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Market Melt-Up: Caution – Sentiment in Nosebleed Territory

Since my last column, the Dow Jones Industrial Average (DJIA) did indeed hit 20,000 and has since gone well beyond.  Most of the post-election run-up initially appeared to have occurred in the November 8th to December 20th period when the index went from 18,333 to 19,975, a rise of 1,642 points (7.9%).  Over the next 44 days, until February 2, the DJIA was flat, actually losing 116 points.  But since …Read More

For Clients & Friends

Dear clients and friends, The long overdue market correction has finally arrived. And due to automated trading, volatility is extreme. Furthermore, it is likely that the volatility will last for a while. Here are the economic issues the market is fretting over: Weakness in China – their currency devaluation is a clear sign that Chinese officials are worried about economic growth. That growth, by the way, is likely substantially lower …Read More

The U.S. is Losing the Currency War

Over the past year, the U.S. dollar has appreciated more than 18%, and in the week of August 10th, China surprised the markets by allowing its currency to depreciate nearly 3% against the dollar, thoroughly roiling the equity markets. The Peoples Bank of China (PBOC) had typically pegged the value of the Chinese currency (RMB) to the dollar. In August, 2014, it took 6.15 RMB to purchase $1; and on …Read More

Putting the Economic Issues in Perspective

Clients have asked whether they should continue to be bullish on the U.S. economy and equities when the media continues to emphasize a plethora of troubling issues including a flat lining manufacturing sector, an energy sector that is still contracting, and a new host of government taxes and regulations (from federal, state, and local authorities) that make it difficult for small businesses to remain viable. The purpose here is to …Read More

June’s economic backdrop

June’s economic backdrop From the emerging data, it would appear that my analysis of the economy’s underlying strength, as published in this column, was spot on. The First Quarter •I remarked several times over the past few months that the seasonal adjustment process (SA) used by the Bureau of Economic Analysis is often unreliable and sometimes misleading. Now, after what appears to be the second year in a row of …Read More

Three Uncertainties Are Driving the Markets

The financial markets have been focused on three uncertainties: the strong and rising value of the dollar vis a vis other currencies, weakening U.S. economic indicators, and the timing and magnitude of Fed policy actions.  All this with a background of the ongoing Greek tragedy and continued political strife and terrorism worries. Volatility has resulted.  To show the market’s uncertainty, in the month of March, of the 19 trading days …Read More