10/21/13

Gold and inflation

This chart may suggest that gold will go nowhere for many years (click on the chart to enlarge it).

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

STRATEGIC INVESTING FOR UNCERTAIN TIMES.
Learn how to manage your portfolio risk and sleep comfortably. Improve the certainty of returns by taking advantage of business cycle trends. Learn to use simple hedging strategies to minimize the volatility of your portfolio and protect it from downside losses.
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IF HISTORY REPEATS ITSELF.....

The stock market reaches a major top only after a period of several months of rising short-term interest rates (click on the chart to enlarge it).

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

STRATEGIC INVESTING FOR UNCERTAIN TIMES.
Learn how to manage your portfolio risk and sleep comfortably. Improve the certainty of returns by taking advantage of business cycle trends. Learn to use simple hedging strategies to minimize the volatility of your portfolio and protect it from downside losses.
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10/17/13

Observations

When I am on my boat I go up to the cockpit for a few minutes every night. I enjoy the sound of the water against the hull and looking at other boats at anchor in the creek. Last time I started thinking about my next publication and about John and Judy. John is kind enough to send me challenging articles. I save them because I want to address his concerns. John is a good man. Enough said.

He likes to think about major issues and he is not afraid of addressing the most sensitive ones. For instance, when I tell him that thinkers like K. Armstrong suggest the concept of God is evolving, he discusses the issue with calm. I appreciate his mature response.

John likes the cold weather and his dream is to contemplate the universe from a frozen, snow-covered mountain in Montana. Judy is his delightful, charming, sensitive, and elegant wife with a superb sense of humor. She instead likes warm weather. As I do. We always joke that she should leave John and run away with me to a tropical island.

They live in a college town near Washington. John therefore is easily exposed to speakers with national and global perspectives. A few weeks ago he sent me a paper by Dr. Bakhtiari, a leading authority on the subject, on why the price of oil could go to $100. Or even higher.

I doubt it. This is exactly what people were predicting in the 1970s and oil sagged to $10. When I took a course in technological forecasting a few decades ago, I learned that new technologies, even the most breathtaking ones like the transistor, find their use in industry very slowly due to the cost of switching to new technologies.

As the price of oil keeps rising, new technologies are introduced and become widespread. A typical example is the hybrid car. Years ago it was a concept, now it is an accepted technology. When a technology becomes obsolete (e.g. the propeller), new and revolutionary technologies are found (e.g. jet engines), to go faster and cheaper.

Technological innovation is an unforeseen event for the masses. It is risky to extrapolate prices. New unknown technologies will certainly appear and place a cap on oil.

(This Observations appeared in the 10-23-2006 issue of The Peter Dag Portfolio ).

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

STRATEGIC INVESTING FOR UNCERTAIN TIMES.
Learn how to manage your portfolio risk and sleep comfortably. Improve the certainty of returns by taking advantage of business cycle trends. Learn to use simple hedging strategies to minimize the volatility of your portfolio and protect it from downside losses.
You will receive your user id to access 4 FREE issues – and all the previous ones - of The Peter Dag Portfolio. Email your request to info@peterdag.com. New subscribers, please.

FOLLOW ME ON TWITTER @GEORGEDAGNINO FOR MY LATEST VIEWS.

10/11/13

The central bank and your investments: Investment Implications

A tightening of monetary policy implies a decrease in liquidity in the system. During such times financial assets tend to perform poorly. Because of the lack of liquidity, business and consumers tend to sell financial assets and use the proceeds to invest in their businesses and to raise cash balances.

On the other hand, when the Federal Reserve is following an easy monetary policy, injecting liquidity in the system, this increased liquidity cannot be used right away by the real economy. It is placed temporarily in the financial markets waiting to be used. This is the main reason why stocks and bonds usually rise during these times of expansion in monetary aggregates.

Monetary policy impacts two main crucial economic variables; the growth of the money supply and the level of real interest rates. It is important to recognize the impact of these two variables on the economy, because as we mentioned in a previous chapter, a strong growth in the money supply causes the economy to expand rapidly, creating a high-risk environment for the stock and bond markets. The reason for this high risk is that a strong growth in the economy is followed by increases in short-term interest rates, and an increase in short-term interest rates has always had a negative impact on stock prices.

It is also true that a strong economy creates great business opportunities, and therefore, business tends to borrow aggressively, thus placing upward pressure on long-term interest rates, thus having a negative impact on bond prices. This is also a time when inflation increases, raising the inflation premium embedded in bond yields. On the other hand, a slow economy creates investment opportunities. As the economy slows below its long-term average growth rate, upward pressure on interest rates declines, thus allowing short-term interest rates to decline and provide a very favorable environment for the stock market. Also, weak economic conditions convince business to borrow less, therefore, creating downward pressure on long-term interest rates. This is also a time when inflationary pressures subside, reducing the inflation pressure embedded in bond yields. This situation typically creates a favorable environment for the stock and bond markets. >p>In order to keep abreast of the trends and position of financial cycles, investors need to follow the money supply, for that matter, all the measures of money: M1, M2, M3 and MZM because their growth tells you what will happen to the economy. If the money supply begins to accelerate, and this is typically favored by the Federal Reserve during a period of slow economic growth, the investor should look for a stronger economy - one to two years into the future. If the money supply grows very rapidly, let’s say close to fifteen percent, the economy should be expected to be very strong. The good news for investors is that stocks will be strong because liquidity is growing rapidly.

However, one should be aware that strong monetary growth is the seed that eventually will bring higher short-term interest rates and a weak stock market usually after two to two and a half years. The money supply is therefore a very crucial leading indicator for investors. Strong growth in the money supply is followed by strong growth in the economy and in industrial production, income, sales and employment which are the typical coincident indicators. Broad measures of money supply should be growing anywhere between 5-7%. Much higher growth rates than 5-7% create the conditions for strong economic activity. If the money supply grows too rapidly for too long, it will cause the lagging indicators: inflation, cost, commodities, and interest rates to rise.

As the price of money increases, it becomes more and more expensive to borrow. An increase in interest rates would gradually discourage businesses from making investments and expand capacity, thus reducing the demand for money. As a result, the money supply slows down. Only substantial weakness in the economy and lower interest rates will encourage businesses to start borrowing again. This is the time that costs (raw material, wages and interest rates) decline, thus improving margins. For this reason, following a decline in interest rates, the money supply starts accelerating again and a new financial cycle is under way.

What we are trying to emphasize here is the important interplay between money supply and interest rates. Their relationship is a typical relationship that exists between leading and lagging indicators. An increase in the growth of the money supply is followed by rising short-term and long-term interest rates after about two years the growth of the economy is rising. An increase in short-term and long-term interest rates is followed by a decline in the growth of money supply. A decline in money supply is followed by a decline in interest rates. The decline in interest rates is followed by more rapid growth in the money supply.

From the investor viewpoint, there cannot be a decline in interest rates without a substantial deceleration in the growth of the money supply. The reason is that a prolonged decline in the money supply is followed by a decline in the growth of the economy. Because of the slow growth in the economy, the demand for money subsides, thus allowing interest rates and commodities such as crude oil to decline (Fig. 6-4). On the other hand, strong acceleration of the money supply will eventually lead to higher interest rates. Strong growth in the money supply is followed by a strong economy, and because of the strong economy, business and consumers increase their borrowing activity, thus placing upward pressure on interest rates.

Interest rates are the fever chart of any economy. The higher they go above 5-6%, the more a country suffers major imbalances and rising inflation. The lower interest rates go below 5-6%, the more pronounced the imbalances become as deflation raises its ugly head.

This process can also be formalized in terms of leading, coincident, and lagging indicators. We have seen that the money supply is a leading indicator. What we call the economy, which is reflected by what happens to employment, production, income, and sales, is a coincident indicator. Interest rates are a lagging indicator. The interaction between these parameters can be visualized as follows:
• A trough in the growth of the money supply is followed by a trough in the growth of the economy.
• The trough in the growth of the economy is followed by rising interest rates.
• Troughs in interest rates are followed by a peak in the growth of the money supply.
• A peak in the growth of the money supply is followed by a peak in the growth of the economy.
• A peak in the growth of the economy is followed by a peak in interest rates.
• Which is almost immediately followed by an increase in the growth of the money supply.
And the cycle starts all over again.

How does the Fed fit in this process? The Fed cannot substantially change the trend in interest rates because they have been determined by how fast the money supply expanded, by the strength of the economy, and borrowing activity. The Fed can have an impact on the growth of the money supply through the level of interest rates relative to inflation. That is the other variable of monetary policy, real interest rates. They are impacted in a profound way by the Federal Reserve, because the Federal Reserve manages the rise in interest rates so that their increase or decrease does not become disruptive for the economy and the financial markets. What is important, crucial to remember for investors, is that the growth of the money supply, the amplitude and length of its cycle that determines business cycle conditions and trends in the financial market.

Real interest rates, as we have seen in a previous chapter, have a fundamental impact on inflation expectation and overall inflation. Changes in real interest rates affect the demand for goods and services because they impact borrowing costs, the availability of bank loans and foreign exchange rates. For this reason, real interest rates are an important tool of monetary policy. While real interest rates represent the difference between short-term interest rates and inflation, nominal interest rates are the level shown without adjustments for inflation.

In 1978, nominal short-term interest rates averaged about 8% and the rate of inflation was 9%. Even though nominal interest rates were high, monetary policy was stimulating demand with negative real short-term interest rates of –1%. Real short-term interest rates were very low. Money, as a result, was very cheap and monetary policy was very easy. That was the main reason inflation soared in those years.

In contrast, in 1998, nominal short-term interest rates were close to 5%. The inflation rate was about 2% and the positive 3% in real short-term interest rates reflected a fairly tight monetary policy. The point is that nominal interest rates don’t provide, per se, a true indication of monetary policy. The nominal funds rate of 8% in 1978 was much more stimulative than the 5% rate in early 1998. The reason is that in 1978 inflation was above 8%, thus making real interest rates very low and very simulative because the price of money in real terms was actually negative. On the other hand, in 1998 when interest rates were 5% and inflation was close to 2%, real interest rates were much higher, in relative terms, than in 1978 with nominal interest rates about twice the level of inflation. Thus, the high level of real interest rates in 1998 was one of the main reasons inflation was low.

A decrease in real interest rates lowers the cost of borrowing and leads to increases in business investments, consumer spending, and household purchases of durable goods, such as autos and new homes. This has inflationary implications because demand for goods and services increase considerably when the cost of money in real terms, that is after inflation, is low. This extra demand is what produces inflationary pressures.

When real interest rates rise at high levels, the reverse is true. The cost of borrowing increases and only those businesses that have projects with a very high return can make the investment, due to the high real cost of borrowing. What is the impact of real interest rates on the economy? Declining real interest rates is a sign money is becoming less expensive, and therefore, consumers and businesses tend to borrow aggressively during such times, causing the economy to grow rapidly, stimulating inflationary forces.

How do real interest rates and money supply impact the financial markets? High real interest rates help to keep inflation under control. This is a long-term determining factor for the stock and bond markets. From a business cycle viewpoint, the money supply has a more immediate impact for investors. When interest rates decline due to slow growth in the economy, credit expands because business and consumers borrow more aggressively due to the lower cost of money. As a result, the money supply grows more rapidly, positively affecting stock prices. An example of this situation occurred in 1995 when the money supply accelerated sharply as interest rates declined. This configuration was followed by strong economic conditions in 1998-2000 accompanied by sharply rising stock prices in the years from 1995 to 1999.

After a protracted period of strong growth in the money supply, the economy strengthens, the demand for money increases, placing upward pressure on interest rates. This is the time when investors have to be more cautious about the outlook of stock prices. When interest rates rise, the demand for money eventually declines and the money supply slows down. The stock market, which reflects trends in liquidity, cannot perform well under conditions of slower growth in the money supply. A good rule of thumb is to expect slow growth in the money supply, and therefore, poor market conditions after approximately two months of rising interest rates.

The investor has to keep in mind that only a slowdown of money supply of one to two years, followed by slower growth in the economy and lower interest rates, creates the conditions for the next bull market. From an investor viewpoint, it is important to be convinced that there is a close relationship between money supply and stock prices. And, since the level and trend of interest rates affect the growth of the money supply, they do have an impact on the stock market. The stock market is affected indirectly by the rise in interest rates, contrary to what is generally believed. It is quite typical for headlines to say interest rates are rising, therefore, the stock market is in a high-risk territory. That is indirectly true. The real impact on stock prices is actually due to the decline in the growth of the money supply, which is caused by the increase in the cost of money, which discourages borrowing, and therefore, reduces the amount of liquidity in the system.

An increase in short-term interest rates is followed by a decline in the growth of the money supply almost immediately and in stock prices after about two months. A decline in stock prices and in the growth of the money supply is followed by a decline in interest rates after about one year after the economy begins to slow down. A decline in short-term interest rates is followed by an increase of the growth of the money supply and in stock prices almost immediately.

These relationships are very important in determining the dynamics of risk, as far as investing in the stock market. In order to formalize this relationship, it is important to recognize that growth in the money supply and stock prices are leading indicators, the economy is a coincident indicator, and interest rates are a lagging indicator. Because of the relationship between leading, coincident and lagging indicators, the following occurs:
• A trough in the growth of the money supply or stock prices is followed by a trough in the economy, which is followed by
• A trough in interest rates, which is followed by
• A trough in interest rates is followed by a peak in the money supply and stock prices, which is followed by
• A peak in the growth in the economy, which is followed by
• A peak in interest rates, which is followed by
• A trough in the money supply and stock prices

The relationship between financial markets and money supply can also be formalized in terms of phases of the financial cycles.

In phase one of a financial cycle:
• Liquidity or growth of the money supply increases.
• The stock market rises.
• The economy is still slowing down.
• Commodities are declining.
• Interest rates are declining.
• Inflation is declining.
• The dollar is strengthening.

In phase two of the financial cycle it is quite common to see:
• Liquidity is increasing.
• The stock market is increasing.
• The growth of the economy is bottoming and then rising.
• Commodities are bottoming and then rising.
• Interest rates are bottoming and then rising.
• Inflation is bottoming and then rising.
• The dollar continues to strengthen.

In phase three of the financial cycle:
• Liquidity begins to decline.
• The stock market declines.
• The economy remains strong.
• Commodities continue to rise.
• Interest rates continue to rise.
• Inflation remains in an upward trend.
• The dollar weakens.

In phase four of the financial cycle it is typical to have the following:
• Liquidity, or growth in the money supply, declines.
• The stock market declines.
• The economy weakens.
• Commodities decline.
• Interest rates decline.
• Inflation declines.
• The dollar continues to weaken.

The decline in interest rates in phase four triggers the series of events which characterizes phase one.

(From Chapter 6 of my book Profiting in Bull or Bear Markets. Published also in Mandarin and on sale in China. The book is available at Amazon.com).

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

STRATEGIC INVESTING FOR UNCERTAIN TIMES.
Learn how to manage your portfolio risk and sleep comfortably. Improve the certainty of returns by taking advantage of business cycle trends. Learn to use simple hedging strategies to minimize the volatility of your portfolio and protect it from downside losses.
Receive your user id to access 4 FREE issues – and all the previous ones - of The Peter Dag Portfolio. Email your request to info@peterdag.com. New subscribers, please.

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10/8/13

This indicator was correct.

The market has been tumbling. This indicator was right. More details in the next issue of The Peter Dag Portfolio.

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

STRATEGIC INVESTING FOR UNCERTAIN TIMES.
Learn how to manage your portfolio risk and sleep comfortably. Improve the certainty of returns by taking advantage of business cycle trends. Learn to use simple hedging strategies to minimize the volatility of your portfolio and protect it from downside losses.
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10/7/13

Sell in May and go away?

Perfect synchronism. All the major global stock market have performed poorly since May (click on the chart to enlarge it).

All stock market are closely correlated at major turning points.

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

STRATEGIC INVESTING FOR UNCERTAIN TIMES.
Learn how to manage your portfolio risk and sleep comfortably. Improve the certainty of returns by taking advantage of business cycle trends. Learn to use simple hedging strategies to minimize the volatility of your portfolio and protect it from downside losses.
Receive your user id to access 4 FREE issues – and all the previous ones - of The Peter Dag Portfolio. Email your request to info@peterdag.com. New subscribers, please.

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10/6/13

The central bank and your investments: Financial Cycles

The amount of money made available by the Fed is the main driver of the economy and the financial markets. Changes in the growth of money create huge waves, lasting about five years, that have a big impact on our lives and on the price of most assets. From mid 1955 to 1995 there have been seven major financial cycles, and each cycle started with the money supply accelerating rapidly from a low level close to 0.3% in a weak economic environment. Growth in monetary aggregates in a typical financial cycle has risen to 10-15%, to decline again to about 0-3%. A complete cycle includes two consecutive troughs and this period of time usually spans about five years.

The stock market performs well during the first half of the financial cycle, when growth in liquidity increases. However, stocks perform poorly in the second half of a financial cycle when liquidity slows down. The stock market closely follows changes in liquidity because its strength or weakness depends on how much money there is in the system. If money grows rapidly, some of it is invested in the economy by business and consumers and some is invested in stocks, and stocks rise. However, when liquidity slows down, stocks decline as investors sell stocks to raise money to be used for other purposes.

The eighth financial cycle began early in 1995 with the growth in MZM close to 0%. The first half of the cycle ended in March 1999 when the growth of most monetary aggregates peaked and MZM was expanding at a rate of about 15%. Most measures of money supply slowed down in 1999 and, not surprisingly, the overall market became much more erratic with a very large number of stocks forming major peaks. Broad market averages, such as the S&P 500, showed no change from March 1999 to March 2000. The stock market does not perform well in the second half of a financial cycle, and the eighth financial cycle since 1955 was no exception. The growth in monetary aggregates, which is a measure of liquidity provided by the Fed to the system, can be used to assess what is happening and what is likely to happen to the business cycle and the financial markets (Fig. 6-3). A financial cycle goes through four distinctive phases.

In phase one of a financial cycle, liquidity accelerates, accompanied by a strong stock market. In the meantime the economy grows slowly, commodities are weak, and short-term and long-term interest rates decline. It is quite typical for the dollar to strengthen during this phase in anticipation of strong economy and lower inflation. In phase two, the economy begins to pick up its pace and grows more rapidly. Commodities and short-term and long-term interest rates bottom. The stock market continues to rise. The dollar remains strong.

In phase three, the growth in monetary aggregates declines while the economy remains strong. Interest rates and commodities keep rising as the dollar sputters. Stocks begin to perform poorly. This is a critical phase for the stock market because it becomes much more selective. Investors should recognize that risk is at the highest level, and their investment strategy should become much more defensive. Short-term interest rates typically rise at least two percentage points (200 basis points) during phase three of a financial cycle.

In phase four, the protracted decline in liquidity and the sharp rise in interest rates which occurred in phase three cause the economy to slow down quite visibly. As the economy begins to grow slowly, interest rates and commodities peak and then decline. By this time the growth in monetary aggregates is very slow, close to 0-3%. The stock market bottoms as the dollar rises. The decline in interest rates stimulates new borrowing and a new phase one is under way again.

The cyclical turning points in short-term interest rates (rates on 13-week Treasury bills) coincide with important turning points in commodities, such as crude oil. They are both dependent on the strength of the economy and by previous expansion on monetary aggregates. This implies a limited lack of control the Fed has on interest rate trends.

Financial cycles are closely related to major crises. The real estate crisis of 1992-93, the Asian crisis in 1997, and the Latin America and Russia crisis in 1998 were all accompanied by aggressive easing by the Federal Reserve and by the strong growth in the money supply. The main reason, of course, is the concern of the Federal Reserve that a financial crisis of major proportions would affect in a negative way the banking system, and as a result, the rest of the country or the global economy. For this reason, it becomes a priority to provide liquidity to the banking system in the U.S. and global banks, in conjunction with central banks of other countries, so that a smooth operation of the economy could be maintained. Because of the strong relationship that exists between growth in the money supply and growth in stock prices, it is not unusual to see financial crises accompanied by a strong stock market. The main reason is that the aggressive injection of liquidity in the banking system spills over in the financial markets, thus placing upward pressure on stock prices. It is exactly what happened in 1992-93, in 1997 and 1998.

(From Chapter 6 of my book Profiting in Bull or Bear Markets. Published also in Mandarin and on sale in China. The book is available at Amazon.com).

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

STRATEGIC INVESTING FOR UNCERTAIN TIMES.
Learn how to manage your portfolio risk and sleep comfortably. Improve the certainty of returns by taking advantage of business cycle trends. Learn to use simple hedging strategies to minimize the volatility of your portfolio and protect it from downside losses.
Receive your user id to access 4 FREE issues – and all the previous ones - of The Peter Dag Portfolio. Email your request to info@peterdag.com. New subscribers, please.

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10/3/13

LACK OF ECONOMIC DATA? THIS IS WHAT YOU SHOULD WATCH.

The economy started slowing down in 2011. Commodities peaked in 2011 and have been going down since then (click on the chart to enlarge it).

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

STRATEGIC INVESTING FOR UNCERTAIN TIMES.
Learn how to manage your portfolio risk and sleep comfortably. Improve the certainty of returns by taking advantage of business cycle trends. Learn to use simple hedging strategies to minimize the volatility of your portfolio and protect it from downside losses.
Receive your user id to access 4 FREE issues – and all the previous ones - of The Peter Dag Portfolio. Email your request to info@peterdag.com. New subscribers, please.

FOLLOW ME ON TWITTER @GEORGEDAGNINO FOR MY LATEST VIEWS.

ISM indices

The ISM indices suggest the economy is growing slowly (click on the chart to enlarge it). Services have slowed down quite sharply. Can interest rates and commodities rise with the economy so weak?

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

STRATEGIC INVESTING FOR UNCERTAIN TIMES.
Learn how to manage your portfolio risk and sleep comfortably. Improve the certainty of returns by taking advantage of business cycle trends. Learn to use simple hedging strategies to minimize the volatility of your portfolio and protect it from downside losses.
Receive your user id to access 4 FREE issues – and all the previous ones - of The Peter Dag Portfolio. Email your request to info@peterdag.com. New subscribers, please.

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Consumer confidence is weak ... very weak

The main issue with declining consumer confidence is that it brings a weaker economy, slower sales, and downward pressure on profits.

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

STRATEGIC INVESTING FOR UNCERTAIN TIMES.
Learn how to manage your portfolio risk and sleep comfortably. Improve the certainty of returns by taking advantage of business cycle trends. Learn to use simple hedging strategies to minimize the volatility of your portfolio and protect it from downside losses.
Receive your user id to access 4 FREE issues – and all the previous ones - of The Peter Dag Portfolio. Email your request to info@peterdag.com. New subscribers, please.

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Market indicator

This market indicator has been suggesting caution in the past several days. This is one of the many technical and fundamental measures we show our subscribers every week.

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

STRATEGIC INVESTING FOR UNCERTAIN TIMES.
Learn how to manage your portfolio risk and sleep comfortably. Improve the certainty of returns by taking advantage of business cycle trends. Learn to use simple hedging strategies to minimize the volatility of your portfolio and protect it from downside losses.
Receive your user id to access 4 FREE issues – and all the previous ones - of The Peter Dag Portfolio. Email your request to info@peterdag.com. New subscribers, please.

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10/2/13

Government spending and unemployment rate

Incredible relationship. Does this mean the unemployment rate declines when the government is not in our way and does not spend frivolously our money (click on the chart to enlarge it)? (Note: government spending as % of GDP is the blue line. The unemployment rate is the red line).

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

STRATEGIC INVESTING FOR UNCERTAIN TIMES.
Learn how to manage your portfolio risk and sleep comfortably. Improve the certainty of returns by taking advantage of business cycle trends. Learn to use simple hedging strategies to minimize the volatility of your portfolio and protect it from downside losses.
Receive your user id to access 4 FREE issues – and all the previous ones - of The Peter Dag Portfolio. Email your request to info@peterdag.com. New subscribers, please.

FOLLOW ME ON TWITTER @GEORGEDAGNINO FOR MY LATEST VIEWS.