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 Chile Leads the Latin Pack |
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Current President Ricardo Lagos Escobar is under pressure to improve economic growth rates and bring down the stubbornly high 8% unemployment rate. From 1991-1998 economic growth increased an average of 8% and per capita income on a purchasing power basis has grown to $10,700. While the whole region is back in favor with investors, it seems appropriate to highlight Chile which is the economic star of Latin America. Since then growth has moderated to a 4-5% range but a total Chilean public and foreign debt at 50% of GDP is very low relative to other Latin countries. The Chile story is somewhat similar to Ireland before its economic takeoff.
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| Consolidation Period |
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The economic data reported Fri showed continued above trend growth with disinflation (at the core level, excluding food and energy) in the second quarter. The economic data suggest market pullbacks will be limited, although we've entered the seasonally weak period of Jul-Aug-Sep after a big run-up. Real output growth has slowed from about 4% in 2003 & 2004 to just over 3 1/2% so far this year, while a core inflation rate fell from 3% last quarter to 2. Arthur Eckart has a BA & MA in Economics from the University of Colorado. Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time.
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| The Economy Is Not The Stock Market |
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So with that, we put together a study of some of the economic indicators that are treated as if they affect stocks, but really may not. In area 3, the fallout from the bear market meant a negative growth rate by the end of 2001. The market hit a bottom just after that, and we're well off the lows that occurred in the shadow of that economic contraction. That's why we focus so much on charts, and are increasingly hesitant to incorporate economic data in the traditional way. The chart below plots a monthly S&P 500 against a quarterly Gross Domestic Product growth figure.
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| Index Trading Weekly Update |
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Mr Greenspan tried to reassure investors this week about the continuation of the current economic growth. It starts to show a slight deceleration in the economic growth but nothing to worry at this point. Remember that when the last major economic cycle that started in march 2003 the PE ratio was at around 16.
Inflation seems to be less concerning with the last economic numbers out in the past weeks. The markets are way from being overbought and we should not expect any major bear market for the time being.
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| The High Price of Oil |
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Persistently high oil prices will eventually slow economic growth, which in turn will cause oil prices to fall, ceritus paribus. The high price of oil tends to slow economic growth rather than cause inflation (in part, because the high price of oil is a tax on consumption, which lowers demand for non-energy goods. Recent data showed slowing and above trend growth with disinflation. Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time. Arthur Eckart has a BA & MA in Economics from the University of Colorado.
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| The Perfect Economy? |
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The longer-term trend has shown slowing output growth with rising inflation (i. Sustainable growth, which is optimal, is 2. So far in 2005, output growth has slowed to just above 3. Arthur Eckart has a BA & MA in Economics from the University of Colorado. To maintain the optimal growth rate, the Fed will need to correctly anticipate the future economy and make the appropriate adjustments.
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| Stocks, Oil, and Bonds |
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However, the most influencial factor is stronger than expected global economic growth. Global economic growth is likely to slow over the next year or two, since the global economy cannot maintain above trend growth. Also, the flattening of the yield curve recently is predicting slower economic growth. TLT may fall after the FOMC announcement Thu, since it may maintain its balanced stance on growth and inflation. Consequently, a higher oil price will slow output growth and lower living standards rather than cause inflation.
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| Preholiday Trading |
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Recent economic data show persistently high oil prices, along with higher interest rates, are slowing U. Arthur Eckart has a BA & MA in Economics from the University of Colorado. Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time. Oil prices and economic data will continue to move the market. There are many important economic reports next week, which should generate a great deal of volatility, in the seasonally low volume market.
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| Volatile Oil |
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The short-term price of oil is largely dependent on the rate of global economic growth, reflected in monthly economic data, and supply disruptions, including geopolitical events and hurricanes in the Gulf. Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time. Arthur Eckart has a BA & MA in Economics from the University of Colorado. The weekly oil inventory report is Wed at 10. There are several other excellent trading opportunities next week, where large gains can be made quickly.
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| Have You Ever Seen A Map of the World Turned Upside Down? |
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The result is a leadership that provides no encouragement to economic growth, regardless of the outcome of the election. Neither has a particularly coherent economic policy, and while both pay lip service, neither fully understands the importance of free, unencumbered markets. If we put aside our preferences and partisanship for a moment, and simply reasons to vote for one or another candidate, the economic policies of both leading candidates leave much to be desired. As we plunge headlong into election season, we're all getting an opportunity to hear the economic strategy of the two leading candidates. However, a glance back at the lackluster growth of the 1970's gives a vivid illustration of how bad a mismanaged economy can become.
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| Makin The Sauce |
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This portfolio seeks both long term growth and income. Sure, you may be able to go into principal for income needs, but growth allocations generally don't like to be tampered with. Again we continue to trade risk for return, but with an average income return of a little over 2%, we begin to shift the focus off pure growth. The Aggressive Growth Portfolio - 100% Growth / 0% Income and Cash. The Balanced Growth Portfolio - 60% Growth / 40% Income and Cash.
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| Invest To Make Money, Not To Get Rich |
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The sudden collapse of mega-companies like Webvan, the online grocer that wasted over $750 million, became highly responsible for the economic problems that we faced earlier this century. With solid research, finding companies capable of returning 10-20% growth per year has a high probability. While not every stock will produce 20%, selecting strong companies will limit your risk for large losses. Ultimately, an investor could lose more than gained. Settle for solid returns and repeat the process as many times possible.
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| Chinas Great Missed Opportunity |
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Here we are more than twelve years later and this bullet has turned into a time bomb that could derail China's impressive economic growth and a better life for its people. First, it has stunted the growth of China's financial markets and prevented many companies from tapping equity capital markets. Congress and other foreign governments will resist these bids since they have little interest in having a foreign government, especially an economic rival enjoying a $200 billion bi-lateral trade surplus, purchase its most prized companies. As an investment advisor, I recommend clients participate in Chinese growth primarily through investing in Hong Kong (EWH) Malaysia (EWM), Canada, (EWC) Australia (EWA), and other Asian countries. The fact that a majority of China's large companies are still owned and controlled by the Chinese government has three negative economic consequences.
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| Volatile Range |
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Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time. So, there is some concern for slowing profit growth and rising inflation, e. Moreover, some proportion of additional labor costs tend to come from profit growth when there is little slack in the economy. Arthur Eckart has a BA & MA in Economics from the University of Colorado. There's a strong inverse relationship between employment and profits, in part, because when employment increases, then productivity falls, which generally lowers profit growth.
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| Angels Investors and Their Networks |
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Angels seek companies that have high growth potential and that have products or services, or an invention that has an attractive future profit growth. They usually like to invest in businesses that are located within a reasonable distance from their home and their reasons are varied, including not only economic, but also personal. They supply funds at various stages of the growth process of the business and are more involved in the start-up phase, rather than in the other phases later on. Another advantage of business Angels is that they are much easier to secure than venture capital or bank finance. Angels do not require security because they purchase a share of the business by taking in equity or shares in the company.
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