Turning Points: Commodities Sluggish, Real Estate Prices Climbing

Here's a wrap-up of key issues affecting global markets for fundamental investors. The BOJ got the green light to print gobs of yen. Commodities are sluggish, in part because Chinese demand is slowing. Credit spreads remain low, encouraging more and more risk taking in the market place. The Fed's reflation efforts are finally starting to pay off as real estate prices are climbing across the country.

Currencies

• US warns Japan on printing more yen . . . then the United States turns around and supports Japan just days later. (Wall Street Journal)
• G-20 backs Japan on yen policy. (Wall Street Journal)
• SNB's Jordan says Swiss franc cap indispensable. (Reuters)

Commodities

• Copper prices recede toward cost of production. (Fox Business)
• BHP says copper supply may exceed demand. (Bloomberg)

China’s Direction

• China GDP: What a 7.7% slowdown looks like. (Bloomberg)
• China, the marginal buyer of just about everything, shows signs of slowdown. (New York Times)

Derivatives

• Credit markets awash with cash — keeping credit spreads low. (Danske Bank, PDF)
• Which nation is next? Credit markets answer. (ZeroHedge)

Energy

• IEA cuts oil demand forecast for fourth consecutive month because of weak European demand. (Bloomberg)
• Wow! Check out this shift in the production of oil in the United States. It likely reflects the shale boom. (US Energy Information Agency)
• New study suggests US natural gas reserves are 26% greater than previously thought. (Motley Fool)

Euro Crisis

• Germany: Euro Crisis could last a decade. (Moneynews)
• Spain social security pension fund now 97% invested in Spanish sovereign bonds. (ZeroHedge)
• Italy's five-year debt costs rising. (Reuters)

Hedge Fund Money

• Elliott's Paul Singer using incentives to attract board talent. (New York Times)
• How Greenlight Capital handles their downside to Gold. (ETF Periscope)

Interest Rates and Central Banks

• Scoring the Reinhart and Roggoff debate. (ZeroHedge)
• SNB warns of challenges reversing Swiss credit boom. (Reuters)

Japanese Debt and Inflation

• Japan's stock market gets a lift from falling yen. (Wall Street Journal)
• S&P says that there is more than a one in three chance of a downgrade of Japan, citing risks to Abenomics. (Fox Business)

Stock Market

• Recent performance of the S&P 500 by sector. (Standard & Poor's)

US Real Estate Bubble 2.0?

• Median home prices in Miami/Dade County rose 25.1% versus a year ago. (Miami Herald)
• Median home prices in Chicago rise 9% versus a year ago. (Chicago Tribune)
• Median home prices in Los Angeles rise 8% versus a year ago. (LA Times)
• The list goes on . . .

Time Capsule

• This link features an analysis of the US housing market in 2004 by the New York Federal Reserve for a possible speculative bubble. From the paper's conclusions we quote, "Home prices have been rising strongly since the mid-1990's, prompting concerns about a bubble. . . . A close analysis of the US housing market in recent years, however, finds little basis for such concerns." Notably, they repeat the popular meme at that time that home prices have not fallen historically, even during periods of recession. Do you think maybe there is a flaw in their analysis?

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Photo credit: ©iStockphoto.com/Pgiam