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Markets: Time to Reflect on Risk, not Return

The week ended September 7th saw a pull-back from the record highs set in late August. Perhaps we witnessed the infamous “double top” (January 26th and August 29th). It is clear that financial markets have become riskier, and, perhaps, it is time for investors to assess the risks inherent in their portfolios versus the prospects of future returns. There is a short-term and a long-term view, neither of which augurs …Read More

Trade Wars Will Slow Growth

Q3 started out with several very positive days in the equity markets, due to the seeming “Goldilocks” economy (solid growth, low inflation, best employment market in 50 years), likely in anticipation of continued 20%+ earnings reports (the tailwind of tax reduction), and, at least in the early days of July, from a lack of any significant moves on the tariff and trade front. That all ended on July 11th when …Read More

“Normal” – It’s the Opposite of What the Media Says

I hear it every day on the business channels or see it in the business media print: “The economy has to get back to normal.”  But normal means different things to different constituencies.  Wall Street and equity investors certainly don’t want to see the stock market behave normally, if indeed, normal means that PE ratios mean revert and that we have periodic 10%-20% corrections.  Everyone, especially the President, would like …Read More

“Normal,” It’s Not What You Think!

Most readers remember the pre-recession days of 4% GDP growth, interest rates at levels where savers had return choices worth pursuing (e.g., the 10 year T-Note at 4%), and workers could count on annual real wage growth.  Today, many refer to this as “normal,” and there is a desire, if not a movement, to return the economy back to such a state. You can see this in the political arena.  …Read More

Will Markets React as the Trump Agenda Becomes Long-Term?

The failure to get health care reform through the House of Representatives highlights the difficulty that this President is having in bringing his legislative agenda to reality; one would think that markets would have a significant negative reaction – but, that has not been the case. For sure, the Trump rally, itself, has stalled (except in the tech sector), as the closing level of the S&P 500 on Thursday, March …Read More

Will the Fed Cause Another Recession?

The Fed raised the Federal Funds Rate by 25 basis points (a quarter of a percentage point) to 1.0%.  This is the anchor rate on the yield curve, and, most other rates respond to it, with shorter rates today responding more than longer rates.  It appears from their communications that they intend to hike rates several more times over the next 12-18 months. While I don’t see a recession over …Read More