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...

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...

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....

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...

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 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,...

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...

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...

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...

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...

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...

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...

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...

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...

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...

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:...

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....

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...

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 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...

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)....

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...

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...

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...

“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...

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...

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...

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...

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...

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:...

“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...

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...

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...

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...

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” 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...

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?”...

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...

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...

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 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. 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%...

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,...

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...

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...

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...

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...

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...

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...

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 “Real Investment Show” next week. I am just returning home to get...

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...

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...

“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....

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 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...

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...

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...

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 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...

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,...

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...

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...

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...

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...

Market Review & Update The market rally we hoped for ended abruptly as retail reports showed a recession is coming. However, since the stock market leads the economy, a recession could already be here. A review of the current market and 2008 is helpful. I am not...

The disinflationary impact of Fed policy on equities is coming. There is currently much debate in the mainstream media suggesting investors should ignore Fed rate hikes. To wit: History suggests U.S. stocks are poised to experience more volatility following the rise...

Market Review & Update On Wednesday, Emily McCormick from Yahoo wrote a great piece encapsulating current market conditions: “As volatility grips markets, investors are naturally wondering when the selling will abate and the bottom will be put in. ‌According to a...

Investor sentiment has become so bearish that it’s bullish. One of the hardest things to do is go “against” the prevailing bias regarding investing. Such is known as contrarian investing. One of the most famous contrarian investors is Howard Marks, who once stated:...

Stock Market Rollercoaster I can almost repeat last week’s opening note: “Another tough week, and month, for the market. Ongoing concerns about inflation, earnings, and economic growth, continue to pressure stocks. As noted last week, there is a tremendous amount of...

Originally Published At Epoch Times “Don’t be bearish.” That was the message delivered by a Wall Street Journal article in August 2021, discussing the “new generation” of “financial media stars.” To wit: “As the U.S. retreated amid the pandemic to its couches,...

Market Review & Update Another tough week, and month, for the market. Ongoing concerns about inflation, earnings, and economic growth, continue to pressure stocks. As noted last week, there is a tremendous amount of damage in the market below the surface of the...

A bull market in bonds is set to return with a vengeance as the Fed once again makes a policy mistake. I recently discussed the surge in bond yields noting that such events have previously led to more unwelcome market and economic outcomes. “As shown below, the surge...

Market Review & Update The market started the week out okay but finished sour as Jerome Powell ramped up his hawkish rhetoric of a .50% rate hike at the May FOMC meeting. That meeting will also contain details on the timing of the reduction in the Fed’s balance...

Is there a bear market lurking in the shadows? Such seems to be the question everyone is asking me as of late. Over the last couple of weeks, we have reviewed the bullish and bearish cases for the market. Sentiment Is So Bearish. It’s Bullish Bullish Or Bearish? Where...

Market Review & Update Given this is Easter Weekend, we are just providing a short-market update on our market thoughts as we begin the wrap-up of the seasonally strong period of the year. On Thursday, markets sold off, reversing the previous day’s gains as April...

Is it still a “bear market rally?” After a big surge from the lows following the Russian invasion of Ukraine, Mike Wilson from Morgan Stanley thinks so. To wit: “The first quarter was one of the worst on record for the collective performance of stocks and bonds, with...

Market Review & Update We provide a daily trading update in our Daily Market Commentary (free pre-market email). During the past week, the message was consistent. “The continued sloppy action over the last week is doing its job of working off the overbought...

Bullish or bearish? What is the case for the market now? As we noted previously, having a proper market perspective is essential in avoiding investing mistakes over time. However, another trap we potentially fall into is “confirmation bias,” “Experts in the field...

Market Review & Update We noted last weekthat while the market was short-term overbought, the market could rally further. To wit: “As we head into the end of the month, a further push to the upside is not out of the question as mutual funds, pensions, and...

“Bear squeeze,” or has the bull market returned? Over the last few weeks, that remains the question as the market rocketed off its lows, eclipsing both the 50- and 200-day moving averages. But is it safe to chase the markets higher? As we discussed recently, the best...

Stocks Rally As Fed Hikes Rates Last week, we discussed the difference a week can make. “We previously stated that any rally above the downtrend would test the 50- and 200-dma averages. That test occurred on Friday, with the index clearing the 50- and...

“BTFD” (Buy The F***ing Dip) or “STFR” (Sell The F***ing Rally) – which should investors do now? With the Fed now hiking rates, seemingly intent on doing so at every meeting in 2022, has the correction priced in the “bad news?” The issue, of course, is that we never...

Stocks Rally As Fed Hikes Rates What a difference a week can make. As discussed last week, the market slid and broke support as the Russia/Ukraine conflict continued. However, this week was very different as the FOMC meeting went off largely as expected. The...

Market perspective is essential in avoiding investing mistakes. With CNBC airing “Markets In Turmoil” every time the market dips, it’s no wonder investor sentiment is now the lowest we have seen financial crisis lows. Of course, as shown, extremely negative investor...

Market Review – Stocks Break Support As has been the case all year, market volatility remained constant this past week. Stocks surged early in the week on hopes of talks between Russia and Ukraine, but hopes faded into Friday. Notably, the S&P 500...

An earnings reversion is coming. In “earnings estimates will disappoint,” we showed the extreme bullishness of estimates entering 2022. “Despite economic growth weakening as inflation increases, liquidity reducing, and profit margins under pressure, analysts continue...

Market Review – Stocks Struggle As Russia Advances Friday morning, stocks sank back to previous support on news Russia had taken Ukraine’s nuclear power facility. It is not surprising with the ongoing Russia conflict; no one wants to hold equities over the weekend if...

“Sell Energy Stocks” Was Originally Published At Marketwatch.com Sell energy stocks? Such certainly seems counter-intuitive advice given high oil prices, geopolitical stress, and surging inflation. However, some issues suggest this could indeed be the time to “sell...

Russia Invasion Sends Stocks Rallying? Thursday morning stocks plunged pre-open on news of the Russia invasion of Ukraine. However, as we wrote in our PRE-MARKET commentary (subscribe for email delivery): “However, as I noted on Twitter recently that the...

The “Fed put?” Exactly, what is it, and where does this mythical support reside? It isn’t surprising with the rough start to 2022, investors are hoping the Fed will look to stabilize financial markets. Of course, after more than a decade of monetary interventions,...

From Russia With Love “When is the selling going to stop?” That was the most common question I received this past week. However, it is an interesting one given that people never ask, “when is the BUYING going to stop?” The importance of the question drives to the...

Market pullback or bear market? Such seems to be the question on everyone’s mind as of late, given the rough start to 2022 so far. There are undoubtedly many issues confronting even the most optimistic of investors currently. Geopolitical risk from Russia and the...

Market Review & Update Another nauseating week in the market as a hotter than expected inflation print and rumors of a Russian invasion of Ukraine sent stocks tumbling backward. The bad news is that support at the 200-dma failed. That break aligned with our...

A 50-percent decline will only be a correction and not a bear market. I know. Right now, you are thinking, how could anyone suggest a 50-percent decline in the market is NOT a bear market. Logically you are correct. However, technically, we need an essential...

Market Review & Update Between Paypal, Facebook, and Netflix, the volatility swings in the market over the last couple of weeks were nothing short of nauseating. As we discussed last week: “The markets do look to be stabilizing, as shown below, and are holding the...