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DJIA

What Normal Could Look Like

The economy of the future will feature more consumer savings, and business balance sheet repair (more cash, more cost, lower profits, and deferred capital expenditures).  After an initial spike up likely starting in June and continuing into Q3, growth will be difficult.  Unemployment, after spiking to the mid-20% range, will come down slowly, remaining in double digits for 2020 and perhaps getting below 10% in 2022. Inflation Inflation is coming, …Read More

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

The Potential Economic Impact Of The Reaction To The Coronavirus

Will You Catch Coronavirus? There is a minuscule chance of contracting the coronavirus if you live anywhere but in Hubei Province in China, and even less of a chance if you live in the U.S. The last time we had something like this (SARS), the public and business reaction wasn’t as extreme. It appears that social media has had a lot to do with this more intense and extreme reaction. SARS infected a …Read More

Fed Drives S&P 500 To Record Levels, Economic Fundamentals Still Soft

Holiday sales look flat. While online sales were up, sales at traditional retailers were lackluster. Penney’s, Kohl’s, L Brands, Macy’s, Urban Outfitters, Bed Bath & Beyond, all reported lower sales vs. a year ago. Meanwhile, in what looks to be a “frugality” or “trade down” movement on the part of the consumer, same store sales at Walmart, Costco, and Target rose. The Wall Street Journal reported that nearly 40% of exchange listed companies lost money in …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

“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