Fairly early in an investor’s development comes the lesson about covered call writing. The lecture usually sounds like this: “Income can be generated in a flat market by writing calls against assets held in portfolio.” Well, you probably noticed the domestic equity market has been churning on either side of unchanged over the past month….
<< Read Part 1: Why Stock Prices Are What They Are This is the second installment in a series that explains why stocks are priced as they are (or for those who prefer a more precise view, why supply and demand trends for a stock are such as to cause the two to converge at…
Following the great financial crisis in which capitalism was almost wiped out due to too much debt, a funny thing happened on the path to recovery (paved with some $57 trillion in even more debt) – Quantiative Easing, that deus ex conceived by central bankers as the miracle tool that would fix the world, stopped working. And it stopped working…
Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method. There is, however, a general belief that there are four big indicators that the committee weighs…
Consumer confidence is the third miss by economists in a single day. Please consider the Bloomberg Consensus Estimate for Consumer Confidence. Consumer confidence has fallen back noticeably this month, down more than 6 points to a much lower-than-expected 95.2. This compares very poorly with the Econoday consensus for 103.0 and is even far below the Econoday…
As expected, Greece was able to make the 750M EUR payment to the International Monetary Fund last Tuesday but in order to get its hands on the cash, the country had to force all of its public service departments to fork over the remaining cash they had left. Source As we were warning in a previous…
I confess to being baffled by the strength of Denny’s over the past year or two. That bafflement, combined with the chart, compelled me to short it a few days ago at $10.72.
The Effective Demand limit upon the economy is not a very visible concept in the econo-blogosphere. Yet, it represents a limit upon the utilization of labor and capital toward the end of a business cycle. When real GDP reaches its effective demand limit, normally we would see capacity utilization peak and start to fall. Capacity…
As the Congress debates currency manipulation [1], it occurs to me useful to reprise my earlier primer on currency misalignment (first published in March 2010), where misalignment is one component of some definitions of currency manipulation. Currency misalignment can be determined on the basis of the following criteria or models: Relative purchasing power parity (PPP) Absolute purchasing power…
Consolidation in the semiconductor sector has increased over the last few years, but that hasn’t really caught our attention because the size of deals was small — so small, in fact, that the acquirers were not even required to furnish too many details. There are several advantages to small deals: they have cheaper valuations, don’t…
