On Friday, November 2nd, the Dow Jones Industrials ended down 110 points in a wild day in which the index swung over 500 points from its intraday high to its intraday low. This occurred despite one of the most stellar employment reports in recent memory, a report that raised hopes that the economy would continue to grow in the 3% range, and a report that put smiles on the faces …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
Why Helicopter Money and Unconventional Monetary Policies Won’t Help the Economy
The equity markets continue to flirt with record highs while the yields on fixed income instruments are at or near all-time historic lows. Generally, those two market movements are not compatible. Everyone feels a high level of anxiety about the economic future. Ben Bernanke visited the Bank of Japan in early July to help them set up a new experimental monetary policy dubbed “helicopter money.” And we are living in …Read More
