Prieur’s readings (May 10, 2011)

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This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

•  Doug Kass (Minyanville): Sell the rallies, May 9, 2010.
I am less preoccupied than most with the chaotic downside to precious metals prices last week. To me, it’s little more than a speculative sideshow. And it’s a circus I prefer not to be entertained by or purchase tickets to. Rather, other key factors are guiding me toward expecting a near-term slowdown in the rate of domestic economic growth and for a limited upside to the U.S. stock market.

•  Tom Stevenson (The Telegraph): The truth behind the popular markets adage of “sell in May”, May 10, 2011.
Goldman Sachs’ flotation marked the top of the equity bubble in 1999, while Blackstone’s IPO rang the bell for private equity in 2007. No surprise then that the day after Glencore, the world’s biggest commodities trader, published its prospectus the prices of oil, silver, copper, cotton and many other raw materials should have tumbled.

•  Roger Bootle (The Telegraph): Why we should hope for a large fall in commodity prices, May 10, 2011.
Last week saw sharp falls in oil and commodity prices, including a record daily fall in the price of oil – of $12 a barrel. And falls occurred across all categories of commodities from precious metals to industrial metals and foodstuffs. Could this be the beginning of something big?

•  Carolyn Cui (The Wall Street Journal): Silver-backer Sprott still believes. Deeply, May 9, 2010.
After silver suffered its worst one-week drubbing in three decades, one of the biggest silver bulls gave a pep talk to hundreds of followers on Monday. “Silver will be a currency just like gold. It’s logical to expect silver prices to go much higher,” said Eric Sprott, chief executive officer of Sprott Asset Management LP, which oversees a $1-billion silver fund that was $327 million larger at the beginning of last week.

•Brett Arends (MarketWatch): Housing crash is getting worse, May 9, 1010.
If you thought the housing crisis was bad, think again. It’s worse. New data just out from Zillow, the real-estate information company, show house prices are falling at their fastest rate since the Lehman collapse. Average home prices are down 8% from a year ago, 3% over the quarter, and are falling at about 1% every month, according to Zillow. And the percentage of homeowners in negative-equity positions – with a home worth less than its mortgage – has rocketed to 28%, a new crisis high.

•  Timo Soini (The Wall Street Journal): Why I don’t support Europe’s bailouts, May 9, 2011.
When I had the honor of leading the True Finn Party to electoral victory in April, we made a solemn promise to oppose the bailouts of euro-zone member states. Europe is suffering from the economic gangrene of insolvency – both public and private. Unless we amputate that which cannot be saved, we risk poisoning the whole body.

•  Dominique Desruelle and Catherine Pattillo (iMFdirect): BRICs and mortar –  building growth in low-income countries, May 9, 2011.
The so-called BRIC nations – Brazil, Russia, India and China – could be a game changer for how low-income countries build their economic futures.  The growing economic and financial reach of the BRICs has seen them become a new source of growth for low-income countries (LICs).

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