Investor Optimism Rises to Highest Level of 2009

Investor Optimism Rises to Highest Level of 2009: "PRINCETON, NJ -- Consistent with Gallup's Consumer Confidence measure and the continued strong performance of the equity market, the Gallup Index of Investor Optimism -- a broad measure of investor perceptions -- in August hit a new 2009 high of 9. This represents a 12-point increase from July and is the first time the Index has been positive since June 2008. The Index has improved by 73 points from February's -64 reading -- its lowest level since its inception in October 1996.

Originally posted at Carpe Diem.

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A Supply-Side Kennedy?

“It is a paradoxical truth, that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.’’ -John F. Kennedy

Earnings Season Analysis

Nearly 95% of companies have reported their quarterly earnings. Below is a summary of results by sector for all securities covered, and S&P 500. Earnings expectations were extremely low, therefore many companies beat. As you can see, growth rates year over year were substantially negative.


All:

S&P 500:

Images from Bloomberg

New Age of Cheap Energy Approaches: A Tribute to the Virtues of Markets, Free Trade and Capitalism

New Age of Cheap Energy Approaches: A Tribute to the Virtues of Markets, Free Trade and Capitalism: "UK Telegraph -- We have all become so used to reading that the end of the world is nigh that we tend to close our eyes and stick our fingers in our ears when there is evidence to the contrary. So you have probably missed one of the biggest pieces of good economic news to emerge recently: energy prices are coming down, in some cases to record lows. Furthermore, even if prices start to recover, they are not likely to return to the ridiculous levels of 2008 any day soon.

This is excellent news, of great import. The trend for gas and electricity bills is downwards; diesel is back at the same price as regular gasoline; the world is practically choking on natural gas, and is potentially awash with oil. The main international natural gas price has this week fallen to a record low, due to a surplus of new resources from North America (see chart above). Even the stubbornly high oil price has dropped.

How come natural gas prices have fallen so much? To understand why, you need to get up to speed on the exciting phenomenon of so-called tight gas. This, after coal, could perhaps be the world's most prolific energy source. Hitherto, we have relied on conventional deposits of natural gas. But tight gas is locked into difficult rock formations, such as shale, and in the past couple of years the industry has found low-cost ways of fragmenting those rocks in order to get at the gas, particularly in America. The result is that US gas reserves have effectively doubled, almost unnoticed; and the same technology can be readily applied in Canada, Australia, Asia and even parts of Europe.

As we go into the autumn, US gas storage units are almost full to bursting. Facilities once designed to import are being turned around for export. When it comes to gas, America is the new Russia. And for the rest of the world, tight gas equals one thing: freedom. How has this amazing development come about? Well, my friends, it is the market at work. The high prices of the past decade incentivized a scramble for new technology and projects which are now producing.

An era of cheap and abundant energy will be a much-needed tribute to the unfashionable virtues of markets, free trade, and capitalism.

MP: As the chart above shows, inflation-adjusted natural gas prices have fallen by 80% since the peak in 2005, and are now close to the prices that prevailed in the 1990s. In addition to the significant benefits of falling natural gas prices, another advantage to natural gas is that there is 'no OPEC cartel to dominate it,' as the article points out.
HT: Arthur Little

Originally posted at Carpe Diem.

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Steve: Free markets, still the best path to prosperity!

81 Bank Failures So Far in 2009: It's All Relative

81 Bank Failures So Far in 2009: It's All Relative: "So far this year, there have been 81 bank failures out of 8,195 FDIC-insured institutions, or slightly fewer than 1% of all banks. How does that compare to previous periods of financial stress and episodes of bank failures?

This first graph below shows annual bank failures (data here) from 1930 to 2009, showing the two most serious banking crises, the Great Depression (9,146 bank failures) and the S&L Crisis (2,935 bank failures).

This chart shows bank failures from 1935 to 2009, and puts the 81 bank failures this year in perspective in comparison to the S&L crisis and the second half of the Great Depression.

This chart below shows bank failures since 1970, and puts some further perspective on the 81 bank failures this year, compared to the S&L crisis.

Caveat: This analysis simply shows the number of bank failures per year, and could obviously be supplemented with data on the number and size of bank failures.

Originally posted at Carpe Diem.

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Google Reader

Google Reader is an excellent tool for reading multiple websites or blogs in a timely and efficient manner. You can easily add/delete subscriptions. Reader's help page can walk you through the process of setting everything up. One of my favorite aspects of Google Reader is the ability to easily share articles and blog posts to facebook, twitter, or to other social networking sites. The Official Google Reader Blog can be found here.