Tag Archive: recession

Overbought Conditions Set Up Short-Term Correction

2024-08-27

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2024-08-27

As noted in this past weekend’s newsletter, following the “Yen Carry Trade” blowup just three weeks ago, the market has quickly reverted to more extreme short-term overbought conditions. Note: We wrote this article on Saturday, so all data and analysis is as of Friday’s market close. For example, three weeks ago, the growth sectors of the market were highly oversold, while the previous lagging defensive sectors were overbought. That was not...

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Red Flags In The Latest Retail Sales Report

2024-08-23

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2024-08-23

The latest retail sales report seems to have given Wall Street something to cheer about. Headlines touting resilience in consumer spending increased hopes of a “soft landing” boosting the stock market. However, as is often the case, the devil is in the details. We uncover a more troubling picture when we peel back the layers of this seemingly positive data. Seasonal adjustments, downward revisions, and rising delinquency rates on credit cards and...

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Market Decline Over As Investors Buy The Dip

2024-08-20

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2024-08-20

The market’s 8.5% decline during August sent shockwaves through the media and investors. The drop raised concerns about whether this was the start of a larger correction or a temporary pullback. However, a powerful reversal, driven by investor buying and corporate share repurchases, halted the decline, leading many to wonder if the worst is behind us. However, the picture becomes more nuanced as we examine the technical levels and broader market...

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Economic Growth Myth & Why Socialism Is Rising

2024-08-16

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2024-08-16

I was recently asked about the seemingly strong “economic growth” rate as the Federal Reserve prepares to start cutting rates. “If economic growth is so strong, as noted by the recent GDP report, then why would the Federal Reserve cut rates?” It’s a good question that got me thinking about the trend of economic growth, the debt, and where we will likely be. Since the end of the financial crisis, economists, analysts, and the Federal...

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Are Mega-Caps About To Make A Mega-Comeback?

2024-08-13

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2024-08-13

Are the “Mega-Cap” stocks dead? Maybe. But there are four reasons why they could be staged for a comeback. The recent market correction from the July peak certainly got investors’ attention and rattled the more extreme complacency. As we noted previously: “While there have certainly been more extended periods in the market without a 2% decline, it is essential to remember that low volatility represents a high “complacency” with investors. In...

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UBI – Tried, Tested And Failed As Expected

2024-08-09

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2024-08-09

A Universal Basic Income (UBI) sounds great in theory. According to a previous study by the Roosevelt Institute, it could permanently increase the U.S. economy by trillions of dollars. While such socialistic policies sound great in theory, history, and data, they aren’t the economic saviors they are touted to be. What Is A Universal Basic Income (UBI) To understand why the theory of universal basic income (UBI) is heavily flawed, we need to...

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Yen Carry Trade Blows Up Sparking Global Sell-Off

2024-08-06

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2024-08-06

On Monday morning, investors woke up to plunging stock markets as the “Yen Carry Trade” blew up. While media headlines suggested the sell-off was due to fears of a recession, slowing employment growth, or fears over Israel and Iran, such is not the case.

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The Sahm Rule, Employment, And Recession Indicators

2024-08-02

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2024-08-02

Economist Claudia Sahm developed the “Sahm Rule,” which states that the economy is in recession when the unemployment rate’s three-month average is a half percentage point above its 12-month low. As shown, the latest employment report has triggered that indicator. So, does this mean a recession is imminent? Maybe. However, we can now add this indicator to the long list of other recessionary indicators, also flashing warning signs. As...

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The Bull Market – Could It Just Be Getting Started?

2024-07-23

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2024-07-23

We noted last Friday that over the previous few years, a handful of “Mega-Capitalization” (mega-market capitalization) stocks have dominated market returns and driven the bull market. In that article, we questioned whether the dominance of just a handful of stocks can continue to drive the bull market. Furthermore, the breadth of the bull market rally has remained a vital concern of the bulls.

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Deviations From Long-Term Growth Trends Back To Extremes

2024-06-04

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2024-06-04

In 2022, we discussed the market’s deviations from long-term growth trends. That discussion centered on Jeremy Grantham’s commentary about market bubbles.

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Retail Sales Data Suggests A Strong Consumer Or Does It

2024-04-26

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2024-04-26

The latest retail sales data suggests a robust consumer, leading economists to become even more optimistic about more robust economic growth this year.

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Immigration And Its Impact On Employment

2024-04-12

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2024-04-12

Is immigration why employment reports from the Bureau of Labor Statistics (BLS) continue defying mainstream economists’ estimates? Many are asking this question as the U.S. experiences a flood of immigrants across the southern border.

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Blackout Of Buybacks Threatens Bullish Run

2024-03-19

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2024-03-19

With the last half of March upon us, the blackout of stock buybacks threatens to reduce one of the liquidity sources supporting the bullish run this year. If you don’t understand the importance of corporate share buybacks and the blackout periods, here is a snippet of a 2023 article I previously wrote.

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Digital Currency And Gold As Speculative Warnings

2024-03-12

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2024-03-12

Over the last few years, digital currencies and gold have become decent barometers of speculative investor appetite. Such isn’t surprising given the evolution of the market into a “casino” following the pandemic, where retail traders have increased their speculative appetites.

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Presidential Elections And Market Corrections

2024-03-10

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2024-03-10

Presidential elections and market corrections have a long history of companionship. Given the rampant rhetoric between the right and left, such is not surprising. Such is particularly the case over the last two Presidential elections, where polarizing candidates trumped policies.

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Valuation Metrics And Volatility Suggest Investor Caution

2024-03-05

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2024-03-05

Valuation metrics have little to do with what the market will do over the next few days or months. However, they are essential to future outcomes and shouldn’t be dismissed during the surge in bullish sentiment. Just recently, Bank of America noted that the market is expensive based on 20 of the 25 valuation metrics they track.

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Fed Chair Powell Just Said The Quiet Part Out Loud

2024-02-16

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2024-02-16

Regarding the surprisingly strong employment data, Fed Chair Powell said the quiet part out loud. The media hopes you didn’t hear it as we head into a contentious election in November. Over the last several months, we have seen repeated employment reports from the Bureau of Labor Statistics (BLS) that crushed economists’ estimates and seemed to defy logic. Such is particularly the case when you read commentary about the state of the average...

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Market Morsels: ISM and Recession

2024-02-07

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2024-02-07

The ISM manufacturing survey has been below 50 for 15 months in a row and sits today at 49.1. This survey, along with a lot of other manufacturing data and anecdotes, has been cited repeatedly by the economic bears as evidence we are heading for recession. That, of course, hasn’t happened and that is consistent with this indicator.

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Rethinking “safe” investments

2023-11-02

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2023-11-02

Part I of II by Claudio Grass, Hünenberg See, Switzerland To most observant citizens and diligent investors it is surely quite obvious that the current monetary, fiscal and banking system is inherently flawed, hopelessly unjust, corrupt, unsustainable and simply destined to collapse sooner or later. With every (predictable) recession and every (foreseeable) crisis, this structure gets weaker; its very own architects increasingly second-guess...

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Weekly Market Pulse: Look Up In The Sky! It’s A UFO! Or Not!

2023-02-13

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2023-02-13

As I sit here writing this Sunday afternoon, the US has just shot down a third UFO in the last 3 days in addition to the Chinese “weather” balloon last week. I have no insight into what these things might be but I do wonder if we haven’t declared war on the National Weather Service. The federal government has become so sprawling that it could easily be the case that NORAD has no idea what the NWS has up in the air.

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