Auto sales are sinking (click on graph to enlarge) as consumers refrain from spending. This is a strong deflationary development creating solid investment opportunities.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Finance ministers and central bank presidents from the Group of 20, which includes wealthy and developing nations, agreed the world must work together to address the current crisis. But they approved no specific plans ahead of a meeting of G-20 heads of state set for Washington next week.
Ministers urged governments to increase spending or cut taxes as they can to help reverse an economic downturn that is expected reduce global trade next year for the first time since 1982.
Meanwhile....China unveiled a $586 billion stimulus package Sunday in its biggest move to inoculate the world's fourth-largest economy against the global financial crisis.
The Cabinet approved a plan to invest the money in infrastructure and social welfare by the end of 2010, a statement on the government's Web site said.
Bottom line.This is a great opportunity to make money! These people are not joking. They are planning to throw a lot of money at the problems they perceive. Even if they may not be problems. Just to make sure.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
The Fed keeps pouring money into the banking system at a very aggressive pace (click on graph to enlarge). This is good news for the financial system and the economy. Eventually.
As far as the long term is concerned, all this money is likely to create other bubbles. The stock market should be the great beneficiary of this fantastic inflow of money.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
This graph shows the behavior of the major bear markets since 1950 (click on graph to enlarge).
The current bear market is the most severe in terms of price decline. It declined 40% in just 14 months. If this bear market follows the pattern of the 2002-2004 bear market, prices should stabilize and rise in the next 6 months. The market could then decline again for the next six months. Time will tell. Stay tuned.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
The unemployment rate soared to 6.5% (click on graph to enlarge). The economy is still in a recession. Is this environment creating investment opportunities? I believe so.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Nonfarm payroll employment fell by 240,000 in October, and the unemployment rate rose from 6.1 to 6.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.
October's drop in payroll employment followed declines of 127,000 in August and 284,000 in September, as revised. Employment has fallen by 1.2 million in the first 10 months of 2008; over half of the decrease has occurred in the past 3 months. In October, job losses continued in manufacturing, construction, and several service-providing industries. Health care and mining continued to add jobs.
Our leaders keep scrambling to find stimulus packages. They are still talking about them. Talk. Talk. Talk. And throwing money at any problem it surfaces from banks to auto manufacturers. Improvising.
What intrigues me is that we knew last year of a credit crisis. We knew last year that it would have affected the economy in a negative way. Yet no plans were drawn for these emergencies. In fact, a presidential candidate was running on the idea of increasing taxes. It tells you how these people live in a different world.
It shows once again that bureaucrats react to the news. They do not try to anticipate. They cannot do it. It is not in their job description.
Social engineering created this mess. The markets always win and correct in a dramatic way the policy mistakes of any country. The bigger the mistake, the bigger the correction. The ultimate example is the USSR. Given what we are enduring, the attempt to provide a house to all of us independently of our means, was not the right policy.
A restrictive Fed from 2004 to 2007 precipitated the crisis and made matters much worse than they could have been.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
It is difficult to be optimistic these days. Every day there seems to be new bearish developments.The latest news is that the global economy is in deep trouble, as documented in detail every month in The Global Business Cycle as part of our service to clients.
The world manufacturing sector suffered its sharpest contraction in survey history during October, as the ongoing retrenchment of global demand and further deepening of the credit market crisis negatively impacted on the trends in output, new orders and employment. The Global Manufacturing Index dropped to 41.0, its lowest reading since data were first compiled in January 1998 and a level below the no-change mark of 50.0 for the fifth month in a row.
Output, total new orders and new export orders all contracted at the fastest rates in the survey history in October. With the exception of India, which again bucked the global trend, all of the national manufacturing surveys posted declines in output and new orders. The impact of the downshift in global market conditions also had a far-reaching effect on international trade volumes. Although new export orders fell at a slower rate than total new business, all of the national manufacturing sectors covered by the survey (including India) saw a reduction in new export orders.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Financial stocks are among the strong performers (click on table to enlarge).
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Jean-Claude Trichet is extending the European Central Bank's powers just as it gears up for what may be the fastest round of interest-rate cuts in its 10-year history.
President Trichet has pushed the central bank's reach into the euro region's neighboring economies as they struggle to cope with the financial crisis, and has approved record lending to banks. Economists predict the ECB will slash its benchmark rate, currently at 3.75 percent, to 2.5 percent by April after reducing it for the second time in a month on Nov. 6.
Bottom line. The global central banks are aggressively easing. Good news for some assets classes, bad news for others.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
In 2007 this proprietary indicator soared (click on graph to enlarge), suggesting the market had reached high risk levels. The message was quite correct.
A decline of this gauge to lower levels is a reliable signal the market has declined to a profitable entry point for the next several months.
I will discuss the behavior of this indicator in the next issue of The Peter Dag Portfolio.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
