The picket signs have been put away and the rabble-rousing masses are conspicuous by their absence. Wall Street is the world’s largest stock market and it is running as smoothly as Usain Bolt does the 100 metres race, but there is a worrying trend developing on the bourses. Investors are no longer playing the markets with the kind of gay abandon that marked out their approach some time back and its not just because playing the market has become tougher to win in and more fickle than ever. It’s a domino effect of a worse kind for the market with investors lopping off stocks they own and reducing their holdings in favor of safer investments such as that provided by the bond markets. There is a very real fear that this will remain a lingering sentiment; as they say, a crystal vase once broken can be fixed, but the cracks will always remain. This might be a lost generation of investors  [...]

The markets rallied on Friday, but nothing came of it. The S&P 500 was a bit flaccid, to say the least, and it is in many ways a strong reflection of sentiment across the board that is tepid and hesitant. Remember that traditionally September and October are not a good month for stocks and you have good reason to draw just an inch closer to that panic button right away. Volumes have been light and individual investors are not picking up stocks the way they used to, and that can be seen quite clearly in the mutual fund market. Here’s a simple fact; bond funds have recently attracted $25 billion while equities have seen $12 billion fly out of their hands. That is an alarming figure. This is a clear message from investors that they don’t believe the recovery is on track and that they want to keep their money where they can keep an eye on it. Most of these individual investors have  [...]

Arms akimbo, they walk through shopping malls with credit cards close at hand and froth coming out of their mouth in anticipation of the feeding frenzy. They’re more likely to feed on a no holds barred sale than human brains though, so you have nothing to worry about. At least for now. These zombies are not the kind you’ve grown to love (or loathe) in the movies though. The ones spawned by Hollywood moguls are more intent on carnage and just being dangerous in their own lumbering way. Conversely, economic zombies are the kind that are more passive and almost pass under the radar, but the damage that they do cause is in terms of tying up capital. This was best witnessed in Japan in the early ‘90s and the parallels to present-day America cannot be ignored. The real estate market went belly up over in the Land of the Rising Sun, and this led to deflation and a concurrent drop in  [...]

Even as stocks have taken a beating and experts expect this trend to continue, gold dust is in the air and everyone is smitten by it. Of late, gold has made a rip-roaring return in the books of buyers and this trend does not look like abating any time soon.  At about $1,230 an ounce, prices are 5% higher than at any other given point in the past few weeks and it shows no signs of easing up at all. Why the sudden gold rush? Curiously, gold has always been seen as the classic hedge in the face of inflation as it is a very tangible and very real asset as opposed to the value of paper currency. But keep in mind that several analysts are more focused on the possible fallouts of deflation as opposed to inflation and so the popularity of gold becomes all the more intriguing in the face of this. This is not to say that gold and inflation are tied hand in hand as it has been seen that gold prices  [...]

It’s the perfect storm, a trifecta that knocks out bettors everywhere. Even in the midst of an economic recovery of sorts, indicators of slower than expected recovery continue to loom large. Manufacturing is still slow to pick up, the jobless aren’t pounding the streets a whole lot less than they were during the worst of the recession and consequently investor confidence too is sagging. This is shown in the way stock value has dipped lower than might have been anticipated by doyens of the industry. The Dow Jones has tumbled 144 points (a loss of 1.4% across the board), and the S&P 500 slid by 19 points, still a loss of 1.7% on previous day’s trading. Nasdaq too wasn’t much different, taking a beating of 37 points, again a mystifying 1.7% lower than the previous day’s close. It seemed as if stocks were recovering after two straight days of posting gains and this came on  [...]

As populations age, western governments are racing against time to deal with the budgetary challenges the rising median age poses according to Moody’s. Even as questions are being asked about the manner in which western economies are bouncing back from the global economic meltdown, Moody’s said that major sovereign bond issuers, among which are the United States of America, the UK, France and Germany, are in a position of strength and can retain their much-coveted AAA credit ratings. But with this note of positivity came a caveat; as western nations averted the worst of the economic meltdown by diverting funds towards it, it has left itself open to the threats posed by an impending increase in costs it will have to incur The financial meltdown may have been insulated and perhaps its advances even checked, but it has come at a price. There are long-term challenges to be faced up  [...]

Most of our investments are down, due to plunge in economy and fall in savings interest rates. However, there are some ways to earn more from falling rates, apart from liquidating your investments and stashing cash at home. Let’s have a closer look at few of them. Weaker Euro The Euro has become cheaper due to wavering financial stability in the European countries. It has gown down to $1.29 from $1.51 in past few months, and it is expected to stay low for another 3-6 months. The Strategy: Everyone from investor to street-side shopper can earn from the weakening euro. Many big European retailers have managed to keep prices equal worldwide. However, savings can be done by purchasing things from direct importers. If you have an import business, this is probably the best time to stash some non-perishable commodities. Besides, European stocks too have seen a sharp fall in recent months.  [...]

Fed paper reports sinking economy and predicts another recession in next couple of years. Travis Berge, Fed scholar and professor at University of California, used data from Leading Economic index produced by the Conference Board, and prepared a paper that predicts another recession for the US in next couple of years. Most economists and researchers, by looking at the report, agree on the point that chances of another recession are rising, and if the administration neglects these indicators, impending economic downturn is inevitable. These researchers tried three experiments, making use of leading indicators like index components and other elements, mentioned in the data. However, this test didn’t include bullish current indicator. The spread of Treasury bond interest rate and fed fund rate is quite steep, which is a strong indicator of economic expansion. They believe the Fed  [...]

After the release of private sector hiring statistics, investors reacted positively by pouring in money into the market. Stocks, on Wednesday, closed on a higher quote. Dow Jones Industrial Average increased by 44 points or 0.4%. S&P 500 index also gained 0.6 % by climbing 7 points. And NASDAQ added 0.9% or 20 points. The major reason of rise was surprising improvement in private sector payroll statistics. People are now awaiting a major report to be released by Labor Department on Friday. Besides, the industry report says there has been growth in the service sector for the seventh month in a row now. The pace of employment and recovery is modest. However, we are sure of one thing: at least the pace is being maintained. Corporate companies have been showing a decent profit for two months, and it is helping the economy to relocate its position to a better place. However, weak  [...]

Congress needs to have a concrete plan to tackle slower growth, rising unemployment rate, and deficit increment as inaction from their part may slower the economic growth further, a board of economists told officials on Tuesday. The same group of economists testified at the Senate Budget Committee. They say the economic growth in 2011 would be gloomy, and the annual GDP would range anywhere between 3% and 4%. Most economists believe it’s a very slow economic recovery. ‘It’s probably one of the slowest recoveries we have had since World War II’ said Simon Johnson, lecturer at Technology’s Sloan School of Management. However, Joel Naroff, founder and president of Naroff Economic Advisors, is not very sure about the mediocre growth. He believes, if Washington doesn’t act quickly and fail to make major changes in monetary policy and fiscal policy, the economic growth would  [...]