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The Goldilocks Labor Report: “Just Right!”

It isn’t ever a good sign when markets become manic. August was quite volatile with five days out of 22 (23%) where the S&P 500 intra-day market swings exceeded 2%, and three days when the market closed down more than -2.5% from the prior day’s close. (We haven’t seen such price volatility since 2011!) While, so far, September has been less volatile, the market is still susceptible to tweets. For example, news about the …Read More

What Investors Believe: Central Banks Have Their Backs

In a world of fragile economic growth where the odds of recession have been on the rise, investors are now convinced that central banks (CBs), led by the Fed, have their backs, as they see the CBs as “buyers of last resort.” Note that the Fed, whose legislative mandates are low unemployment and stable prices, has morphed into the role of equity market savior beginning in the Greenspan era and rolling …Read More

5/7/2019 It’s Not the Economy – It’s Buy-Backs

There were three significant economic events since my last column: the GDP report, the Fed meeting, and the unemployment report. GDP The Q1 real GDP growth rate (3.2% annualized) surprised nearly everyone to the upside. And, of course, Wall Street characterized the headline number as proof that the “soft patch” had passed.  Never mind the details.  Of the 3.2% growth, nearly .7 percentage points came from inventory growth. This was …Read More

5/27/2019 Bonds, Not Stocks, Reflect the State of the Economy

The equity markets have gyrated around tariff and trade news (and Presidential tweets), falling when, at the last minute, the expected trade deal with China fell apart, and then fluctuating around various trade announcements, going up when they looked hopeful, and falling when they did not, including additional tariffs put on by both sides, suspension of European auto tariffs, and a deal to lift steel and aluminum tariffs on our …Read More

Fallout From Fed Dovishness

The rate setting committee of the Fed met on Tuesday and Wednesday, March 19 and 20. What the Market Saw and Heard From their formal statement and press conference, the equity market saw and heard only what it wanted, at least at first, and equity markets rose on Thursday, March 21st (Dow Jones +217): No rate hikes in 2019, and possibly only one in 2020 (and that one would occur because …Read More

Where’s The Recession, You Ask? Reprise

The narrative is that the “soft patch”, now so evident in U.S. data, is temporary, related to factors like weather, the government shut-down, and/or trade/tariffs. The Atlanta Fed, where GDP forecasts always seem to come out on the high side, put Q1’s real GDP growth at just +0.3%. And, the N.Y. Fed’s model says +0.9%. In any case, even the most ardent bulls have at least recognized that current data …Read More