Author - Don Martin

1
Tech Stocks: A Source of Future Growth?
2
Rising Rates Damage Bonds: Should Investors Dump Bonds?
3
The Fed Can’t Reach Inflation Target 85% Of The Past 19 Years
4
Risk of Recession Rising
5
SP Finishes Negative For January: Is That A Crash Indicator?

Tech Stocks: A Source of Future Growth?

    Examining macroeconomic themes it seems there many reasons to be bearish about stocks and the economy. But eventually after a big crash new green shoots grow through the cracks in the sidewalk and a new economy grows. After a systemic crash there will be a further dramatic growth of tech companies. Tech enthusiasts have shown how it may take a period of 20 years for tech developments to reach critical mass at which time the growth and economic impact start to be clearly accepted by investors.
    Does that mean one should not bother trying to avoid a systemic

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Rising Rates Damage Bonds: Should Investors Dump Bonds?

Global interest rates rose today, hurting bonds, as problems in Greece and China appeared to get better. However investors should realize that even if the little tiny Greek economy had no problems the rest of world has a huge amount of debt which has reached an unprecedented level of debt to GDP in 1997 and has continued to rise. This debt increase was not accompanied by an offsetting increase in high quality productive assets so the result is that much of the debt increase was wasted. Now people have to service the debt which is like paying a tax. Increasing …

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The Fed Can’t Reach Inflation Target 85% Of The Past 19 Years

The Federal Reserve’s favorite inflation gauge, the PCE, has only gotten above the Fed’s target of 2% for three full years in 2005, 2006, and 2007 in the past 19 years. The years 2005-07 were when China imported an enormous amount of commodities far in excess of what would be used on a sustainable basis. That probably caused inflation to exceed the 2% target during those years. I guess one could joke that the Fed is so incompetent that they can’t even create inflation despite an enormous increase in the money supply from $4Trillion of Quantitative Easing. Thus, had there …

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Risk of Recession Rising

Durable goods orders fell 1.4% in part due to less demand from oil producers for capital equipment. The Atlanta Federal Reserve said GDP for first quarter revised down to 0.2%.  The annual inflation rate is 0.0%. If the U.S. calculated inflation as is done in Europe where housing costs are not counted then inflation would be about 1.5% lower. The problem with counting housing in the CPI index is that if only a few wealthy people pay high prices for a home that distorts the market.
    The formula for estimating interest rates for the ten year Treasury is real …

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SP Finishes Negative For January: Is That A Crash Indicator?

The SP500 stock index went down 1.3% today to 1,995 points, closing out January with a 3% loss for the month.  January is an important indicator because annual bonus money is used to buy stocks then and so as January goes, so goes the year. This year will have scary debt negotiations with Greece which will probably result in more stimulus from the ECB to Greece which will cheer the stock market but it won’t be enough to break the now developing bear market in stocks. Once the thrill of a new ECB Greek stimulus package becomes yesterday’s boring old… Read More

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