Juggling Dynamite

Over the past few decades I have seen people do some pretty crazy things with money. In truth I wasted a bit myself for a couple of years in the early days of making a decent income. While most people spend their time just trying to cover monthly expenses, many waste a ton trying to keep up “lifestyle” and appearances. It is always instructive to see that many wealthy people are actually relatively simple and frugal in their spending choices.
A recent article: 7 spending tips from frugal billionaires, outlines key areas where financial restraint is wise and rewarding to long-term success, peace and sustainability:
-keep housing relatively simple
-ride bikes and public transport
-buy discount clothes off the rack
-keep personal grooming costs on the low end
-drive a regular, paid for car until it wears out
-no private jets and yachts…
All good advice… worth the read and reflection

A shocker this morning: a new study published Tuesday from the WSJ analyzing the results of the European banking stress tests found that “some banks didn't provide as comprehensive a picture of their government-debt holdings as regulators claimed.” (!) (Sorry it’s hard to resist sarcasm on this one). The European stress tests were designed from inception to gloss over the problems; everyone knew it. Today Mr. Market is waxing concerned again, with bank shares leading declines in stock markets around the world.
Indices are rolling over still under their 200-day moving averages, and long bond yields are giving back some of the rapid rebound made last week. This next chart shows a strong correlation between the semi-conductor Index price (SOX) and the 10-year Treasury yield (TNX). Both bottomed before the overall stock market in Nov/Dec of 2009, and both peaked most recently in April 2010 and have been heading down since.

As we have noted in previous cycles, the semi-conductor sector typically has led the stock market. A comparison of the SOX (Top) and the S&P (SPX below) in this next chart makes the point:

So far semis are down just over 19% since April. The S&P 500 on the other hand is so far off just a little over 9%…

Robert Shiller, Professor of Economics at Yale University, sits down with Simon Constable to discuss the sharp falloff in home sales, the likelihood of a double-dip recession and what the Federal Reserve should do to stimulate the U.S. economy.

Hat tip: The Big Picture