Saturday, August 27, 2011

A Review of This Week's Barron's

I am just back from vacation and would like to try something new to see if this is worthwhile and of interest to you.  I will write on gold soon, but want to try this first.

A little over half the weekends I go and buy Barron's, the financial newspaper/magazine put out by Dow Jones.  Sometimes it is interesting sometimes not. I must disclose RIGHT NOW that Barron's is a BIG paper full of information, articles and data.  So, my comments will be limited to what I see as important or of interest to me.  I WELCOME your comments and emails to improve my weekly reviews if this experiment goes well.


The Cover Story is "Best and Worst Run States", and all 50 states are ranked.  Very seductive cover, when I see something like that, I buy...  The two WORST states are California (A- "rating") and Illinois (A+).  No surprises there.  12 states got AAA "ratings", the only surprise for me was Florida.  Apparently Florida's governor is going to be real tough on spending.

The criteria used in evaluating the states (a kind of combination of fiscal health, ability to backstop municipalities, etc.) include unemployment rate, federal spending as % of state GDP, Medicaid as % of GDP (important in states with big cities and with big underclasses), funding of state pensions, etc.  It is not very well explained how the various criteria combine to get their ratings.

I was a little surprised to see Alaska, North Dakota and Texas rated AA+, I would have guessed those three would have been AAA.


There were a SLEW of articles both on Bernanke and Buffett.  Bernanke blaming deficit spending and that he cannot do much, which may be sort of true.  It has been my feeling that it is government spending that is the slightly greater problem rather than Bankster misdeeds.

Even the various articles marveled at the way Warren Buffett got such a  sweet deal re Bank of America.

Both of these matters are well covered at Zero Hedge.


There is a gold article as well, by Gene Epstein.  Epstein quotes Steve Briese (a publisher of commodity information) as saying the near vertical rise of gold (or anything else) ALWAYS ends with prices going down and staying down for a long time.  This would be a short term thing he says, and the price of gold could go down to $1250 (!).  He says that "weak hands" hold the long bets in paper gold.  Briese then goes on to say that investors should sell now and re-buy after the price goes down.

Epstein then writes that an earlier Barron's article made a very positive case for gold in October 2010, and that scenario of course came true.

Almost all of you know MY view: buy physical gold for "insurance against monetary mismanagement" and for the very real possibility of FOFOA like numbers ($55,000).  If Briese is right about gold going to $1250 (hey, it could), then if you have any money left: buy, buy, buy.  Despite his pretty bearish view, note that he did NOT predict a very low price for gold.  IMHO gold will likely NEVER see a lower price than the "India Put" ($1040, when they bought 100 tonnes a year and a half or so ago).


One of Barron's most beloved writers is the fairly bearish and cranky Alan Abelson, whose column is usually very near the first pages.  This week he writes about Ben and Warren...  I like reading Abelson.


Leslie Norton, a writer there, reviews a book: Red Capitalism (C. E. Walter and F. Howie), which is about how weak China's banks are. "China's Banks: Worse Than You Think".

Apparently China's banks ARE pretty bad, worse than here.  DON'T store your gold in China...


Thomas Donlan writes the big editorial each week at the end of the main section of the paper.  He is SPOT ON re the very dangerous lending at subsidized rates (both in Europe and here).  Apparently the European Central Bank has started buying up Italian and Spanish debt (news to me, hey I was on vacation!).  He does not see any good way out for Europe.

He also speculates that "QE3 is underway without acknowledgement."


Finally, I always look at an obscure statistic that I gleaned from the Mogambo Guru (who I hope returns to write again soon): the Federal Reserve Data Bank (Market Laboratory - Indicators) located on the 5th last page of the Market Week section of Barron's (where all the little numbers are).

The number I always look at is the Total, which this week is 2.902847 trillion dollars, down a tiny bit from last week.  The week to week figures usually do not matter much, but compare that to the year ago change: up $549 billion or some 20%.  No real surprise, but I look every week...


I look forward to receiving comments on my Barron's review.  It is idiosyncratic (but has to be because the paper is stuffed with financial information), but the above pieces caught my attention this weekend.


We were in Canada and Alaska for over two weeks.  If my daughter sends along her photos, maybe I will write up the trip.

Alaska was really something, I see why "CC" likes it there, except it RAINS a lot in his part of the state.  I must mention that I picked up more "Chi" (see my article on Tai Chi if interested) doing Tai Chi next to Denali National Park, than anywhere else I have ever done it.

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