Economic Analysis for 2015
Economic Analysis takes place when an investor evaluates economic conditions through a logical and systematic approach. This type of analysis is done in order to find the underlying trends and investment opportunities. When an economist looks at the state of the economy, they might consider GDP growth, inflation, interest rates, major political events, unemployment, and consumer demand.
An economic analysis can help investors get a general idea of upcoming market conditions and a possible trend reversal.
Regular readers of mine will know that I used to be bullish on China; I thought the Chinese economy offered a good contrarian investment opportunity. Now, I’m turning my sights to the eurozone for the top potential investment opportunity outside the U.S. Here’s why...
Chinese Economy in 2015 Losing SteamYou don't have to be behind the Great Wall of China to realize there are deeper issues brewing in the country of 1.3 billion people. Since assuming the role of the second-largest economy in the world, China’s economy has been caught in a downdraft, with weaker gross domestic product (GDP) growth and broad stalling across the board. There must be something about ... Read More
The NASDAQ may have passed 5,000, but investors shouldn’t get caught up in the excitement. A market correction may just be on the horizon, especially when you consider factors affecting the global economy.
NASDAQ, Stock Markets Near Highs, but Bull Market SlowingAfter the NASDAQ’s recent breach of the psychological 5,000 level, there was talk about a move to another record at above 5,104, last encountered 15 years ago. At that time, in 2000, for the stock market, it was both a period of excessive greed and jubilation. After the recent records by the DOW and S&P 500, I fully expect some pausing in the stock market. We are beginning to see that. Following a strong February, the major stock marke ... Read More
Eurozone Still Messy, but Economic Recovery Has BegunEurope is open for business. Well, kind of. The region—namely the 19-country eurozone—has recently been in the news with the Greece fiasco and its potential exit. Greece now has a four-month reprieve in the form of an extension to its current bailout loans and terms, but the distressed country still has to convince eurozone finance ministers that its revised bailout plan for austerity measures makes sense. For the time being, we are seeing some progress in the eurozone that points to growth. I had been worried about the negative impact from the Russian mess, but so far, it appears to be a non-issue. In the end, Germany, the s ... Read More
One of the more common themes that I keep reading about these days is the strength of U.S. economic growth. It’s important to get at least some understanding of the potential for economic growth, as this will impact your investment strategy. Recent data is definitely making me ask the question: just how strong is the level of economic growth in America? We all know that this holiday season was much weaker than expected for retail companies. Considering that consumer spending fuels the majority of economic growth in America, this is certainly not a positive environment for that sector—but that shouldn’t ... Read More
This past weekend, a friend of mine made a statement that there must be a large amount of economic growth coming shortly because of the booming stock market, driven by investor sentiment. As I told him, the two are not necessarily tied together. Over the past few months, we have heard about how economic growth is about to accelerate here in America, and this has helped drive investor sentiment in the stock market higher. However, I think there are many questions that need to be answered before we can assume economic growth will reach escape velocity, and investor sentiment is heavily contaminated with a large addictio ... Read More
There is yet another Greek tragedy playing out across the Atlantic, where legendary poets, mathematicians, scientists, and thinkers once roamed. Fast-forward several thousand years and the country once known for its proud history is cracking at its foundation, burdened by tens of billions in debt and fiscal chaos. (There is a way investors can profit from Greece’s potential demise, but more on that later…)
Syriza Party to Negatively Change Economic Outlook in Eurozone?Making the situation even more uncertain for this poor cousin in the 19-country eurozone is the recent transformation in power with the left-wing Syriza party, under Prime Minister ... Read More
The money printing presses may be dry in the U.S., but they are just being inked up across the Atlantic in the eurozone, where they’re beginning to print easy money in the form of euros. While there are both pros and cons to this move, there is the potential for American investors to profit. Recall how the Federal Reserve’s three rounds of quantitative easing (QE1, QE2, and QE3) over the past six years helped the stock market and economy. Of course, there are the negatives with the booming $18.0-trillion national debt.
ECB Introduces Easy Money Printing ProgramLooking to avoid a hard landing, so to speak, the European Central Bank (ECB) did just as it was expected to do ... Read More
Oil may be holding above $40.00 per barrel, but investors shouldn’t get too comfortable. The chart foreshadows oil prices could falter and maybe even drop below $40.00. It’s true that speculation has influenced the direction of oil to some degree, but much of the negative sentiment has to do with a declining global economy that shows some despair. And while gross domestic product (GDP) growth in the U.S. is pretty decent, what we are witnessing in the global economy cannot be saved by what is happening domestically. That suggests weaker oil prices ahead—along with weaker commodity prices overall.