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Lance Roberts

Lance Roberts

Chief Strategist/Economist for Clarity Financial, Editor , Talk Show host Lance Roberts Show @ksev700, Analysis without the spin.

Articles by Lance Roberts

Interview: Candid Coffee – Mid-Year Market Review

20 days ago

Last weekend, I joined Richard Rosso, CFP and Danny Ratliff, CFP to discuss the outlook for the markets for the rest of this year and take questions from our attendees.
We cover a lot of ground from:
The financial markets now and what to expect. 
Inflation outlook.
The dollar.
Why Government actions are destroying the foundation of capitalism.
Plus some interesting questions on 
Why you shouldn’t put real estate in a tax-deferred account.
Better ways to build tax-free retirement funds
Cryptocurrencies and gold

Plus much more.

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Technically Speaking: Yardeni – The Market Will Soon Reach 4500

29 days ago

“The strong economic recovery will not get interrupted by inflation or a credit crunch, and the market will soon reach 4,500.” – Ed Yardeni via Advisor Perspectives
After discussing BofA’s view of why the market could drop to 3800,  I thought it fair to discuss a more optimistic view.
BofA’s view of a market correction was a function of the more exuberant “optimism” in the market.
To wit:
“This analysis is interesting, particularly when analysts are rushing to upgrade both economic and earnings estimates.”
“More importantly, investors are incredibly long-biased in portfolios, with equity allocations reaching some of the highest levels in history.”
What Subramanian questioned is whether all the “good news” is already “priced in?”

“Amid increasingly euphoric

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Technically Speaking: If Everyone Sees It, Is It Still A Bubble?

May 11, 2021

“If everyone sees it, is it still a bubble?” That was a great question I got over the weekend. As a “contrarian” investor, it is usually when “everyone” is talking about an event; it doesn’t happen.
As Mark Hulbert noted recently, “everyone” is worrying about a “bubble” in the stock market. To wit:
“To appreciate how widespread current concern about a bubble is, consider the accompanying chart of data from Google Trends.
It plots the relative frequency of Google searches based on the term ‘stock market bubble.’ Notice that this frequency has recently jumped to a far-higher level than at any other point over the last five years.”

Concern of Stock Market Bubble, 2016 – 2021 – Click to enlarge

What Is A Bubble?
“My confidence is rising quite rapidly that this

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#MacroView: Are Stocks Cheap, Or Just Another Rationalization?

May 7, 2021

Are stocks “cheap,” or is this just another bullish “rationalization.” Such was the suggestion by the consistently bullish Brian Wesbury of First Trust in a research note entitled “Yes, Stocks Are Cheap.” To wit:

“The Fed remains highly accommodative, there are trillions of dollars of cash on the sidelines, vaccines have reached over 50% of Americans, and the economy is expanding rapidly. Some valuations have been stretched, but the market as a whole remains undervalued. As a result, we remain bullish and are lifting our targets.”

Yes, it is true the Fed remains highly accommodative, which has undoubtedly pushed asset prices higher. In fact, financial conditions recently reached a historic low, which suggests elevated asset valuations ironically.

We have busted

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All Inflation Is Transitory. The Fed Will Be Late Again.

May 2, 2021

In this issue of “All Inflation Is Transitory, The Fed WIll Be Late Again.“
Market Review And Update
All Inflation Is Temporary
The Fed Should Be Hiking Now
Portfolio Positioning
#MacroView: No. Bonds Aren’t Overvalued.
Sector & Market Analysis
401k Plan Manager

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Catch Up On What You Missed Last Week
Market Review & Update
Last week, we said:

“The market is trading well into 3-standard deviations above the 50-dma, and is overbought by just about every measure. Such suggests a short-term ‘cooling-off’ period is likely. With the weekly ‘buy signals’ intact, the markets should hold above key support levels during the next consolidation phase.” 

“As shown above, that is what is currently

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A Major Support For Asset Prices Has Reversed

December 24, 2020

In 2019, we wrote about how corporate share repurchases, or “stock buybacks,” had accounted for nearly all buying in the market. A year later, that significant support for asset prices has reversed.
While markets have certainly been on a tear this year, due to massive amounts of Federal Stimulus, it has been an advance solely on valuation expansion. While the decline in 2020 earnings was no surprise given the pandemic, earnings were already declining in 2019. The chart shows this in the
return attribution of the S&P 500.
Notably, while investors are willing to “pay more for less” in earnings, revenue growth deteriorated more.


Overpaying For Earnings
Such is not a new phenomenon. Since 2009, sales per share, what happens at the top of the income statement,

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The Theory Of MMT Falls Flat When Faced With Reality (Part II)

July 6, 2020

If you missed Part-1 of our series on the “Theory Of MMT Falls Flat When Faced With Reality,” start there. In Part-2, we complete our analysis of the theory and the potential ramifications. The premise of our discussion was this recent explanation of “Modern Monetary Theory” by Stephanie Kelton.
As discussed previously, economic theory always sounds much better than how it works out in reality. The reason is that in “theory,” supply and demand imbalances always revert to previous norms. However, in “reality,” humans rarely act or react, according to theory.
We left off in Part-1, discussing the similarities between the U.S. and Japan. Most importantly, while MMT suggests that debt and deficits don’t matter in theory, economic realities have been vastly

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The Savings Rate Conundrum

November 8, 2017

The economy is booming.
Employment is at decade lows.
Unemployment claims are at the lowest levels in 40-years.
The stock market is at record highs and climbing.
Consumers are more confident than they have been in a decade.
Wages are finally showing signs of growth.

What’s not to love?
I just have one question. If things are so good, then why is America’s saving rate posting such a sharp decline?
The answer is not surprising. Despite the bullish economic optics, the reality for the majority of Americans is they simply have not yet recovered from the financial crisis. As the chart below shows, while savings spiked during the financial crisis, the rising cost of living for the bottom 80% has outpaced the median level

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The Psychological Impact Of Loss

January 22, 2017

For the third time in four weeks, the market was closed on Monday due to a holiday. Not only is this week shortened by a holiday,  it is also coinciding with the annual Billionaire’s convention in Davos, Switzerland and the Presidential inauguration on Friday. Increased volatility over the next couple of days will certainly not be surprising.
In this past weekend’s missive, I discussed a variety of “extremes” being registered in many areas of the market and particularly in prices. To wit:

“I have often compared market prices to the equivalent of “stretching a rubber band.” Prices can only deviate so far from the long-term trend line before a mean reverting event eventually takes place. Much like a “rubber band,” prices can only be stretched so far before having to be relaxed to provide the ability to be stretched again.
The chart below shows the long-term trend in prices as compared to its underlying growth trend. The vertical dashed lines show the points where extreme overbought, extended conditions combined with extreme deviations in prices led to a mean-reverting event.”

S&P 500 Large Cap Index(see more posts on S&P 500 Large Cap Index, ) – Click to enlarge

“This is shown a bit clearer below which compares the deviation of the S&P 500 from the long-term growth trend.

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End Of The Bond Bull – Better Hope Not

October 26, 2016

It’s been really busy as of late to cover all of the topics I have wanted to address. One topic, in particular, is the bond market and the ongoing concerns of a “bond bubble” due to historically low interest rates in the U.S. and, by direct consequence, historically high bond prices.
Bob Bryan, via Business Insider, recently penned the following note:
“Bond yields are low. Historically low. Yields on government bonds in the US, Europe, Japan, and beyond are at seriously depressed levels. Even corporate bonds are reaching multi-decade lows as more investors pour into the asset class.
While the serious flows into these debt instruments continue seemingly unabated, Scott Colyer, CEO, and CIO at Advisors Asset Management thinks that the continued support for the asset makes no sense stating:
‘Bond prices are the highest they’ve ever been, yields are the lowest they’ve ever been and we go back to 1776, this is such an anomaly it’s not even funny.’”
While many financial analysts, asset managers and the media have been quick to adopt the idea of a “bond bubble,” there are a few things to consider with respect to this concept. As I have discussed previously, we are currently in the midst of the third stock market bubble since the turn of the century, but a bubble in bonds is a bit of a different animal.

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Fed GDP Projections

October 23, 2016

“It is not surprising the Fed once again failed to take action as their expectations for economic growth were once again lowered. In fact, as I have noted previously, the Federal Reserve are the worst economic forecasters on the planet.
As shown in the table/chart below, not only are the expectations for economic growth now the lowest on record, the Fed has given up on 2% growth for the economy with the long-run economic projections now at just 1.9%.”

GDP – Estimates vs. Actual 2011-2017FOMC Economic Projections, GDP – Estimates vs. Actual 2011-2017 – Click to enlarge

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Weekend Reading: Another Fed Stick Save, An Even Bigger Bubble

September 23, 2016

As I noted on Thursday, the Fed non-announcement gave the bulls a reason to charge back into the markets as “accommodative monetary policy” is once again extended through the end of the year.
Of course, it is not surprising the Fed once again failed to take action as their expectations for economic growth were once again lowered. Simply, with an economy failing to gain traction there is little ability for the Fed to raise rates either now OR in December.

Click to enlarge.
However, it was the docile tones of the once again “Dovish” Fed that saved market bulls from a “bearish” rout. The recent test of the bullish trend line from February lows combined with a move back of the 50-dma clears the way for the markets to retest, and potentially breakout, to new highs.

S&P 500 Large Cap Index(see more posts on S&P 500 Large Cap Index, )S&P 500 Large Cap Index – click to enlarge.
With economic data remaining extremely weak, and leading indicators continuing to roll over, the “bad news is good news as the Fed stays on hold” scenario continues to play to investor’s favor….for now.
The question that remains, of course, is when does the reality of the weak economic environment begin to impact the fantasy of stock prices.

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Intriguing Eruditions: The weak month of the stock market

September 2, 2016

[unable to retrieve full-text content]On Tuesday, I noted the end of summer and the entrance into one of the weakest months of the year statistically speaking. “We can confirm BofAML’s point by looking at the analysis of each month of September going back to 1960 as shown in the chart below."

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