Are Stocks Overvalued?

By Keith Weiner – Re-Blogged From Silver Phoenix

We could also have entitled this essay How to Measure Your Own Capital Destruction. But this headline would not have set expectations correctly. As always, when looking at the phenomenon of a credit-fueled boom, the destruction does not occur when prices crash. It occurs while they’re rising. But people don’t realize it, then, because rising prices are a lot of fun. They don’t realize their losses until the crash. So we want to look at stocks when they’re high, before people realize what’s happened to them.

How do you value a stock? The classic methodology, proposed by Benjamin Graham and Warren Buffet, is to discount future free cash flows. Let’s leave aside the problem of how to predict future revenues much less cash flows in our crazy resonant system with positive feedback. For purposes of this discussion, we will just assume that a stock generates a known and constant cash flow of, say, $1 per year, in perpetuity.

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Does Flat CPI In November Imply Flat Gold?

By Arkadiusz Sieron – Re-Blogged From Gold Eagle

Zero. The US inflation rate was unchanged in November. What does the flat CPI mean for the gold market?

What Happened With Inflation?

The CPI was unchanged in November, following an increase of 0.3 percent in October. It was the weakest number since March 2018, when monthly inflation fell about 0.1 percent. However, the flat reading was caused by a sharp decline in the price of gasoline – that subindex dropped 4.2 percent in November, offsetting increases in an array of prices including shelter and used cars and trucks. But the core CPI, which excludes food and energy prices, increased 0.2 percent last month, the same change as in October. So, don’t worry about the upcoming deflation.

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Wholesale Prices Rise Most in 6 Years as Gasoline, Food Jump

By Associated Press – Re-Blogged From Newsmax

U.S. wholesale prices rose by the most in six years last month, led higher by more expensive gas, food, and chemicals.

The Labor Department said Friday that the producer price index — which measures price increases before they reach the consumer — leapt 0.6 percent in October, after a smaller 0.2 percent rise in September. Producer prices increased 2.9 percent from a year earlier.

The “Strong Dollar” Buys Less

By Clint Siegner – Re-Blogged From Gold Eagle

Some of last week’s weakness in the stock market was attributed to surprisingly week jobs report on Friday. Non-farm payrolls came in significantly below projections.

However, much of that weakness was explained by Hurricane Florence. And the headline unemployment rate dropped to 3.7% – the lowest in almost 50 years.

Much was made of that, while almost nothing was made of the rate of employment at 60.4% – also near 50-year lows.

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The Yield Curve and Recession

   By Bob Shapiro

The Federal Reserve (FED) has raised interest rates 7 times during its latest tightening cycle, after almost 10 years of its previous rate suppression binge.

What tended to have happened in previous interest rate tightenings is that shorter term interest rates have risen somewhat faster than long rates, and at some point, short rates catch up to and pass long rates. This rare situation is referred to as an ‘Inverted Yield Curve.’

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Your Incredibly Shrinking Dollar

By Peter Schiff – Re-Blogged From http://www.Gold-Eagle.com

Over the last 12 months, the purchasing power of your dollar has dropped at the fastest rate since 2011.

According to the latest data released by the Bureau of Labor and Statistics, the Consumer Price Index (CPI) jumped by 2.8% year-over-year in May. That follows on the heels of a 2.5% leap year-over-year in April.

In other words, prices are going up. That’s not good news for people who buy stuff.

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