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REMINDER: All investment, economics, and finance related material now appears at the new IaconoResearch.com. For the time being at least, this has become a personal blog covering a variety of mostly unrelated topics.
After more than four weeks, the Occupy Wall Street crowd shows no signs of going away anytime soon (though that might change as the weather gets colder) and we even have our own little Occupy event on tap for tomorrow here in Bozeman, Montana. It’s not exactly clear what they all want, but, one thing is certain, if there were more jobs to be had, there would be less people outside voicing their displeasure with their current condition.
From the Jimmy Margulies archive at NorthJersey.com
In this item at MarketWatch, Peter Brimelow brings us details of the latest investment performance of the folks at Elliott Wave, a group that comes about as close as you can get to being perma-bears and, of course, perma-deflationists.
One bear feeling good about deflation call
An investment letter that dodged the crash of 2008 is a current top-performer. It’s feeling good about its long-standing deflation prediction.
The Elliott Wave Financial Forecaster, edited by Steve Hochberg and Pete Kendall, is fifth of just nineteen of the 180-plus investment letters monitored by the Hulbert Financial Digest to have beaten the market in 2011 through September—up 5% by HFD count versus negative 9.86% for the dividend-reinvested Wilshire 5000 Total Stock Market Index.
This is, frankly, pretty unusual. EWFF has been relentlessly bearish for so long that many investors think it was always so, and any favorable mention gets vitriolic response.
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Needless to say, 2008 was a great year for EWFF, especially because it also made one of its brief excursions into bullishness in time to catch the subsequent bounce. See April 2 column.You can still see this in HFD’s monitoring: over the past five years, EWFF was up an annualized 0.7% versus negative 0.75% annualized for the total return Wilshire 5000.
But further out, the cost of prolonged bearishness has been horrific. Over the past fifteen years, for example, EWFF is down negative 3.43% annualized versus a gain of 5.4% annualized for the total return Wilshire 5000. It’s worth noting, however, that EWFF closes the gap significantly on a risk-adjusted basis.
Still, in the face of the 2008 crash, and the savage slump this summer, few investors can wholly repress the fear that, just maybe, the Elliott bears might ultimately be vindicated.
Well, not as long as there are people like Ben Bernanke with his hand on the printing press… As noted here on a number of occasions before, I’ve long thought that Elliot Wave Theory is nonsense and, basically, lost all respect for Bob Prechter when he predicted that the gold price would never surpass $400 an ounce about a decade ago.
Poor Federal Reserve Chairman Ben Bernanke was the subject of intense criticism by GOP Presidential candidates during last night’s debate, though Texas Governor Rick Perry, who started all the Fed bashing about a month ago when he warned the Fed Chief to stay away from Texas, was noticeably silent on the subject. Details are in this report at Reuters.
Newt Gingrich led the charge. Asked if the nationwide Occupy Wall Street movement had a valid grievance about income inequality and the out-sized influence of big banks, the former House speaker pivoted:
“If they want to really change things, the first person to fire is Bernanke, who is a disastrous chairman of the Federal Reserve,” said Gingrich.
“Bernanke has in secret spent hundreds of billions of dollars bailing out one group and not bailing out another group. I think it is corrupt and it is wrong for one man to have that kind of secret power.”
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“I wouldn’t keep Bernanke in office. I would choose someone of my own,” said Republican front-runner Mitt Romney, who did not include Bernanke when doling out praise to Bush and Treasury Secretary Henry Paulson for pulling the financial system back from the precipice in late 2008.
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(Ron) Paul termed Bernanke’s predecessor, Alan Greenspan “a disaster” because of policies that fueled investment bubbles such as the early 2000s Internet stock boom and bust.“Bernanke compounds the problem,” Paul said. “He’s inflating twice as fast as Greenspan.”
Bernanke’s term ends in early-2014, so, should any of these GOP hopefuls occupy the White House beginning in early-2013, it should make for an interesting and awkward period leading up to the nomination process in the fall.
Conditions are deteriorating rapidly in Greece where, not only is the current generation undergoing forced austerity, but the next generation may have been scarred for life by this image of Prime Minister George Papandreou as related in this story at The Economist.
For all I know, maybe Greek children have a universal love for clowns, but, if they are anything like kids in the U.S., this sort of imagery could have a long lasting impact.
[Following are excerpts from the current issue of the Weekend Update at Iacono Research.]
The latest batch of economic reports from around the world have called into question what had been, in the late-summer up until about a week ago, a growing consensus that the U.S. and other important parts of the global economy are either about to enter another recession or, in the view of some, are already in a new recession.
While clearly affected by the latest moves by European officials to stem the sovereign debt crisis, last week’s impressive bounce for stocks and commodities was also influenced by a fading sense of imminent calamity for economic growth following an increasing number of comparisons between 2011 and 2008 in recent months.
It’s worth taking a closer look at the question of whether the world is now facing another recession – the likelihood and, more importantly, the severity – as it is of utmost importance for any investor. Was last Monday’s low for stocks and commodities an enduring low or will another economic contraction produce even lower price levels in the period ahead?
One thing is clear – the U.S. economy today is much different than it was three years ago and the soaring unemployment rate is a key reason why.
(Continue reading this article at Seeking Alpha.)
If yesterday’s big rally did signal that markets have put in their lows for the year, someone should tell retail investors to get on board because, according to this Gallup poll , they were pretty shaken up last month, investor confidence plunging to early-2009 levels.
It should come as no surprise that two-thirds of the survey respondents said they feel “little or no control in their efforts to build and maintain their retirement savings in the current environment”, but Fed Chief Ben Bernanke’s low interest rates have forced many of them to hold their nose and stay in the market in hopes of higher returns.
The potential good news here is that confidence last reached current levels in February 2009 just before one of the biggest stock market rallies in history that began in March.
By Tim Iacono, Since 2005
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