Category Archive: _Austrian Economics

Eugen von Böhm Bawerk
“Value does not come out of the workshop, but out of the wants that goods satisfy” The quote by Mr Eugen von Böhm-Bawerk is as true today as it was more than 100 years ago, even though modern pundits often ignore the simple fact. This blog is not an attempt to revive Mr Böhm-Bawerks thoughts, life and deeds, but from a sober view of the world comment on and analyze ongoing events. We aim to take the analysis a step further. We question accepted truths and always strive to answer the simple question “why?” We are opinionated.

The Future of Copper – Incrementum Advisory Board Meeting Q1 2018

The Q1 2018 meeting of the Incrementum Fund’s Advisory Board took place on January 24, about one week before the recent market turmoil began. In a way it is funny that this group of contrarians who are well known for their skeptical stance on the risk asset bubble, didn’t really discuss the stock market much on this occasion. Of course there was little to add to what was already talked about extensively at previous meetings. Moreover, the main...

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What Kind of Stock Market Purge Is This?

Down markets, like up markets, are both dazzling and delightful. The shock and awe of near back-to-back 1,000 point Dow Jones Industrial Average (DJIA) free-falls is indeed spectacular. There are many reasons to revel in it. Today we shall share a few. To begin, losing money in a multi-day stock market dump is no fun at all. We’d rather get our teeth drilled by a dentist. Still, a rapid selloff has many positive qualities.

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Why I Own Gold and Gold Mining Companies – An Interview With Jayant Bandari

Maurice Jackson of Proven and Probable has recently interviewed Jayant Bandari, the publisher of Capitalism and Morality and a frequent contributor to this site. The topics discussed include currencies, bitcoin, gold and above all junior gold stocks (i.e., small producers and explorers). Jayant shares some of his best ideas in the segment, including arbitrage opportunities currently offered by pending takeovers – which is an area that generally...

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Seasonality of Individual Stocks – an Update

Readers are very likely aware of the “Halloween effect” or the Santa Claus rally. The former term refers to the fact that stocks on average tend to perform significantly worse in the summer months than in the winter months, the latter term describes the typically very strong advance in stocks just before the turn of the year. Both phenomena apply to the broad stock market, this is to say, to benchmark indexes such as the S&P 500 or the DJIA.

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When Budget Deficits Will Really Go Vertical

United States Secretary of Treasury Steven Mnuchin has a sweet gig. He writes rubber checks to pay the nation’s bills. Yet, somehow, the rubber checks don’t bounce. Instead, like magic, they clear. How this all works, considering the nation’s technically insolvent, we don’t quite understand. But Mnuchin gets it. He knows exactly how full faith and credit works – and he knows plenty more.

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US Stocks – Minor Dip With Potential, Much Consternation

On January 31 we wrote about the unprecedented levels – for a stock market index that is – the weekly and monthly RSI of the DJIA had reached (see: “Too Much Bubble Love, Likely to Bring Regret” for the astonishing details – provided you still have some capacity for stock market-related astonishment). We will take the opportunity to toot our horn by reminding readers that we highlighted VIX calls of all things as a worthwhile tail risk play....

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“Strong Dollar”, “Weak Dollar” – What About a Gold-Backed Dollar?

The recent hullabaloo among President Trump’s top monetary officials about the Administration’s “dollar policy” is just the start of what will likely be the first of many contradictory pronouncements and reversals which will take place in the coming months and years as the world’s reserve currency continues to be compromised. So far, the Greenback has had its worst start since 1987, the year of a major stock market reset.

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Too Much Bubble-Love, Likely to Bring Regret

Readers may recall our recent articles on the blow-off move in the stock market, entitled Punch-Drunk Investors and Extinct Bears (see Part 1 & Part 2 for the details). Bears remained firmly extinct as of last week – in fact, some of the sentiment indicators we are keeping tabs on have become even more stretched, as incredible as that may sound. For instance, assets in bullish Rydex funds exceeded bear assets by a factor of more than 37 at one...

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The Donald Saves the Dollar

The world is full of bad ideas. Just look around. One can hardly blink without a multitude of bad ideas coming into view. What’s more, the worse an idea is, the more popular it becomes. Take Mickey’s Fine Malt Liquor. It’s nearly as destructive as prescription pain killers. Yet people chug it down with reckless abandon.

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The FOMC Meeting Strategy: Why It May Be Particularly Promising Right Now

As readers know, investment and trading decisions can be optimized with the help of statistics. One way of doing so is offered by the FOMC meeting strategy. A study published by the Federal Reserve Bank of New York in 2011 examined the effect of FOMC meetings on stock prices. The study concluded that these meetings have a substantial impact on stock prices – and contrary to what most investors would probably tend to expect, before rather than after...

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Swiss Trade 2017: Exports at all-time high

Last year, Swiss foreign trade accelerated yet again relative to 2016: exports rose by 4.7% to reach a new record high. Imports grew by 6.9%, posting their strongest growth rate since 2010. Aside from the improved economic situation worldwide, the weakening of the Swiss franc and price trends played a decisive role in both directions of trade. With a surplus of CHF 34.8 billion, the balance of trade closed the year 6% (or CHF 2.1bn) lower than the...

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Tax Reform and Trump’s Chinese Trade Deficit Conundrum

Most things come easier said than done. Take President Trump’s posture on trade with China. Trump doesn’t want a bigger trade deficit with China. He wants a smaller trade deficit with China. In fact, reducing the trade deficit with China is one of Trump’s promises to Make America Great Again.

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As the Controlled Inflation Scheme Rolls On

American consumers are not only feeling good. They are feeling great. They are borrowing money – and spending it – like tomorrow will never come. On Monday the Federal Reserve released its latest report of consumer credit outstanding. According to the Fed’s bean counters, U.S. consumers racked up $28 billion in new credit card debt and in new student, auto, and other non-mortgage loans in November.

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Punch-Drunk Investors & Extinct Bears, Part 2

For many years we have heard that the poor polar bears were in danger of dying out due to global warming. A fake photograph of one of the magnificent creatures drifting aimlessly in the ocean on a break-away ice floe was reproduced thousands of times all over the internet. In the meantime it has turned out that polar bears are doing so well, they are considered a quite dangerous plague in some regions in Alaska.

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Punch-Drunk Investors & Extinct Bears, Part 1

We didn’t really plan on writing about investor sentiment again so soon, but last week a few articles in the financial press caught our eye and after reviewing the data, we thought it would be a good idea to post a brief update. When positioning and sentiment reach levels that were never seen before after the market has gone through a blow-off move for more than a year, it may well be that it means something for once.

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2018: The Weakest Year in the Presidential Election Cycle Has Begun

Our readers are probably aware of the influence the US election cycle has on the stock market. After Donald Trump was elected president, a particularly strong rally in stock prices ensued.  Contrary to what many market participants seem to believe, trends in the stock market depend only to a negligible extent on whether a Republican or a Democrat wins the presidency.

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Several Simple Suppositions and Suspicions for 2018

The New Year is nearly here. The slate’s been wiped clean. New hopes, new dreams, and new fantasies, are all within reach. Today is the day to make a double-fisted grab for them. Without question, 2018 will be the year in which everything happens exactly as it should. Some things you will be able to control, others will be well beyond your control.

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Why Monetary Policy Will Cancel Out Fiscal Policy

Good cheer has arrived at precisely the perfect moment. You can really see it. Record stock prices, stout economic growth, and a GOP tax reform bill to boot. Has there ever been a more flawless week leading up to Christmas?

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Season’s Greetings

A Difficult, but Also Exciting Year… Dear Readers, Another year is coming to a close, and the team at Acting Man wishes you and your loved ones a Merry Christmas / Happy Holidays and all the best for the new year. You have probably noticed that your main scribe was a lot less prolific this year than he normally tends to be; unfortunately, we were held back by health-related issues.

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How the Asset Bubble Could End – Part 2

There is just one more positioning indicator we want to mention: after surging by around $126 billion since March of 2016, NYSE margin debt has reached a new all time high of more than $561 billion. The important point about this is that margin debt normally peaks well before the market does. Based on this indicator, one should not expect major upheaval anytime soon. There are exceptions to the rule though – see the caption below the chart.

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