The Bond Rally Is Not A Good Omen For The Stock Market
- Bonds continue to defy the experts.
- Bonds rallying since December even as the Fed tapers back its QE bond-buying, and even as pressures build for the Fed to begin raising interest rates sooner than expected.
- They tend to move opposite to stocks, yet have rallied even though the stock market has rallied to new highs.
Jobs Report Not As Positive For The Economy As Some Think
- The jobs report for June was great news.
- But employment is a lagging indicator and says next to nothing about the direction of the economy.
- Meanwhile, other recent economic reports paint an entirely different picture.
A Second Quarter GDP Bounce-Back May Not Be Bullish
Jun. 27, 2014 • 13 Comments
- The economy (GDP) was unexpectedly negative in the first quarter, but is expected to bounce back in the second quarter.
- The popular opinion is that it will mean the bull market will be fine.
- As the chart in this article shows that is not at all a sure thing.
Is Stage Set For Markets To Again Be Smarter Than The Fed?
- In every economic cycle the Federal Reserve eventually winds up ‘behind the curve’, still trying to keep consumers, businesses, and investors optimistic when the reality no longer supports that outlook.
- Markets are not fooled, and have bear markets underway well before the Fed admits the changed conditions.
- Has this cycle reached that stage?
Worry About The Second Quarter, Q1 Is History
- Only two weeks left in second quarter.
- Has the expected big economic snap-back from the winter slowdown shown up yet?
- The world’s wealthiest investors, presumably also the most successful, seem worried, having raised unusual levels of cash, while unworried individual investors have become even more bullish.
The Truth About The Jobs Report And The Economy
Jun. 6, 2014 • 30 Comments
- The economy may be recovering from the winter slowdown, but the jobs report is certainly not evidence of that.
- Here is the reality beneath the headline that 217,000 jobs were created in May.
- The truth about the jobs report and the economy.
Bull Market Continues, But Will Cash Be Summertime King?
- Increasing similarities to 2011, in the current economy, investor sentiment, valuation levels, and the Fed’s situation, are not encouraging.
- The S&P 500 plunged 19% in 2011 before the Fed realized what was happening.
- The Fed rushed in with additional QE stimulus that prevented the significant correction from worsening into a bear market.
Are Some Proven Investment Strategies Too Simple To Accept?
- An interesting look at Jeremy Grantham’s letter to clients of his $117 billion international money management firm for institutions and wealthy investors.
- Decades of his firm’s studies confirm the remarkable performance of several investment strategies, and how investors blow them off because they seem too simple to be effective.
- Are some proven investment strategies too simple to accept?
Wall Street Says It's Different This Time
- It’s a good thing it’s different this time. We know it is because Wall Street says so.
- So I must be a dinosaur in my thinking that conditions at previous tops, valuation levels, warnings from "smart money," seasonality, etc. going back at least 100 years have always had relevance when similar conditions appeared in later periods.
- Not with enough accuracy to provide buy or sell signals, but certainly with enough to warn of unusual risk.
'Defensive Stocks' Are Not Much Help In Market Downturns
- Wall Street’s advice on how to prepare for possible market corrections has always been the same.
- No matter what happens people will still have to eat, drink and take their medicine.
- So consumer staples, food, beverage, healthcare and drug companies will do well even in market downturns.
- Nervous investors now piling into those "defensive" areas would be shocked to know how terribly they have performed in previous market declines.
Is Housing Ringing The Stock Market's Bell Again?
- It is said they don’t ring a bell at stock market tops.
- However, the housing industry has sometimes been quite adept at doing so.
- Is it currently ringing its warning bell again?
More To Economic Slowdown Than Weather
- Hopes are currently that the weather was so harsh that it had an unusual impact that accounted for the economy’s problems.
- It’s widely expected, or at least hoped, that economic reports for March and April will show a significant bounce-back that will confirm that assessment.
- So far, the picture is not all that reassuring.
The Market Is Too Dependent On Hopes That Await Evidence
- The market remained positive, near its December peak for three months, primarily based on these four hopes.
- At this point it needs more than hopes. Meanwhile, the volatility has spawned loose talk of bubbles and crashes.
- However, both bubbles and crashes are extremely rare events, neither likely to take place.
The Market's Annual Seasonality Is A Real Concern This Year
- The thought of Sell in May type seasonality is out of favor this year.
- After all, it failed to outperform the market for two straight years.
- Here's why it could come roaring back big-time this year to bite the unwary investor.
U.S. Market Swimming Against An Ominous Global Tide
- The U.S. market has only been stalled so far this year, Dow down 1%, S&P 500 up 1%.
- However, global markets outside of the U.S. have been in retreat, some in substantial bear markets.
- The rising tide of global market declines raises the risk that the U.S. market will not be able to endure against that tide much longer.
Can U.S. Markets Avoid A Serious Correction Again?
- Market decline this week is causing some concern.
- At this point it is minor and hardly a blip on the charts.
- But that does not mean it should be ignored.
Safe Havens Are Trouncing Stocks So Far This Year
- Investors are going crazy for stocks.
- Perhaps looking in the rear view mirror at last year’s big gains, they have unusually high portfolio allocations skewed to stocks from bonds.
- Yet so far this year stocks have gone almost nowhere, while safe haven bonds, and particularly gold, are significantly out-performing the stock market.
- Markets Still Loving The Economy's Increasing Problems
- Watch For A Taper Time Out
- The Economic Outlook Is About More Than Just Jobs
- Bonds Are Defying Dire Forecasts
- Was The Fed Too Hasty With Its Taper Decision?
- Don't Blame The Weather For Dismal December Economic Reports
- The Jobs Report Rained On New Fed Chair Yellen's Honeymoon Period
- Will The Market's 2013 Winners Also Be Winners In 2014?
- Investor Expectations Also Need Tapering As We Enter 2014
- The Fed Will Still Provide Massive QE Next Year - But
- Will The Real Economy Please Stand Up?
- Market Seasonality And The Fed Are A Powerful Combination
- The Fed Is Backed Into A Corner
- Why It's Still Only A Cyclical Bull Market Within The Long-Term Secular Bear
Don't Worry So Much About The Record U.S. Government Debt
Nov. 8, 2013 • 20 Comments