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Blog Archives

The Rocky Road to “Normal”

The terms “normal,” “normalize,” and “neutral” are common in today’s economic discussions.  But, does anybody really know what “normal” is?  When the Federal Reserve (Fed) says that it  wants to “normalize” interest rates, do they have a rate scheme in mind?  Does it mean that rates will be similar to what they were 10-20 years ago?  That’s what most people believe “normal” is.  The truth is “normal” is significantly lower.  The current …Read More

Markets Have Recovered, But Charts Look Like Niagara Falls

In January, the equities markets bounced from significantly oversold conditions at the end of December, on the hopes that a) the Fed stopped it tightening cycle in time, and b) the halt to the government shut-down occurred in time to avoid negative Q1 GDP growth. As I have stated in prior blogs, “hope” is not a good investment strategy. But wait! The “hope” regarding the Fed doesn’t even make sense. …Read More

In the Face of Hard Data & Market Selloff, the Fed Blinked

The incoming data, both sentiment indexes and the actual hard numbers, continue to show growth deceleration in the U.S. and worldwide.  In post-Fed meeting appearances, the Fed Chair and other FOMC members have walked back their hawkish positions taken in the immediate aftermath of the December 19 (rate hike) meeting.  The oversold markets, having thrown the biggest December tantrum since 1931, responded positively and, at this writing, have recouped about …Read More

December’s Petulant Children: Trump, the Fed, Markets

Surely, this was a December to remember, but due to financial pain, not joy. Prior to December, markets were uneasy, and this showed up in a downward pricing bias and significantly increased volatility. As measured by the intraday swings on the Dow Jones Industrial Average (DJIA) between high and low [(high-low)/prior close], volatility more than doubled between September (0.67% per day) and October (1.55% per day), as markets became concerned …Read More

Caution: Markets Are Forward Looking

This is the time of year to take stock of where the economy and markets stand and try to figure out what lies ahead. Markets are telling us something, and so is the underlying data. In what follows I will try to parse the signals the markets are sending, look at the data and the trends, and give you my view of what 2019 holds for investors. What the Markets …Read More

“Pause” Gave the Market Temporary Hope But Hope is not a Good Investment Strategy

The Dow Jones Average rose 618 points on November 28th as the market interpreted Fed Chair Powell’s speech as dovish and has assumed that the Fed will “pause” in its stated rate hiking plan. Then, on December 3rd, the Dow rose another 288 points, interpreting the 90 day “cease fire trade pause” between the U.S. and China as significant progress. The following day, the Dow plunged nearly 800 points on …Read More