The BEA released the end-2007 International Investment Position data on June 27. Several observations: As in recent years, the NIIP to GDP ratio continues to deteriorate. However, the NIIP to GDP ratio as of end-2007 is improved relative to the originally reported end-2006 NIIP/GDP ratio. In the last year, the dollar change in the NIIP deviates substantially (i.e., is more positive) than the corresponding current account reported on a NIPA basis. This repeats the pattern from the previous five years. Interestingly, 2005 stands out by far as an outlier, wherein the the NIIP improves while the CA is in substantial deficit. There appears to be a measurable correlation between dollar depreciation against other major currencies and the deviation between change in NIIP and CA. The first two observations are illustrated in Figure 1. Figure 1: Net international investment position to GDP ratio, 2007 release (blue), ...

I've lived through four U.S. recessions, two bouts of surging inflation and at least two close encounters with a Wall Street meltdown. But this is the first time in my lifetime — and probably yours — that all three have converged in one time and place. It's an unprecedented Triple Crisis. And despite repeated Wall Street attempts to deny it — including a new round of cheerleading Friday in response to stronger-than-expected retail sales numbers — the severity of the Triple Crisis is undeniable: We have the worst food and energy price inflation since the early 1980s. We've just seen the worst surge in unemployment in 22 years. And ... Financial institutions continue to book the biggest losses of all time, with more than double the losses yet ...

Article Source Over the past few days, I've been trying to identify appropriate measures of the output gap (and trying to relate that to exchange rate changes). As I've done so, I've come to realize that (1) it's a difficult thing to do, and (2) interesting stories come out of different measures. The easiest thing to do is to pull down the CBO's measure (interpolated to quarterly frequency). This yields the following picture (in logs): Figure 1: Log real GDP (Ch.2000$, SAAR) (blue line), and log potential GDP. NBER-defined recession dates shaded gray. Source: BEA, GDP release of 29 May 2008, and CBO, Update of CBO's Economic Forecast (February 2008), data [xls], and NBER. Two observations: (i) recessions do not necessarily coincide with negative output gaps (although they do seem to coincide with the beginning of periods of ...

Article Source Could well be, and yes you should. There is no question that we've been experiencing an episode of economic stagnation in which key indicators of output and employment are not growing at their usual historical rates. Some analysts take the position that this is all that really matters, and whether it meets the formal definition of a "recession" is a pointless question of semantics. In support of such a position, there are a number of economic models quite popular among academics today that would warrant just such a perspective, in that they presuppose linear dynamic systems in which a "recession" is indeed just an arbitrary definition you would make up to characterize a string of bad luck. I espoused the opposing view in a recent academic paper. I argued that recessions represent distinct and objectively identifiable episodes in which the usual dynamic factors that ...

Glassman, one of Kiplinger’s regular contributor’s and a  Senior Fellow at the American Enterprise Institute, identified companies that he believes are ripe for buying, because, as he writes, “Every investor has a chance to become a partner in some of the best global companies since they are going at a discount”.  And, “Rarely have such clearly excellent companies been available at such clearly terrific prices.”:

1. Pfizer (PFE)

a. medicine is shifting to long-term drug therapies

b. baby boomers are entering their 60’s

c. developing world is getting richer

d. stock trades at 8x 2008 projections and 6.5% dividend yield- dividends have risen 41 years in a row

e. though some of their drugs are facing the prospects of generics soon, the macro factors are too good to ignore.

f. price is 1/3 of what it was in 1999

2. Boeing (BA)

a. Dominant aerospace company in the world

b. A++ rating

c. last year’s Return on Equity was

...

It’s my job to analyze the markets, turn them upside down, inside out, and always consider both sides of the story.

That’s the only way to make informed trading decisions, and to make sure the odds are tipped in your favor as much as possible.

Take the U.S. dollar, for example. There are strong arguments being made from both the bulls and the bears. Today I want to examine both sides, and tell you which one is more convincing based on the current evidence.

Let’s start with …

Why Bulls Say the
U.S. Dollar Has Bottomed

Reason #1. This dollar bear market is about seven years old. What difference does that make? Well, the last two major bear markets in the U.S. dollar lasted … seven years. …

Too severe, or not too severe; that is the question.

I’m talking about the U.S. recession that we’re already in, about to be in, or hoping to avoid.

At this point it depends a lot on how you approach the subject, but assuming for a moment that recession is inevitable, analysts and economists are asking: How much will growth contract? Can Mr. U.S. consumer muddle through, or will he stumble and fall? And how much have financial markets already discounted an official recession?

Today, I’ll answer these questions and tell you what to expect in the currency markets, namely the U.S. dollar. First, let’s address …

HOW to Identify a Recession

Unfortunately, pinpointing the magnitude and velocity of a recession before it has ended isn’t as easy as measuring the change in …