Category Archives: Economic Trends

Michael Lewitt Video on the US Government Stimulus

HCM Market Letter author Michael Lewitt comments on the US Government stimulus efforts.

I’ve been reading Michael’s articles for about 3 years and it is good to see him finally getting some more publicity as a result of publishing his new book The Death of Capital.

Other Comments from the December market letter include:

  1. Bad policy in the US will ensure the that boom and bust cycle will continue
  2. The US economy showing signs of improvement but not as much as might be expected following a recession. The data is also not as positive as it is being seen by the markets
  3. Europe (and the Euro) is in trouble with Spain Portugal, Greece, Ireland Belgium and Italy the most vulnerable
  4. China boom to end at some point unless “they are unlike every other growing economy in the history of the world” – ┬áPeople trusting numbers coming out from China are not wise.
  5. He also gives a range of investment recommendations at the end of the article that are worth reading.

The benefits of an economic recession and how to prepare for one

Bear market

I recently read an interesting article about the potential upsides that accompany a recession. With much talk of a recession in the coming months in Australia and one already on the cards in the USA, I thought it may be worthwhile to outline some of the positives that accompany the fear associated with a recession.

Ultimately, a recession will bring a slowdown in spending, a tightening in the job market and an increase in corporate restructuring and lay-offs. This, most people are aware of.

However, for those willing to use sound financial and business analysis, a recession can bring a wealth of opportunities and provide the necessary timing to enter a number of markets.

I like to think of a recession as a time where almost everything goes on sale because this outlines the number of opportunities that are available to the everyday person or investor.

I have outlined 2 main investment related benefits of a recession below and then summarised a few common benefits after that: Continue reading The benefits of an economic recession and how to prepare for one

Stock market beginners – What moves the stock market and stock prices?

what drives the stock market ?

What factors move the stock market? What about individual stocks? How do interest rates affect the stock market and what does this have to do with the Consumer price index and inflation?

Many people know that economic factors such as corporate profits and interest rates tend to influence the movement of the broader stock market. However, I found it particularly interesting to actually analyse how these factors move the market and whether one should follow such trends when purchasing individual stocks.

Corporate profits and GDP

A drop in the Gross domestic product (GDP), the market begins to fear a recession and a subsequent drop in corporate profits. With worsening economic conditions, the market may enter a recession resulting in reduced demand for many company’s products.

Following on from this, many company’s earnings will be affected and the corresponding company stock price will fall (rationale outlined below). Thus, when the GDP and corporate profits fall, the market will suffer.

Continue reading Stock market beginners – What moves the stock market and stock prices?