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Year: 2013

Corporate Cash Reaches a Record High.

Corporate Cash Reaches a Record High.

We live in a period of all-time highs. NYSE margin debt is at an all-time high, US debt is at an all-time high and the S&P 500 and DOW are at all-time highs.  However, interest rates remain at all-time lows. So then, it is surprising to find out that cash & short-term investments on the balance sheets of S&P 500 companies, excluding financials, have reached a level not seen before.  Indeed, according to data from Factset the S&P 500 cash…

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Earnings Growth Compared To Market Returns

Earnings Growth Compared To Market Returns

In theory, the S&P 500 should rise in line with earnings. In practice  this does not happen. While this comes as no surprise, the scale of the difference is astounding. Period Earnings Growth S&P 500 Returns 2003-2013 148% 68% 1993-2003 16% 137% 1983-1993 5% 179% Across three decades the date shows that the S&P 500 has almost no correlation to earnings growth. The current period, 2003 to 2013 has seen the fastest earnings growth but the slowest S&P 500 growth….

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Congress’ Approval Rating Reaches A New Low

Congress’ Approval Rating Reaches A New Low

Earlier this week Gallup announced that Congress’ approval rating among the American public had reached a new low of only 9%, down from the 10% approval rating reported from the last poll. This is by far the lowest rating that Congress has achieved since Gallup started asking Americans how they feel about Congress 39 years ago. Since 1974, the average approval rating has been 33%, reaching a high of 56% after the Sept. 11 attacks. I should state however that Gallup…

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Russian Privatization Continues

Russian Privatization Continues

It is everywhere you look, on television, in newspapers, on flags, coins and books. I am talking about the world famous Mikhail Kalashnikov’s AK-47, possibly one of the most influential ‘tools’ of the past decade. The Avtomat Kalishnikova 1947 (AK-47) was finally perfected and issued to Russian troops in 1947, as the name suggests. Nearly 60 years on the weapon is still responsible for an estimated 250,000 deaths a year, which could make the AK-47 more deadly than any weapon, nuclear…

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Derivatives Market Reaches New High

Derivatives Market Reaches New High

A combination of fractional reserve banking, bank leverage, money printing, derivative manufacturing and government borrowing has been the reason behind much of the global GDP growth over the past 40 years. This market is now worth a staggering $1 + quadrillion,  that’s $1,000,000,000,000,000 of essentially worthless derivatives where buyers only need to put up a fraction of the purchase price. Add in $250 trillion of government debt around the world and things start to look pretty shaky. During 2012, the…

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COMEX Deliverable Gold Bullion Reaches a 10-year Low

COMEX Deliverable Gold Bullion Reaches a 10-year Low

Back in August, the number of claims per physical ounce of gold stored in COMEX warehouses reached 50. That’s 50 owners for every ounce of gold available for delivery. The physical gold rout has continued and the number of owners per physical ounce, now stands at 54.6, a level not seen since 2003. This comes at a time when the global demand for physical gold is rising, led by Asia where Chinese gold consumption is expected to grow 29% this year….

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De-leveraging is Holding Back Growth

De-leveraging is Holding Back Growth

Nationwide, the UK’s biggest building society has decided to put its SME lending plans on hold as the company has been forced to increase its capital buffer by regulators. Once again, regulation strikes, holding back growth in the banking sector and making the economic situation worse by drawing money out of the economy at a time when liquidity is most needed. According to the Financial Times: The mutual, which had planned to begin lending to small businesses this year, faces…

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Where has all the Gold Gone?

Where has all the Gold Gone?

The total amount of gold available for delivery on the COMEX has fallen to a record low. There are now up to 50 owners for every ounce of gold available for delivery. The total amount of gold available for delivery in COMEX warehouses currently totals around 774,000 ounces, or 24 tons; 29 tons were requested for delivery in July. With the August delivery date coming up someone should start getting worried. It would appear that buying gold nowadays does not…

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A Recovery Built on Thin Air

A Recovery Built on Thin Air

You could be forgiven for thinking that the economic recovery is under way in the UK. Gross domestic product grew by 0.7% in the second quarter and the National Institute of Economic and Social Research expects growth of 1.2% for the year as a whole. Meanwhile, British industrial output grew at the quickest pace in more than two years in June and house prices have expanded 4.6% year-on-year – driving the UK’s average house price to the highest level ever. However,…

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Gold is not an Inflation Beating Long Term Investment

Gold is not an Inflation Beating Long Term Investment

Gold is often quoted as being a long term inflation beating instrument. However, in reality it is far from that. Over the past 23 years since 1990, the price of gold has risen 74.8%, from an inflation adjusted price of $730 per troy ounce in January 1990, to July’s 2013s average price of $1276 per troy ounce. A compounded annual growth rate of around 2.57%. Furthermore, extending this study over 46 years, all the way back to January 1967, when…

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