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Tag Archives: S&P 500

Is Gold Starting to Behave Itself?

Gold is doing what it is supposed to do! Equity markets are tumbling, “NASDAQ 100 Rout Erases $1.5 Trillion in Market Value in 3 Days” reads one Bloomberg headline. The big names such as Apple lost over US$225 billion, Microsoft almost US$200 billion, Amazon and Tesla each lost US$175 billion market value over the three trading days from May 4 to May 9. Bonds are also declining in value as yields are rising. The market selloff has been the most extreme in the tech...

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Weekly Market Pulse: Is This A Bear Market?

I don’t know the answer to the question posed in the title. No one does because the future is not predictable. I don’t know what will happen in Ukraine. I don’t know how much what has already happened there – and what might – matters to the US and global economy. I don’t know if the Fed is making a mistake by (likely) hiking interest rates by an entire 1/4 of 1% this week. I can only see things as they are today and think about similar times in the past and know that...

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Weekly Market Pulse: Fear Makes A Comeback

Fear tends to manifest itself much more quickly than greed, so volatile markets tend to be on the downside. In up markets, volatility tends to gradually decline. Philip Roth Be fearful when others are greedy and be greedy when others are fearful. Warren Buffett The new year hasn’t gotten off to a great start for growth stocks or any of the other speculative assets that have drawn so much attention over the last couple of years. Bitcoin is down 25% since the...

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Weekly Market Pulse: Discounting The Future

The economic news recently has been better than expected and in most cases just pretty darn good. That isn’t true on a global basis as Europe continues to experience a pretty sluggish recovery from COVID. And China is busy shooting itself in the foot as Xi pursues the re-Maoing of Chinese society, damn the economic costs. But here in the US, the rebound from the Q3 slowdown is in full bloom. Just last week we had pending home sales, ADP employment, both ISM reports,...

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What’s Going On, And Why Late August?

This isn’t about COVID. It’s been building since the end of August, a shift in mood, perception, and reality that began turning things several months before even then. With markets fickle yet again, a lot today, what’s going on here? What you’ll hear or have already heard is something about Europe and more lockdowns, fears about a second wave of the pandemic. No, that doesn’t fit the herdlike change in direction you can observe across many different markets (below)....

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Yep, There’s A New ‘V’ In Town And The Locals…Don’t Seem To Much Care For It

They should be drooling over the prospects of a clearing path toward normality. The pain and disaster of 2020’s economic hole receding into a more pleasant 2021 which would have been in position to conceivably pay it all back before any long run damage. Getting back to just even with February instead is becoming a distant probability, the kind of non-transitory shortfall with which we’ve grown far too accustomed. Therefore, “they” now salivate (reported to be...

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Why The FOMC Just Embraced The Stock Bubble (and anything else remotely sounding inflationary)

The job, as Jay Powell currently sees it, means building up the S&P 500 as sky high as it can go. The FOMC used to pay lip service to valuations, but now everything is different. He’ll signal to all those fund managers by QE raising bank reserves, leading them on in what they all want to believe is “money printing” (that isn’t). This provides the financial services industry with the rationalization those working within it desperately want for them to do what they...

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A Day For Rate Cuts

Well, that wasn’t he had in mind. The whole point of a rate cut, any rate cut let alone an emergency fifty, is to signal especially the stock market that the Fed is in the business of…something. The public has been led, by and large, to assume that something good happens when the Fed Chair shows up on TV. If you ask anyone to be specific, however, they can’t really answer you beyond the primitive superstition of low rates being especially beneficial to borrowers....

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The Transitory Story, I Repeat, The Transitory Story

Understand what the word “transitory” truly means in this context. It is no different than Ben Bernanke saying, essentially, subprime is contained. To the Fed Chairman in early 2007, this one little corner of the mortgage market in an otherwise booming economy was a transitory blip that booming economy would easily withstand. Just eight days before Bernanke would testify confidently before Congress, the FOMC had met to...

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Global Asset Allocation Update

The risk budget is unchanged again this month. For the moderate risk investor, the allocation between bonds and risk assets is evenly split. The only change to the portfolio is the one I wrote about last week, an exchange of TIP for SHY. Interest rates are on the rise again, the 10 year Treasury yield punching through 3% again this morning. That is an indication that growth and/or inflation expectations have risen...

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