Archive for January, 2011
Single-Stock VIX Levels Compared to VIX and VXN
Friday’s sharp price action saw the S&P 500 shed nearly 1.8% and the NASDAQ fall by almost 2.5% – wiping out much of January’s gains. As for implied volatility, it spiked to highs for the month – at least as measured by two popular indices. The VIX, which measures implied volatility for S&P 500 index [...]
Eurozone Inflation Prompts Thoughts of Interest Rate Hikes
A preliminary estimate of Eurozone inflation for the month of January 2011 has come in at 2.4%, higher than the 2% target that guides the policy of the European Central Bank (ECB). The inflation rate rose in January from a level of 2.2% in December. Following the December report, ECB President Jean-Claude Trichet made remarks [...]
Egyptian Demonstrations Shake Markets
Where the demonstrations in Tunisia sent some shivers into the markets earlier, the rioting in Egypt is causing much more serious tremors now. A country with 80 million people, Egypt’s population is mostly young – the median age is 24. And the overall unemployment rate of about 9.7% is surely much, much higher among citizens [...]
Little Optimism for Homebuilders
The headwinds facing US homebuilders could last through the first nine months of 2011, and, to make matters worse, the headwinds could be stronger than they were last year. Earnings reports that came out earlier this month had shown some unexpected positive signs, however, the most recent builder to report earnings, D.R. Horton Inc. (NYSE: [...]
US Federal Reserve Will Continue Quantitative Easing
A united US Federal Reserve board of governors has reiterated the central bank’s policy of buying government bonds in an effort to boost the economy. That means that the bank’s quantitative easing policy, known as QE2, will continue. The Fed noted that headline inflation is rising in the US, but that when the volatile costs [...]
Dow Jones Average Components: A 10%+ Weighting in IBM
Most people know that the Dow Jones Industrial Average has its quirks – given that it’s weighted by price, not market capitalization. That means, of course, that its performance largely depends on the higher priced stocks in the average. I noticed that IBM (IBM) closed over $160 on January 25. That’s the highest priced stock [...]
UK GDP Slips, Pound Follows
The surprise report that the UK’s gross domestic product fell by -0.5% in the fourth quarter of 2010 has put at least a temporary halt to talk that the Bank of England may raise interest rates this year. The currency markets are waiting for a signal now on how the UK plans to deal with [...]
Platinum vs. Palladium: Which Is The Best Autocatalyst?
Two recent articles on palladium and platinum discuss the usage of these metals as autocatalysts for reducing pollution. Sean Daly’s article on palladium suggests that growth in the automotive sector could be bullish for palladium. According to Avery Goodman, however, “in most cases, palladium is a far inferior substitute” for platinum. In my own article [...]
Euro Continues to Rise After Comments from ECB Head
Calling the idea that sound fiscal policy undermines growth an example of “very simple reasoning,” European Central Bank head Jean-Claude Trichet has indicated that the ECB could raise interest rates despite the weakened condition of several Eurozone economies. In a recent interview with The Wall Street Journal, Trichet said, “All central banks, in periods like [...]
Overheard: An Argument Between Gold and Greenback
An interesting story I ran across about Gold versus Greenback: A man was writing a letter for a wounded soldier – to help the soldier send his wife $40 – a US double eagle ($20 gold piece) and a twenty dollar bill. As the man wrote the letter he evidently had a strange dream. He [...]
