Soaring Neutral Rate to Hurt Nasdaq, Treasuries, Survey Shows
Nasdaq 100 to fall up to 10% this quarter, almost half of respondents say The interest rate that neither spurs nor slows the US economy has at least doubled in the aftermath of the pandemic, handing investors a reason to be nervous about buying bonds or stocks,...
Profit Cuts Signal More Bad News for S&P 500 After October Slump
Fourth-quarter estimates cut more than typical: Deutsche Bank Morgan Stanley’s Wilson sees year-end stock rally as unlikely A deteriorating outlook for corporate earnings offers little support for the S&P 500 reeling from its worst October since 2018. While data...
Morgan Stanley’s Wilson Sees Year-End Stock Rally as Unlikely
Earnings remain at risk for most companies, Wilson says Bearish view unfolding as S&P 500 enters technical correction Investors hoping for a boost to stocks by the end of the year will be disappointed, according to Morgan Stanley’s Michael Wilson. “Chances of a...
Stock Traders Face Pivotal Week as Apple Steals Fed Spotligh
The world’s most valuable company delivers earnings Thursday Fed decision, Powell remarks and Treasury refunding all on tap A Federal Reserve meeting typically is the stock-market story of the week. Not so this time, however, as investors are more focused on Apple...
Worst October for Stocks in Five Years Has Investors Exiting Market
Active manager poll, positioning show investors reduce risk Bond volatility adds pressure amid a mixed earnings season The VIX is at 20, stocks are on the brink of their worst October in five years, and every other day the bond market throws a fit. For equity bulls...
Debt Catharsis
The ancient Greeks had a word κάθαρσις, which in English we now spell as “catharsis,” although it’s pronounced basically the same. It originally referred to purifying religious ceremonies, medical treatments, and so on. Aristotle was the first we know to have used the...
Economists No Longer Expect A Recession. Are They Right?
Economists no longer expect a recession. Such was according to a recent WSJ survey of Wall Street economists. To wit: “In the latest quarterly survey by The Wall Street Journal, business and academic economists lowered the probability of a recession within the next...
US Near-Term Inflation Views Jump to 4.2%, Highest Since May
Longer-term inflation expectations also rose in October News of war weighed on University of Michigan sentiment gauge US near-term inflation expectations rose in October to a five-month high as consumers feared higher prices at the gas pump, reinforcing downbeat views...
Big Tech Sheds $386 Billion in Value as Earnings Disappoint
Meta falls Thursday, in the wake of Alphabet and Tesla Selloff could push S&P 500 down 10% from its recent high The so-called Magnificent Seven technology companies that have powered this year’s US stock rally are posting disappointing earnings, wiping about $386...
Big Tech earnings drove a stock market rally. They won’t be enough this time.
Big Tech earnings aren't providing a clear story at a time when the stock market needs one. A look at Microsoft's results tells investors that business-to-business spending might be picking back up and declines in cloud spending have bottomed. A peek at Google's...
Food Insecurity in the US Jumps for the First Time in 11 Years
More Americans faced food insecurity in 2022 than in the previous year, marking first annual increase of struggling households in more than a decade. About 17 million US households, or 12.8% of the total, experienced difficulty at some time during the year in...
Wall Street Sours on EVs as Demand Falters, Funding Costs Soar
(Bloomberg) -- Electric vehicles may be seen as crucial to the future of transportation, but it’s been a rough stretch for investors in stocks tied to the sector. First, industry giant Tesla Inc. warned of growth troubles last week, then General Motors Co. said it was...
Stellantis Nears Deal to Buy 20% of China EV Maker Leapmotor
Companies could set up JV for car sales outside of China Leapmotor stake could be valued at more than $1 billion Stellantis NV is nearing a deal to acquire a roughly 20% stake in Chinese electric vehicle company Zhejiang Leapmotor Technologies Ltd., people with...
AI is driving divergent paths for big tech stocks
Alphabet (GOOGL) and Microsoft (MSFT) stocks are headed in opposite directions after reporting quarterly earnings on Tuesday night. On the surface, Microsoft's Intelligent Cloud surpassed Wall Street's expectations while Alphabet's cloud unit disappointed. But for...
Bond sell-off has recession indicator flashing new warning sign
The US economy has avoided slipping into recession all year, but one closely watched indicator shows it's on the brink. Usually, yields on longer-maturity bonds exceed those of shorter ones. An inverted yield curve happens when the reverse occurs. Some track the...
The Pain Trade Is Higher Into Year-End
The “pain trade” continues to be higher into year-end. We made Such a point in January, suggesting the 2022 “correction” was complete. Let’s review what I wrote, and then we will expand on why we believe the “pain trade” is higher over the next few weeks. “From the...
Consumer Sentiment Turns Negative in Canada as High Rates Bite
Canadians worried about wealth tied to the housing market Majority say their finances have deteriorated in past year Consumer confidence slipped into negative territory for the first time in more than six months, as a growing number of Canadians say their own...
Elon Musk’s finances may crash Tesla’s stock to the ground
With all that goes on with Elon Musk, it’s easy to forget it’s Tesla that finances the Musk machine: His purchase of what was Twitter (now renamed by Musk as X) that enhances the reach of his opinions; his ability to send rockets into space, and whatever else he might...
Stock Pickers Sidelined With World Events Overshadowing Earnings
Four of the six earnings sessions have seen concerted swings Results from tech megacaps may bring earnings back to the fore Earnings season typically is the time when investors can look past macroeconomic forces and focus on company-specific news moving stocks. This...
Car Owners Fall Behind on Payments at Highest Rate on Record
The risk of vehicle repossession is rising for many Americans facing a budget crunch. Americans are falling behind on their auto loans at the highest rate in nearly three decades. With interest rate hikes making newer loans more expensive, millions of car owners are...
Supercycle of Debt
We have been looking at big historical/economic/political cycles for the past two months. We reviewed Neil Howe’s Fourth Turning concept, then George Friedman’s twin US institutional and socioeconomic cycles, then Peter Turchin’s “cliodynamics” concept, and then Ray...
Tesla’s Slowing Growth Is Sending a Warning to All EV Makers
Stock falling again, after dropping 9.3% on Thursday Analyst says demand is slowing for Tesla, sees ripple effect Tesla Inc. this week tempered its growth expectations, signaling that pain is coming for the electric-vehicle industry, a Morgan Stanley analyst said on...
Restrictive Yields Will Be The Fed’s Waterloo
Restrictive monetary conditions, from higher yields and tighter lending conditions, are the Fed’s “Waterloo.” If you don’t remember, the “Battle of Waterloo” was fought on June 18th, 1815. The battle was a catastrophic defeat for the Napoleonic forces and marked the...
Billionaire investor Leon Cooperman says the S&P 500 won’t hit a new high for years – and house prices will probably fall
Leon Cooperman told Insider in an interview he thought stocks were overvalued. The billionaire investor said he didn't expect the S&P 500 to hit a fresh high for a long time. Cooperman said a "rolling correction" was underway and house prices were likely to drop....
Tesla Valuation Looks Unsustainable to Wall Street Analysts
Across-the-board miss on results, cautious call spark concerns Shares sink 9.3% on Thursday to lowest since Aug. 18 Tesla Inc.’s price cuts this year show customers are no longer willing to pay a premium for its vehicles. That raises a key question on Wall Street:...
Paul Singer Says World More Perilous Than Markets Pricing In
Elliott Investment Management founder Paul Singer said the world is much more perilous than markets are pricing in and that investors should be more worried. “The world is now completely dependent on the good sense of leaders to avoid an Armageddon,” he said,...
Consequences Are Always Unintended
Bloomberg recently penned a great piece on the “Law of Unintended Consequences.” To wit: “There is only one true law of history, and that is the law of unintended consequences. In the early 1920s, the University of Chicago economist Frank Knight famously drew a...
Bond Valuations Are Cheap.
Bond valuations are cheap. Psychology in markets is always fascinating. In February 2009, I wrote “8 Reasons For A Bull Market.” While in hindsight, it is easy to see that was the right call, overall, psychology was highly negative at the time. The arguments for lower...
The Fed Pivot That Turbulent Treasuries Need
The world’s most-important central bank has ended up fueling volatility in the US government bond market. Here’s a recipe for change. Greater stability in US Treasuries is needed for the smooth functioning of other segments of the financial market, housing and the...
Big Tech’s Profit Machine Is Propping Up S&P 500 Earnings
Five tech giants expected to show 34% profit growth on average Tech-related earnings announcements kick off this week With the list of stock-market worries growing seemingly by the day, investors looking to earnings season for a dose of good news are hanging their...
Wall Street Strategists Sound Alarm on Dimmer Profit Outlook
Morgan Stanley and JPMorgan note weakening revisions trends RBC says commentary shows uncertain macro, but lifts forecast The outlook for earnings is weakening and could remain subdued, according to strategists from Morgan Stanley to JPMorgan Chase & Co. As the...
The Big Cycle 2
When your system, whatever it may be, is working extremely well, we used to say it’s “firing on all 8 cylinders.” What does that mean? A gasoline motor contains metal cylinders inside which the gasoline burns (hence “internal combustion engine”) and causes belts and...
China’s real estate struggles could threaten global economic growth
The world's second-biggest economy continues to grind its gears, as its crucial property industry flails. Why it matters: At its peak, China's residential property sector was thought to contribute an estimated 25%-30% of the country's GDP. Its ongoing struggles...
US Producer Prices Rise by More Than Forecast on Gasoline, Food
PPI climbed 0.5% in September, marking third-straight increase Categories used in Fed’s preferred inflation gauge were mixed Prices paid to US producers rose by more than forecast in September, bolstered by higher energy costs that continue to wrinkle the path toward...
Disneyland Lifts Prices Up to 9%; Florida Annual Passes Rise Too
Walt Disney Co. is raising ticket prices at its Disneyland resort by up to 9% and lifting annual pass prices at Walt Disney World by as much as 10%. The new prices take effect immediately, the company said Wednesday. Rising prices are a touchy issue at Disney, which...
The Big Cycle
“…what I learned is whatever successes I had in life had to do more with how I dealt with what I didn’t know than what I know… “…the reason I did that book is because there are things that are happening now that never happened in our lifetime before, and I want to be...
Fund Flows And Bond Yields. Two Different Stories
While bond yields have risen sharply lately, fund flows into bonds tell two very different stories. We have previously written much on the recent rise in bond yields related to economic growth, event risks, and recessions. To wit: “Since rates and expectations must...
Bill Gross Sees Stocks ‘Clearly Overvalued’ as Bond Yields Rise
Bill Gross, co-founder and former chief investment officer at Pacific Investment Management Co., said stocks are “clearly overvalued” and that bond yields would need to fall “significantly” to justify current valuations. In an investment outlook published Wednesday,...
Early Estimates Suggest Japan Didn’t Buy Yen on Tuesday
Japan likely refrained from intervening in foreign exchange markets to prop up the yen late Tuesday, according to a calculation based on projected central bank figures and estimates by private money brokers. Unlike last year’s massive yen buying operations in...
Fed May Be Closer to Bailing Out the US Economy, Stock Market Than It Lets On
Based on some comments, it appears we scared a few people with A Crisis Is Coming. Our article warns, “A financial crisis will likely follow the Fed’s “higher for longer” interest rate campaign.” We follow the article with more on financial crises to help calm any...
Government Shutdown Averted. But Is That A Good Thing?
Once again, due to the ongoing lack of fiscal responsibility in Washington, the markets and the economy faced a Government shutdown. After a day of theatrics, Congress passed a “stopgap” measure that will keep the Government operating for 45 days. But is that a good...
Higher Rates Starting to Hit US Profits, Goldman Strategists Warn
Borrowing costs soared by largest amount in nearly two decades S&P 500 profitability continues to decline from 2022 peak Rising rates are starting to weigh on US corporate profits and if they stay higher for longer it may upend a historical trend, according to...
S&P’s next leg higher will rely on stocks outside the Magnificent Seven
It's been well documented that the 'Magnificent Seven' stocks have driven much of the S&P 500's gains this year. They've also been leading the leg downward over the past month as the benchmark index just posted its worst monthly return of 2023. Some Wall Street...
[VIDEO] A Market Bounce… Then Look Out Below?? | Lance Roberts & Adam Taggart
Source: Wealthion @Youtube.com
Cyclical Forces
Intermission is over. Today we resume my series on the global cycle theories that, probably not by coincidence, all point to major change unfolding in the next few years. Finishing it may take some time since I keep finding new material. (If you missed—or want to...
“Soft Landing” Hope By The Fed Is Likely Optimistic
The Fed’s “soft landing” hopes are likely overly optimistic. Such was the context of the recent #BullBearReport, which discussed the long record of the Fed’s economic growth projections. To wit: “However, there is a problem with the Fed projections. They are...
Stock Optimism Fizzles as Quarterly Losses Pile Up: Markets Wrap
Crude futures notch best quarterly gain since March 2022 Global stocks monthly selloff is worst since last September Optimism in the markets faded as traders were left to contend with the prospect of a government shutdown and interest rates staying put at their...
Nike to Shed Light on Pinched US Consumers as Shares Sputter
Apparel, retail stocks lag market with borrowing costs rising Investors focus on back-to-school demand, annual outlook Nike Inc. is set to offer a crucial look at the financial health of American households as Wall Street frets over a growing list of headwinds to...
Goldman’s Rubner Sees Deeper Stock Losses in a ‘No Rules Market’
Options dealers shifting to position that may fuel volatility CTAs estimated to offload $48 billion even in a flat market The two-month selloff in US stocks threatens to intensify as options dealers on Wall Street and fast-money traders both turn against the market....
Why Are China’s Households in the Doldrums?
A perennial challenge with China’s growth model has been overly high investment spending relative to GDP and unusually low consumer spending, something which China has long struggled to rebalance. As China attempts to move away from credit-intensive,...
Elon Musk Says Auto Union’s Demands Would Bankrupt Big Three Carmakers
Tesla Inc. Chief Executive Officer Elon Musk blasted the United Auto Workers Tuesday, saying the union’s demands would “drive GM, Ford and Chrysler bankrupt in the fast lane.” President Joe Biden endorsed the UAW’s demand for a major wage increase during a visit to a...
Compound Market Returns Are A Myth?
“Compound market returns.” During bullish markets, there is inevitably a regurgitation of this myth that was contrived to extract capital from retail investors and place it in the hands of Wall Street. However, the compound market returns myth was contrived from the...
Hedge Funds Cut Stock Leverage at Fastest Pace Since 2020 Crash
Wall Street prime brokers say clients ramped up short selling Bears benefit as the most-shorted stocks led the market rout As the cross-asset selloff engulfed Wall Street last week, hedge funds ramped up their bets against stocks while one measure of their market...
Banks Fearing a Liquidity Crunch Pay More to Cling to Cash
BofA says banks seek ‘extra buffer’ in case deposits leave Large time deposits have risen $675 billion since June 2022 Banks are paying up to protect their cash holdings from sinking further and to safeguard against future runs on deposits, according to Bank of...
“That 70s Show”
The hit TV series “That 70s Show” aired from 1998 to 2006 and focused on six teenage friends living in Wisconsin in the late 70s. The irony was that the actors playing the teenagers were not born in the late 70s and had never experienced life during that period. Many...
October Weakness Before The Year-End Run?
While September has been a bit sloppy so far, will further weakness in October weigh on investor sentiment before the seasonally strong period begins? As shown by the S&P 500 index seasonality chart below, weakness in the last two weeks of September and the first...
World Debt Surges to Record $307 Trillion, Rises as Share of GDP
Debt up a ‘staggering’ $100 trillion in past decade, IIF says Liabilities as a share of global GDP fell as inflation surged Global debt climbed by $10 trillion in the first half of 2023, resuming its upward march as a share of the world economy after falling for close...
Fed Signals Higher-for-Longer Rates With Hikes Almost Finished
Powell stresses ‘careful’ approach in Wednesday press briefing Officials now see less easing next year than they anticipated Federal Reserve Chair Jerome Powell made clear Wednesday the central bank is close to done raising interest rates, but his colleagues delivered...
Bond Vigilantes And The Waiting For Godot
The term “Bond Vigilantes” is a nostalgic twist on an old-west theme. In the nineteenth century, the American West formed self-appointed groups, or committees, to seize the duties of law enforcement and judicial authority in situations when citizens found law...
What’s in My Personal Portfolio?
I am now in my 24th year of writing Thoughts from the Frontline. I started in early 2000 with 2,000 readers from a previous newsletter project and had no idea it would become as popular as it has. I want to thank all of my longtime readers and welcome the new ones!...
Housing remains key component to bringing inflation down
The growth in housing costs eased in August, but not enough to bring inflation down to where it needs to be. The shelter component in the latest Consumer Price Index (CPI) rose 0.3% in August from the previous month, the Bureau of Labor Statistics reported Wednesday,...
Predictions Are Pointless. Why You Shouldn’t Listen To Gurus.
“(Market) Predictions Are Difficult…Especially When They Are About The Future” – Niels Bohr Okay, I took a little poetic license, but the point is that while we try, predictions of the future are difficult at best and impossible at worst. If we could accurately...
Cycle Review
Greetings from Europe. I promised to write a letter describing my personal investment portfolio. I still plan to, but it won’t be this week. Shane and I are having a wonderful trip—a much-needed break for both of us. I will leave you with a suggestion, though. My...
US Consumer Credit Rises $10.4 Billion, Largely on Credit Cards
US consumer borrowing rose in July, reflecting a rebound in credit-card balances. Total credit increased $10.4 billion, Federal Reserve data showed Friday. The gain, which isn’t adjusted for inflation, was less than the $16 billion median forecast in a Bloomberg...
Economic Data Points Diverge
Since the beginning of the year, economic data has continued to defy the recession calls of 2022. Therefore, it is unsurprising that economic data surprised analysts’ more dire predictions last year. Of course, given the underestimation of the economy previously, the...
Higher-for-Longer Rates Set to Hurt Stocks, Bank of America’s Hartnett Says
Strategists would sell any rally to position for hard landing Yield gap between equity and bonds is lowest since 2000 The rising threat of interest rates staying higher-for-longer is likely to dent prospects of a soft landing for the US economy and drive a selloff in...
China is pushing ahead with dedollarization, hoarding gold for a 10th straight month after slashing Treasury holdings to a 14-year low
China's central bank added 29 tons of gold to its reserves in August, marking a 10th straight increase. The country's stockpiling of the safe-haven asset coincides with its efforts to move away from its reliance on the dollar. China recently cut its holdings of US...
Mega-Cap Stocks Continue To Dominate. But Why?
Mega-cap stocks continue to dominate the market in 2023. The question is, why? After all, many other great companies have arguably much better valuations and fundamentals. Yet, those companies continue to lag the market’s overall returns as the bifurcation between the...
Jeremy Grantham Explains the Case for His Latest Doom Prophecy
He tells David Rubenstein 95% of his money is in a foundation Co-founder of GMO says most pressing issue is climate change While many on Wall Street have stopped obsessing about a recession, Jeremy Grantham has not. That should shock no one who has followed the career...
Noble Sacrifices
Look up the word “cycle” in a dictionary, and you’ll find something like this: “A regularly recurring sequence of events.” Sounds simple, but that definition leaves a lot of ambiguity. Zoom in on the “regularly recurring” part. A recurring event is one that happens...
Powell’s Speech Obfuscates The Truth Behind Inflation
Powell’s recent Jackson Hole Summit speech was mainly as expected. Well, except for the part where Powell obfuscated the truth behind the surge in inflation. More telling was the misunderstanding of the impact of fiscal and monetary policies on long-term outcomes....
Deficit Surge Will Lead To Lower Rates, Not Higher
Fitch’s recent downgrade of the U.S. debt rating alarmed investors as the deficit and debt steadily increased. The downgrade sent 10-year Treasury bond yields above 4%, causing concern about America’s deteriorating financial condition. The problem is that if radical...
The Science of Cycles
Today we continue our study of the historical cycles suggesting a major crisis is in our near-term (5‒8 years) future. We don’t know the precise timing or nature of the crisis, but the patterns indicate one is coming and could be severe. As with many therapeutic...
Landlords with US$1.2 trillion of debt face rising default risks
Newmark sees defaults mounting for overleveraged owners Offices account for biggest share of potentially troubled debt ABOUT $1.2 trillion of debt on US commercial real estate is “potentially troubled” because it’s highly leveraged and property values are falling,...
Stock Market Rally Coming? And Investing In 2024.
Is a stock market rally coming? I think that is most likely the case. However, to understand why, we must review what we said at the beginning of July in “Complacency Seems Overly Complacent.” With bullish optimism quickly returning to the market, the pressure to...
10 Best Days – A Meme For Every Bull Market
About once a year, I have to address the issue of chasing the “10 Best Days” of the year. Statista recently presented the analysis: “There is clear evidence that market timing is difficult. Often, investors will sell early, missing out on a stock market rally. It can...
Storms and Patterns
Everything about human life has a rhythm. It is literally built into our bodies: Your heart beats in a repeating pattern that keeps you alive. Your breath is another pattern. Repetition is natural for all of us individually and for the societies we create together....
A Recession Is Coming, Or Is It?
Since the beginning of 2022, the media has regularly warned a recession is coming. As we suggested previously, if a recession DID occur, it would be the most well-forecasted recession ever on record. “While the ‘probabilities’ of a recession in 2023 seem far more...
Government Bonds Or Stocks? Which Is A Better Choice Now?
Government bonds or stocks? If you were picking an asset class to outperform over the next 18-24 months, which would you choose? Such was an interesting point made by Greg Feirman last week. To wit: “The market has now priced in a soft landing based on the idea that...
Americans are still ransacking their retirement savings
The number of workers looting their retirement savings is escalating. In the second quarter, the tally of folks taking hardship withdrawals from their 401(k) was up 12% compared to the first three months of the year and leapt 36% year over year, according to a...
Tax Receipts. Another Leading Recession Indicator?
Tax receipts are falling, which has historically preceded economic recessions. In a recent #MacroView post, we discussed the issue of rising debt levels on economic growth and increasing debt levels. To wit: “While Washington continues a seemingly unbridled spending...
Storms and Patterns
Everything about human life has a rhythm. It is literally built into our bodies: Your heart beats in a repeating pattern that keeps you alive. Your breath is another pattern. Repetition is natural for all of us individually and for the societies we create together....
Turning Time, Part 3
The Old Testament portrays King Solomon as the wisest of all men. In addition to recording his wisdom in the book of Proverbs while dealing with 700 wives and 300 concubines, he also became a chart-topping songwriter in the 1960s (some 3,000 years after his death)...
Deflation in China: Why Prices Are Falling and What Beijing Can Do
July’s data left no doubt: China is now clearly dealing with a deflation threat. Consumer and producer prices fell together for the first time since 2020, adding to concerns about the health of the world’s second-largest economy. News that China’s prices...
Market Cycle Lows And Bull Market Recoveries
There is a rhythm to the markets, and market cycle lows support bull market recoveries. Recently, Ed Yardeni made a bold prediction that the S&P 500 index could hit a high of 5400 in 2024. To wit: “Market veteran Ed Yardeni predicts that the S&P 500 could...
Fired-Up Traders Get Burned in ‘Everything Selloff’
Everything selloff is mirror image of July’s everything rally Treasuries drop amid Fitch downgrade, government bond sales When skepticism shifts to euphoria as quickly as it has in 2023’s stock and bond markets, the comeuppance is apt to be swift. That was the tale of...
The Market Is Detached From The Real Economy
“The stock market is not the economy.” Such is the latest rationalization to support the “bull market” narrative. The question, however, is the validity of the statement. During the 2020 economic shutdown and surging market rebound I stated: “There is currently a...
Turning Time, Part 2
My friend Neil Howe titled his latest book The Fourth Turning Is Here because, well, the Fourth Turning is here. It is no longer the decades-away crisis he and the late William Strauss described in their 1990s books. As noted last week, each “turning” is generally 20...
China’s stubborn savers risk precipitating liquidity trap
Summary Chinese investors, companies flock to CDs for higher returns Liquidity trap brewing as loss of confidence in economy spreads Money managers draw parallels with Japan's 'balance sheet recession' in 1990s SHANGHAI/SINGAPORE, Aug 4 (Reuters) - China's consumers...
Bullish Measures Are Getting Really Bullish
“Bullish measures are getting really bullish.” This is an interesting statement, given how “bearish” sentiment was in 2022. As I noted then: “Investor sentiment has become so bearish that it’s bullish. One of the hardest things to do is go “against” the prevailing...
Turning Time
We talk frequently about the way central banks and governments affect the economy. In the grander scheme of things, though, whatever the Fed does is more like throwing a hand grenade into a large building. Yes, you’ll make some noise and cause some damage. People may...
Deficits, Debt, And Why $32 Trillion Matters
While Washington continues a seemingly unbridled spending spree under the assumption “more spending” is better, debts and deficits matter. To better understand the impact of debt and deficits on economic growth, we must know where we came from. The chart shows the...
“Beating Estimates” – How Companies Win In Earnings Season
No matter what happens, financially or economically, there is always a high number of companies regularly beating Wall Street estimates. Are Wall Street analysts that poor at predicting future corporate earnings, or is there something else potentially going on?...
ESG Is Dying Its Inevitable Death
ESG scoring and mandates remain a subject we have contested since it sprang to life in 2020. The push of “woke activism” on, and by companies, to meet nebulous or artificial standards has led to various bad outcomes. ESG refers to the Environmental, Social, and...
Housing Hiccups
While inflation is technically about general price levels, in practice we use it to describe living costs. That’s why the benchmarks measure consumer prices and personal consumption expenditures. These are where higher prices hurt because they apply to everyone. Other...
The Collapse Of The “Risk-Free” Delusion: Implications For The $133 Trillion Bond Market
Authored by Nick Giambruno via InternationalMan.com, Did you know that 2022 was the WORST year for US Treasuries in American history? The benchmark 10-year Treasury fell nearly 18%, and the 30-year Treasury collapsed over 39%. Many other bonds did even worse. Even if...
Disinflation will shift to deflation, hitting earnings and sending stocks lower, Morgan Stanley CIO says
Deflation could become a headwind for stocks, Morgan Stanley's Mike Wilson warned. That's because falling prices takes away firms' pricing power, which hurts earnings. "[T]his is a slippery slope for earnings growth and hence stock valuations, which are now quite...
Volatility Index Is So Low It Has To Go Up?
The volatility index is so low it has to go higher eventually. Such seems obvious, but this year, despite the banking crisis, higher interest rates, and slowing economic data, investors continue to abandon hedges amid bullish optimism. But what exactly is the...
A timeline of China’s 32-month Big Tech crackdown that killed the world’s largest IPO and wiped out trillions in value
Since Beijing quashed Ant Group’s IPO in November 2020, the upheaval in China’s tech sector has hit Alibaba, Tencent, Meituan and Didi A nearly US$1 billion fine levelled against Ant Group this month has been taken as a sign that the crackdown has finally come to an...
How to Prepare for Deflation
Inflation has been a stressful reality for many Americans recently, having a marked impact on consumer budgets. But with inflation rates finally slowing, and the threat of a recession in the news, deflation is also a phenomenon many should prepare for. Deflation, or a...
Flip Side of the Inflation Coin
The market, and maybe all of us, would like to believe the latest 3% annual CPI number was a harbinger of ever-lower inflation, and we are on the road to 2% inflation by year end. I would argue, “Not so fast.” Inflation is far from dead, and CPI will likely go...
Market Cycles And Why The Bull Isn’t Dead
There is much debate as of late on the current market cycle. Is it a bear market? Maybe. But what if this is just a correction within a 40-year-long secular bull market cycle? It is a question posed by Jacques Cesar previously. “The cyclical bull started in late March...
Beijing’s regulatory crackdown wipes $1.1 trillion off Chinese Big Tech
HONG KONG, July 12 (Reuters) - China's major tech companies have shed more than $1 trillion in value -equivalent to the entire Dutch economy - since the government's regulatory crackdown on the sector began more than two years ago, according to Refinitiv data....
Stock Risk – Does It Decline Over Time?
Does stock risk decline the longer the holding period is? It’s a great question and something I received a comment about. Blaise Pascal, a brilliant 17th-century mathematician, famously argued that if God exists, belief would lead to infinite joy in heaven, while...
Corporate Profit Growth Will Slow, Says The U.S. Fed
Michael Smolyansky, a senior Fed economist, claims corporate profit growth will slow appreciably. His case rests on corporate tax rates and interest rates. Access to his white paper, The coming long-run slowdown in corporate profit growth and stock returns, can be...
Markowski Stops SQI Diagnostics from Filing for Bankruptcy
Edited July 30, 2023 On June 16, 2023, SQI Diagnostics (SQI), a leader in the science of lung testing, announced that it planned to voluntarily file for bankruptcy. Upon the legal action being filed the shares of the publicly traded SQI Diagnostics that are...
Muddled Optimism
“A man hears what he wants to hear and disregards the rest…” —The Boxer, Paul Simon, 1969 One of the hardest parts of economic forecasting is separating what we expect from what we want. Actually, this is part of the human condition, genetically programmed into us and...
Workers are still raiding their retirement savings at record rates
The share of workers robbing from their future selves remains at an all-time high. Thirty-seven percent of workers have taken a loan, early withdrawal, and/or hardship withdrawal from their 401(k) or similar plan or IRA, according to a survey released Thursday by the...
Endless Intervention
National leaders are (or should be) reluctant to enter wars because, once begun, they are often hard to end. You could be bogged down for years, vainly trying plan after plan as the damage accumulates. Monetary policy works the same way. Central bankers think they can...
Student Loan Repayments – Will It Start The Recession?
Millions of young Americans will face the end of the student loan payment moratorium this summer. Why is this happening now, after a three-year break from payments? It is the result of the recent passage of the “Fiscal Responsibility Act” to raise the debt ceiling....
Bull Trap Or A Bull Market?
Is the recent rally a “bull trap,” or are we in a new “bull market?” Such was a question I recently received on Twitter. Of course, understanding the term “bull trap” is needed for those not deep into technical analysis. “A bull trap is a false signal, referring to a...
Signs, Signs, Everywhere Signs (But No Recession Yet)
“Signs” was a song by the Five Man Electrical Band in 1970 about the hippie movement. The song came to mind as I was looking at the economic data recently. There are “Signs, Signs, Everywhere A Sign” of a recession, but no recession yet. For example, as of the end of...
A Funny Kind of Recession
I’ve often thought it would be fun to convene a therapy group of weather forecasters and economic forecasters. Both face the same frustration: Everybody wants a clear, simple answer they can’t possibly give, because they don’t know. Then they get blamed for being...
Short sellers are betting more than $1 trillion against US stocks after big run
Total US short interest exceeded $1 trillion as of last Friday, S3 Partners data shows. The top five shorts are mega-cap tech stocks Tesla, Apple, Microsoft, Nvidia and Amazon. That comes after big stock market gains so far this year. US short interest this month rose...
Speculation In A.I. May Face Challenges
The current market speculation surrounding artificial intelligence (A.I.) has garnered everyone’s attention. You can’t turn on a television or pick up a newspaper without a mention of “artificial intelligence.” The “F.O.M.O.” (Fear Of Missing Out) in stocks associated...
A Skip, Not a Stop
A year ago, the US Consumer Price Index was rising at an almost 9% annual rate. The Federal Reserve was trying to change that trend with tighter policy. But it wasn’t just the Fed. All of us—businesses, consumers, everyone—responded to the pain. Good news: Our...
New Bull Market? It’s Different This Time.
“It’s a ‘New Bull Market’!” Over the past few days, the call of a new bull market has plastered headlines and media commentary. To wit: “The S&P 500 rallied Thursday to end the day in a bull market, marking a 20% surge since its most recent low, reached on October...
BofA’s Hartnett Sees Big US Stock Rally Followed by Big Collapse
The S&P 500 may have entered a technical bull market last week, but Bank of America Corp.’s Michael Hartnett says it’s not the start of a new major rally in equities. The strategist who correctly predicted the selloff in stocks last year said in a note Friday he’s...
The AI-fueled rally in US stocks is too narrow – and that’s setting up the market for a ‘digestion phase’, Citi strategist says
The hype over AI has driven a narrow rally in stocks - gearing equities up for a "digestion phase," a Citi strategist said. "This is not a broader market move. This is a very narrow move if you will from that perspective," he said. Investors have been wary about the...
Bullish Sentiment Rises As FOMO Kicks In
Bullish sentiment has surged as the “Fear Of Missing Out,” or FOMO, kicked in in recent weeks. It is somewhat interesting to write this blog, given that we discussed the exact opposite roughly one year ago. “Investor sentiment has become so bearish that it’s...
Storm Cycles
In economics we often talk about cycles. “Business cycle theory” is an entire academic sub-field whose basic idea is that economic history really does repeat itself. Not in every detail, of course, but as a recurring sequence of expansions and recessions. More...
Earnings Improve. But Beware Of Trojan Horses.
Since October 2022, the stock market has traded consistently higher as earnings improved. With the first quarter earnings season behind us and the second quarter approaching, will earnings improve further? In 2021 and 2022, we wrote several articles discussing why...
US Family Offices Top Pay Ranks With $1 Million CIO Salaries
About 40% of US family office CIOs make at least that amount ‘They’re prepared to pay for the best’ in US, recruiter says It pays to be chief investment officer at a US family office. The private investment firms of ultra-wealthy Americans have the greatest number of...
Breadth Not As Strong As Advance-Decline Suggests
In several recent blog posts and weekly Bull Bear Reports, we discussed our concern over the narrow breadth of the rally in 2023. To wit: “The A.I. chase is making for a very narrow market. As Bob Farrell once quipped: “Markets are strongest when they are broad and...
Carvana Cancels $1 Billion Debt Swap as Creditors Hold Out
Used car retailer fails to lure enough investor participation Key debtholder group has opposed the debt exchange offer Carvana Co. canceled a $1 billion debt swap after a group of creditors refused to exchange their notes, posing a challenge as the used car retailer...
Monetary Conditions Index Is Working Against The Fed
Could monetary conditions be supportive of the “soft landing” scenario? While the “recession” versus “no recession” debate rages, there is a precedent for a “soft landing” scenario. Such is where the economy slows substantially but avoids a deeper contraction....
A Much-Needed Crisis
“Crisis” is an overused word. Actual crises are those rare times when we are on the knife edge of disaster. It’s not a crisis when a bank fails, or Congress can’t agree on a budget. Those are annoyances (unless it's your bank). While not good, they don’t spell...
Technical Review Of The Market: Bulls In Control
Lately, we discussed macro-related market issues such as the” A.I., chase,” but a technical review can help manage shorter-term risks. Currently, the debate is about the market rally from the October lows. Is it a resumption of the 2009 bull market trend or an...
The Treasury Bond. It’s Time Has Likely Come.
I received many emails and questions on “why” we are adding the U.S. Treasury bond to our portfolios. The question is understandable, given its dire performance in 2022, where bonds had the biggest drawdown since 1786. However, there is, as they say, “more to the...
Goldman Says US Mutual Funds Suffer From Big Tech Aversion
Only a third of funds are beating benchmarks, strategists say Funds underweight the seven stocks driving Wall Street gains A reluctance by US mutual funds to invest in big tech stocks, which have staged a ferocious rally this year, is costing them dearly as they’re...
Local alcohol distributer sees drop in sales after controversial ad
With sales plummeting, local distributors of Anheuser-Bush products are feeling the pressure. Mitchell Distributing supplies local businesses in Mississippi and says these products make up roughly 64% of alcohol sales across the entire state. Since the recent...
Goldman Says Stocks Risk ‘Elevator Down’ With Quants Near Max Long
Pain trade is stocks up on debt deal, then correction: Rubner Pullback is bad news for hedge funds just warming up to stocks The stock market is becoming more prone to a swift pullback as opposed to keep climbing at this stage, with rules-based traders boosting their...
A.I., Narrow Markets, And The New T.I.N.A.
The A.I. chase is making for a very narrow market. As Bob Farrell once quipped: “Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.” Breadth is important. A rally on narrow breadth indicates limited participation,...
AI-Generated Hoax of Pentagon Explosion Sparks Brief Market Sell-Off
This Monday marked a new high—or arguably low—in demonstrating the power of artificial intelligence (AI). A picture depicting a fabricated explosion at the Pentagon, quickly flagged as being AI generated, spread like wildfire across social media. It also appears to...
A Chinese company is releasing an ultra-cheap EV that costs less than almost any new car in America — here’s how that’s possible
Electric vehicles (EVs) are about to get cheaper and more accessible around the world, as Chinese automotive company BYD has now created the most inexpensive EV in existence. Dubbed the “Seagull,” the car was recently unveiled at the Shanghai auto show, and according...
Monetary Support Suggests Bear Market Is Possibly Over
Could massive monetary support have softened the deep bear market many expected? It is an interesting question. Particularly given the Fed has hiked rates at one of the most aggressive paces in history. Combined with inverted yield curves, surging debt levels, and...
Technology Turning
We often talk about technology’s influence on the economy. After the Strategic Investment Conference, though, I’ve decided that isn’t strong enough. It’s more correct to say technology is the economy. But when I use the word technology here, I'm not talking about the...
The AI Revolution. A Repeat Of History.
The artificial intelligence, or “AI,” revolution is upon us. The financial media and headlines are abuzz with stories of generative “AI” and the subsequent “industrial revolution.” Not surprisingly, attention has turned to AI with the launch of ChatGPT. The benefits...
SVB’s Former CEO Says Fed, Social Media Contributed to Bank’s Collapse
Becker cites efforts made to overhaul bank in his testimony Signature Bank executives are also set to testify Tuesday The fastest pace of rate hikes by the Federal Reserve in decades combined with negative social media sentiment contributed to the failure of SVB...
New York Manufacturing Index Plunges Most Since April 2020
Empire State factory gauge slumped more than 42 points in May Nearly half of all respondents cited worsening conditions A gauge of New York state manufacturing activity slumped in May by the most in more than three years as orders and shipments shrank abruptly. The...
Plan for Paralysis
This year’s Strategic Investment Conference is wrapped up, but it’s not over. We spent five days thinking the unthinkable. I, for one, will continue not just thinking about it but meditating on it. I believe we got some serious insight into this decade’s fin de...
Why Future Returns Could Approach Zero
What if I told you that future returns could approach zero? Such seems hard to believe, considering young investors piling back into the markets since the beginning of the year. As I discussed previously, this behavior follows the clubbing many received in 2022. “A...
COT Extreme Positioning Suggests The Bears May Be Wrong
The COT (Commitment Of Traders) data, which is exceptionally important, is the sole source of the actual holdings of the three critical commodity-trading groups, namely: Commercial Traders: this group consists of traders that use futures contracts for hedging...
Goldman Sachs Warns of Stock Volatility as Quant Traders Pile In
Systematic investors have been swooping into US stocks Buy options to protect against pressure on prices: Goldman Goldman Sachs is urging investors to cushion themselves from the possibility of increased volatility in the next few months as Wall Street quants dive...
Odds High for Extinction of Tesla, U.S. Auto Industry & 3rd U.S. Great Depression
My findings from researching the auto industry’s vehicle retail price trends and the profit margins and expense ratios for Tesla, General Motors and Ford were very disturbing. The odds are high that the three vehicle manufacturers and the entire U.S. Auto Industry...
Buffett on investing in EVs: ‘You won’t see anyone that owns the market’
It's premature to declare any winners in the electric vehicle competition, Warren Buffett said on Saturday. There's just too much uncertainty in the sector. "You will see a change in the vehicles, but you won't see anyone that owns the market because they changed the...
Minimum Wage & The Fed’s Biggest Fear
How does the minimum wage affect the Fed’s biggest fear? I touched on this subject previously as the Fed began its rate-hiking campaign. However, while the issue of the “millions of people” who aren’t paid a “living wage” for work makes headlines, the actual numbers...
A Rosie Forecast, and More
World economic growth is slowing. That’s so obvious, very few will disagree. I suppose there are people out there predicting imminent 1990s-like expansion, but they are few and far between. If recession begins soon, it will be the most anticipated one in history. This...
Taking Risk No Longer Necessary. But That Is A Problem.
Taking risks is no longer necessary to make a return on your savings. Not long ago, “cash is trash” was a common theme as savings accounts yielded zero. Of course, such was the intent of the Federal Reserve following the “financial crisis” in the hope that inflating...
Alibaba’s Faded Rally Signals Grim Outlook Ahead
(Bloomberg) -- It took only four weeks for optimism around Alibaba Group Holding Ltd.’s breakup plan to fizzle. Restoring it will likely be an uphill battle. Alibaba’s American Depositary Receipts are now 2.3% below where they were before the e-commerce firm announced...
Commercial Real Estate Market Faces Next Wave of Financial Stress, Apollo’s Rowan Says
Marc Rowan, the co-founder of Apollo Global Management Inc., says that the next wave of turmoil across the financial sector will likely come from the commercial real estate market. “It’s a bad day to be an office owner in San Francisco and Chicago,” Rowan, who is also...
Economist Says Stock Market Will Witness Largest Crash Since 1929 As U.S. Dollar Explodes
ZINGER KEY POINTS Henrik Zeberg said that stocks are likely on their way up while the dollar index (DXY) is likely on its way down. Last week, Zeberg predicted that Bitcoin would skyrocket this summer. Macroeconomist Henrik Zeberg expects a massive blow-off top for...
Conviction (Or How To Lose A Lot Of Money In Investing)
Conviction (kan-vik-shan): noun, a strong persuasion or belief; the state of being convinced. In life, there are things that we should be convicted and committed to. For example, the love for our families, spouses, and religious beliefs. We can also be convicted about...
Tesla’s biggest Chinese rival unveiled a ridiculously cheap electric car — see $11,000 BYD Seagull
Chinese electric-car maker BYD launched the Seagull, a ridiculously cheap hatchback. It costs roughly $11,000 to start and offers up to 251 miles of range, according to BYD. It can charge from 30% to 80% in 30 minutes. This sleek little hatchback is one of...
US Pending Home Sales Fall 5.2%, Biggest Drop Since September
Decrease in March contract signings missed all estimates ‘Supply is simply not meeting demand,’ NAR economist says US pending home sales fell last month by the most since September, suggesting the housing market isn’t totally out of the woods yet. The National...
Summers Says Inflation Won’t Get Back to 2% Without Downturn
The former Treasury secretary said he is ‘not that optimistic’ about the fight against rising prices and that the Federal Reserve lost credibility by acting too slowly. Former Treasury Secretary Lawrence Summers said taming inflation will likely lead to a...
Fund Manager Man GLG Says Stocks Need to Fall 26% to Reflect Looming Economic Slowdown
Man GLG’s Cole says markets are pricing in ‘almost no landing’ S&P 500 below 3,000 would reflect cyclical risks, he says US stocks need to drop by more than a quarter from current levels to adequately reflect the looming slowdown in economic growth and company...
Sell May In April And Go Away?
An old adage says investors should “Sell May And Go Away.” The historical analysis suggests summer months of the market tend to be the weakest of the year. The mathematical statistics prove this as $10,000 invested in the market from November to April vastly...
5 Economic Disasters We Were Warned About In Advance That Are Happening Right Now
Authored by Michael Snyder via The Economic Collapse blog, Our leaders were able to successfully kick the can down the road for a long time, but now many of our long-term problems are becoming short-term problems, and the economic outlook for the remainder of 2023 is...
BYD $11,450 EV Hatchback Set to Reshape China’s First-Car Market
Feature-packed Seagull launches into midst of China price war Later version may carry cheaper, safer sodium-ion battery A new electric hatchback starting from just 78,800 yuan ($11,450) from BYD Co. is set to intensify competition in China’s already crowded...
Breakeven Inflation Rates Falling Isn’t Bullish
What can breakeven inflation rates tell us about oil prices, energy stocks, and market direction? It turns out it’s a lot more than you think. Since 2021, as the impact of an economic shutdown collided with $5 Trillion in artificial, stimulus-driven demand, inflation...
Still Rethinking the Fed
Back before clocks went digital, you could say “a stopped clock is right twice a day” and even youngsters would know what you meant. A mechanism could be nonfunctional but occasionally correct. So it is with the Federal Reserve and its leaders. They make many mistakes...
Tesla Stock Has Second Worst Day In 2023 After Earnings As ‘This Keeps Investors Up At Night’
Tesla (TSLA) reported a big first-quarter earnings decline Wednesday night while revenue missed views. Profit margins for the global EV giant also fell below 20% as the company executes an aggressive price-slashing strategy. TSLA tumbled Thursday as a number of...
Tesla’s stock is plummeting. Here’s why one analyst thinks it’s ‘one of the most overvalued’ on the market and could drop another 80%
Tesla stock cratered nearly 10% on Thursday as investors assessed the impact of the electric vehicle giant’s aggressive price cuts and what CEO Elon Musk calls an “uncertain” economic environment. Tesla has slashed the prices of some of its most popular models six...
US Home Prices Fall Most in a Decade But Still Far From Affordable
US median selling price in March was 0.9% below year-ago level Houses are still expensive due to historically limited supply US housing prices are finally starting to come down, but not nearly enough for many aspiring buyers struggling to break into the market. The...
Tesla Increases Price of Model S, X in US After Shares Slump
The two still cost less than they did at end of first quarter Elon Musk has said he’ll sacrifice profit margins for growth Tesla Inc. increased prices of its Model S and X vehicles in the US after steep markdowns early this year took a toll on profitability and the...
The Cash Hoard Of 2023 (And The Sideline Money Myth)
The vast “cash hoard of 2023” has the bullish media salivating about what it means for the future of equities. That cash hoard in money market funds now exceeds $5.2 trillion. Such has brought forth the age-old narrative that the “money on the sidelines” is set to...
Zeekr X Takes On Tesla Model 3 With Incredible Performance and 348 Miles of Range at Just $27,600
Zeekr, the electric vehicle (EV) subsidiary of Chinese automaker Geely, has launched its first electric SUV, the Zeekr X. Boasting impressive performance and range, the Zeekr X is designed to offer an accessible entry point into the world of electric vehicles. Geely...
Fuel That Powers the Global Economy Is Flashing Recession Signs
US demand seen dropping 2% in 2023, with West Coast hit harder Trucking and container port activity both inch lower in China Signs of an economic slowdown are flashing in the global diesel market. In China, the number of trucks running on highways is noticeably down...
Recession Odds Jump As The Fed Crushes Consumers
Recession odds have climbed considerably since Jerome Powell’s testimony before Congress and the latest FOMC meeting. However, the recent failures of Silicon Valley Bank (SVB) and Credit Suisse (CS), as higher rates impact regional bank liquidity, also added to the...
Inflationary Choices
Spotting trend changes is the key to economic forecasting. They don’t happen often. Most of the time, this year will be similar to last year. The pace varies but the overall trend continues… until it doesn’t. Those who lived through the painful 1970s inflation...
US Economy Is Cooling Steadily as Consumers, Factories Pull Back
Retail sales slipped 1%, manufacturing output dropped 0.5% Michigan data showed jump in year-ahead inflation expectations The US economy moderated gradually as the first quarter drew to a close, with elevated inflation and borrowing costs restricting household...
Probability High for Investview to be Acquired
Investview shares (ticker: INVU) traded to as low as $0.017 and have been trading at prices below $0.02 since the company reported its results for the year ended December 31, 2022. Based on my analysis of the financials Investview shares should be aggressively...
Bullishness Remains Missing, Which Is A Good Thing
Despite media headlines, podcasts, and broadcasts suggesting “doom and gloom” lurks around the corner, investor bullishness has increased markedly since the October lows. This isn’t the first time we have discussed investor sentiment, which is often wrong at the...
Bullishness Remains Missing, Which Is A Good Thing
Despite media headlines, podcasts, and broadcasts suggesting “doom and gloom” lurks around the corner, investor bullishness has increased markedly since the October lows. This isn’t the first time we have discussed investor sentiment, which is often wrong at the...
Surging Tech Stocks Are About to Run Into an Earnings Season Buzzsaw
Tech earnings growth this quarter may be weakest since 2009 Apple and Microsoft trading above their historical multiples This year’s rally in the shares of the biggest technology companies is the best thing going for bulls. It’s about to run into an earnings season...
US Small Businesses Face Worst Credit in a Decade After SVB
NFIB survey shows a net 9% of firms said loans harder to get Larger share sees tighter credit conditions in coming months More US small businesses reported having greater difficulty getting a loan in March after multiple bank failures led to a further tightening of...
‘Sell Before May and Go Away’: Wells Fargo expects S&P 500 to drop to 3700
S&P 500 is likely to shift its direction in the coming days and likely correct 10% in the coming 3 to 6 months, Wells Fargo equity analysts told clients in today's note. S&P 500 Futures are trading modestly higher in pre-market Tuesday and "within spitting...
Apple’s 40% Plunge in PC Shipments Is Steepest Among Major Computer Makers
Apple Inc.’s personal computer shipments declined by 40.5% in the first quarter, marking a tough start to the year for PC makers still grappling with a glut of unsold inventory. Shipments by all PC makers combined slumped 29% to 56.9 million units — and fell below the...
Pivot to the Fourth Turning
The week we’ve been waiting for is here. The Strategic Investment Conference starts Monday, and we have a jam-packed schedule. This year is clearly the best SIC we've ever had in 19 years—a wide-ranging set of topics dealing with the issues that are most important to...
Thinking the Unthinkable
“Thinking the Unthinkable.” What does that phrase bring to mind? To me it suggests a situation that has become so stressed you are forced to consider undesirable solutions. Yet the opposite is possible, too. Thinking differently may reveal an immensely profitable and...
US Credit Conditions to Weaken to Post-Pandemic Low, Banks Say
Bank economists see tighter credit for businesses, consumers Survey was taken after recent banking stress, trade group says US credit conditions for consumers and businesses are expected to deteriorate in the next six months to their worst level since the pandemic,...
The Market Bottomed In October. Now What?
The market bottomed last October despite ongoing concerns about inflation, higher rates, recessionary risks, and a banking crisis. While the media headlines and youtube podcasts are filled with “crisis” headlines, as noted in “Analysts Raise Estimates,” expectations...
Fear of Stock Losses Has Retirement Savers Sticking With Cash
A survey finds many investors playing it safe, which could cost them in the long term. American workers are keeping large chunks of their retirement savings in cash to protect themselves from another slump in the stock market. Millennial workers have a third of their...
BofA witnessed the biggest week of equity outflows since October
Despite the ongoing rally in U.S. equities with the S&P 500 up nearly 4% since last Monday (27/03), Bank of America’s clients were selling stocks. Analysts at the firm highlight $3.2 billion of outflows from U.S. equities, marking the first net sale by the...
Disturbing Thoughts
Remember when banks were small? Those old enough to have a bank account in the 1970s should. Back then, most people did their banking with a locally owned institution, often the First National Bank of (Your Town). These were fully independent banks, not branches of...
Banking Crisis Is How It Starts, Recession Is How It Ends
As the Fed tightens monetary policy, a banking crisis is historically the first evidence that something was breaking. As noted recently in “Not QE,” “Last week, amid a rash of bank insolvencies, government agencies took action to stem a potential banking crisis. The...
Bloomberg Wealth: Recession Vibes Are Strong
The odds of a recession are growing. That’s the takeaway from a new survey of economists that Bloomberg recently conducted. The probability of a downturn in the next year is now 65%, up from 60% in February. It feels like we’ve been saying this for months, but a few...
Bullish Buy Signals Mark 4200 For Relief Rally
Despite an ongoing “banking crisis,” investors continue to chase stocks triggering several bullish buy signals. As noted in this past weekend’s newsletter, two primary reasons exist for this current dichotomy. The first is psychological, and the second is purely...
Recession Odds Rising
Recently I saw someone share a clip from their weather app. It said, “Rain expected at 3 pm,” right above a little graphic showing a 30% chance of rain at 3 pm. What’s wrong with that picture? Well, if the calculated odds of rain were only 30%, then “expected” wasn’t...
Recession Indicators Say The Fed Broke Something
Recession indicators are ringing loudly. Yet, the Fed remains focused on its inflation fight, as repeatedly noted by Jerome Powell following this week’s FOMC meeting. During his press conference, he specifically made two critical comments. The first was that inflation...
‘Sell The Last Rate Hike’: BofA Sees Stock Market Tumbling On Bearish Sentiment, Regional Bank Run
"Ain't nothing more dangerous than a bear at the end of a bear market," Bank of America investment strategist Michael Hartnett said about the stock market in his latest "The Flow Show" report. The analyst stated the stock market will attempt new lows over the next...
Wall Street Expects the Fed to Cut Rates. That Isn’t a Good Sign
Market ignores Powell, prices in rate cuts on recession risk ‘Rate cuts would actually be negative’ for stocks, Sohn says Wall Street pros are warning investors who bid up US stocks on expectations the Federal Reserve will soon be cutting interest rates to remember an...
Amazon’s Pricey Stock Is Getting Harder to Justify
Slower sales growth has investors balking at premium valuation Despite rebound, stock remains down over 46% from a 2021 peak For years, Amazon.com Inc.’s aggressive growth strategy has enabled the stock to command a hefty premium to big tech peers. But with its...
GMO co-founder warns of 50% stock decline in next market phase
Grantham suggests that the Federal Reserve's low interest rate policy has fuelled this bubble by making borrowing cheap and driving up asset prices. Renowned investor and co-founder of GMO, Jeremy Grantham, had issued a warning in his most recent write-up titled...
Bloomberg Invest: Stanhope CEO Sees ‘Substantial’ Crisis Impact
Stanhope Capital Chief Executive Officer Daniel Pinto warned that fallout from the banking crisis will be “substantial” and the Federal Reserve must bear the blame. “I agree we are not on the verge of a massive run on the banks but there will be very, very substantial...
“Not QE” Puts Fed Between A “Rock And A Hard Place”
“QE” or “Quantitative Easing” has been the bull’s “siren song” of the last decade, but will “Not QE” be the same? Last week, amid a rash of bank insolvencies, government agencies took action to stem a potential banking crisis. The FDIC, the Treasury, and the Fed...
Another Unstable Finger
“There’s an old saying: Whenever the Fed hits the brakes, someone goes through the windshield,” said Michael Feroli, chief economist at J.P. Morgan. “You just never know who it’s going to be.” (The New York Times, March 16, 2023) For years I’ve used a sandpile...
Consensus View Of “No Recession.” Could It Be Wrong?
Could the consensus view of a “no recession” scenario be wrong? As portfolio managers, this is the question we ask ourselves daily. Since the lows of last October, the technical backdrop has improved markedly, as discussed last week in “Bear Trap.” To wit: “Our most...
Where to Look for Signs Financial Turmoil Is Impacting the US Economy
Less lending, tighter standards would signal softer spending Business surveys will be parsed for signs of growing caution The key to if — or when — the US economy falls into recession will depend on how the latest turmoil in the banking sector spills over to Main...
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Statements made by Michael Markowski and Profitfromthecrash.com pertaining to returns made from investing in Airbnb, UBER and Snapchat are not indicative of a TRACK RECORD. They are examples for educational purposes only.