Oil prices are collapsing as West Texas intermediate is now trading at just over $11/bbl Oil prices move to the point where the marginal supply is profitable or unprofitable. In today’s world the marginal oil supply is US fracked oil. But the economics of fracked oil differs from traditional oil in that the current cost […]
As of the market close on 11 March 2020 the S&P 500 PE had fallen to 18.2. This makes the market cheap in my valuation model as it has fallen below my fair value band. Moreover, with interest rates still falling to new record lows the fair value band is also rising. In the chart […]
My brother lives in Lucca, Italy ( near Florence) and sent the following report. We’re not quite at the “Bring Our Your Dead” stage. Schools & museums are closed, flights are being canceled, but all in all life in Lucca is quiet & normal. Many shops are closed for their usual breaks this time of […]
Before the recent swoon stock market market performance under Trump had been quite favorable. The market gain since his inauguration (100) had been (144) similar to those under Clinton (141) and Obama (150). At this point Ike actually had the best return ( 170) but Ike and Truman are not included in the chart because […]
Different bloggers have been posting their favorite charts of 2019 this January. So I decided to post my favorite chart of the past 20, or more, “years of the long bond yield versus the long run trend.” Bond yields are now below their long run trend and may be at or near a secular bottom. […]
In October the real trade deficit fell to $79,133 (million 2012 $) from the third quarter average of $84,713 (million 2012 $), a 6.6% improvement. This implies that the fourth quarter is starting with trade making a significant large boost to fourth quarter real GDP growth. Remember, the trade balance is the difference between two […]
I first met Volcker when I was a junior international economist in Washington in the late 1960s. He was the Treasury Under Secretary for International Economics. I was going to a luncheon at the National Press Club for the Indian Finance Minister. As I got on the elevator, Paul Volcker and John Kenneth Galbraith — […]
With the presidential election still a year away, Wall Street is starting its normal analysis that if a democrat is elected it will cause a devastating stock market crash. One would think that after all these years of such claims being proven dead wrong that the street would finally give up on it. In the […]
Despite all the recent stock market volatility the actual S&P 500 PE on trailing operating earnings is almost exactly where my model says it should be. The biggest problem is that the market PE is about 19 and bond yields are under 2%. The quick and dirty rule of thumb is that a 100 basis […]
The use of drones against Saudi Arabian oil facilities changes the economic-market risk significantly. Until now the oil producers have done an excellent job of preventing terrorist attacks from disrupting oil supplies. But the use of drones significantly changes the risk of future oil disruptions. How do we prevent future drone attacks on the […]