Contradictory goals create tension. Look at immigration policy. The stated goal to increase arrests to 3,000 per week is in conflict with the goal to allow farms, landscapers and construction sites to keep and maintain work forces necessary to maximize production. Tension can only be released if a happy median can be found. Within the …
June 12, 2025 – Despite a resilient stock market grinding near all-time highs, a fresh wave of geopolitical risk and fiscal policy uncertainty is creating headwinds. A chorus of Wall Street’s most respected investors is sounding the alarm, warning of dangerously high valuations, an unsustainable U.S. debt burden, and the rising probability of an economic slowdown.
A Market That Refuses to Quit Despite a drumbeat of anxieties, the stock market has been on a remarkable run, continuing its relentless grind higher and hovering just shy of all-time highs. It’s a classic bull-market climb, but this week, the ascent was checked by a fresh wave of geopolitical jitters. Renewed tensions in the …
June 9, 2025 – This week the focus will be on trade negotiations with China and the progress getting the Big Beautiful Bill on the President’s desk. The former is likely to be complicated and slow moving, but any movement in the right direction should keep investors happy. As for the legislation, it will be inflationary and worrisome long-term if one focuses on future debt service requirements. But this market has heard wolf cried too often to care until either interest rates spike higher or the dollar comes under renewed attack.
If the Trump Presidency can be summed up in one word, perhaps that word is transactional. Every step is viewed as a transaction, not just monetary. But there is always a winner and a loser. Win-win isn’t normally in his playbook. Obviously, the Presidency is multi-faceted. And because of that fact, often various steps can …
June 5, 2025 – The Old Faithful Geyser in Yellowstone National Park erupts regularly, but not on an exact schedule. Considering the most recent 100 eruptions, the average time between eruptions ranged from 55 minutes to over 2 hours. Likewise, inflation and employment data can cause ebbs and flows in the bond market, creating volatility for investors. Economic data are currently coming in mixed, mostly related to changing tariff policy. Meanwhile, equity markets are slightly positive so far this year, and only off about 3% from all-time highs.
April Was A Sinkhole, May Was A Geyser May was a rebound month from a poor April showing in the stock market, with the S&P500 rising 6.2%. This marked one of the best May periods since 1990. “Sell in May and go away” has not worked as a trading strategy this year. Year to date, …
June 2, 2025 – Just as the Soviets laid down the gauntlet in the 1960s starting the space race, China has caught up to us technologically in many ways and is still gaining ground in others. For the U.S. to maintain its leadership requires coordinated efforts from both the private and public sectors. Trying to erect barriers is not a winning formula. Rather, properly focusing resources to support the most strategic initiatives makes sense.
In the fall of 1957, the Soviet Union launched Sputnik I, the first satellite to reach orbit. Four years later, Yuri Gagarin became the first astronaut to orbit the earth. The U.S. had been left behind. President Kennedy initiated a full court public-private press to catch up and reclaim American superiority. It was a true …
May 30, 2025 – Amidst a volatile market, significant economic risks such as high interest rates and trade policy are creating a tense environment where stock market gains may be capped. Key sectors, like housing, are already showing signs of strain from elevated rates, while the bond market remains turbulent. Therefore, a diversified and defensive investment strategy is recommended, emphasizing fundamental analysis and valuation discipline for stocks while holding high-quality bonds to navigate the expected volatility.
2025’s Crosscurrents: Markets in tension The current investment landscape presents a series of complex and often conflicting signals. While the S&P 500 has impressively recovered to within 4% of its February highs, a palpable sense of tension remains present. This environment is characterized by a tug-of-war between persistent economic risks and resilient asset prices, creating …
May 27, 2025 – The House has passed Trump’s big beautiful bill and moved it on to the Senate. It’s a budget buster that offers something for all but will expand deficits meaningfully. It’s a bit of a mess that can be fixed if the Senate has the backbone to fix it. Wall Street will be watching, especially bond investors.
More Whack-a-Mole. President Trump, frustrated with the pace of trade talks with the EU, announced 50% tariffs by June 1 if insufficient progress wasn’t made. Within 48 hours that deadline was stretched to July 19th. And if it has to be modified again, it most likely will happen given that 50% tariffs will essentially halt …
May 22, 2025 – Memorial Day Weekend is typically the unofficial start of summer for many. However, this year has been anything but typical. Corporate earnings have been holding up based on recent company reports and outlooks. Tariffs have dented a few earnings reports, but the consumer continues to spend. Credit spreads are not indicating a recession yet, although interest rates have been on the rise as Congress works on a spending resolution bill. Markets gave back some of their recent gains yesterday but are still only about 5% from their all-time highs. Not quite bear market territory. Anyone traveling this weekend to a national park should remember to bring their bear spray.
Keep Your Bear Spray Handy Anyone that has hiked in a national park, such as Yellowstone, knows that you have to bring bear spray with you. You may never see a bear and have no reason to utilize the bear spray, but it is a must-have in your arsenal. Similarly, portfolio diversification is important to …
May 19, 2025 – Stocks have clawed back all their post-Liberation Day losses as the perceived impact of tariffs have lessened. But now comes the hard part. Whatever tariffs are imposed will have economic consequences that we are only just starting to see. The big tax bill as originally proposed is a budget buster. 10-year Treasury yields are now back above 4.5%. With hindsight equity investors overreacted after Liberation Day. The subsequent rally may have gone too far as well.
Stocks have now recouped all their post-Liberation Day losses. The recovery started as soon as Trump backtracked from his reciprocal tariffs within 48 hours of announcing them. Subsequent steps, including an outline of a trade deal with Great Britain, and a suspension of the lion’s share of Chinese tariffs for at least 90 days, set …
May 15, 2025 – Following a big rebound, the S&P 500 is flat YTD but trades at a high valuation of 23x forward earnings. Consumer spending faces headwinds from rising student loan defaults and a cooling housing market. While recession fears have eased, the economy is slowing and inflation trends remain uncertain.
Navigating a complex landscape The YTD period has presented a fascinating, and at times unsettling, picture for the equity markets. Despite a significant downturn in early April, the market has managed to make a complete rebound during the last four weeks, rising an incredible 18%. The S&P 500 finds itself essentially flat for the year …
May 12, 2025 – China and the United States have agreed to reduce tariff rates on each other by 115% leaving our tariff rate on Chinese goods at 30%. Since shortly after the shock of Liberation Day that sent equity investors into panic mode, there has been a gradual retreat from an overbearing tariff framework outlined that day. Today’s suspension of tariffs, pending further negotiations may not be a final step. But it comes right out of the Trump playbook that shoots for the moon first and then settles into a much more compromised reality later. While tariff negotiations continue not only with China but the rest of the world, investors can now focus on the next leg of the Trump agenda, tax cuts.
Fears of excessive tariffs peaked on Liberation Day in early April. Financial markets cratered based both on the excessiveness of the announced levies in addition to the irrational nature of the process to determine payments each country would make. That included a tariff on an unoccupied island, at least uninhabited by people. The economic pain …
May 8, 2025 – The Federal Reserve on Wednesday held its key interest rate unchanged in a range between 4.25%-4.5% as it awaits better clarity on trade policy and the direction of the economy. While uncertainty about the economic outlook has increased further, the Fed is taking a wait and see stance toward future monetary policy. Meanwhile, the S&P 500 Index has just about fully recovered its losses following the April 2nd “Liberation Day” when major tariffs were announced on U.S. trading partners. The bounce in risk assets is welcome, but we are still looking for white smoke signals showing that progress on inflation and tariffs is being made.
Federal Reserve Standing Pat The Federal Open Market Committee voted unanimously yesterday to keep short term interest rates stable at 4.25-4.5%. The Fed has now left rates unchanged for a third straight meeting and at the same level since December. The post-meeting statement noted how volatility and tariff gyrations are factoring into policy decisions as …
May 5, 2025 – Investors overreacted to Trump’s early tariff overreach but may have gotten a bit too complacent that everything is now back on a growth path. While there are few signs of pending recession, the impact of tariffs already imposed are just starting to be felt. So far, no trade deals have been announced although the White House claims at least a few are imminent. The devil is always in the details. Congress will start to focus on taxes. Conservatives may balk but there is little indication to suggest they won’t acquiesce to White House pressure once again.
April was a yo-yo month for equity investors. The first week was a disaster. Trump’s Rose Garden announcement of huge tariffs on worldwide imports shocked the economic world. By the end of the first week, equities were on pace for the worst April in a century. But the administration quickly backtracked leaving room for further …
May 1, 2025 – U.S. GDP unexpectedly contracted by 0.3% in the first quarter, the first decline since 2022, largely due to a surge in imports ahead of anticipated tariffs. Despite this GDP contraction, major tech companies like Alphabet, Microsoft, and Meta reported quarterly earnings, indicating continued strength in areas like advertising and cloud computing. However, concerns remain about the broader economic outlook due to uncertainty surrounding tariffs, potentially leading to higher prices, weaker employment, and a challenging environment for the Federal Reserve regarding inflation and interest rate policy.
Surprise GDP Decline and a Mixed Economic Landscape The U.S. economy unexpectedly contracted in the first quarter of 2025, with the gross domestic product (GDP) declining at an annualized rate of 0.3%. This marks the first such contraction since 2022. A primary factor in this downturn was a significant surge in imports, as businesses increased …
April 28, 2025 – Markets rallied as the Trump Administration suggested tariffs might be reduced against China and that ongoing negotiations with almost 100 countries are progressing, although no deals have yet to be announced. But even with tariff reductions, the headwind will still likely be the greatest in a century. So far, the impact is hard to measure as few tariffed goods have reached our shores. Early Q1 earnings reports show little impact through March, although managements have been loath to predict their ultimate impact. Stocks are likely to stay within a trading range until there is greater clarity regarding the impact of tariffs.
Finally, we had a good week in the stock market. After a rocky Monday, when investors fretted over possible consequences should Trump attempt to fire Jerome Powell, equities rallied over the next four sessions once Trump put to rest such a notion, and Treasury Secretary Bessent commented that 145% tariffs on China might not last …
April 24, 2025 – “Headache” is the official Journal of the American Headache Society. Europe and Asia have their own publications and consortia devoted to the study of headaches and pain. The incidence of headaches may have increased for those following the stock market gyrations over the past few months, though resolution of tariff issues would go a long way toward calming markets down. Eventually. Near-term impacts on inflation and the economy may create some pain points and additional volatility if consumers and businesses retrench.
Pain Points Swelling There are several medical journals devoted to the study of headaches and pain. “Headache” is the official Journal of the American Headache Society. The “Journal of Headache and Pain” is the official journal of the European Headache Federation. Not to be left out, Asia has their own Headache Consortium. The prevalence of …
April 21, 2025 – Tariffs raise barriers that make imports less desirable. They serve to reduce the balance of payments. But by protecting local producers of higher cost goods, they are inflationary. The attendant decline in the value of the dollar chases investment capital away, capital necessary if reshoring of manufacturing is going to be achieved. The goal of the Trump administration should be to find the balance that favors U.S. manufacturers but retains investment capital within our borders. So far, markets suggest that dilemma hasn’t been resolved.
Trying to distill policy to its essence, the Trump economic game plan is to eliminate the trade deficit on goods while bringing manufacturing back to the United States. The two goals are often in conflict with each other. One cure for a trade deficit is for the dollar to weaken, thereby making exports cheaper and …
April 17, 2025 – The Trump administration’s trade and tariff plans aim to improve trade for American businesses, primarily through the use of tariffs. However, initial market reactions have been contrary to expectations, with a weaker dollar and rising interest rates creating economic uncertainty. Investors should brace for potential recession and stagflation risks with balanced portfolios and a patient approach to future investment opportunities.
The Times They Are A-Changin’ This week, I want to talk about the Trump administration’s trade and tariff plans and what they could mean for the economy. In essence, the president is trying to change how we trade with other countries—and this has shaken the financial markets. Many of the ideas come from a 40-page …
April 14, 2025 – The tariff roller coaster ride continues as Trump exempts some tech products made in China from tariffs but warns that secular tariffs on semiconductors are likely soon. While bond yields this morning are slightly lower, the dollar continues to weaken as the world continues to adjust to economic chaos in this country. While the tariff extremes of Liberation Day may be reduced over the next several months, they still appear likely to be the highest in close to a century, a clear tax on the U.S. economy. Wall Street’s mood can change daily depending on the tariff announcement du jour but until markets can determine a rational logic behind the Trump economic game plan, volatility will remain elevated.
Trade deficits occur due to comparative advantage. For whatever reason, one party can produce a product at a lower cost than its trading partner. Maybe wages are lower in the producing country. Maybe one party has a surplus of natural resources the other needs. Maybe climate allows one country to produce what another cannot. There …
April 9, 2025 – In a storm, the best advice is to hunker down and stay as safe as you can. Markets are screaming and all the news at the moment is bad. Despite Trump’s efforts to draw capital to the U.S., it is leaving. No one likes uncertainty. What’s happening today will force changes to a hastily implemented policy. But until we know what the changes are, hunker down, stay liquid and don’t overreact.
“What do we do now?” After yesterday’s wild ride, the question is voiced even louder. Yesterday proved that whatever people thought they knew, they didn’t. Here’s what we know, or at least can surmise. If nothing changes from where we are positioned today, with the massive “reciprocal” tariffs announced last week now in effect, the …
April 7, 2025 – What a week! Judging from markets overseas, the rough ride will continue when markets open today. While some reaction or rationalization of tariffs announced last week is likely to be forthcoming, investors fear the worst right now and are seeking safety until clarity improves. While it may be tempting to bargain hunt, perhaps in hopes that Trump will moderate the level of tariffs as countries offer appeasement, stock markets don’t rise simply on hope and dreams. Valuations, despite last week’s carnage, still aren’t low historically although there are bargains and more will appear if the decline continues at last week’s pace for much longer.
The VIX is a commonly noted index that measures fear and anxiety. It is based on option premiums, the thought being that higher premiums denote greater expected volatility. In this century, there have been only five instances where the VIX was over 45, the level it closed at on Friday. In each case, equities were …
April 3, 2025 – President Trump’s surprise tariff announcement has triggered significant market volatility, escalated trade war fears, and prompted analysts to revise down corporate earnings forecasts. Consumer confidence is also waning, with concerns about economic prospects compounding the uncertainty caused by the new tariffs. Despite this, long-term investors should focus on the potential opportunities arising from market corrections, maintaining a balanced and diversified portfolio to navigate the anticipated volatility.
Tariff announcement spooks investors After the market closed yesterday, President Trump announced sweeping tariffs which triggered a sharp decline in U.S. stock markets. The proposed tariffs, with a baseline of 10% and potentially higher rates for certain countries, have raised concerns about a global trade war, impacting multinational companies and investor sentiment. The market’s reaction …
March 31, 2025 – Don’t lose sight of the core game plan, to reduce the Federal deficit through a combination of tariffs, a reduction in the Federal bureaucracy, and tax reform. The conflict today, is that the tariff pain happens now while tax benefits come later. The mismatch roils markets. April will see a crescendo of tariff news, economic data that probably projects lower growth this year, and a likely reduction of earnings expectations as companies report first quarter results in a couple of weeks. Keeping cash reserves for now seems to be a prudent posture.
It’s been a tough month for stocks. Assuming no change today, it will be the worst month for equities since 2022. Consumers are in a foul mood as measured by two key consumer confidence surveys last week. Corporate managements are confused. When confused, they defer investments until they regain clarity. Americans have become reticent spenders. …
March 27, 2025 – A couple of weeks ago, NCAA college basketball March Madness was just getting underway. After several surprise upsets and some chaos among millions of brackets, we now know which teams are in the Sweet Sixteen final games. Over the past 40 years, only three men’s teams have had a long streak of winning years making it into the finals. As in the stock market, last year’s darlings may not be this year’s victors, but good companies can reinvent themselves and market volatility can work both ways.
More March Madness Tariff policy has been dominating headlines and impacting market volatility this year. The Magnificent 7 technology stocks had rebounded the last few days, but fell 3% yesterday on a day in which the Nasdaq declined 2%. This volatility has been mostly due to the potential inflationary effects of new tariffs and concerns …
March 24, 2025 – Last week’s earnings from FedEx, Micron, Lennar and Nike, all on the same evening serve as a prelude to the pending earnings season. Stocks of all four companies declined 5-10% the next day as expectations for the coming months were lowered. Before we get to earnings season in about three weeks, we will see an onslaught of tariff news. There are no signs of recession yet, but the odds are higher than 30 days ago. It is probably prudent to maintain larger than normal cash reserves until passing the heart of earnings season about a month from now.
Last week’s big economic event, the FOMC meeting, turned out to be fairly a non-event. The Fed kept interest rates steady as expected while raising its inflation forecast and lowering its outlook for economic growth. There was only a slight downward movement in the 10-year Treasury yield while stocks nudged up slightly. To me, however, …
March 20, 2025 – Fed Chairman Powell’s reassuring statements about “transitory” inflation and the Fed’s decision to slow balance sheet reduction triggered a significant market rally, despite downward revisions to 2025 growth and earnings forecasts. The current economic landscape is heavily influenced by political policy changes, creating heightened uncertainty and potential volatility for investors. While a lower 10-year Treasury yield is a potential silver lining, gold’s recent surge to all-time highs raises questions about its relative valuation compared to other assets and its historical correlation with U.S. debt growth.
Transitory—not again! Stocks surged yesterday, with the S&P 500 experiencing its largest gain since July, while bond yields fell sharply following the Fed’s March meeting, press release, and news conference. Jerome Powell’s measured response to the potential economic impacts of Donald Trump’s trade war, specifically citing the potential for “transitory” inflation from tariffs, calmed investor …
March 17, 2025 – Friday’s rally was a relief but, unless there is significant follow through today, it should be viewed simply as a relief rally. Since the start of the 21st century there have been three shock and awe moments that have frozen consumers and businesses in place leading to economic contractions of various lengths, 9/11, the Great Recession, and Covid-19. We may be at a fourth as both consumers and businesses face so many rapid fire events that they freeze in place. For equities to move higher, confidence needs to be restored and investors need to see a pathway to a better life promised by less government, increased productivity and reduced deficits.
The 21st century is almost a quarter old. Over that span there have been three distinct shock and awe moments for investors, 9/11, the collapse of Lehman Brothers, and the onset of Covid-19. The stock market reacted in a sharply negative fashion each time. Away from Wall Street, Americans seemed to freeze in place. After …
December 19, 2024 – The Federal Reserve lowered its key interest rate by a quarter percentage point yesterday, but signaled that only two more rate cuts may be coming in 2025 instead of the four cuts widely expected. Fed Chairman Powell said it is like “driving on a foggy night or walking into a dark room full of furniture: you slow down, you go less quickly.” That hawkish and more uncertain tone was not well received by markets. While the stock market is typically volatile on Fed decision days, the 10-year yield backed up to 4.5% and stocks dropped about 3% following the Fed’s remarks. Markets have been strongly positive this year, but a pause on this news provides a chance to focus on better valuations. Stock market futures are indicated positively this morning.
Fed Meeting – Driving on a Foggy Night The Federal Reserve lowered its key interest rate by a quarter percentage point yesterday, the third consecutive reduction. This brings the total reduction to 1% since the Fed began cutting rates in September. The rate cut to a target range of 4.25%-4.5% is back to the level …
August 12, 2024 – Last week’s volatility exposes the heightened level of uncertainty in today’s financial markets. This week, the largest retailers report earnings and may offer some clarity into consumer spending trends. But uncertainty is likely to remain elevated until we get closer to the November elections.
Roughly 75% of the time, stocks go up. They go up because earnings rise. They don’t go up in a straight line for obvious reasons. Interest rates fluctuate. Central bank actions are impactful. With that said there are periodic bear markets. While occasionally they represent a correction of a severely overvalued market, most bear markets …
December 8, 2023 – Markets rallied yesterday but remained in tepid anticipation of today’s employment report and next week’s CPI report. The November employment report came in close to expectations with gains of 199,000. Not sure from the early read how much those numbers were enhanced by the end of the auto and Hollywood strikes. Markets reacted negatively to the report as month-over-month wages increased slightly more than anticipated. The unemployment rate fell to 3.7% as the labor participation rate rose to a pre-pandemic high.
Stocks rallied yesterday while bonds stayed mostly level in front of next week’s Federal Reserve meeting. For a change, the leaders were the big tech stocks, noticeable laggards over the last four weeks during a period where investors moved toward equities perceived as being cheaper than the high multiple Magnificent Seven. The pop in the …
September 18, 2023 – Markets are directionless, torn between better economic activity and an increase in storm clouds from labor unrest to China. What is crucial is the future trend for interest rates. Investors will parse this week’s FOMC meeting for clues, but probably won’t get a much clearer picture for their efforts.
Stocks have been trading sideways in a directionless pattern for the past month. On the plus side, earnings have exceeded forecasts and the economy continues to grow at a rate faster than economists had predicted. But that has been countered by a series of concerns: 1. Interest rates, particularly at the long end of the …
June 12, 2023- : The S&P 500 traded into Bull market territory last week on the back of a broad market rally. The broadening of the rally is key to continued optimism in the market. However, the possibility of a recession still looms, despite the rally.
Are we in a new Bull market? Last week the S&P 500 rallied to its highest level this year which put the index 20% above its October lows. On a year-to-date basis the index is up 12% led by mega-cap technology stocks. However, as we mentioned many times before, not all stocks and sectors have …
May 12, 2023 – While mega caps keep gaining steam, the average stock is now down for the year. Eight of the last nine trading sessions have been negative for the Dow Jones Industrial Average. The Fed may be done raising rates, but an all-clear signal is far off in the distance. Transitions are hard!
April’s consumer inflation report was well received, with a continuation of a gradual slowing for inflation. Ditto for the Producer Price Index yesterday morning. Our infamous “Fed whisperer”, Nick Timiraos, helped fuel a minor rally in growth stocks when his latest Wall Street Journal missive noted “Federal Reserve officials were already leaning toward taking a …
April 26, 2023 – Markets are being buffeted by crosscurrents. The banking crisis has come back into focus amid turmoil at First Republic. Earnings reports move individual stocks both ways. Bond market strength portends a weakening economy and slower inflation. Yet pockets of economic strength endure, mostly in the travel and leisure sectors. The net for equity investors is a standoff, one likely to endure for some time amid persistent rotation of leadership.
It was a wild day yesterday with several strong moves relative to earnings, a wild ride for First Republic Bank, the regional bank most people see as the stress point within the banking system, and a sharp rally in bonds. The major averages were all lower. After the close, solid earnings from Microsoft# reduced some …
October 26, 2022- Stocks have now risen sharply for three straight sessions as both the value of the dollar and the yield on 10-year Treasuries retreated. But disappointing earnings last night from a trio of tech names may spoil the party this morning. Or at least give it some reason to pause. The poor numbers from tech land remind us to look forward, not back. The great opportunities that technology created over the last quarter century are now maturing. The good news is that new opportunities will appear. They always do in a capitalistic entrepreneurial society.
Stocks rose sharply for the third straight session. It’s earnings season. Through yesterday, the results were basically in line with lowered expectations, but perhaps the biggest driver of higher stock prices was the reversals over the past several days in the value of the dollar and the yield on 10-year Treasuries. Within a bear market …
October 12, 2022- As we enter earnings season, attention will shift from interest rate fears to corporate performance. Pepsi kicked it off this morning with good results, hopefully an encouraging sign. As always, the story for the season will revolve around expectations versus reality. In July, reality beat expectations sparking the best rally of the year. The key will be the relative performance of the large tech names, notable laggards coming into earning season.
Stocks ended mixed yesterday in a very volatile session where the Dow Industrial Average moved back and forth by more than 1000 points. News was rather sparse. A brief afternoon plunge occurred after the Bank of England signaled it would halt its planned intervention to support the pound Friday as originally planned. Stock, bond, and …
October 5, 2022 – Two huge up days in a row put bulls back in charge. Is this the market bottom? Only time will tell. It will largely depend on the severity of the pending economic downturn. But retreating interest rates, and weaking labor market statistics suggest the end to the Fed’s cycle of higher interest rates is nearing an end. That is at least one key ingredient to the end of a market downturn.
For those of you who have read my letters over the years, you should know about my 2-day rule. It states that two consecutive days of outsized moves in the opposite direction of recent market trends marks a reversal. Certainly, the gains Monday and yesterday qualify as strong up sessions in sharp contrast to the …
August 26, 2022 – Markets continued to consolidate the ~20% spike off June’s low with minor rebounds the past few days. In anticipation of Chairman Powell’s long-awaited speech at Jackson Hole today, stocks are priced for a somewhat hawkish update. Anything that deviates from that position could release energy in either direction. Other news items require some attention as well that could affect GDP going forward.
Stocks staged a late day rally to help bring all 11 S&P sectors to a positive close yesterday. Gains were led by Basic Materials, Technology, and Communication stocks. The risk-on tone had defensive sectors lag the overall market with Utilities, Consumer Staples and Health Care stocks fractionally higher. Rallies continue to follow the Treasury market. …
June 13, 2022 – Friday’s report on Consumer Prices told us all that the fight against inflation will be harder than previously anticipated. This week, the Fed will increase interest rates again. It may suggest the ultimate Fed Funds rate this cycle will need to be higher than previously thought. None of this is good news for equity investors.
Friday’s CPI report didn’t make investors happy. Led by sharply higher energy expenses, and the fastest growing shelter costs in decades, the message loud and clear was that inflation shows no signs yet of abating. Recognizing that government steps to curb inflation only began in March, the numbers we are seeing now weren’t impacted one …
May 25, 2022 – While the Dow tries to find its footing, the NASDAQ continues in steep decline as one former darling after another faces reality. It’s an ugly picture and it isn’t over for the speculative end of the market. for those looking for safer havens, more dependent on predictable cash flow growth, the picture is far better. The contrast between the two worlds was most evident yesterday.
Stocks fell once again although a sharp afternoon rally reduced the damage. Still, the NASDAQ fell another 2.4% after a prominent social media company lowered earnings guidance just a month after it previously offered a somber outlook. As a group, social media and related companies depend on advertising for revenue. With the economy slowing and …
May 2, 2022- When leadership gets taken out to the woodshed, the whole market dies. That is what happened last week. While some escaped (e.g., Microsoft) the loud and clear message is that the big boys of the S&P 500 are now at or near economic maturity. That isn’t a message a market already worried about interest rates and recession wanted to hear.
Stocks sank on Friday to close out one of the most miserable months for equities in many years. The NASDAQ took it on the chin the worst after Amazon# reported a weaker than expected outlook for its retail business when it reported results Thursday night. On Friday, Amazon# suffered its worst percentage loss since the …
March 25, 2022 – Investors continue to grapple with inflation, war news, Fed tightening and valuations. Historians will point to stocks not topping until earnings peak, inversion occurs and/or better alternatives. We got some answers over the past few weeks but cloudiness prevails, for now.
A few weeks ago, there were almost no positives to think of. Most investment advisors were bearish. Cash was sitting on the sidelines earning nothing. Short sellers were pressed. Russian invasion continued to look worse by the hour. Oil, wheat, natural gas and many other commodities spiked higher even after doubling since Covid. The most …
March 21, 2022- The Fed did what it said it would do, economic growth remains intact, and the war isn’t getting worse by leaps and bounds. That set the table for a strong rally in stocks. Is the bottom in? Or is this just a bounce? The answer may be a little yes and a little no. For some stocks, the bounce might be over, but if the economy stays solid, there remain plenty of opportunities.
Stocks rose sharply all week as the NASDAQ rebounded out of bear market territory and both the Dow and S&P 500 cut their 2022 losses roughly in half. Oil prices remained volatile closing at over $100 per barrel. Pain at the pump continues but it isn’t getting worse, at least for now. Interest rates rose …
March 7, 2022 – While the war outcome continues down a path leading to a Russian occupation of Ukraine, the economic costs are becoming both starker and more apparent. Gasoline prices are rising close to $0.50 per week. If anything, the pace is accelerating. Wheat, aluminum, copper and palladium are spiking as well. These root commodity price increases will flow into a massive array of products. Inflation is quickly becoming more supply constrained than demand driven. The Fed’s weaponry can’t increase supply.
Stocks fell last week for the fourth week in a row, a combination of inflation fears and the war in Ukraine. Bond yields fell amid a flight to safety. The news from Ukraine is discouraging, to say the least, but it isn’t unexpected. Russia has overwhelming military advantages and continues to make progress in its …
January 10, 2022 – If there was a message last week, it was that speculative fever is dissipating as the Fed winds down its pace of bond purchases. No one knows when the purging of speculation will end but it probably will be with a thud, not a whimper. Market rotation to financials, industrials and energy names suggests the economy continues to thrive despite Omicron. The rotation can go a bit farther. The high growth sector got very overpriced, outpacing cyclical and value stocks for years, and it could take several more months for the rotation to run its course, allowing for some intermittent bounces and reversals. The overall market is down only modestly as the speculative fringes blow apart.
It was a tough week for stocks particularly on the NASDAQ. The speculative end of the market took the biggest hit as bond yields rose in line with continued economic growth. I noted last week the relevance of the January barometer. While not always valid, there is a trend that says, “as goes January, so …