It has been pointed out to me that the Business Week folks were smart enough to hedge their bets with their last cover on ‘Why the Market Will Keep Going Up’ – if you flip the cover it also has ‘Why the Market is Going Nowhere’.
Anyway, while we’re on the subject of magazine covers, this five-page paper from 2007 (Are Cover Stories Effective Contrarian Indicators?) is very much worth reading. It looks at covers from Business Week, Forbes and Fortune over two decades to see if they can be used as contrarian plays – and hey presto, a lot of evidence they can. I would be curious to know what the track record of The Economist or our sister publication Barron’s are?
As interesting – the % of positive and negative covers the three weeklies ran over the period – Business Week ran a lot more negative stories than bullish Forbes, for example.
And so we lead on to Forbes, which has an amusing slideshow of countries that billionaires could buy – some of the real estate on offer is not so appealing: North Korea, Somalia etc. although buying out the Bahamas does have its charms.
One area where there is no shortage of real estate buyers though is the lower-end of the housing market in Southern California – the tax credit and the U.S. government being pretty much the entire current mortgage market doubtless help. Anyway, interesting video of the current state of play by Jim the Realtor over at Calculated Risk.
Naked Capitalism has some illuminating stats on household debt levels and stock market performance. The charts mirror similar observations by Steve Keen of the correlation in economic growth and debt levels in Anglo-Saxon economies.
Some of Naked Capitalism conclusions – primarily “a new secular bear market may have just started in 2007” – seem a bit odd, particularly in light of the big deleveraging of the U.S. consumer continuing apace in August. Long-term chart here.
How bad are U.S. consumer loan defaults and bankruptcy filings?
Credit Slips makes the point the surge in bankruptcy filings is bad when looked at year-on-year but that is reflective of new bankruptcy legislation put in place in 2005 and are actually reasonably steady this year, plus some other observations.
A chart at Calculated Risk helps visualize this, and shows filings now reaching around 2000-2005 levels (although I’m not sure given the legal changes whether the two periods are directly comparable).
Accrued Interest also has a great post on the nature of loan defaults based on various securitized loan pools.
“I think the correct way to think about this is that we really have two waves of consumer loan losses. The first is related to bad lending. These are burning out now and won’t be a problem on the margins going forward. The second is old-fashioned recession style delinquencies.”
An interesting chart on inflation-adjusted gold prices from Bianco Research, via Big Picture, on this basis Au is still some way off its highs.
Manheim Used Car index up in September – C4C obviously helped by taking out some capacity but the up-trend predates this.
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