Less than a decade after the biggest financial crisis since the Great Depression, over-zealous central bankers are risking a second economic collapse. The continuous credit creation and rock-bottom interest rates in the U.S., China, the EU, and Russia are meant to incentivize lending, but really they are engineering a second, much larger, financial crash.
Monetary stimulus provided the backbone for a global recovery by adding liquidity to the market and .
As the Greek debt crisis winds down, world markets are reverting to business as usual without acknowledging a fundamental truth: Greece was only the beginning. Many countries have used nothing but debt to fuel their growth, laying the groundwork for a mega-sized economic collapse.
A key study by the International Monetary Fund (IMF) found that an over-indebted population is directly correlated with a volatile economy. And when I say debt, .
There seems to be a trending theme in today’s economy—borrowers cannot pay their debt. This time, the spotlight is on oil companies. Low oil prices have forced many energy drillers to the financial brink, and analysts fear a wave of defaults could set off another financial crisis in 2015.
Shale drilling has gained popularity among oil drillers over the last decade. Shale companies also raised a lot of debt. Recent .
On Sunday, June 7, 2015, the Government of Iceland agreed to present before Parliament two bills of legislation sponsored by the Minister of Finance and Economic Affairs. Together, the two bills lay the foundation for a comprehensive strategy for capital account liberalization. (Source: Iceland Prime Minister’s Office, June 7, 2015.)
The statement said, “The public interest demands that the capital controls be lifted without jeopardising economic and financial stability. The .
The thought of an economic crisis in 2015 is all too distant for too many. With the S&P 500 advancing 200% since its bottom in 2009, it’s worth taking some time to pause and reflect. As is often the case, the most devastating risks are those that we don’t see coming. Few recognized the dangerous consequences of the overvalued housing market or loose financial regulations before the recession hit. This .
Credit card companies are some of the best indicators in the global economy. Visa Inc. (V) just reported a pretty decent quarter. While earnings were down comparatively due to a one-time charge, adjusted earnings handily beat consensus.
The company’s fiscal fourth quarter came in solid, with growth of 10% on a constant dollar basis to $3.2 billion compared to the same quarter last year.
Recently, the company increased its quarterly .
Now that the Dow Jones Industrial Average has fallen 1,035 points (six percent) from its mid-September peak, the question investors are asking is “how far will she go?” For small-cap investors, the drama is greater, as the Russell 2000 Index has fallen 12.5% from its July peak.
Since 2009, every market pullback presented investors with an opportunity to get back into stocks at discounted prices. Even some editors here at .
Getting a sense of where stocks are going to go in the year ahead is always difficult with the major indices at their all-time highs.
The fundamental backdrop is still very favorable for equities. While the Federal Reserve has put off raising interest rates for the near future, the cost of capital, especially for corporations, remains extremely low. And corporate balance sheets remain in excellent condition with strong cash positions .
According to the U.S. Congressional Budget Office, next year, the government is expected to incur a budget deficit of $469 billion and then another budget deficit of $536 billion in 2016. (Source: Congressional Budget Office web site, last accessed July 21, 2014.) From there, the budget deficit is expected to increase as far as the projections go.
Yes, the government’s own estimates are that our country will run a budget .
We are hearing more and more about interest rates getting ready to rise. The Federal Reserve itself has said it expects the federal funds rate to increase to 1.5% by the end of next year and to 2.25% by the end of 2016.
Before the Fed came out with its forecast, I was writing about how the Fed will have no choice but to raise interest rates because inflation is .
Immediate term outlook:
The bear market rally in stocks that started in March 2009, extended because of unprecedented central bank money printing, is coming to an end. Gold bullion is up $1,000 an ounce since we first recommended it in 2002 and we are still bullish on the physical metal.
Short-to-medium term outlook:
World economies are entering their slowest growth period since 2009. The Chinese economy grew last year at its slowest pace in 24 years. Japan is in recession. The eurozone is in depression. With almost half the S&P 500 companies deriving revenue outside the U.S., slower world economic growth will negatively impact revenue and earnings growth of American companies. Domestically, America’s gross domestic product grew by only a meager 2.3% in the second quarter, which will negatively impact an already overpriced equity market.
Estimates Aug. 29, 2015
Trailing 12-month EPS for Dow Jones companies (Most Recent Quarter)