Simply put, there is no support or interest in buying oil at this time, and that means oil prices could realistically hit $40.00 a barrel. Oil prices that low could cripple the global economy. Let me explain…The Decline in Oil PricesWhen the West Texas Intermediate (WTI) crude oil prices initially broke below $80.00, I was thinking maybe it was overdone. Then we witnessed a break below $70.00, followed. Read More
The Shanghai Composite Index (SCI) has been rallying and is up 9.3% this year as of Thursday, which is ahead of the Dow Jones Industrial and just below the S&P 500.However, playing the Chinese capital markets involves excessive political and economic risk. The country is also stalling, but continues to grow well above other global regions, including Europe and the eurozone. My investment advice is that you need to. Read More
The fact that consumer spending has not tanked in spite of unemployment being at over nine percent and expected to stay around this level through 2012, and continued weakness in housing is encouraging.
We have a likely debt default in Greece, pegged at a whopping 98%. Ireland and Portugal continue to struggle with muted growth and massive debt. Spain may be needing help. Bond yields are rapidly increasing in Europe in line with the risk levels. You can get a whopping 70% yield in Greek bonds, but then the bonds are likely to default. In comparison, the current yield on a U.S. 10-year bond is less than two percent. Germany and France are suffering due to their focus on the poorer nations. Germany is said to have no issues letting Greece default and then dealing with the debt crisis mess after.
I must admit the fact that consumers continue to spend despite any strong or sustained job growth and continued weakness in housing is encouraging. With consumer spending accounting for two-thirds of GDP, retail sales will eventually be stronger when the jobs and housing areas improve, albeit it will likely take over a year.
I’m in Modena today, home of the iconic “Ferrari” brand. My mind is wandering quickly…thinking about Europe and America. Invariably, I wander off to government austerity measures. I apologize in advance to my readers if I have been talking too much about this as of late. But that’s all I hear from people here. They are upset. Governments in Europe are cutting fast and deep.
Consumer spending drives the economy and gross domestic product (GDP) growth, accounting for about 70% of GDP in the U.S. The retail sector has been rebounding in spite of the lack of jobs and the declining home prices. The S&P Retail Index (RLX) is trading near its 52-week high, up 37% from the 52-week low. The RLX recently traded at its highest level since the index was created in 2007.