Michael Harkins and Michael Shaoul on Bond Market Distortions, Natural Gas Boom, and the Attractive Housing Market

April 10, 2012

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Harkins:

  • Natural Gas: the marginal cost of production for natural gas is the equivalent to extracting oil at $13-$14 a barrel – 1/5th to 1/6th the cost.
  • Harkins Warren Buffet said he’d buy 1 million homes if he could.
  • 63% of all bonds are purchased by the Fed; market is manipulated. This is “wildly” unstable. Price signal is distorted. You should buy a home or borrow money.

Shaoul:

  • Likes homebuilders; notes fleet buying in  the car market; retail sales is at a new nominal all time high.
  • Manufacturing jobs increasing at fastest pace since 1997, while service jobs are slowing increasing, but at a normal pace.
  • Official statisticians are the worst people at understanding what is happening in the economy, dubbing their methods arcane.
  • You want to take on debt, and you want to be a user of capital.
  • Corporate debt and emerging market debt is “wildly” overpriced.
  • People don’t understand a normalized yield curve will make forty percent of their principal disappear.
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