Sep 29 2012

Odds of Obama victory in November increase

If you were to bet on the current presidential race, you would likely put your money on President Obama.  Polls are one thing.  Yet when it comes to people putting their money on the line the odds are now largely in favor of the incumbent.  What this does bring us at least in the short-term is more of the status quo.  Depending on your political leanings this is probably good or bad.  However one thing is certain, the economy is still mired in serious problems.  It is naive to think that one political party or even one person can have much of an impact on a $15 trillion economic machine.  Congress and each independent state government will likely have more of an impact but when it comes to the odds of an Obama victory in November the money is quickly flooding to the side of the incumbent.  What is interesting is that the spike really occurred in September.  Up until that point the race was fairly even at least when it came to the betting odds:

US presidential election

If you feel confident one way or another there is a betting market waiting for your money.  One thing is certain and that is one person will be the winner come November.

 

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Sep 16 2012

Bank of Japan and quantitative easing – Japan blueprint of future?

The Bank of Japan is now looking down the barrel of deflation for the Japanese economy.  The Japanese economy is facing troubles ahead in spite of the Bank of Japan entering multiple decades of quantitative easing.  Does that come as a surprise to you?  Did you really think that Ben Bernanke was coming up with something completely innovative for the US economy?  The Bank of Japan after the bust of the Japanese stock market and real estate bubble essentially has faced two lost decades.  Inflation has been virtually non-existent but economic growth has largely disappeared.  The Bank of Japan with a rapidly aging population is facing demographic challenges ahead.  Does Japan offer a blueprint for our economic future?  We have different demographic changes but the actions taken by both our central banks are very similar:

BOJ Monetary Base

BOJ monetary base (unit = ¥100mm)

Anyone that thinks QE is a recipe for growth need only look at Japan.

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Sep 9 2012

Equity trading volume in the US continues to contract. Equity trading volume low but why?

Equity trading volume in the US continues to move to lower levels even in the face of a rising stock market.  Why is trading volume so low?  A few differing theories are out there trying to explain this change.  One, you have that retail investors are actually out of the market and moving into other items like ETFs or investments that are perceived to be safer.  That can be one of the reasons why equity trading volume is back to levels last seen in 2008.  Or it can simply be that many US retail investors have opted out of the market and are eyeing other items.  The decline in equity trading volume is reflected in the low volatility numbers and it is an interesting development.  It is likely that a combination of things has led to this low equity trading volume in the face of stock market that is up over 100 percent from the lows reached in 2009.

Exchange volume

Time will tell why this is occurring but something is pushing trading volume low.

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