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On Gazing Into The Abyss

The six large cap stocks (FB, AAPL, AMZN, GOOGL, NFLX, and MSFT), which now compose 22% of the S&P 500 (vs. 10% five years ago) are, amazingly, up about 4% YTD as of Friday April 17. The S&P 500, itself, closed Friday, down only -11% YTD (and only -15% below its all-time peak), even in the face of the most severe Recession (Depression?) since the 1930s. And, Wall Street is raving that …Read More

Look For The Preponderance Of The Evidence, Don’t Rely On One Factor

The headline on my LinkedIn page on Friday (October 4th) read: “Jobless rate reaches half-century low, HP plans to cut up to 9,000 jobs…” Is this good news about jobs, or bad? I’ve learned many times over the years to rely on the preponderance of the evidence, and not on any single indicator. The jobs numbers, themselves indicate that the economy is still expanding. But, the lower level of job creation, along with …Read More

Key Indicators Have Peaked; Markets Hope for Soft Landing

The National Bureau of Economic Research (NBER), a private sector company, is the entity responsible for officially labeling recession start and end dates. As a rule of thumb, the financial markets use two consecutive quarters of negative GDP growth as the marker. But, that is not the way the NBER sees it. According to their website, the NBER defines a recession as: “a significant decline in economic activity … lasting more than …Read More

5/7/2019 It’s Not the Economy – It’s Buy-Backs

There were three significant economic events since my last column: the GDP report, the Fed meeting, and the unemployment report. GDP The Q1 real GDP growth rate (3.2% annualized) surprised nearly everyone to the upside. And, of course, Wall Street characterized the headline number as proof that the “soft patch” had passed.  Never mind the details.  Of the 3.2% growth, nearly .7 percentage points came from inventory growth. This was …Read More

Major Economic Trends: All Downbeat

The business cycle still exists no matter what the folks on TV or the politicians say. The major economic trends continue to weaken. Yield Curve Inversion Bond yields have fallen dramatically recently. The equity markets reflect nervousness. The yield curve is now inverted to the rates “administered” by the monetary authority. The Fed Funds rate is pegged near 2.4% versus the 10-year T-Note yield which stands near 2.1% as of …Read More

Faster Growth Deceleration Prompts Increased Market Turbulence

Market volatility looks to have become the norm of late, with intraday swings of 500 points on the Dow Jones Industrials seemingly commonplace. The days of complacency and ever rising stock prices appear to be firmly in the rear-view mirror, now replaced by daily angst. And, with good reason. Markets have fully recognized that “synchronized” world economic growth has ended, that the U.S. economy is not an island, immune from …Read More