Tuesday, May 18, 2010


Equity analysts have been too optimistic. McKinsey ran the numbers and in the past analysts have substantially overestimated earnings growth. Earnings have grown at ca 6% annually vs over 12% for the analysts' guess.
Get that 6% not more!
6% seems a lot like long term nominal GDP growth. According to BEA stat US Nominal GDP grew at 6.3% annually from 1929 to 2009 and at 5.3% annually over the past 25 years. No magic here over long period of times earnings just can't outgrow the economy.

Trade or Die...

This seems to be the conclusion from this new book reviewed in the NYT. (H/T Crossingwallstreet). The book's central thesis: "“At some point,” Dr. Ridley writes, “after millions of years of indulging in reciprocal back-scratching of gradually increasing intensity, one species, and one alone, stumbled upon an entirely different trick. Adam gave Oz an object in exchange for a different object.”"
And the author's prediction for the rest of the century: “Prosperity spreads, technology progresses, poverty declines, disease retreats, fecundity falls, happiness increases, violence atrophies, freedom grows, knowledge flourishes, the environment improves and wilderness expands.”

Monday, May 3, 2010

Where do we stand?

Brad DeLong points out to a slightly different version of this chart
Always hard to fathom how the small looking drop on the chart threw millions out of their jobs. And while real GDP is almost back to its peak the Urate is still extremely high.

Saturday, May 1, 2010

Sovereign Defaults

Earlywarning refers to a nice chart on Sovereign defaults.

Sovereign defaults are recurring affairs.
Current rate still low