Economy Blog

Yes, the sector looks scary right now, especially in the US. But take a look at the newly comfortable, and graying, classes around the world, and you may see a wealth of opportunity….
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Some perspectives from the late 1800’s which still hold true today…
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So far the stock market has mostly ignored the jump in crude oil prices, but high energy costs could eventually take their toll…
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I’ll give you a hint.

Toronto.

Give up?

Much of the momentum on the TSX has been caused by strength in resource stocks. The energy sector has climbed 40 per cent since January while the price for crude oil rose above US$125.

Investors have been turning to commodities stocks as a reliable investment alternative to international financial institutions, whose results have been bruised by the credit crisis.
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Inflationary pressures remain a concern in the U.K.…
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Mothers of Ohio, here you go. Ohio Treasurer Richard Cordray is using your tax dollars to provide you with the gift you desired. Though, for some reason, you couldn’t recognize your desire — a breakdown of Thymology, I suppose.

Regardless, here it is. Enjoy. Cordray knew you would.

Thankfully, my mother lives in Florida and is unaware of Cordray trumping my measly gift.
M…
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Equity gains and potential monetary easing weigh on the swissie.…
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Interesting piece picked up by The Oil Drum on the relationship between gas prices and real estate in Australia. It summarizes a study of the effect on commuting costs when considering various communities progressively further outside the urban/suburban/exurban horizon west of Sydney. Here is the effect in the $2/litre scenario, with red representing the highest percentage of income going to fuel consumption, etc.: …
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On our blog agenda there is a discussion of the "alternate data universe."

There is a rich and thriving discussion of economic data among economists — that would be the "real economists".  We are talking about those who are (preferably) in the academic world or working on Wall Street.

There is another discussion.  It occurs mostly in the cottage industry of those making a business of criticizing the official government data.  As we have noted, g…
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I love this quote that Felix picks from a Brad DeLong commenter in the ongoing debate about whether Harvard’s endowment gains should be taxed: Harvard is an investment bank with a mom-and-pop non-profit enterprise attached to it for tax purposes. …
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“Why trade in fads when you can invest in long standing greatness?” Jim Cramer asked fans of his “Mad Money” TV show Monday. Cramer said he is tired of hearing about Research In Motion’s (RIMM) BlackBerry and Take-Two Interactive’s (TTWO) Grand Theft Auto 4 video game. He wants investors to focus more on what really matters to the U.S. economy. Cramer told investors to buy Emerson Electric (EMR), calling the company a new tech play and one of the top five best manufacturers in the world. Cramer likes the company’s diverse product lines from network power systems, appliances and tools and climate control systems. He explained the firm’s new tech segments were up 15% to 20% for the quarter and the company receives more than half of its sales from abroad. “Emerson makes money in good times, and in bad,” he noted. Emerson is projected to generate $2.4 billion in free cash flow for 2008 and Cramer thinks the company will use that cash to buyback stock and raise its dividend.
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The US House of Representatives will hold hearings on energy markets trying to determine who is causing oil prices to rise. The anti-market investigation will blame hedge funds and investment banks for manipulating the markets to make oil go to record levels.

Oil is too global a commodity for speculators to determine its price. We know, for instance, that oil prices are high not only in spot markets but in futures markets, not only on the Nymex but in the UK (Brent), Dubai, Malaysia, and numerous smaller, less liquid markets not accessible to speculators. Are we to believe that the conspirators somehow entered all these markets at once?
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California hedge fund regulations, we hardly knew ya!…
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Now that OPEC is playing nice with one another, at least temporarily, there is lots of discussion about the price OPEC wants for crude oil. Everyone says that OPEC likes higher prices, to a point, with the implicit argument being that there is some price at which OPEC members make lots of money, but it still dissuades investments in alternatives. That’s true, sort of. But it misses something important. Predictable prices, even at higher levels, are easier to invest around than unpredictable prices. If you know, in some sense, that crude oil prices are going to be over $100 for some time, you can plan accordingly as an investor, entrepreneur, integrated oilco, etc. …
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Now that OPEC is playing nice with one another, at least temporarily there is lots of discussion about what price OPEC wants for crude oil. Everyone says that OPEC likes higher prices, to a point, as if there is some price at which is makes lots of money, but dissuades investments in alternatives. That’s true, to a point. But it misses something important. Predictable prices, even at higher levels, are easier to invest around than unpredictable prices. If you know, in some sense, that crude oil prices are going to be over $100 for some time, you can plan accordingly as an investor, entrepreneur, integrated oilco, etc. …
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Sentiment in the housing market in England and Wales deteriorated to its weakest level in more than 30 years in April as the global credit crisis weighed on demand and reduced the number of transactions, the Royal Institution of Chartered Surveyors said Tuesday.
The latest RICS housing market survey found yet more surveyors reported falling rather than rising prices in April, with the net balance declining to -95.1 percentage points in seasonally adjusted terms from a revised -79.4 percentage points in March, marking the lowest level since the series began in January 1978. The result was worse than the market consensus forecast of -80 from a Dow Jones Newswires survey of economists last week. March’s net balance was also revised down from -78.5 percentage points reported last month.
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“Why trade in fads when you can invest in long standing greatness?” Jim Cramer asked fans of his “Mad Money” TV show Monday. Cramer said hie is tired of hearing about Research In Motion’s (RIMM) BlackBerry and Take-Two Interactive’s (TTWO) Grand Theft Auto 4 video game. He said he is more interested in what really matters to the U.S. economy.
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Cramer recommended shares of Colfax (CFX), a play on fluid management that recently came public on May 8. Coflax makes makes pumps and transfers liquids for sectors like oil, paper, chemical and shipping. “Think of it as the lubricant that keeps so many markets running smoothly,” Cramer said. Coflax gets 76% of its revenues from abroad and has some big name customers like General Dynamics (GD), Cummings (CMI) and General Electric (GE). Coflax is well diversified with 44% of the company’s sales coming from general industrial, 24% from commercial marine, 15% from oil and gas, 11% from power generation and 6% from the U.S. Navy. Cramer also likes that the Rales brothers hold a 44% stake in the firm. Cramer thinks Coflax should be trading in line with peers like Flowserve (FLS) and Robbins & Myers (RBN). If the company were to fetch a similar valuation as FLS and RBN the stock should advance by 26%. Cramer advised investors to only by this stock during normal trading hours and use limit orders. He also said don’t pay more than $21 per share and wait one week before buying. Cramer called Colfax a gem of a new tech company. “This is your chance to buy it at a decent price,” he said.
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