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Kevin Grewal
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As deflationary concerns continue to make headlines amongst investors, dividend paying investments, interest-bearing investments and cash become more appealing. Weak economic figures, a decline in money supply and fiscal tightening around the world are a few reasons why falling prices could be in the near future. Other factors that could lead to a drop in prices include tight credit markets, declines in consumer spending and high unemployment- all of which lead to a reduction in the demand for goods. Declines in the demand for goods eventually result in excess supply, which further leads to a decline in prices to bring... Continue reading
Posted Aug 3, 2010 at Traders' Library Blog
3 Ways To Play Sovereign Debt Crisis As the sovereign debt crisis continues to take its toll on Europe and fails to linger away, currencies continue to deteriorate, government bond yields continue to rise and stock markets remain volatile. Depsite the fear that this crisis has brought on, there are four ways one can play it. Japan Many believe that the next country to be hit by the crisis is Japan. Traditionally, the Japanese Yen and Japanese bonds have been a safe haven in times of uncertainty; however, this is no longer the case. According to a study conducted by... Continue reading
Posted May 18, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at As companies continue to outperform Wall Street’s expectations, bonds issued by non-financial companies are the most expensive they have been since the start of credit debacle and investors are starting to shun away from Treasuries turning to corporate debt. According to Bank of America Merrill Lynch Index data, Chevron Corp.(CVX) and Johnson & Johnson (JNJ) led a drop in U.S. industrial company debt yields to 130 basis points more than similar-maturity Treasuries. Additionally, the overall U.S. corporate bond market is up 1.3% this month and is expected to post its fourth straight month of... Continue reading
Posted Apr 23, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at Despite the continued hype behind its competitor’s innovative products, and its withdrawal from China, Google (GOOG) may be worthy and for good reason. The search engine giant’s emergence into the mobile device world through its Nexus One and Android software stack which includes an operating system has been a hit. Recently, Google announced that 60,000 cell phones equipped with Android are shipping on a daily basis. Additionally, advertising on the Android continues to increase. According to advertising firm AdMob, U.S. ad impressions on Android devices have increased from 27% in November to 42% in... Continue reading
Posted Apr 13, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at Recently, gold had a technical breakout surpassing $1,150/ounce and history suggests that a pullback is likely to follow. Despite this, there are three reasons to consider adding the precious metal to a portfolio. First, gold is a traditional hedge against inflation and the U.S. dollar. A combination of massive stimulus spending and excess printing of dollars by the government is ultimately going to lead to inflation and a weak dollar. With the inverse relationship between gold and the dollar, gold is likely to reap the benefits of the inevitable. Second, the precious metal offers... Continue reading
Posted Apr 9, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at Bigger than forecasted inventory gains caused crude oil to drop two days in a row, however, there are plenty of reasons to suggest that the highly sought after commodity is likely to appreciate and potentially hit the century mark. Over the past six months, black gold has been oscillating back and forth in the $70-$85 range and according to an analyst at Lind-Waldock, the commodity is at the uppermost point of its range. To take it a step further, crude’s pattern suggests that it will break away from its high point and could potentially... Continue reading
Posted Apr 7, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at As developing nations around the world have turned to government funded stimulus packages to ignite their economies, a nation’s debt and currency debasement should be of much concern. Most recently, a study indicated that the U.S. national debt has ballooned nearly 12 fold over the last 30 years. Additionally, over this same time span the ratio of debt to GDP has gone from nearly one-third to 85%. During this time of exploded debt, GDP has only expanded 5.3 times, indicating that debt is growing at twice as fast as the U.S. economy. Similar trends... Continue reading
Posted Mar 31, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at The world’s second largest economy has been struggling to get back on its feet and emerge from its worst recession since World War II. However, recent data suggests that Japan’s economic recovery efforts are finally starting to reach households and its economy could finally be starting to stabilize paving the road to opportunity. According to Japan’s Ministry of Economy, Trade and Industry, consumer demand and spending has been on the rise. Higher demand for automobiles, energy and machinery has pushed retail sales up in February, marking the second straight month of increases, and nearly... Continue reading
Posted Mar 30, 2010 at Traders' Library Blog
In a time when market volatility and equity preservation is of utmost importance, determining the correct number of shares to buy, or “position sizing”, is key to maximizing returns and minimizing risk. The common investor generally doesn’t spend much time thinking about how many shares to buy or how significant of a position to take. Instead, most investors use a common methodology of trading the same number of shares each time, which usually translates to a specific dollar amount. Other, more sophisticated investors, opt to allocate a certain percentage of their portfolio value to a specific position. Following this train... Continue reading
Posted Mar 25, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at Now that the historic Health Care Bill has been signed into law by President Obama, drug makers are likely to reap all the benefits and for good reason. The overhaul of the healthcare system will likely add to the revenues of Big Pharma companies. From a mere quantity perspective, the reform is expected to provide insurance coverage to more individuals, hence giving more people the ability to pay for prescription medication and pushing sales volumes up significantly. From a competition perspective, it appears that the pharmaceutical sector has won nearly a decade of protection... Continue reading
Posted Mar 24, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at As the economy starts to recover and consumers start to come out of their shells, retailers have reaped the benefits of extra spending. Some are even taking on additional efforts to retain these customers and their spending habits; however, the likelihood that these trends are sustainable is unclear. According to the most recent report issued by the Commerce Department, a range of retailers boasted month over month gains, enabling the sector as a whole to show seasonally adjusted increases of 0.3% in February over the prior month. Additionally, a Thomson Reuters index of 28... Continue reading
Posted Mar 23, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at Over the past week, gold prices have been teetering in positive and negative territory and somewhat uncertain; however, there is much confidence that the price of bullion will increase this year. One factor that is likely to support the price of the precious metal is the fact that central banks around the world have been hoarding onto the commodity and reluctant to sell it. In fact, some bullion analysts expect the Central bank of China, Russia and India to continue to gobble up gold as they move away from sovereign bonds and seek safer... Continue reading
Posted Mar 22, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at As the economy starts to show signs of prosperity and tries to mend the wounds caused by the recession, the technology sector is likely to boom. For starters, the sector appears to have strong fundamentals and is relatively cheap as compared to other sectors. In fact, as a whole, the sector boasts a projected five year PEG ratio of 1.1, which indicates that value on the expected growth of the sector is prevalent. In general, a lower PEG translates to higher value because an investor would pay less for each unit of earnings growth.... Continue reading
Posted Mar 19, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at In an attempt to ignite the labor markets, Congress passed a $17.6 billion measure and sent it over to President Obama to sign into law, paving the path of opportunity in some sectors. With unemployment lingering around 9.7%, spring break right around the corner and Congressional elections looming at the end of the year, the clock was ticking and policymakers decided to agree on the Job Bill. This Job Bill is expected to exempt businesses from paying the 6.2% payroll tax on newly hired employees who have been jobless for at least 60 days... Continue reading
Posted Mar 18, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at Although the future of reform legislation remains unclear, a recent bill proposed by Senator Christopher Dodd could potentially hinder the financial sector and its exchange traded funds (ETFs). This new proposed reform, which is expected to be forced onto the Senate Finance Committee as early as next week, aims to give the Federal Reserve extraordinary control and power over large financial institutions. More specifically, it would give the Fed the power to break up any large financial institution which could potentially jeopardize the stability of the financial system. Additionally, the bill will give the... Continue reading
Posted Mar 16, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at As consumers start to loosen the grip on their wallets and search for a solution to fuel their appetite for innovation, the technology sector is likely to reap the benefits. The technology sector as a whole is relatively broad based. Of all the sub-sectors included in the sector, those which are involved, either directly or indirectly, with smartphones will likely benefit the most. According to a research study, the surge in global demand for phones like the Apple (AAPL) iPhone and the Google (GOOG) Nexus One will soon push sales of smartphones past those... Continue reading
Posted Mar 11, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at As the global population continues to expand and purchasing power in developing nations increases, the world’s appetite for energy is likely to amplify painting an opportunity for investors. According to the Energy Information Administration (EIA), average consumption of crude oil is expected to increase to 1.5 million barrels per day, up nearly 300,000 barrels per day from its previous forecast of 1.2 million barrels per day. This uptick in demand is primarily being driven by expected economic growth in the Asia-Pacific regions and the Middle East as well as a more optimistic domestic economic... Continue reading
Posted Mar 10, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at As consumers around the world continue to opt for choices that don’t break the bank, some fast-food eateries remain attractive and for good reason. Most recently, the most well known fast food franchise in the world, McDonalds (MCD), reported that same stores sales are on the rise. The retailer stated that sales at restaurants open for at least one year increased 4.8%, marking the largest one month gain in nearly one year. Domestically, analysts suggest that the gains may be attributed to McDonald’s dollar menu, which recently expanded to include breakfast items and promotional... Continue reading
Posted Mar 9, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at When it comes to the global economy, China continues to be the talk of the town. To take it a step further, the nation, expected to witness the largest economic growth in 2010, is said to be driving the fate of exchange traded funds (ETFs). According to a recent Securities and Commission filing by the Chinese Investment Corporation (CIC), the sovereign wealth fund holds north of $9 billion in U.S. equity investments. The detailed filing further indicates the following allocations: · $254 million to the iShares S&P Global Materials (MXI) · $235 million to... Continue reading
Posted Mar 8, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at Over the past year, the real estate sector has been on somewhat of a roller coaster ride as the federal government has poured billions dollars worth of incentives its way to add stability; however, recent data indicates the sector is far from being stable. Most recently, the Commerce Department indicated that new home sales slumped to an all-time low and the National Association of Realtors stated that sales of previously owned homes unexpectedly dropped 7.2% in January, after witnessing a record decline in the month before. This resulted in overall pending home sales to... Continue reading
Posted Mar 5, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at In the midst of a natural disaster and catastrophe in Chile, the metals and mining industry is likely to see positive price supports in the near future. One major factor that drives the price of metals is the efficiency and speed of extraction of the metal in the production and mining process. According to analysts, this process is likely to be hindered. The good news is that most of Chile’s copper deposits and port facilities are in the northern half of the nation and had no major reports of damage. However, despite locality, numerous... Continue reading
Posted Mar 1, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at As developing nations continue to prosper, grow and decouple from the Western world, the demand for certain alloying metals is likely to surge making them a highly sought after commodity. There is a direct correlation with the demand for alloying metals and economic growth. In general, as economies grow, they consume and hence demand more alloying metals. Some of these metals, like aluminum, iron and copper are invaluable building a modern economy due to their roles in the development of roadways, communications and other areas of infrastructure. Additionally, these metals are vital to the... Continue reading
Posted Feb 18, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at As developing nations continue to draw investor attention, opportunities in developing market debt may present a viable opportunity. To not much surprise, many have been turning to developing nations mainly due to their aggregate, or combined, size and expected exponential growth compared to the United States in the near future. In fact, a recent study indicates that 97% of the world’s population, 75% of its economic production and nearly 67% of stock market capitalization is outside of the United States. As for economic growth, developing nations are expected to grow at two to three... Continue reading
Posted Feb 17, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at Despite the recent global market selloff, opportunities in emerging markets still remain relatively prevalent. Most recently, the risk premium on JP Morgan’s Emerging Market Bond Index Global Fund rose by a whopping 14 basis points over U.S. Treasuries and the Bank of New York Mellon Emerging Markets ADR index dropped over 4%. This descent in emerging market assets has been primarily driven by sovereign debt problems seen in the Euro Zone and an unstable U.S. employment market. Other factors that have been causing this sell off include fears that developing nations are overvalued and... Continue reading
Posted Feb 5, 2010 at Traders' Library Blog
By Kevin Grewal, Editor at Despite stellar quarterly earnings reports by some financial services giants like Goldman Sachs (GS) and JP Morgan Chase (JPM), the financial sector as a whole fares better than it did a year ago, but is still not in the clear. Most recently, the nation’s largest life-insurer, Met Life (MET), disappointed Wall Street, as it reported a book value short of what was expected. Many suggest that this was driven by the impact that financial derivatives have on balance sheets and the fact that these financial derivatives, which many blame for the recent financial crisis,... Continue reading
Posted Feb 4, 2010 at Traders' Library Blog