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BofA’s Hartnett Says Equity Rout Not Over as Recession Looms
Investors are ‘too greedy’ for rate cuts, BofA strategists say Bank turmoil may have bigger effect on small businesses: BofA Bank of America Corp. strategist Michael Hartnett — one of the most bearish voices on Wall Street last year — says investors should sell any...
The SVB Collapse Threatens an Already Fragile Economy
When the Federal Reserve is raising rates, an unexpected shock can trigger a recession. Take a tour through US recessions of the past 50 years, and it’s hard not to wonder whether Silicon Valley Bank will turn out to be the banana peel that upends an already unsteady...
Credit Suisse Ignites Global Market Rout as Banking Fears Return
Bank slumps 24% after top shareholder rules out investing more European stocks decline amid a selloff in global banks All it took was a few tough words from Credit Suisse Group AG’s biggest shareholder on Wednesday to spark a selloff that spread like wildfire across...
[VIDEO] Nouriel Roubini on Credit Suisse Crisis, Inflation, Strategy
Source: Bloomberg
Ray Dalio Warns SVB’s Collapse Shows Cracks Widening in Global Finance
Hedge fund founder: Economy entering new era post-rate hikes Dalio says it’s likely ‘many more problems’ will follow SVB Bridgewater Associates founder Ray Dalio warned Silicon Valley Bank’s failure shows cracks widening in global finance, joining other US...
BofA Gets More Than $15 Billion in Deposits After SVB Failure
Bank of America Corp. mopped up more than $15 billion in new deposits in a matter of days, emerging as one of the big winners after the collapse of three smaller banks dented confidence in the safety of regional lenders. The inflows offer a first glimpse into the...
Moody’s Downgrades US Banking Sector to Negative After Collapse of Three Major Banks
After the failure of three major U.S. banks last week, with two of them being the second and third largest banking failures in the country, Moody’s Investors Service has downgraded the rating of the U.S. banking system from “stable” to “negative.” As one of the “Big...
Bank Runs. The First Sign The Fed “Broke Something.”
With the collapse of Silicon Valley Bank, questions of potential “bank runs” spread among regional banks. “Bank runs” are problematic in today’s financial system due to fractional reserve banking. Under this system, only a fraction of a bank’s deposits must be...
Canada Yields Take Historic Dive as Investors Alter Rate Bets
Two-year bonds see biggest 3-day yield decline since 1995 Investors seek havens after failure of two US regional banks The yield on short-term Canada bonds is falling at the fastest rate in decades, as investors bet the Bank of Canada will cut rates in coming months...
Silicon Valley Bank collapses, in biggest failure since financial crisis
The Federal Deposit Insurance Corp. has transferred the bank’s deposits to a new entity in order to protect consumers. Silicon Valley Bank collapsed on Friday after a run on deposits drove the Northern California institution into insolvency, marking the largest bank...
Investor dash for cash pumps U.S. money market funds to record high – BofA
LONDON, March 10 (Reuters) - Assets invested in U.S. money market funds have reached a new all-time high of $4.9 trillion this year, as soaring short-term interest rates have sent investors rushing into cash, BofA Global Research said on Friday. Money market funds...
Thousand-Word Equivalents
If a picture is worth a thousand words, this will be the “longest” letter I’ve sent you in a while, as there are quite a few pictures. It may also be the most wide-ranging. Every Wednesday my Over My Shoulder members get a PDF file with some of the week’s most...
Short Sellers Make $500 Million on SVB’s Demise. Collecting Won’t Be Easy
One-day mark-to-market profit of $513 million on short bets Stock remains halted after falling 63% in premarket trading SVB Financial Group’s record plunge on Thursday minted short sellers roughly half a billion dollars in paper profits. But they now face a challenge:...
Buffett On Buybacks
Warren Buffett defended stock buybacks in Berkshire Hathaway’s annual letter, pushing back on those railing against the practice he believes benefits all shareholders. “When you are told that all repurchases are harmful to shareholders or to the country, or...
Companies Fold on High Valuations, Sparking Flood of Stock Sales
Biggest run of secondary offerings in a year shows new shift Large holders join corporate issuers with outsized selling Corporate America and its biggest investors are finally accepting lower valuations in stock sales, sparking a sudden rebound secondary offerings...
Citadel’s Griffin Sees Setup for US Recession After ‘Traumatic’ Inflation
Billionaire Ken Griffin said the setup for a US recession is unfolding, with the Federal Reserve needing to raise interest rates further after Americans were stung with “traumatic” levels of inflation. The founder of Citadel and Citadel Securities said the Fed is...
Bear Trap? Market Holds Critical
Is the recent correction a “bear trap?” Or is the bounce just a selling opportunity for a return of the bear market? “A bear trap occurs when there is a bearish correction or reversal amid an overall uptrend. A downward correction sees shorting temporarily overcoming...
Morgan Stanley’s Wilson Sees 20% Downside for Tech Stocks
‘Even the cyclical names that have gone too far’ could tumble Lack of cash coming in the door is an earnings vulnerability Morgan Stanley’s Michael Wilson says he still sees some 20% downside on some of the big technology and meme stocks, without specifying which...
Roubini Fears Hard Landing Amid Persistent Global Inflation
Geopolitical factors will add to high inflation, Roubini says The RBA is expected to lift rates by 25 basis points Tuesday Economist Nouriel Roubini warned that the global economy is at risk of a “hard landing” due to central bank efforts to gain control over...
[VIDEO] WARNING: Fed Predicts BIG Housing Crash in 2023
Source: Reventure Consulting
Retailers Fear High-Flying US Consumers Are Falling Back to Earth
In recessionary sign, shoppers trading down to cheaper goods Consumer sector did well last quarter, but bearish on 2023 One of the biggest questions for investors over the past year has been when Americans will pull back on spending and trigger a recession. In the...
Gen Zers Are Overly Optimistic About Being Wealthy
Gen Zers, according to a recent Magnify Money survey, are overly optimistic about being wealthy. In fact, according to the survey, they are THE most financially optimistic generation. To wit: “Nearly three-quarters (72%) of Gen Zers believe they’ll become wealthy one...
How It Started/How It’s Going
If you read and pay attention to the world, you probably know the recent past pretty well. And if you’re a history buff like me, you also know something about the more distant past. In between, however, we often have a memory gap. Events from 5, 10, even 20 years ago...
German Inflation Unexpectedly Quickens in Fresh Blow for ECB
Consumer prices rose 9.3% from year ago in February; est. 9% ECB set for half-point March hike with focus on months ahead German inflation surprisingly accelerated in February, further complicating the European Central Bank’s task after overshoots this week in other...
Paul Tudor Jones-Backed Quant Manager Returns 20% Using Crowdsourced Ideas
Numerai solicits trading ideas from amateur data wonks Open-for-all vision is unconventional on Wall Street A Paul Tudor Jones-backed hedge fund that harnesses the stock-picking skills of amateur quants has nabbed another $100 million of inflows after soaring 20% in...
Capitalism Is Broken If Record Profit Margins Don’t Revert
“Profit margins are probably the most mean-reverting series in finance. And if profit margins do not mean-revert, then something has gone badly wrong with capitalism.” – Jeremy Grantham While there are certainly many complaints that “capitalism” is broken, such is not...
Berkshire Rail, Insurance Units Earnings Slip on Weak Demand
Conglomerate still reported record operating earnings for year Buffett takes issue with critiques of share buybacks in letter Warren Buffett’s Berkshire Hathaway Inc. reported weaker results in some of its key businesses, underscoring fears the US economy is facing a...
Retail Traders Go Bust As Speculation Inevitably Goes Wrong
A recent Wall Street Journal articlediscussed how retail traders that made millions during the pandemic trading the market are now mostly wiped out. “Amateur trader Omar Ghias says he amassed roughly $1.5 million as stocks surged during the early part of the pandemic,...
Deficits Forever
“Diamonds are forever,” according to the jewelry industry. That may be a slight exaggeration, yet diamonds will certainly outlive you and whomever you give them to. Debt isn’t forever but can definitely seem like it. That feeling is a clue you have too much debt....
Summers Sees Signals of a Sharp Drop-Off in Economic Activity
Former Treasury chief says data on current conditions strong Leading indicators suggest risk of ‘Wile E. Coyote’ moment Former Treasury Secretary Lawrence Summers said worrying signals of a potential sharp drop-off in activity combined with strength in other...
Dimon Says the US Economy Is Facing Some ‘Scary Stuff’ Ahead
JPMorgan CEO’s list includes Fed, Ukraine, Energy, China Central bank will have to pause rate hikes, Dimon says The US economy has obstacles to overcome, though there’s still a chance for a so-called soft landing, Jamie Dimon said. “The US economy right now is doing...
Cliff Asness Issues Warning on Stocks Pricing Inflation Drop
AQR co-founder says ‘fat tail event’ would be macro economic Quant pioneer says world too quick to think valuations fixed Billionaire quant investor Cliff Asness warned Thursday that US stocks are vulnerable to a macro shock if inflation doesn’t stage a spirited...
Farmers Are Turning to Swarms of Drones as Labor Costs Soar
Iowa startup Rantizo saw its drone flights triple last year Farmers are increasingly deploying drones to spray their fields as growers look for alternatives to tight labor markets and heavy machinery that can knock over crops. While traditional land-based tractors...
US Fourth-Quarter GDP Revised Lower on Weaker Consumer Spending
Revision shows 2.7% annual gain versus 2.9% initial estimate Federal Reserve’s key inflation metrics were revised higher US economic growth in the fourth quarter was weaker than previously estimated, reflecting a downward revision to consumer spending as the Federal...
Real estate: US homeowners have lost $2.3 trillion since June: Redfin data
U.S. homeowners have lost $2.3 trillion since June, according to a new report from the real-estate brokerage Redfin. The total value of U.S. homes was $45.3 trillion at the end of 2022, down 4.9% from a record high of $47.7 trillion in June. That figure signifies the...
Bond king Jeffrey Gundlach: Here comes the hard economic landing
Whether it's a "hard" or "soft" landing, Gundlach says: "You need an umbrella."The bond king is bracing for a hard economic landing. "We have been preparing for a hard landing at DoubleLine," DoubleLine Capital founder and CEO Jeffrey Gundlach exclusively told Yahoo...
“No Landing” Scenario At Odds With Fed’s Goals
Economically speaking, bullish bets are mounting on a “no landing” scenario, which suggests the economy will avoid a recession entirely. As noted by Yahoo Finance last Friday: “The newly-coined ‘no landing’ outcome considers a scenario in which inflation doesn’t...
Morgan Stanley Says S&P 500 Could Drop 26% in Months
Risk-reward for stocks is extremely poor amid hawkish Fed: MS Strategist says S&P 500 to slide as much as 26% in first half Expensive US equities are flashing a warning sign that could see the S&P 500 sliding as much as 26% in the first half of this year,...
Markowski says “S&P 500 to Bottom at 1482.90, a Decline of 69.2% from January 2022 Peak”
Michael Markowski, the developer of algorithms that have forecasted the S&P 500’s significant crashes for over a decade, has updated his forecast for the S&P 500’s bottom. His new forecast is for the S&P 500 to bottom at 1090.90. At this bottom, which...
Adjustments Matter
Federal Reserve officials like to call their decisions “data dependent.” Business leaders say it a little differently, often “data driven.” The point, in both cases, is something like: “We consider relevant data when making important decisions.” All well and good but...
Recession Signal As Consumers Struggle To Pay Bills
We recently discussed the recession signals from the NFIB (National Federation Of Independent Business) and the inverted yield curve. “As in 2019, we see many of the same recession signals from the NFIB survey again combined with a high percentage of yield curve...
US Leading Economic Index Falls for a 10th Straight Month
Conference Board measure fell 0.3% in January after 0.8% drop Decrease was led by weaker expectations and factory orders An index of US leading economic indicators fell in January for a 10th straight month, reflecting declines in consumer expectations and factory...
Volatility to persist, S&P 500 to plunge: Guggenheim’s Walsh
While the pending recession will be “relatively mild”, offset by a strong consumer balance sheet, Guggenheim Partners said investors should prepare for the S&P 500 to reset significantly lower. “We believe that no one should be betting on the Federal Reserve...
Starwood Single-Family Rental Firm Stung by Housing Market Slump
Wall Street-backed landlords have cut jobs and slowed purchases with high borrowing costs weighing on the housing market.Retired baseball star Alex Rodriguez took to LinkedIn in late 2021 to ask for help: He’d invested alongside Starwood Capital Group in a...
Investors Are Buying Roughly Half As Many Homes As They Were A Year Ago
Investor home purchases fell a record 46% year over year in the fourth quarter. Investors bought 18% of homes that sold, down from 19% a year earlier. Pandemic boomtowns Las Vegas and Phoenix saw investor purchases fall over 60%—more than all of the other metros...
The Correction May Have Started, Will Bulls Remain In Control?
The market correction has started. The question we have repeatedly discussed over the last several weeks is the ongoing battle between bullish technical improvements and bearish fundamentals. On January 27th, we discussed the bullish signals the market was giving...
Assumptions Have Consequences
Remember National Lampoon’s Vacation? It was a 1983 comedy film in which suburban dad Clark Griswold (Chevy Chase) takes his family on a cross-country road trip to the fabled Walley World amusement park. Clark made one critical mistake, though. He assumed Walley World...
Bullish Investors Continue To Fight The Fed
Bullish investors continue to “Fight the Fed,” hoping that a change to monetary policy will reignite the 12-year-long bull market. But, for over a decade, the “Don’t Fight The Fed” mantra was the “call to arms” for bullish investors. “With zero interest rate policies...
Google shares pop 5% after company announces Gemini AI model
Google shares jumped Thursday, a day after the company announced its latest artificial intelligence model called Gemini. Google executives said Gemini outperforms OpenAI’s GPT-3.5, but the company did not share how it compares with OpenAI’s latest model, GPT-4....
The Technicals Vs The Fundamentals. Which Is Right?
Last week, we discussed why the more bullish technical formations were at odds with the many recession forecasts. Not surprisingly, that article generated substantial pushback from readers, pointing out various bearish fundamental measures. As I discussed in our...
J-Pow Throws In The Towel
The Bear Market Has Been “Cancelled.” Last week’s message asked the question of whether the market’s break above the long-running downtrend line was a “head fake?” To wit: As we noted, the inverse ‘head-and-shoulder’ pattern already suggests a market bottom has...
A Muddle-Through Market, for Now
These weekly letters, of which I’ve now written well over 1,000 (plus 7 books and multiple papers and articles), are generally about two broad topics: the economy and the financial markets. While related, these aren’t the same. Good news for one can be (and often is)...
NFIB Survey Suggests A Recession Is Coming
The most recent NFIB (National Federation Of Independent Business) is sending a strong signal of an economic recession. In 2019, the NFIB survey, combined with an inverted yield curve, suggested an impending recession. In 2020, those signals became a reality. As in...
Recession Forecasts At Odds With Bullish Formations
Despite mounting evidence supporting recession forecasts, the stock market remains at odds with that outlook. Such leaves investors in a predicament of avoiding a further drawdown in the equity markets but not wanting to miss out on a potential recovery. It is hard to...
“Head Fake” or “Breakout” – Where Are Stocks Headed Next?
The FOMC Meeting Approaches Was the break above the long-running downtrend line a “head fake?” Maybe. However, before we get into the analysis, let’s review where we left off last week. Such is critically the case as we head into this coming week’s FOMC meeting and...
Growth Pains
In stock investing there’s a management style called “growth at a reasonable price” or GARP. It seeks to achieve steadier results by avoiding both expensive growth stocks and beaten-down value stocks. We can apply a similar idea to economic growth. Everyone wants the...
Contrarian Trade. Everyone Remains Bearish
From a contrarian investing view, everyone remains bearish despite a market that corrected all of last year. I polled my Twitter followers recently to take their pulse on the market. Of the 1280 votes cast in the poll, roughly 73% of respondents anticipate the market...
Jeremy Grantham Warns of a 17% Plunge in the S&P 500 This Year
Range of problems larger than it usually is, strategist says He doesn’t rule out a ‘brutal decline’ to 2,000 for S&P 500 The popping of the bubble in US stocks is far from over and investors shouldn’t get too excited about a strong start to the year for the...
[VIDEO] From Boom to BUST: The Impact of a Flooded Airbnb Market on the Housing Market
Source: Reventure Consulting
Slow Change Speeds Up
The world’s leading CEOs, politicians, and various do-gooders were in Davos, Switzerland, this week, discussing ways to solve our collective problems and create opportunities for their own companies. The most important conversations were off the record and many of the...
Monetary Policy. Is The Fed Trying To Wean Markets Off Of It?
Is the Fed trying to wean the markets off monetary policy? Such was an interesting premise from Alastair Crooke via the Strategic Culture Foundation. To wit: “The Fed however, may be attempting to implement a contrarian, controlled demolition of the U.S....
[VIDEO] “USA Collapse Will Be Far WORSE Than You Think…” — Jim Rickards Last WARNING
Source: Primal Investor
Opinion: This perfect storm of megathreats is even more dangerous than the 1970s or the 1930s, Roubini says
The view from Davos: We can expect more instability, higher risks, more intense conflict, and more frequent environmental disasters.DAVOS, Switzerland (Project Syndicate)—A host of interconnected “megathreats” is imperiling our future. While some of these have been...
Jim Grant Warns “Japan Is Perhaps The Most Important Risk In The World”
Authored by Christoph Gisiger via TheMarket.ch, Speculation is mounting that the Bank of Japan is losing control of the bond market. Jim Grant, editor of «Grant’s Interest Rate Observer», believes this could trigger a shock to the global financial system. He also...
The “Pain Trade” Is Higher For Now
The “pain trade” is likely higher over the next few weeks. I touched on this topic in this past weekend’s “Bull Bear Report:” Not surprisingly, the “bullish” short-term outlook garnered a substantial amount of pushback. However, there is more to this outlook than just...
The Punchbowl Is Gone
The Federal Open Market Committee’s 12 voting members differ on where they think interest rates should go this year. But we know they’re unanimously against cutting rates until at least 2024—or at least they were as of December, according to that meeting’s minutes....
US Banks See Consumers Piling On Debt, Boosting Bottom Lines
Card balances rose in the fourth quarter, and so did bad loans Investors shake off lower-than-expected forecasts for lending US banks see tougher times ahead for consumers. That may not be so bad for the banks. But with many still keeping up, the swelling loan...
Home Prices Will Likely Fall Further
Home prices have started to correct as interest rates rose sharply in 2022. However, the real problem for home prices is still coming in 2023 as the standoff between sellers and buyers comes to a head. However, before we get there, let’s review how we got here. Since...
The Lag Effect Of The Fiscal Pig & Economic Python
The lag effect of monetary policy changes will surprise the Fed as the fiscal “pig” of stimulus begins to exit the economic “python.” For those unfamiliar with the term “pig in a python,” it refers to when a python consumes its prey. It does so by swallowing it whole,...
US Consumer Borrowing Tops Forecast on Higher Credit-Card Balances
US consumer borrowing climbed in November by more than forecast as credit-card balances increased by the most in three months. Total credit rose $28 billion from the prior month, Federal Reserve figures showed Monday. The median forecast in a Bloomberg survey of...
Year of the Pause
“Every new beginning comes from some other beginning’s end.” — Seneca, the Elder “Democracy is the theory that the common people know what they want and deserve to get it good and hard.” — H.L. Mencken Welcome to 2023. It’s Forecast Season on Wall Street, the time...
The Fed’s “7% Solution” Won’t Work This Time
Just recently, James Bullard, President of the St. Louis Federal Reserve, suggested the central bank might need to employ the “7% solution” to ensure the complete destruction of inflation. As we have discussed previously, the fear is repeating the policy errors of the...
More Americans Tap Credit Cards for Everyday Expenses
Census data shows that households are struggling to cover bills as pandemic savings run out. The number of Americans relying on credit cards to cover daily expenses jumped in December as households battered by inflation find their regular income is no longer enough to...
Wall Street’s Top Bear Sees Another Big Down Year for S&P 500
Kantrowitz at Piper Sandler forecasts a 16% decline in 2023 Back-to-back double-digit annual losses are rare in S&P’s book Equity investors hoping for a reprieve in the new year after a brutal 2022 are likely to be disappointed, according to Michael Kantrowitz at...
This Contrarian Stock Market Signal Is Losing Predictive Power
Put/call ratio spikes not a ‘buy’ signal for stocks anymore Picture is being blurred by large market players, CBOE says A long-watched indicator of which way the stock market is likely to move next has lost predictive power lately, confounding investors who have come...
New Hedge Fund Soars 163% Betting Everything Is Going Down
Eagle’s View Capital launched fund to catch market downturn Fund is betting on continued bear market, BOJ tightening A veteran trader’s well-timed bet on the end of easy money has achieved triple-digit returns in his new hedge fund’s first full year. After running...
Forward Returns Will Disappoint Compared To The Past Decade
For many investors who started their investing journey following the financial crisis, forward returns will be disappointing compared to the last decade. But it won’t be solely due to high valuations. I recently discussed why the next “Secular Bear Market” may have...
Hedge Fund Losses Hasten Tiger Global’s VC Transformation
Tiger Global Management started out as a traditional stock-picking hedge fund that dabbled in venture investments. Now, after a tumultuous 2022, its startup bets vastly outstrip equities. That transformation helped the money manager weather its worst year ever, as...
Wall Street’s Top Stars Got Blindsided by 2022 Market Collapse
The year began with faith that inflation would fade and the Fed would hold rates low. Then came a brutal reckoning. Marko Kolanovic and John Stoltzfus, two of the loudest stock bulls on all of Wall Street, were convinced of one thing at the outset of 2022: The Federal...
60/40 Portfolio Set To Outperform Over The Next Decade
Much ink has been spilled over the death of the 60/40 portfolio. However, declaring the demise of the 60/40 portfolio could be a mistake. Such is particularly the case as equity returns remain slated to be lower over the next decade due to high valuations. We bet a...
Financials say “Buy Investview” Shares
Investview’s share price has been obliterated due to the company having a significant bitcoin mining operation. The shares price is reflecting that the Investview is a bankruptcy candidate. The chart below depicts the share prices of the five largest publicly...
[VIDEO] Charlie Munger Makes A Scary Prediction of Total Economic Collapse
Source: Empire Investing on Youtube.com
Why Gardening Can Help You Manage Your Portfolio Better
Managing your portfolio has more to do with gardening than you might imagine. Over the last decade, behavioral finance studied investor psychology and identified the repeated behaviors investors make throughout market cycles. As you can probably surmise, investors...
Higher for Longer
This will be my last letter of 2022. I want to use this letter as a set-up for my annual forecast issue the first week of January. That means we will touch on a variety of topics, kind of a snapshot into where my mind is today. Get ready to travel the world but let’s...
Valuation Math Suggests Difficult Markets In 2023
In 2023, the math of valuations suggests returns will likely be challenging as markets remain difficult to navigate. Estimating price targets for the next full trading year is an exercise in futility. Too many variables, from politics to economics to monetary and...
Three experts predicting S&P 500 to decline by 45.5 to 77.4 PERCENT
Market experts Michael Markowski, Jim Chanos and Nouriel Roubini have predicted that the S&P 500 will decline by 45.5 to 77.4 percent from its January 4, 2022 all-time high of 4818.62. At its low for 2022 (3491.58, 10/13/22) the S&P 500 had declined by as...
The 2023 Investing Outlook As The Fed Pivots – Part II
In Part 1, we suggested a weaker dollar may not lead to the bullish outcomes many investors expect in 2023. We will build on that thesis in Part II, and bonds will win in the first half of 2023 and stocks in the second half. The big question heading into 2023 is the...
Markowski’s Latest, “S&P 500 to Decline by 77.36 Percent from January 2022 Peak” ⎯ Bottom at 1090.90
Michael Markowski, the developer of algorithms that have forecasted the S&P 500’s significant crashes for over a decade, has updated his forecast for the S&P 500’s bottom. His new forecast is for the S&P 500 to bottom at 1090.90. At this bottom, which...
Recession Scale
Economic news—and market reactions to it—increasingly resemble a tennis game. Spectators follow the ball back and forth, thinking something will happen but usually it doesn’t. Last week, for instance, many investors got excited when they thought Jerome Powell was...
Will A Dollar Decline Be Good For Stocks? – Part 1
Will a dollar decline be good for stocks? It is an interesting question, given that during 2022 there was a significant non-correlation between the dollar and the stock market. The strong dollar rally was something I suggested could be a problem for stocks, given what...
The Bull Case Has A Two Problems
Since the beginning of October, the market has performed better as a “Fed Pivot” bull case pushed investors into the market. We previously laid out the case for a strong “short squeeze” around the lows of September, stating: “Currently, everybody is bearish. Not just...
China’s BYD plans to beat Nissan and Tesla on EV price in Japan
TOKYO -- Chinese automaker BYD will begin selling its first passenger electric vehicle in Japan next month for 4.4 million yen ($32,000), less than EV offerings from rivals such as Nissan and Tesla, as it accelerates its global expansion. The carmaker, initially known...
Why this Wall Street bear says it’s time to sell stocks again
One of the market’s biggest skeptics is going back to his old ways. Morgan Stanley strategist Mike Wilson cautioned that the rally that has enveloped markets in recent weeks is long in the tooth and overdue for a breather. “As predicted, falling interest rates at the...
Bitcoin Sinks Further 70% in Standard Chartered List of Possible 2023 Upsets
(Bloomberg) -- Speculators cleaving to the view that the crypto rout is mostly over are at risk of a rude awakening in 2023, according to Standard Chartered. A further Bitcoin plunge of about 70% to $5,000 next year is among the “surprise” scenarios that markets may...
The Economy Is a-Changin’
Then you better start swimmin'Or you'll sink like a stoneFor the times they are a-changin' —Bob Dylan, "The Times They Are A-Changin'" Change is constant, in the economy and everything else. We talk about it often. Yet when we talk about the economy changing, we...
Lessons From The “Nifty Fifty”
Recently, Bank of America discussed the “5-Lessons From The Nifty Fifty.” Of course, if you are unfamiliar with the importance of “The Nifty Fifty,” it is worth explaining. The “Nifty Fifty” refers to the fifty most popular large-cap stocks in the 1960s and 70s. These...
Wall Street’s top strategist Mike Wilson predicts a double-digit percentage drop to hit stocks in early 2023
Morgan Stanley chief investment officer Mike Wilson was once the only strategist on Wall Street bearish enough to predict the S&P 500 would fall to 3,900 by the end of the year. Now as the S&P 500 lingers around 3,950 and Wilson's predictions become a reality,...
Goldman strategists say stocks are yet to reflect recession risk
Stock markets are in for a wild ride next year as they don't yet reflect the risk of a U.S. recession, according to strategists at Goldman Sachs Group Inc. and Deutsche Bank. The team including Christian Mueller-Glissmann and Cecilia Mariotti said their model implies...
Short seller Jim Chanos blasts crypto, warns the S&P 500 may plunge 55%, and predicts Tesla’s growth will slow in a new interview. Here are the 10 best quotes.
Jim Chanos tore into crypto after Sam Bankman-Fried’s FTX exchange imploded. The short seller compared the crypto crash to the dot-com bubble bursting. Chanos expects the S&P 500 to plunge, Tesla’s growth to slow, and Twitter to distract Elon Musk. Jim Chanos has...
An Interview with Keith Fitz-Gerald
Last week, I introduced you to my friend of 20+ years, Keith Fitz-Gerald of Keith Fitz-Gerald Research. As I mentioned, I recently signed up for his Morning! 5 With Fitz free research email, and I'm enjoying it immensely. This week, around my trip to a far-too-cold...
Top economist Mohamed El-Erian says we’re not just headed for another recession, but a ‘profound economic and financial shift’
Investors and economists have been sounding the recession alarm. But one major economist who has seen warning signs mounting for many months says this potential recession is unlike what we’re used to. That economist is Mohamed El-Erian, previously the chief executive...
More Bearish Market Action Before The Bull Can Run
Following the weaker-than-expected October inflation report, stocks surged on hopes the Fed will “pivot” sooner than later. As we discussed recently, a “policy pivot” is not necessarily bullish but instead suggests more bearish market action will come first. To wit:...
Digital Shiny Objects
Financial crises are really about trust. They tend to occur when people lose trust in assets, institutions, or people they had thought trustworthy. Whether the lost trust was a consequence of the crisis, or its cause is a different question. But they do seem to go...
Hard Landing Coming? Investors Don’t Think So.
Is a “hard landing” coming, economically speaking, as the Fed continues its most aggressive rate hike campaign in 40 years? Investors don’t seem to think so as investors continue to chase economically sensitive stocks despite the underlying economic deterioration....
Midterm Elections Are Bullish Even In A Bear Market
With the midterm elections behind us, does the market outlook improves given a now gridlocked Congress? Historically speaking, such is the case. As noted by Michael Cannivet via Forbes: “Before you hit the panic ‘Sell Everything’ button, though, it’s worth considering...
Morgan Stanley Sees Rough Ride for US Stocks in 2023
(Bloomberg) — US stocks will end 2023 almost unchanged from their current level — but will have a bumpy ride to get there, according to Morgan Stanley’s Michael Wilson. The top-rated strategist sees a “volatile path” to get to his 2023 year-end S&P 500 base-case...
Recession Thoughts
Early this week, with the severe inverted yield curve and other signals flashing recession, I planned to use this letter to delve into the data. Then Thursday’s CPI data convinced markets to blow the all-clear whistle. Lack of any “green shoots” would have been out of...
The “Policy Pivot” May Not Be Bullish
Since June, the market rallied on hopes of a “policy pivot” by the Federal Reserve. However, those hopes got dashed each time as Jerome Powell clarified that the “inflation fight” remained the primary focus. Mr. Powell made that point very clear following the latest...
There Really Is No Middle Class Any Longer
There was a time when a large portion of Americans belonged to the “middle class.” It meant you could afford a decent living standard, such as owning a house and a car and had savings in the bank. When “baby boomers” reminisce about the “good ole days,” they are...
‘The next big thing is small’: Get ready for some bullish history to repeat with these stocks, says BofA analysts
The 70s are proof investors shouldn't give up on that Fed pivot, says the bank Stagflation is coming, but with that comes a silver lining for some equities if history is any guide. That’s according to strategists at Bank of America, who see a macro backdrop that...
Dangerous Assumptions
Historically speaking, this phase of life we call “retirement” is a new concept. The idea you could stop working at a certain age was unknown until quite recently. People worked as long as they physically could, then died quickly unless they had family or servants to...
Are The FANG Stocks Dead?
Are the FANG stocks dead? Or, to be clear, are the MANNGMAT stocks dead? Of course, we are talking about the big technology heavyweights of Meta (FB), Apple (AAPL), Netflix (NFLX), Nvidia (NVDA), Google (GOOG), Microsoft (MSFT), Amazon (AMZN) and Tesla (TSLA)....
BYD Will Make Electric Cars in Brazil Using a Factory That Was Once Owned by Ford
Irony is always elaborate, but it may have broken new records for that quality in Brazil. Ford announced on January 11, 2021, that it would close three factories in Brazil. The largest one was in Camaçari, Bahia. The company justified that with its need to focus on...
October Market Lows And The End Of Bear Markets
October started strong and then slid to new lows but managed to rally back toward the month’s end. As noted in “As Buybacks Return:” “The Dow is on pace for its best month since 1976. It is also close to its best month since 1938. So far, the Dow is up four straight...
Turning Bullish on Energy
I literally grew up in the oil patch: Wise County, Texas, 60 or 70 miles northwest of Fort Worth in a little town called Bridgeport. The two first-generation Greek immigrant brothers who became Mitchell Energy talked old man Christie into funding Christie, Mitchell...
The Treasury Market Is The Fed’s Next Crisis
The Fed’s next crisis is already brewing. Unlike 2008, where “subprime mortgages” froze counter-party trading in the credit markets as Lehman Brothers failed, in 2022, it might just be the $27 Trillion Treasury market. When historians review 2022, many will remember...
Druckenmiller: A Decade Of No Returns
Is a “lost decade” ahead for markets? Stanly Druckenmiller believes that could be the case. “There’s a high probability in my mind that the market, at best, is going to be kind of flat for 10 years, sort of like this ’66 to ’82 time period.” Druckenmiller added that...
Summers Warns on Deficit ‘Doom Loop’ Risk, Oil Price Spike
Former Treasury chief sees need for fiscal debate in US Oil prices pose a major ‘wild card’ for inflation, recession Former Treasury Secretary Lawrence Summers said that policy makers in the US and elsewhere should heed the fiscal lessons from the UK’s recent crisis,...
“Recession Fatigue” As Consumers Begin To Break
“Recession Fatigue” is setting in as consumers struggle under rising interest rates, high inflation, and a declining stock market. Such was a point made in a recent CNBC article: “As the Federal Reserve aggressively raises rates to combat persistent inflation, the...
BofA Says Investor Capitulation Yet to Show Up in Equity Flows
Hartnett remains bearish, sees new lows for stock markets Stocks, cash see weekly inflows; gold, bonds have outflows Equity funds are still seeing inflows despite deeply pessimistic sentiment, with “final capitulation” not yet here, according to strategists at Bank of...
Forecast for US Recession Within Year Hits 100% in Blow to Biden
Bloomberg Economics sees near certainty downturn will start Tightening conditions, inflation, hawkish Fed weigh on outlook A US recession is effectively certain in the next 12 months in new Bloomberg Economics model projections, a blow to President Joe Biden’s...
Stocks Upended by Inflation Survey’s Sobering View: Markets Wrap
(Bloomberg) — US stocks fell after a report showed US year-ahead inflation expectations rose for the first time in seven months. The dollar gained and Treasuries fell. The S&P 500 closed near lows of the day, falling more than 2%. The growth-sensitive Nasdaq 100...
Pension Sandpile
Sandpiles can be fun. Nothing beats taking kids to the beach (or being a kid!) and watching their creativity blossom into all kinds of magical shapes. The problem with sand construction is it doesn’t last. I have it on good authority that building your house on the...
IMF Warns ‘Worst is Yet to Come’ as Steps to Slow Inflation Raise Risks
One third of global economy may tip into contraction next year Caution comes as leaders gather in Washington for IMF meetings The International Monetary Fund warned of a worsening outlook for the global economy, highlighting that efforts to manage the hottest...
Plunging PC Shipments Threaten Tech Stocks
Semiconductor stocks extended their underperformance in Tuesday morning trading, sliding to the lowest since October 2020, as a sharp decline in global PC shipments added to concern about soft demand. Tech mega-caps were among top S&P 500 decliners by value. The...
Where Are the Workers?
By now it should be clear Federal Reserve leaders intend to keep hiking until the economy breaks. Their recent speeches and interviews all underline this. Specifically, they want to reduce the strong consumer demand that has been keeping goods and service prices...
The Strong Dollar Is A Risk To Corporate Profits
The strong dollar remains a risk to corporate profits and asset prices as the impact on the global economies grows. While many commentators argued the dollar would go bust due to the excessive debt levels in the U.S., such has hardly been the case. In 2022, as the...
Wall Street Sees S&P 500 Falling Further After Bear-Market Bounce
HSBC cuts S&P 500 year-end price target to 3,500 from 4,450 Credit Suisse, Goldman Sachs also lower targets for the index Some of Wall Street’s biggest banks aren’t buying this stock-market rally. Firms from HSBC Holdings Plc to Credit Suisse Group AG are...
“Market Instability” Causes BOE To Reverse QT. Is The Fed Next?
Market Instability Originally Appeared At MarketWatch “Market instability” remains the most significant risk to central banks globally. Despite their desire to combat surging inflation, market instability is a greater risk to global economies due to the massive...
JPMorgan’s Kolanovic Warns Anew on Policy Risk to S&P 500 Target
Bullish strategist’s 2022 price target is 4,800 for the index Kolanovic has previously urged investors to buy the dip JPMorgan Chase & Co.’s Marko Kolanovic reiterated that increasingly hawkish central banks and the destruction of the Nord Stream pipelines will...
Stock markets will drop another 40% as a severe stagflationary debt crisis hits an overleveraged global economy
PROJECT SYNDICATE NEW YORK (Project Syndicate)—For a year now, I have argued that the increase in inflation would be persistent, that its causes include not only bad policies but also negative supply shocks, and that central banks’ attempt to fight it would cause...
El-Erian Warns ‘Economic Accident’ Would Precede Any Central Bank Pivot
Sees more volatility as tightening spurs financial instability Central banks won’t allow higher inflation without ‘more pain’ Mohamed El-Erian has a cautionary word for anyone anticipating an end to interest-rate increases from the Federal Reserve and other central...
Currency Crescendo
Big problems usually begin as small problems. We see that in nature, where small disturbances become hurricanes, and we see it in the economy, too. So, it shouldn’t surprise us if the economic disturbances of the last years compound into something bigger. Going into...
Mild Recession Likely To Be Worse Than Expected
A recent MarketWatch article discussed JPMorgan’s Chief Operating Officer, Daniel Pinto, views about a coming mild recession. “Pento said he’s reluctant to shed talent right away and may look to pick up bankers let go by other firms as inflation feeds talk of layoffs...
Global Market Risk Is Building Like in August 2007, Summers Says
Crisis firefighters had better not book vacations, he says Japan’s bond holdings need watching, ex-Treasury chief says Former Treasury Secretary Lawrence Summers likened the array of risks confronting the global economy to the pre-crisis summer of 2007, with the UK’s...
CarMax’s Big Profit Miss Sends Warning Signal on US Consumer
Auto dealers Carvana, Sonic Automotive plunge in broad selloff Rising rates, low confidence makes consumers wary of spending Already shaky market sentiment took a gut punch on Thursday, after used-car dealer CarMax Inc.’s latest quarterly results laid bare the plight...
1932, 1974, 2008… And Today: Stocks Enter Meltdown “Crash Pattern”
Another day, another yield-driven market shock, and another down day for the S&P which is now lower for 6 consecutive days, the longest stretch since February 2020 when the world was about to shut down (worse, as the last chart at the bottom of this post show,...
Morgan Stanley, JPMorgan, Goldman and BlackRock turn bearish on stocks as recession risk rises
A global recession probability model by Ned Davis Research recently rose above 98%, triggering a “severe” recession signal. Bloomberg: Goldman Sachs Group Inc. and BlackRock Inc. are turning more bearish on equities for the short term, warning that markets are yet to...
The Big Short Squeeze Is Coming
The latest rate hike announcement by the Fed sent stocks tumbling to the year’s lows. While last week’s market action was brutal, the good news is the markets are set up for a rather significant short squeeze higher. It is quite likely the Fed has already tightened...
Notes on Inflation
We were a bit preoccupied here in Puerto Rico this week. Hurricane Fiona decided to camp out over the island, bringing mind-boggling amounts of rain. I am sure you have seen the flooding pictures. The entire island lost power and much of it is still down. Our...
Debt & Why The Fed Is Trapped
The massive debt levels provide the single most significant risk and challenge to the Federal Reserve. It is also why the Fed is desperate to return inflation to low levels, even if it means weaker economic growth. Such was a point previously made by Jerome Powell:...
Goldman’s Oppenheimer Sees S&P 500 Falling 10% If Recession Hits
‘Cash right now is looking attractive,’ strategist says Says he expects corporate profit margins to come down in 2023 Peter Oppenheimer, the chief global equity strategist at Goldman Sachs Group Inc., said the US stock market may see more losses as interest rates...
“Dr. Doom” Roubini Expects a ‘Long, Ugly’ Recession and Stocks Sinking 40%
‘Dr. Doom’ cites high debt ratios of both firms and nations Global recession throughout 2023 will hit ‘zombie countries’ Economist Nouriel Roubini, who correctly predicted the 2008 financial crisis, sees a “long and ugly” recession in the US and globally occurring at...
Buffett Indicator Says Markets Are Going To Crash?
“The ‘Buffett Indicator’ says the stock market will crash.“ Such was an email I received recently and was worthy of a more detailed discussion. Let me begin with my favorite line from “The Princess Bride.” “I do not think it means what you think it means.” The Buffett...
Financial News Flow Fully in Support of Markowski’s Dire Predictions
Financial news for the week ended September 16, 2022 fully supports Michael Markowski’s dire June 2022 predictions. For the week: S&P 500 Declined by 4.7 percent and closed the week just above the low of 2022 “FedEx CEO says he expects the economy to enter a...
Inflation Sinks In
Remember when inflation was going to be transitory? Good times. I was in that camp myself early on, as were some serious analysts I greatly respect (and still do). Then the data began to show core inflation would be stickier than expected, and I turned in my Team...
Asset Bubbles & Forward Returns
Asset bubbles have been prevalent throughout history. Whether it was the “Tulip bubble” in the 1600s, the South Sea bubble of the 1700s, or the Dot.com bubble of 2000, they were all a result of excessive investor speculation. Of course, the other side of the inflation...
‘Black Swan’ author Nassim Taleb says years of zero interest rates destroyed the economic structure and created ‘tumors like bitcoin’
Years of 0% interest rates in the US damaged the economy and created bubbles like bitcoin, Nassim Taleb told CNBC on Thursday. "You're creating bubbles, creating tumors like bitcoin," the author of "The Black Swan" said about monetary policy. Taleb has been critical...
Deficit Reduction. Is It Reality Or A Mirage?
Recently, the Biden Administration started taking victory laps on deficit reduction. Of course, the deficit remains the bully-pulpit of fiscal conservatives, so going into a mid-term election, it is not surprising to see it used for political advantage. “The bottom...
Labor Mysteries
Politicians talk about “jobs, jobs, jobs” because a steady income keeps people happy and (mostly) voting for incumbents. Carville once told us, “It’s the economy, stupid,” and it always has been. Economies in recession are usually bad for those in power. Economists...
Recession Signals Abound As Fed Hikes Rates
At the Jackson Hole Summit, Jerome Powell made it clear the Federal Reserve remains focused on combatting inflation despite recession signals rising in tandem. To wit: “Restoring price stability will take some time and requires using our tools forcefully to bring...
Mike Wilson Sees Stocks Tumbling To 3,400 In 3 Months, Slashes S&P EPS Forecasts As “Fire & Ice” Shifts Into High Gear
Over the weekend, in Morgan Stanley's Sunday Start note, the bank's in-house permabear Mike Wilson, previewed the topic of his weekly fire and brimstone sermon, which ironically was fire and ice, part 2, and his justification for why stocks are going far lower: his...
The coming long-run slowdown in corporate profit growth and stock returns
Over the past two decades, the corporate profits of stock market listed firms have been substantially boosted by declining interest rate expenses and lower corporate tax rates. This note's key finding is that the reduction in interest and tax expenses is responsible...
Small Business Sales And The Running Of The Bull
Small business sales are the lifeblood of the economy. We have written previously about the importance of small businesses relating to employment, incomes, economic growth, and even the stock market. April 2020 – Previous Recession Warnings Now A Reality January 2021...
The Rule Of 20 & Why The Bear Market Remains
The “Rule Of 20” says the “bear market” may just be resting despite much commentary to the contrary. In a recent Investing.com article, Bank of America strategist Savita Subramanian warned clients that stocks are still expensive despite this year’s drawdown. “Our...
Your Inflation May Vary
People who think about the economy are a non-random subset of the population. Most folks aren’t like us. Worse, we aren’t always like us. Hence the endless arguments. Currently our subset is debating whether we face inflation or recession. In my view, it’s...
The Bear Market Is Over. Or, Is It Just Hibernating?
The bear market is over. While that statement fills the mainstream media, it remains a hotly debated question in every media forum. It is an interesting point considering that it was just in June we were answering the question of “when will this bear market end?”...
The COVID-19 Pandemic Accelerates Nike’s Ecommerce Focus
US-based sports retailer, Nike, reported a $790 million quarterly loss and revenue $1 billion below initial Wall Street forecasts. Despite the poor quarterly results, Nike reported a 75% increase in digital sales. The results drove Nike’s management to change...
Buy Stocks Now? When It’s Time, You Won’t Want To.
Buy stocks in a bear market. It sounds a whole lot easier than it is. Truth be told, when it comes time to buy stocks, you won’t want to. As discussed previously regarding bonds, when assets are in a bear market, and prices are lower, investors repeatedly don’t buy...
FOMC Minutes Excites The Bulls
Market Really Overbought For Now Over the last 10 weeks, the market staged an impressive rebound from the June lows, increasing nearly 17%. That rise also reversed the vast majority of the previous “extreme bearish” sentiment as “Reddit...
Muddling Through Stagflation
This week I am at the Cleveland Clinic going through numerous tests. Some have not been good news. It seems lifestyle changes are needed so I can keep writing and working for many more years. I am ecstatic to bring you David Bahnsen as a special guest writer. He is on...
Paul Volker And 1982. Why Now Isn’t Then.
Jerome Powell isn’t Paul Volker, and this isn’t 1982. As of late, market analysts are stumbling all over themselves, trying to outdo each other on the “why this time is different” related to the Federal Reserve’s ongoing inflation fight. One of the more interesting...
Economic Slowdown Now, Recession Coming In 2023
Economic slowdown but no recession! That message comes from the latest employment report, service sector data, and Federal Reserve. “We’re not in a recession right now. We do have these two-quarters of negative GDP growth. To some extent, a recession is in the eyes of...
Long Term Returns Are Unsustainable
Long-term returns are unsustainable. I realize that is a bold statement that flies in the face of mainstream analysis. How often have you seen the following chart presented by an advisor suggesting if you had invested 120 years ago, you would have obtained a 10%...
Curving Toward Stagflation
The latest data shows inflation is still with us at an 8.5% annual rate. That means we can expect the Fed to keep tightening, trying to reduce demand and relieve pressure on consumer prices. At the same time, we’ve seen declining GDP growth the last two quarters. Some...
Pulling Forward Growth No Longer An Option.
Pulling forward growth over the last decade remains the Federal Reserve’s primary tool for keeping financial markets stable while economic growth rates and inflation remained weak. From repeated rounds of monetary and fiscal interventions, asset markets surged,...
Market Surges As New Bull Market Begins?
Following the recent Fed rate hikes and some “better than expected” economic data, the market surged this week. The rally is not surprising given the extremely negative sentiment and positioning in the markets in June. As we noted then, such extreme negative...
Weirdness Factors
It’s a recession! No, not yet! I see these arguments everywhere and I’m already tired of them. For those who believe it is not yet a recession, I will make a deal with you. The third quarter is likely to be negative. When we have three quarters of a recession in a...
Investing Lesson Of Math Learned The Hard Way
Every investor must learn the one investing lesson in surviving the long game: how math works. I recently received an email from a reader suggesting that the 2022 decline in the market is “no big deal” because of the stellar returns over the last decade. He quoted a...
The New Bull Bear Report Brought To You By SimpleVisor
Market Update – The Trading Week In Review As noted last week: “The market finally gained a decent rally. The break above the 50-dma and the declining trend channel gave the bulls the signal to jump back into stocks. While much of the rally was short-covering, the...
A Weird Recession
Professional economists, perhaps tired of being asked, years ago formed a committee to officially mark the beginning and end of recessions, the NBER (Nation Bureau of Economic Research) committee considers a variety of data, but its final decision is subjective. Many...
No Recession? All Of A Sudden Yield Spreads Are Collapsing
No recession. That was the recent declaration from Treasury Secretary Janet Yellen, noting that consumer spending, industrial output, credit quality, and other indicators don’t suggest economic risk. “You don’t see any of the signs. A recession is a broad-based...
Technically Speaking There Are Some Bullish Signs
Market Trading Update Over the last week, the market finally gained a decent rally. The break above the 50-dma and the declining trend channel gave the bulls the signal to jump back into stocks. While much of the rally was short-covering, the market did push into the...
Hubris at the Fed
Finding just the right word brings great pleasure to writers like me. As I think and write about the Federal Reserve, the word “hubris” keeps coming to mind. The Merriam-Webster dictionary defines hubris as “exaggerated pride or self-confidence.”...
ESG Underperformance Will Be Its Undoing
ESG underperformance will be the strategy’s eventual undoing. We have discussed the many problems with ESG investing in previous posts. The Great Wall Street Money Heist Wall Street Wins Again As ESG Infiltrates Retirement Plans In those previous articles, we...
Market Risk Remains As Earnings Season Begins
Administrator Note As noted last week, my family and I traveled to Maiori, Italy, to visit our son, who lives in Germany. It was a great trip, and I look forward to sharing some stories on the next week. I am just returning home to get back to work, so this...
Forgotten Lessons
“Those who cannot remember the past are condemned to repeat it” is a well-known quote that’s also incomplete. You can remember the past vividly and still have to repeat it. This happens when, for instance, powerful people forget (or ignore) important lessons that...
The “Bullwhip Effect” Will Frustrate The Fed
The “Bullwhip Effect Originally Published At The Epoch Times The “Bullwhip Effect” has gotten the media’s attention as of late. However, the causes, effects, and consequences to the market and monetary policy are not well discussed. In order to understand its impact...
Earnings At Risk
Administrator Note The family and I are on vacation this week to visit our son who lives in Germany. Due to the Covid pandemic lockdowns and restrictions, we have been unable to see him for almost 2-years. So, we organized a quick trip to meet up in Maiori, Italy for...
John Bull and Two Percent
The economics profession has long had a vigorous academic argument over “natural” interest rates. What would rates be if we could somehow remove all the subjective actors—central banks, commercial lenders, government agencies—that conspire to set them? What would...
Payment For Order Flow & The SEC’s Plan To End It
“Payment For Order Flow” remains a contention between retail investors and Wall Street. On the one hand, it creates the ability to have “free trading” for retail investors. However, it also creates an opportunity for Wall Street to “front-run” individuals for profit....
Time Has a Price
One benefit of human progress is the way we gain “common knowledge” that was once anything but common. We observe basic facts—for example, water boils if placed over a flame—and then build on them. Boiling water took us to steam engines and then much more. But that...
Recession Risks. Are They Already Priced In?
Are recession risks fully “priced in” by the markets? Such was an interesting question asked recently by my colleague Albert Edwards at Societe Generale. To wit: “A US recession looks imminent and the discussion in the markets has moved on to how deep it will be....
Earnings Recession Coming As Fed Hikes Rates
Earnings Recession Coming Was Originally Published At MarketWatch An earnings recession is coming as the Fed hikes rates which accelerates an economic recession. Such should be no surprise given earnings are derived from economic activity. However, despite economic...
Recession Signs Increase As Fed Dismisses Risk
Market Review & Update Last week, we noted that previous support levels failed to hold as markets tumbled to new lows for the year. However, we also discussed the more extreme oversold conditions present on many levels, which suggested the potential for a rally...
Inflation Reaches Unicorns
“Government has three primary functions. It should provide for military defense of the nation. It should enforce contracts between individuals. It should protect citizens from crimes against themselves or their property. When government—in pursuit of good...
How bear market rallies trap dip buyers and frustrate investors
This article first appeared in the Morning Brief. Thursday, June 23, 2022 Today's newsletter is by Jared Blikre, a reporter focused on the markets on Yahoo Finance. Follow him on Twitter @SPYJared. Bear market rallies are the stuff of legends. Born through a...
Oil Price Reversions – The Inevitable Outcome Of Recessions
An oil price and energy stock price reversion may be starting. The reason is that oil price reversions are the inevitable outcome of economic recessions. Of course, such is due to the previous price spikes that create demand destruction in the economy. The chart shows...
Fed Bluffs And Wall Street Calls
Down Again, Another Tough Week As we noted in last week’s update: “Our concern was that the longer the market remained in a tight trading range, the risk of a failed rally increased. While there was certainly room for the market to break to the upside, the multiple...
Gradually Worse
This time last year, the great debate was whether inflation would be “transitory.” That question is now settled (Narrator: “It wasn’t transitory at all.”), we have moved on to debating what the Federal Reserve will do about it… and can do about it. The experts at the...
“Economic Hurricane” – Hyperbole Or Real Possibility?
An “economic hurricane” is coming. That ominous warning comes from Jamie Dimon, CEO of J.P. Morgan Chase. “I said there were storm clouds. But I’m going to change it. It’s a hurricane. Right now it’s kind of sunny, things are doing fine, and everyone thinks the Fed...
Rally Fails As Recession Risks Rise
Rally Fails Last week, we discussed how the reflexive rally that started mid-May ran into resistance at the first levels from the recent low. To wit: “While the market did clear the 20-dma, the “trapped longs” headed to the exits at the initial 38.2% Fibonacci...
A Trillion Here, a Trillion There…
Complaining about federal debt is a time-honored American tradition. Remember Ross Perot and his hockey-stick charts? Then there was Harry Figgie’s 1992 best-selling book, Bankruptcy 1995. It was quite a sensation at the time. Not only did the US government not go...
Investors Are Terrified, So Why Aren’t’ They Selling
Investors are terrified. Such is what you would assume from recent mainstream media headlines and CNBC’s continuous run of “Markets In Turmoil.” There are also plenty of indicators suggesting that retail investors are terrified about financial markets. For example,...
Technical Review Of The Market. Where To Next?
Market Fails At First Resistance As discussed last week, a rally finally took hold as investors found reasons to be bullish. That rally pushed the market above the 20-dma and triggered a reasonably strong “buy” signal. However, despite the optimism of the bulls, we...
No Soft Landings
“There’s no soft landing when you’re this far out of equilibrium.” —Tom Hoenig My last four letters featured highlights from the Strategic Investment Conference. I told you they would build toward a conclusion that might not be obvious. Today we’ll lift that final...
Fed Pause? Markets Hope So, But Likely Not Yet.
Will the Fed pause its rate hikes as markets correct? That is the question that everyone is trying to answer. Of course, after more than a decade of monetary interventions, investors have developed a “Pavlovian” response to market declines and the “Fed Put.” Classical...
Reasons To Be Bullish. Are There Any?
Market Finally Rallies Over the last few weeks, we have been a bit of a broken record suggesting a counter-trend rally was likely. However, that rally remained very elusive. Finally, a rally took hold this week, as investors found reasons to be bullish pushing the...
Rock and a Hard Place
Two weeks after SIC ended, I’m beginning to assimilate everything. Different pieces are connecting in my head. I’d like to tell you I have a vision for uninterrupted peace and prosperity. Sadly, that’s not the case. Good things are coming, but not just yet. For now,...
A “Lost Decade” Ahead For Markets?
Is a “lost decade” ahead for markets? We and many others have discussed a topic regarding financial market valuations and forward returns. Now, halfway into 2022, all of a sudden, the “crazy talk” of valuations seems a lot less crazy as bear markets growl. However, it...