Manic Depressive

31 Tháng Năm 201012:00 SA(Xem: 2880)
Manic Depressive

Lời Bàn – Kinh Tế và Thị Trường Chứng Khoán

 

Manic Depressive

 

May 31, 2010 – “Sell in May and go away,” so goes the adage about stock market doldrums in summer. Better to sell in May and wait for better market conditions comes fall.

 

Let’s hope the cooler weather will drive away the manic depressive state of the equity market seen this month.

 

Starting with promises on the first trading day of May, and poised to make new highs since the rally started in March last year, the market’s follow-up was hardly more disappointing. In subsequent days, early advances on openings quickly reversed, and gains on one day were erased the next. The debt crisis in Greece was the first to be fingered for the violent moves, followed by rumors of massive trading errors on May 6 that were supposed to prompt the Dow to lose 1,000 points in a matter of minutes. Yet the market found little comfort in the $1 trillion EU bailout for the benefits of the spendthrift Greeks and lack of evidence for the alleged trading mistakes. By the last trading day, the loss in May had wiped out all the Dow’s gain since the year’s beginning, and turned the year’s gain of 7.4% at the high into a loss of 2.8%. year-to-date

 

In fact, investors who bought into equities since October last year amid urgings of pundits who proclaimed the return of bull markets have seen their investment gains, if any, disappear –in the midst of unprecedented uncertainty about the European debt crisis and its global contagion. To further stir up the boiling pot, emerging markets from China to India weakened as their economies slowed down in response to actual or threats of monetary and credit tightening.

 

The prospects of economic growth in the U.S. are hardly brighter. Going into the second half, the effects of various stimulus measures are fading, with second half growth expected to taper off to 1-2%, from 3.0% in Q1, which was revised down from 3.2%. The reported unemployment rate –already understating the severity of the depressed state of the labor market with rising discouraged and part-time workers—has bounced back up to 9.7%. Statistics on income and spending showed spending growth has outpaced growth of income, but now spending was slowing down. Consumer spending in April was flat, compared to forecasts of 0.1% rise, after six straight monthly increases.

 

In the meantime, year-on-year CPI ex. food and energy continued to decelerate from the cyclical peak in 2007. Since December 2008, core CPI has been increasing at less than 2%; in April, it rose at 1%. Money supply has also been decelerating. Rising at 10.2% in December 2008, M2 has been accelerating at less than 2% since March 2010. Commodity prices have also weakened. Backing off from the high in January, the Thomson Reuters/Jefferies CRB Index has lost 13.3% since then.

 

Where are strong economic growth rates, higher commodity prices, accelerating money velocity, and fast growing foreign markets to provide tailwinds for the equity market? No wonder Ben Bernanke has kept Fed funds rate at near zero, despite calls for tightening among some of his colleagues on the Board of Governors. The debt crisis in Europe is another nail in the coffin for any near-term possibility of a U.S. rate hike.

 

However, will zero Fed funds rates cure the de/disinflation disease that has plagued the Japanese for decades and is germinating in the U.S.?

 

May 31, 2010

 

Vinh Q. Tran, Ph.D.

Visiting Scholar

New York University

 

Managing partner

Pinehill Capital LLC

 

CTKD K1

 

Gửi ý kiến của bạn
Tên của bạn
Email của bạn
16 Tháng Mười Hai 2010(Xem: 2899)
The Fed Reflates the Economy December 15, 2010 – On November 3, the Fed announced after its policy setting Federal Open Market Committee meeting that it was launching the second phase of quantitative easing, with purchases of up to $600 billion in Treasury bonds through the first half of 20111. Although QE2, as it is referred to, is much less than the first round of $1.75 trillion between 2009 and 2010, the Fed’s latest move came to immediate criticism from all circles. Trần Quang Vinh, Ph.D. CTKD 1
23 Tháng Mười Một 2010(Xem: 2615)
There Will Be Blood By PAUL KRUGMAN It’s hard to see how this situation is resolved without a major crisis of some kind. Mr. Simpson may or may not get the blood bath he craves this April, but there will be blood sooner or later. And we can only hope that the nation that emerges from that blood bath is still one we recognize.
02 Tháng Mười 2010(Xem: 2798)
Delusions and Denouement September 15 – Albert Edwards, an equity analyst at Societe General in L o n d on wrote a hard-hitting article about delusions in the stock market. For the column “ Loi Ba n,” I thought it would be an insightful reading and worth sharing it with you in its e ntirety. Trần Quang Vinh, CTKD 1
31 Tháng Tám 2010(Xem: 2719)
Fleeing the Stock Market? August 31, 2010 – In a stunning reversal, investors have been taking money out of stock mutual funds! Is that so? In a recent front page article, the New York Times headlined “In Striking Shift, Investors Flee Stock Market.” Vinh Q. Tran, Ph.D. CTKD1
15 Tháng Tám 2010(Xem: 2953)
Oblivion is Bliss A ray of hope in this gloomy outlook is Bernanke’s policies of aggressive monetary easing, promising to apply all measures available to pump liquidity into the system. Unfortunately, fiscal imbalances at local, state and federal levels continue to show unrelenting strains, not only robbing the economy of stimulus funds, but also dragging it down. Tran Quang Vinh, CTKD1
02 Tháng Tám 2010(Xem: 2883)
August 2 – The temperature soared to oppressive levels but stocks enjoyed a great month. In July, the S&P 500 surged 7%. Except for the bounces from the March 2009 bottom, it has been years since the market saw such elevated returns. A casual observer would understandably conclude that all is well on the mend for the economy. Vinh Q. Tran, Ph.D., CTKD1
17 Tháng Bảy 2010(Xem: 2914)
July 15, 2010 – The stock market has been experiencing severe mood swings, going up and down from one day to the next. After reaching the highest levels since the bottom last March, the key market indices crashed into bear market territories in May and June upon discovery of the not-so-secret fiscal mess of the PIIGS countries. Vinh Q. Tran, Ph.D.
24 Tháng Sáu 2010(Xem: 3015)
Deflation, debt and budget deficits June 22 – It is difficult to think of the U.S. experiencing a deflationary cycle like in the 1929 depression, or a la Japan in the last two decades, with its devastating impacts on economic growth and wealth of the nation.
SINH HOẠT
MINH XÁC QUAN ĐIỂM
- Website do một ít Thụ Nhân chung sức, dù rộng mở đến tất cả đồng môn trong tình thân hữu, nhưng không nhân danh hay đại diện tập thể nào.

- Quan điểm của bài viết trong Diễn Đàn là của cá nhân tác giả, không hẳn phản ánh quan điểm chung của Ban Biên Tập và những người tham gia Diễn Đàn.
KHÁCH THĂM VIẾNG
409,485