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The Recovery Stalls; Fed Pledges “Lower for Longer;” Equity Markets Pause

With the Fed pledging to keep rates low even when (or if) inflation rises above its 2% target, it is hard to see why long-term Treasury yields (and those of other quality issuers) won’t move toward yields of similar debt in the world’s other industrial economies (i.e., Europe and Japan). The economic lull is now showing up in both the labor market (Initial Claims) and in retail sales, likely because …Read More

A ‘W’ Recovery, Obstructed By Bankruptcies And Unemployment

The Recession’s ending isn’t the story – it is whether or not the Recovery lives up to its billing. In truth, the Recovery’s shape was never going to be a CAPITAL “V.” Like in the post-Great Depression period or the post-1918 pandemic period, consumer behavior will radically change. And, there is a lot of evidence that that has already begun. In those past periods, consumers became more frugal, and today’s data shows a surge …Read More

The Recovery Begins – The Steep Part Of The “V”

The big market mover this week was Retail Sales, up 17.7% in May. Consensus estimates averaged 8%. A pop was expected; the magnitude wasn’t. Remember, the economy has never seen this kind of shutdown, or experienced such fiscal or monetary policies, so there is no experience or precedent upon which forecasts can be based. In this recovery, the consensus is likely to get the direction right, but as we have seen with other data …Read More

The Opposite: The Market Takes A Cue From Seinfeld

The Opposite In one of the 1990s Seinfeld episodes known as “The Opposite,” George Costanza decides to make decisions opposite of what his “normal” instincts would tell him to do. The results of his “opposite” actions were a beautiful girlfriend, a standing ovation, and a job with the N.Y. Yankees! Today’s equity market seems to be behaving similar to George, choosing to do the “opposite” of what one would normally expect from …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

Investor Prospects For 2020 And The Wall Street Casino

This is the time of year when I am supposed to make predictions for markets for 2020, or, at least give an outlook. This has become quite difficult to do in recent times as markets no longer appear to be driven by corporate fundamentals or macroeconomics. Rather, markets have been moved by: 1) passive investment flows; 2) corporate stock buy-backs; 3) TINA (There Is No Alternative), especially for baby boomers looking for …Read More