The Lost Lesson of July 2007

By Brian Maher This post The Lost Lesson of July 2007 appeared first on Daily Reckoning. We have it on supreme authority — stocks are not in a bubble. Bubbles peak as lingering fear flees and investors finally make it over that wall of worry. But it’s eight years into the second-longest bull market in history. And many investors are leery as ever. Maybe more so. Until “mom and pop” investors re-enter the markets, all is peace. CNBC’s Michael Santoli: The reluctance of retail investors to buy stocks as the Dow hits new highs suggests that the rally has further to run. Just be ready to grab your coat once Mom and Pop show up at the party. That’s a sure sign it’s time to go. Santoli cites one wizened analyst: One reason we remain cyclically positive on the broad market is that retail investors still have not participated… It … Continue reading

The Bubble That Could Break the World

By James Rickards This chart shows the Shiller Cyclically Adjusted PE Ratio (CAPE) from 1880-2017. Over this 137-year period, the mean ratio is 16.75, media ratio is 16.12, low is 4.78 (Dec 1920) and high is 44.19 (Dec 1999). Right now the 29.45 ratio is above the level of the Panic of 2008, and about equal to the level of the market crash that started the Great Depression. With the likelihood of a bubble clear, we can now turn to bubble dynamics. The analysis begins with the fact that there are two distinct types of bubbles. Some bubbles are driven by narrative, and others by cheap credit. Narrative bubbles and credit bubbles burst for different reasons at different times. The difference is critical in knowing what to look for when you time bubbles, and for understanding who gets hurt when they burst. A narrative-driven bubble is based on a story, … Continue reading

Moving Closer to the Precipice

By Pater Tenebrarum Money Supply and Credit Growth Continue to Falter The decline in the growth rate of the broad US money supply measure TMS-2 that started last November continues, but the momentum of the decline has slowed last month (TMS = “true money supply”). The data were recently updated to the end of April, as of which the year-on-year growth rate of TMS-2 is clocking in at 6.05%, a slight decrease from the 6.12% growth rate recorded at the end of March. It remains the slowest y/y growth since October of 2008, when the Fed had just begun to pump quite heavily. US money supply and credit growth keep slowing. The monthly y/y growth rate of M1 fell rather more sharply in April, from 8.76% to 7.07% (the most recent weekly annualized growth rate is lower at 6.80%). The composition of M1 is close to, but not quite equal … Continue reading

Blow to iron ore price as Chinese steelmakers opt for scrap

By analyst By Frik Els World Steel Association data showed a 5% year-on-year jump in global steel production in April to 142.1m tonnes. It’s a continuation of robust growth in the industry which increased output by 5.1% during the first four months of the year of 2017 to 550.5 million tonnes. The 50-year old industry body estimates that steel production in China, which is responsible for just shy of half the global total rose a healthy 4.9% year on year in April climbing from an average of 4.6% during the first quarter. We expect lower construction activity in coming months as the government’s measures to take the heat out of the property sector have an impact A note from Capital Economics warns however that April may represent the peak of production in China: We expect lower construction activity in coming months as the government’s measures to take the heat out … Continue reading

Everything You Need to Know About Startup Investing

By Adam Sharp I talk to a lot of people about startup investing. The most common objection I get to the idea is that it’s a new and unproven market. It’s true, equity crowdfunding is new. Investing in startups, however, isn’t new at all. The only difference is that before equity crowdfunding, venture capitalists (VCs) and other wealthy investors had a monopoly on investing in private startups for 80-plus years. And the returns VCs have seen over the years are impressive. Over the past 20 years, 1,603 venture funds had an average internal rate of return (IRR) of 55.97% annually. And those numbers are going up over time. The average return is only 34% over the last 25 years and 22% over the last 30. Those numbers are based on research by Cambridge Associates, the leading index provider for private market returns. Here’s a more complete chart from its Q1 … Continue reading

Should You Buy Intuit Stock Before Earnings?

By Rob Otman Intuit (Nasdaq: INTU) is a $32.85 billion company today. Investors that bought shares one year ago are sitting on a 22.31% total return. That’s above the S&P 500’s return of 17%. Intuit stock is beating the market, and it reports quarterly earnings tonight. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company. Our system looks at six key metrics… [iu-adbox] ✗ Earnings-per-Share (EPS) Growth: Intuit reported a recent EPS growth rate of -54.55%. That’s below the software industry average of 24.67%. That’s not a good sign. We like to see companies that have higher earnings growth. ✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the software industry is 71.5. And Intuit’s ratio comes in at 42.65. It’s trading at a better … Continue reading

Disputes, Higher Dividends and New Study: Mostly Good News 

Source: Adrian Day for The Gold Report 05/23/2017 Money manager Adrian Day reviews news from several companies, mostly positive developments, and notes that some stocks are good buys at current levels. Freeport-McMoRan Inc. (FCX:NYSE, 11.83) continues to struggle on various fronts in Indonesia. Just as it was ramping up to restart operations and resume exports under a temporary permit, the main union at its Grasberg mine went on strike. Separately, a little optimism has entered discussions with the government, reflected in its granting of the permit. The government wants Freeport to sell a majority stake in its Grasberg mine. It also wants to abrogate its long-term “contract of work” with Freeport, and the company is seeking legal and fiscal guarantees in exchange. Meanwhile, the government is sticking to its demand that Freeport build a second (unnecessary) local smelter. Clearly, the stock is volatile and there is a risk while this … Continue reading

Making the Empire Pay

By Brian Maher This post Making the Empire Pay appeared first on Daily Reckoning. President Trump writes a new chapter in the art of the deal… Official business brought Mr. Trump to the desert kingdom of Saudi Arabia this weekend. He now heads for Israel to maybe write another. But not before his Saudi hosts agreed to take purchase on nearly $110 billion of U.S. arms. American-born tanks, ships and missile defense systems will find loving new homes in and around the deserts of Araby. U.S. radar, communications and cybersecurity technology will go with them. “It was a great day,” gloated the American president. It means “tremendous investments in the United States… and jobs, jobs, jobs.” It also means a red-letter day for American defense stocks… Lockheed Martin opened about 2% higher this morning. Raytheon, over 1.4%. Northrop Grumman climbed 1%, while General Dynamics was up about half a percent. … Continue reading

Pope Francis and Libertarianism

By Antonius Aquinas Papal Delusions The purported pope of the Catholic Church recently attacked “libertarianism.” As a number of theologians have ably shown, Jorge Bergoglio, a.k.a Pope Francis, cannot be a legitimate pope, since he was neither ordained as a priest or consecrated as a bishop in the traditional Catholic rite of Holy Orders. And since he is not a bishop, he cannot be “Bishop of Rome” – a prerequisite for being the head of the universal Church. The collectivist pope Francis – what a contrast to the revered John Paul II, who not only tirelessly argued in support of individual liberty, but had a firm grasp of economic issues as well (we have contrasted their economic views in “A Tale of Two Popes”). John Paul II realized that the Church had to stand up in defense of the free market economy if it really wanted to help the poor … Continue reading

Report blasts Antofagasta’s Minera Los Pelambres

By analyst By Valentina Ruiz Leotaud An 18-pages long report released today by the London Mining Network slams Antofagasta Minerals’ 60%-owned Los Pelambres copper mine, located in the central-northern of Chile in Coquimbo Region. In a move that comes just a couple of days prior to Antofagasta’s (LON:ANTO) annual general meeting in London, the document titled In the Valley of the Shadow of Death? A Report on Antofagasta Plc, Minera Los Pelambres and Los Caimanes, highlights allegations of corruption, environmental damage and water depletion caused by the project’s waste tailings dam. According to the report, the El Mauro tailings dam, with a capacity of 1,700 million tonnes of mine waste, is the biggest in Latin America, surpassing Brazilian Samarco dam by 100 times. The magnitude of the dam, the dossier reads, is a cause of concern for both environmental groups and local residents, who think a similar the disaster to … Continue reading