The Mess That Greenspan Made - Part 18

Me Again

Yesterday afternoon, Cory Fleck and I chatted along with Big Al Korelin himself over at the popular Korelin Economics Report and that interview is now available.

Among other things, we talked about how warmer weather in the U.S. is making the economy, perhaps, look a little better than it really is and the prospects for a really good stock market bubble developing in the months ahead.

The .mp3 file is again available here at the blog – just click on the image to the right – or you can go directly to this page over at KER.

We talked about precious metals too and, it sounded like Al was a little disappointed about the idea that gold and silver could continue to struggle in the period ahead.

Not mentioned explicitly during the discussion was the unusually strong inverse correlation between stocks and gold that, here in 2014, had been working in favor of the latter up until a few weeks ago.

Demand in Asia has picked up again now that the gold price is almost $100 an ounce lower and, as noted during our talk, that could make for some rather exciting developments later in the year as there is no ready supply of physical gold exiting Western ETFs this year as was the case last year when physical gold demand in China shattered records.

[To access commentary that Tim only shares with subscribers, join Iacono Research.]

Another Scary Stock Bubble Chart?

Amid repeated warnings from the mainstream financial media in general about bubbly stocks losing their fizz (or much worse), there appears to be a developing cottage industry over at Marketwatch in creating chart comparisons between today’s five-year bull run for U.S. stocks and prior episodes that didn’t end well.

The latest offering comes from this report that is much better than the last one if for no other reason that the two curves use the same scale (I guess that’s progress).

The story is titled, “Now there’s a 1987 chart to get worried about” but the URL contains what was likely the working title of “Less that 37 shopping days before stock prices drop?”.

Based on this Google search of “wells capital 2009 1982 stocks” it would appear that the 1982-1987 comparison has been around for more than a year now, apparently being recycled to generate provocative headlines that are known in the industry as “click bait”.

Hey, it worked on me.

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Thursday Morning Links

MUST READS
The Perpetual Bubble Economy – NY Times
Big money’s grip stronger than ever – Politico
Bitcoin Falls 12% as China Deposit Ban Begins – ForexNews
More Americans see middle class status slipping – AP
BOJ’s Kuroda Will Stick With His Bazooka on 1st Anniversary – WSJ
ECB deflation paralysis drives Italy, France and Spain into debt traps – Telegraph
Reverse Mortgages Spike 20%, Boomers Scramble for Cash – Liberty Blitzkrieg
What Happens After the Low-Hanging Fruit Has Been Picked? – of two minds
Old Math Casts Doubt on Accuracy of Oil Reserve Estimates – Bloomberg
Obamacare enrollment boosted by in-person help, money – CNBC
The Coming Obamacare Shock for 170 Million Americans – Fiscal Times
Why Those Guys Won the Economics Nobels – HBR
About That Rigging Claim – Morningstar

MARKETS/INVESTING
World shares rise on China stimulus, US hiring – AP
Is there a stock bubble or not – Barron’s
‘Hope-for-Growth Momentum Investing’ – Testosterone Pit
China ‘bears’ hope for their ‘told you so’ moment – Reuters
Now there’s a 1987 chart to get worried about – MarketWatch
The Changing Face of Global Risk – Roubini, Project Syndicate
S&P 500: 1600, 1700, 1800, do I hear 1900? – USA Today
Treasury Yield Near Most Versus Germany’s Since 2006 – Bloomberg
Gold edges down as investors mark time ahead of ECB, U.S. data – Reuters
Buy Gold Ahead of Janet Yellen’s Revival of the Press – RCM
Gold price snaps losing streak as Chinese buyers return – Mining.com

ECONOMY/WORLD/HOUSING/BANKING
How is the real US economy doing? – AEI
U.S. Job Creation Index Reaches Six-Year High in March – Gallup
We Don’t Need “Animal Spirits” to Understand Economics – Mises
IMF boss Lagarde warns economy ‘too weak for comfort’ – BBC
China unveils mini stimulus to boost slowing economy – CNA
(Mis)measuring prices in an era of globalisation – voxeu
London house price bubble moves to the suburbs – Telegraph
‘Maid’s apartment’ at 15 Central Park West sells for $3M – NY Post
Homebuyers getting priced out in cities across U.S. – CNN/Money
The Fed Goes Hunting For “Asset Price Bubbles” – Zero Hedge
Lenders Are Taking More Risk – House of Debt
Let’s play 1960s-era Fed – The Money Illusion

 

Gold and the National Debt

Via this item at GoldSilverWorlds comes the graphic below where it’s not difficult to spot the time period that is the clear outlier in a world where debt, seemingly, doesn’t matter.

Of course, at some point, debt will matter, but the perception that it doesn’t (or won’t) goes a long way in explaining why the yellow metal has had such a rough time of it lately.

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