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The Fed’s New Bubble

“Most valuation parameters are either the richest ever or among the highest in history. In the past, levels like these were followed by downturns. Thus, a decision to invest today has to rely on the belief that ‘it’s different this time.’ I’m convinced the easy money has been made.” (Howard marks, Oaktree Capital, WSJ, 1/29/18). The legendary investor, Baron Rothschild famously said, “I got wealthy never waiting for the peak.” …Read More

2018 Preview and Assessment

Market valuations are high.  Current consumption is being financed by debt.  The housing data is mildly positive, but has been impacted by “rebuild” issues in the wake of natural disasters.  Corporate balance sheets are strong and laden with cash.  The world’s major economies are doing well and central banks are beginning to tighten policy led by the U.S.’s Fed.  Q4 real GDP growth looks to come in above 3% (third …Read More

Bitcoin: A Primer What Investors Need to Know

Bitcoin; everyone is talking about it.  That’s what happens when the perceived value of something rises 2,000% in a year.  (The value of Bitcoin, in terms of dollars, was under $1,000 at the start of 2107, and, as of this writing (December 18, 2017), has been as high as $20,000. Bitcoin boasts of its “Blockchain” technology, where every transaction is transparent and can be tracked, but also of its privacy, …Read More

2018: A Pivotal Year

Since my last blog, even more volatility has been present in the marketplace (both equities and debt spurred by the narrative that whatever tax legislation was passed by Congress would greatly benefit the economy and especially U.S. corporate profits.  In the two weeks running up to the passage of the Senate’s version of the tax bill, the equity markets moved significantly depending on how any particular Republican Senator intended on …Read More

Fed Likely to Put Economy at Risk

Market volatility finally showed up in the popular indexes (DJIA, S&P 500, NASDAQ).  These were down two weeks in a row as of November 17 on rising volume (never a good sign when markets are falling), and they are no higher than they were a month earlier (October 20).  The VIX, a measure of market volatility, rose to 13.13 on November 15, from a near record low of 9.14 earlier …Read More

The Headlines Say Growth…

The headline numbers, for jobs and GDP, and most of the sentiment indexes, would lead one to conclude that the economy was robust and accelerating. Even the Fed agrees, as they upgraded their view of the economy to one now in “solid” growth mode. The reality is that much of the data was distorted by the hurricane rebuild effort, and Q4 data will also be plagued by distortions due to …Read More