The Bubble

Stock markets made new all-time highs again.  The price of gold and the S&P 500 index continue in opposite directions.  As a philosophical goldbug who is outside the gold bull camp, finding investment opportunities is difficult at this time.

I’m not a doom and gloomer.  However, John Hussman:

“For example, back in 1999, Warren Buffett correctly warned ‘In my opinion, you have to be wildly optimistic to believe that corporate profits as a percent of GDP can, for any sustained period, hold much above 6%…’

Yet today, with corporate profits near 11% of GDP – a level that is clearly explained by massive federal deficits and depressed personal savings – not a peep.

The “hook” today is the dramatically elevated, deficit-induced level of profit margins. While the complete faith of investors in the Federal Reserve may prove to be the hook for ordinary investors, it’s not enough to draw in more careful observers. The real hook, in my view, is the absence of a bubble in any individual sector, and instead a bubble in profit margins across the entire corporate sector. That is the hook that serves to keep investors and traders thinking that everything is going to be all right.”

With Japan Taking QE to a whole new level (Sober Look), no actual arguments are made in Kyle Bass gets it wrong on Japanese bonds at Credit Writedowns.  Dan Loeb’s process on the Japan trade (Josh Brown).

Dow 16,000?  Kimble

Jim Chanos on Daily Ticker: Stay Away From U.S. Tech Firms at Mish’s blog.

Remodeling projects pick up steam at the Press Democrat.

"The world has just woken up and said, 'We need land!'