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Faster Growth Deceleration Prompts Increased Market Turbulence

Market volatility looks to have become the norm of late, with intraday swings of 500 points on the Dow Jones Industrials seemingly commonplace. The days of complacency and ever rising stock prices appear to be firmly in the rear-view mirror, now replaced by daily angst. And, with good reason. Markets have fully recognized that “synchronized” world economic growth has ended, that the U.S. economy is not an island, immune from …Read More

How Will Markets React to Growth Deceleration?

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

Before Political Correctness, We Called This “Stagflation”

“Those that cannot remember the past are condemned to repeat it.” (George Santayana 1863-1952). This time, indeed, could be different. It certainly is in the realm of possibility. But, the odds are against it. One doesn’t get up on a particular morning and find an entry in the calendar on our smartphone, like “Cinco de Mayo” or “Mother’s Day,” that says “Start Day: National Recession.” In fact, the National Bureau …Read More

The Fed’s new bubble – Part 2

In part I of this two part series, I discussed the possible rush for the exits and market volatility in what I saw as a long overdue correction. The violence of the correction and the extremes of volatility that I worried about have now actually appeared. As I rewrite the introduction of this part II, conventional Wall Street wisdom has now become that the correction and volatility are due to the …Read More

The Fed’s New Bubble

“Most valuation parameters are either the richest ever or among the highest in history. In the past, levels like these were followed by downturns. Thus, a decision to invest today has to rely on the belief that ‘it’s different this time.’ I’m convinced the easy money has been made.” (Howard marks, Oaktree Capital, WSJ, 1/29/18). The legendary investor, Baron Rothschild famously said, “I got wealthy never waiting for the peak.” …Read More

2018 Preview and Assessment

Market valuations are high.  Current consumption is being financed by debt.  The housing data is mildly positive, but has been impacted by “rebuild” issues in the wake of natural disasters.  Corporate balance sheets are strong and laden with cash.  The world’s major economies are doing well and central banks are beginning to tighten policy led by the U.S.’s Fed.  Q4 real GDP growth looks to come in above 3% (third …Read More