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The ‘Insurance’ Cut Worry

Fed Chair Powell’s congressional testimony did little to allay market fears regarding the Fed’s underlying posture. Markets continue to be worried that, while the Fed is certain to cut the Fed Funds rate by 25 bps at July’s meeting, the rate reduction may turn out to be just an “insurance” cut, especially in light of the fact that the June jobs report has been portrayed as “strong.” Describing the cut …Read More

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

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

Slower Growth, Inflation, the Fed, and End of Cycle Indicators

The U.S. economy itself appears to be doing well, but we see many end of cycle signs, including less than 4% unemployment, rising interest rates, emerging consumer inflation, a strained housing market, slowing growth worldwide, and huge instability now developing in the emerging market space. Economy Still Healthy The 0.8% rise in retail spending in May would seem to confirm that the U.S. economy is still expanding. We believe that …Read More

Don’t be Fooled: Complacency is a Danger to Investors

The U.S. economy itself appears to be doing well, but we see many end of cycle signs, including less than 4% unemployment, rising interest rates, emerging consumer inflation, a strained housing market, slowing growth worldwide, and huge instability now developing in the emerging market space including Argentina, Turkey, Brazil, Indonesia, and Thailand. However, what scares us the most is the level of investor complacency. Because of the Fed’s and other …Read More