Forget about inflation, writes Ed Yardeni today in a note to clients. “The next mood swing among investors is likely to be increasing concerns about deflation,” writes the chief investment strategist of Oak Associates. BCA Research made a similar point on Tuesday, advising that in 2005 “inflation will surprise on the downside.” As a result, “The obvious investment implication is to buy bonds.”
Monthly Archives: June 2005
MISSING IN ACTION
Inflation, Milton Friedman first counseled all those years ago, is a monetary phenomenon. But in the here and now, inflation suddenly seems to be something less than threatening.
TALKING TOUGH, TALKING TURKEY, AND JUST PLAIN TALKING
The sound of desperation is in the air these days regarding the matter of crude oil. Or is that merely the squealing that comes whenever reality is accepted at face value?
HEALTH PROBLEMS
The OECD released a new study on trends in pharmaceutical spending in the developed economies, telling us what we already knew: expenditures on drugs have taken wing.
MARKET LOGIC
Deciphering the collective mind of the bond market is one of the more challenging tasks in the 21st century, right up there with trying to cure cancer and deciding if the bull-market run in Google’s stock is the Internet bubble reincarnated.
RESEARCH ROOM UPDATE
John Hussman, manager of the Hussman Strategic Growth Fund, weighs the odds of what some say is an approaching recession. He lays out his case in a new essay published earlier this week, and now noted in the CS Research Room.
MONETARY PORNOGRAPHY
Among the various definitions of “neutral” found in the Oxford English Dictionary, one informs: “occupying a middle position with regard to two extremes.”
SEWARD’S FOLLY & AMERICA’S BURDEN
In the late-1970s, Alaska’s oil output was on the rise. The ascent was timely, coming in the wake of the Opec-engineered oil crisis of 1973, which announced to the world (and the U.S. in particular) that the days of counting on cheap, accessible supplies were gone, though not necessarily for geological reasons. By 1978, Alaskan crude production exceeded one million barrels per day on average for the first time, Energy Department numbers recount. That was roughly 14% of America’s domestic oil production in 1978. Alaska’s output eventually doubled in absolute terms, hitting slightly more than two million barrels a day in 1988.
THE JOY OF MOMENTUM
The iShares Lehman 7-10 Year Treasury ETF (Amex: IEF) is sitting on a 10.3% total return for the 12 months through today’s close. That’s a healthy performance edge over the 1.9% rise in that stretch for the iShares Lehman 1-3 Year Treasury ETF (Amex: SHY). There’s nothing inherently peculiar about longer-term maturities outperforming shorter terms. Sometimes it happens, sometimes it doesn’t. But the fact that longer-term Treasuries are besting shorter ones is more than a little out of the ordinary after the Federal Reserve has hiked interest rates for nearly a year.
WAITING FOR A SIGN
The value-stock train has had quite a run, but the momentum has to end sometime. As always, the question is when?