Economic fundamentals were ignored as if they were merely background noise as markets attempted once more in early August to breach their record high levels put in late last January. The common theme in the business media is that, due to great corporate earnings (24%+ in Q2), the equity markets are cheap. Never mind that a good part of that earnings growth was due to one-time tax reduction (in fact, …Read More
Tag Archives: bond market
The Italian Job Shouldn’t Have Been Such a Shock
The good news is that it looks like manufacturing got a bit stronger entering Q2, and consumer spending was slightly better, too. So, Q2’s U.S. GDP may actually be a tad stronger than Q1’s. But, the good news stops there, as the rest of the world, especially Europe, appears to have hit a wall, a barrier that has displayed itself for the last couple of months, but, till now, was …Read More
Waiting for Market Rationality
Equity markets have yet to recognize the fragility and softness of the underlying economy, although they do appear to be somewhat sensitive to geopolitical issues (North Korea). The incoming data continue to confirm: that the consumer has little spending capacity remaining; that inflation’s roar is nowhere to be found (except, perhaps, in hot dogs); that the detail underlying the headline employment number (209,000) show labor market deterioration; that the equity …Read More
Hope is Not a Good Investment Strategy
According to the Bespoke Investment Group, every year, Wall Street analysts declare that the stock market will rise, and since 2000, the annual average forecast has been for a 9.5% gain. The reality is that the market has only risen at a 3.9% rate over this time frame. The 2008 forecast was for a market increase of 11%; the reality was -38%. To say that Wall Street promotes the stock …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
