The volatility of markets since the election is head spinning. After the massive gains on the day after election day 2 weeks ago, markets caught their breath and decided that the risks of uncertainty appeared greater than the opportunities. The Fed seems to be hedging its bets on continuing interest rate reductions saying that any further reductions are data dependent. Mixed into this reaction are President elect Trump's threats to fire the Federal Reserve chairman...
What a week. It was election week with a decisive electoral college and popular vote victory for Donald Trump. The country remains deeply divided despite this victory. Many of the campaign promises made by Trump have serious implications for the US economy as well and household economics. The Senate has also turned Republican but as of now the House is still undecided. If Republicans have the House, the Senate and the Presidency, it will make...
The jobs report on Friday was a bit of a shocker! Much lower number of new jobs than expected with previous months estimates reduced as well. Is the Bureau of Labor Statistics making numbers up. No!!!! Reports are always adjusted, and a more accurate indicator is looking at trends over 6 months. We recently had a GDP growth quarterly report of just under 3% and economic growth persists. Additionally, wages are increasing greater than inflation...
Goldman Sachs issued a report today in regard to the performance of the US stock market over the next 10 years. \ Their expectation is 3%! CNBC Daily Open: Concerns over high interest rates return, pressuring stocks . If you read the report, they are concerned about the historically high valuation of the current market averages. A common measure is a benchmark called the CAPE index that stands for the cyclically adjusted price earnings measurement...
October begins with uncertainty in the air. We have the election in 30 days and middle east conflicts are escalating as we speak. Again, investing based on politics and current events is even more hazardous and unreliable than investing on a regular basis. In addition, with the employment report issued on Friday, analysts and economists are more convinced that a soft landing is ahead. Markets expect two additional rate decreases before the end of the...
After all the anticipation and market discounting of the consensus view of the Fed lowering interest rates, it finally happened. Somewhat of a surprise, the first move down was a big one-50 basis points or ½%. The Fed also said they expect a couple of more moves down in the Fed funds rate before the end of the year. The total reduction for the year 1%. This is the Feds attempt for a “soft landing”...
Talk about good news and bad news and bad news and good news. We have it all and markets are reacting on a daily basis. Sell off and recovery, recovery and sell off. This week is a big one. 100% expectation that the Fed will reduce interest rates. The question is ¼ point or ½ point. Often the Fed is behind the curve with interest rates. The bond market has already priced in a reduction...
The anticipation of lower interest rates has been driving markets for the entire year. Looks like we are finally there but the fat lady has not sung yet. A September cut by the Fed has been likely confirmed by chairman Powell at the annual Jackson Hole conference as expected. Even with markets typically discounting news about 6 months in advance, this news drove a substantial rally all week peaking on Friday. This anticipated rate reduction...
What a week in the stock market. Talk about volatility-we saw it this week as markets rallied toward their highs after a monumental sell off last week. The rally was encouraged by positive economic signs including bullish consumer spending at the same time new jobs numbers were lower than expected. Goldilocks economy appears again. We are seeing confirmation that the jobs market is weakening but consumer spending continues on the retail level increasing confidence that...
The past week started with a selloff in markets due to fear of a slowing economy and possible recession. It was a severe sell off because formerly good news (economy slowing and lower interest rates) turned into bad news. We have discussed many times the bad news is good news, and good news is bad news and then of course the bad news is bad news is what we witnessed this past week. Despite the...
Inflation numbers confirm market assessment that the Fed is headed to the first reduction in interest rates at their September meeting. The Fed is scheduled to meet in August, but markets feel the reduction in interest rates is more likely in September. The day before, we received the first numbers on GDP growth for the 2nd quarter indicating stronger economic growth than economists expected at 2.8%. Some might say this is a goldilocks economy with...
Don’t blink because you might miss it. Market strategy shifted at the end of last week and beginning of this week. The 7 winners that have lifted market averages to records as recently as two weeks ago became pariahs within a couple of days. Sentiment changed overnight from large cap growth (7 stocks) to small and midcap stocks. As far as growth vs. value there was no question that small cap and value were the...
