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  • US house price decline accelerating

    Alexander Gloy

    US house prices have entered into an accelerating decline. The more I dig into the details the worse it gets. The most widely followed measure of US single family home price is the S&P Cash-Shiller Home Price Index (CS HPI). First a word on how it is calculated: “The S&P/Case-Shiller Home Price Indices are calculated…

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  • US house prices – Roll out the welcome mat for a double-dip

    Alexander Gloy

    by Alexander Gloy Let’s take a look at the situation after the October data from the Case-Shiller home price index has come in[1]: You see all major metropolitan areas peaking between March and May 2010 (the end of the first-time home-buyer tax credit). After only 8 months in positive territory, the overall index comprising 20…

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  • Ireland: Bail-out with a Boomerang

    Alexander Gloy

    Why the EU/IMF bail-out of Ireland will be a boomerang with multiple victims. This article looks at the motivations behind the, at first sight, clueless actions.

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  • The mystery of the equity investor

    Alexander Gloy

    Performance of international stock market indices in local currencies. Source: StockCharts.com Looking at the performance of international stock markets over the last 200 days, the German Dax index stands out. But why? Sure, Germany is an island of prosperity amongst the European turmoil. Low unemployment, strong economic growth and a stable political system help. You…

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  • Ben’s Big Bluff

    Alexander Gloy

    For the last weeks I tried to figure out why “Ben” (Bernanke, Chairman of the Federal Reserve) would go for “QE2” (Quantitative Easing – part II) when “QE1” was not very effective in terms of stimulating the economy. It did not make much sense. My conclusion is that the Fed has run out of options,…

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  • The Fed has run out of options – is it bluffing?

    Alexander Gloy

    Tuesday we have US mid-term elections, and Tuesday-Wednesday the FOMC (Federal Open Market Committee) meeting. Policy announcement on Wednesday 2:15 EST. So far, the Fed has increased its balance sheet by $1,500bn (from $750bn to $2,300bn) by purchasing various assets (MBS – mortgage backed securities, GSE debt – government sponsored entities and treasury debt). Federal…

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  • Trading olives and feta cheese for submarines is a losing proposition

    Alexander Gloy

    Greek 10-year government bond yields, after having graced 8.73% merely a good week ago, are back with a vengeance (9.67%). Where is the insatiable demand for Greek bonds from China? On October 22, Eurostat published revised Euro zone government deficit and debt figures for 2009. One country was missing – Greece: “Eurostat is not publishing…

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  • Why the Fed is fighting deflation tooth and nail

    Alexander Gloy

    Economics class is in session! Let’s have a look on the impact of inflation and deflation on companies. We are focusing on the balance sheet only: Impact of inflation and deflation on balance sheets. Source: Lighthouse Investment Management Inflation means prices go up, so the value of the asset side of the balance sheet increases. Liabilities remain the…

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  • Portfolio managers asleep at the wheel – again?

    Alexander Gloy

    What would you do if you expected a stock market decline, but had to be invested in stocks no matter what (i.e. if you are a fund manager of a mutual fund – you can’t have more than 5% in cash)? You would shift your portfolio out of cyclical (sensitive to economic cycles, i.e. makers…

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  • Presenting the LIMTI

    Alexander Gloy

    Presenting the LIMTI  (Lighthouse Investment Management Timing Index) Apart from fundamental considerations markets move in waves (prevailing bearishness or bullishness). As supply is often constrained (number of shares, bonds, currencies, gold etc) the change in investor sentiment has to happen via the price. Traditional sentiment polls might be misleading, as many portfolio managers are constrained…

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