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Now Is The Time To Buy Stocks, Not Sell Them
Sun, Aug. 3 • 40 Comments
- The market selloff was prompted by noise rather than real data.
- On a YoY basis, the signals remain in range.
- There is no call for higher bond yields.
- Stocks remain cheap to bonds.
A Brief Note On The Second Quarter
- Both nominal and real growth remain subdued.
- There are no signs of acceleration.
- The bond market has over-reacted.
Janet Yellen: The Manchurian Candidate?
Mon, Jul. 28 • 2 Comments
- Both the Right and Left see Yellen as a radical departure from her predecessors.
- But she is just another Bernanke and she won’t upset the apple cart.
- We can expect to see nothing radical coming out of the FOMC in the foreseeable future.
Bond Yields Don't Rise When The Fed Tightens Prematurely
Thu, Jul. 17 • 19 Comments
- Many pundits are predicting stronger growth and higher bond yields, but they are wrong.
- The FOMC is withdrawing stimulus in the face of slowing growth.
- The outlook is for low money growth, low inflation, low nominal growth and low bond yields.
- Low bond yields support high PE ratios.
Ignore The June Employment Data
Thu, Jul. 3 • 27 Comments
- The June employment numbers are noise.
- Employment growth remains slow.
- There is little risk of an inflation shock.
The Equity Risk Premium Is Still High
- The stock market remains attractively valued.
- The equity risk premium remains high by historical standards.
- The size of the premium reflects the low yields on offer in the bond market.
Draghi's Latest Announcement Is Another Big Nothing
Sat, Jun. 7 • 4 Comments
- Another "growth package" from the ECB.
- No effective policy to spur money growth.
- Eurozone inflation and growth remain out of reach.
The FOMC Is Plotting 'Normalization'
- The Fed intends to “normalize” monetary policy and reduce the size of its balance sheet.
- There would appear to be no opposition on the FOMC to this objective.
- The FOMC doves have flown the coop.
- The outlook is for low bond yields and high equity multiples.
Why Bond Yields Are Falling
- Bond yields have been falling since January.
- This has nothing to do with monetary stimulus.
- Falling yields signal declining inflation and growth expectations.
- Stocks are the only option for today’s investor.
Bond Prices Rise As Fed Tapers - Markets Perplexed!
- Bond yields are falling despite the Fed’s decision to taper QE.
- This is because QE has not affected the economy.
- Falling bond yields are not bearish for stocks.
Implications Of Weak Growth For Financial Assets And Monetary Policy
- The economy is flirting with recession.
- This is bullish for bonds and stocks, and bearish for precious metals.
- It will take more bad news for the Fed to reverse course.
Implications Of Deflation Risk For Stock Prices
Sun, Apr. 13 • 26 Comments
- The possibility of deflation poses a risk to current stock market valuation.
- Inflation is falling and the risk of a deflationary episode is growing.
- Deflation is a monetary phenomenon caused by inadequate money growth.
- The Fed appears to be unable or unwilling to raise the rate of inflation to its targeted level.
Weak Inflation Supports Current Equity Prices
- High P/E ratios do not signal an overvalued equity market.
- Multiples are high, because bond yields are low.
- Bond yields are not depressed by the Fed's bond buying.
- Bond yields are likely to remain low, given the inflation outlook.
NY Fed Paper Says That Stocks Are Still Cheap
- The ERP is still close to its all-time high set in July.
- Stocks are still a buy.
- But don't buy stocks if you expect higher inflation.
Valuing The Bull Market
- One school believes that equities can be valued without reference to bond yields and suggests the market is overvalued.
- Another school believes that equity yields should be compared with the risk-free rate and suggests that it is undervervalued.
- A lot depends on the outlook for bond yields.
The Outlook For Stocks And Bonds: Still Bullish
- The overall macro picture is one of weak money and credit growth.
- Bond yields have overshot inflation and will decline.
- Stocks remain attractive and there is still room for prices to rise.
- What Are Puerto Rican Bonds Worth?
- More On Puerto Rico
- Puerto Rico's Cash Crisis
- The Selloff Is Rational
- Puerto Rico On The Brink Of Default
The Post-Crash Credit Contraction Is Over
Wed, Jan. 22 • 16 Comments
- My 2014 Predictions: Still Bullish
- 3rd Quarter Growth: Please Ignore The Blip
- Bitcoin: The Future Of An Illusion
- The Fed's October Minutes: Embracing Defeat
- The Treasury Bond Remains The Queen Of Debt Securities
- Bearish Scenarios Lack Credibility
- Yellen Can't Change Fed Policy
- Forget The Debt Ceiling: Stock Prices Are Very Low
- The Debt Ceiling Is Not Lehman
- Mr. Market Is Yawning