months of 2011. The technical picture indicates that they are likely to remain pressured for a while longer before recovering in 2012.
GLD (the major ETF for gold) fell below its 200-day simple moving average earlier in December and at the time, I pointed out in a previous article that this indicated lower prices in ...
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