Short End Of The Curve Could Cause An Inversion
Inflation Breakdown Since inflation was mentioned numerous times during Powell’s testimony and then in the interview with former Fed chairs Ben Bernanke and Janet Yellen, let’s look at a breakdown of the metric. As you can see from the chart below, the purple line shows the cellular data series Yellen referred to often last year.…
Fed Chair Powell Has His First Congressional Testimony
The Markets’ Reaction To Powell This Powell testimony reminds me of the Fed Minutes in that the markets’ reaction doesn’t make sense. There wasn’t much in the testimony which was hawkish, but the markets’ knee jerk interpretation was that it was hawkish. The market has been increasing the odds of 4 rate hikes this year.…
2018 Earnings Estimates Are Likely Done Increasing
The Estimates Are Done Rising The Q4 2017 earning season is now almost over. I will be reviewing the S&P Dow Jones numbers, but first let’s look at the chart which shows future expectations. With the GAAP earnings being hurt by tax related write downs in Q4, the future estimates are the most important aspect…
U.S. Economy An Emerging Market?
Cycles Not In Tune The developed markets are likely a couple years away from the end of their business cycle, while emerging markets are just recovering from their recession. India and Brazil had weak economies in 2017. They’re looking to see acceleration in 2018. The countries which export commodities are probably going to have a…
Stocks Finish The Week On A Winning Note
Finally, Stocks Rally Stocks were stuck in a rut this week. There were a bunch of failed rally attempts. It’s demoralizing to give up gains so often. It made some investors wonder if the correction was still ongoing. The bears were out in full force predicting the next bear market and recession even though there’s…
Central Banks Headed In The Hawkish Direction For The First Time In 9 Years
Hawkish For The First Time In 9 Years The chart below is very interesting because it combines the Bank of England, the Fed, and the ECB’s policy to come up with a rolling 5 year average of rate changes. I would have used a 3 year average because I feel that 5 years is too delayed…
Why The 10 Year Bond Yield Will Fall
Stocks Have Another Failed Rally In the past 4 days, stocks have peaked in the morning and then fallen in the afternoon, sometimes into the negatives. I think there is a technical battle between those who want the market to retest the recent trough and those who want the market to make new highs. On…
The Short Treasury Trade Is Over Crowded
Wal-Mart Margins Shrink Wal-Mart stock fell 2.75% on Wednesday as the stock is in complete free fall. It’s down 16.46% since January 29th. I don’t think the selloff in Wal-Mart signifies overall weakness from the consumer because the same store sales growth was fine. There are 3 main causes of the decline in WMT. The…
FOMC Minutes Sends Stocks Up & Then The Dollar Pushes Stocks Down
Fiscal Stimulus Bails Out The Fed At face value, the equity market’s initial reaction to the Fed Minutes was very confusing. The Fed boosted its economic projections and said it expected “further gradual rate hikes.” Objectively, these are hawkish statements. The market rallied on signals of further hikes even though a few years ago it…
Best Positive Guidance Since At Least 1996
EPS Guidance Looks Spectacular Q4 2017 earnings are shaping up to be great. These results support this bull market. There are many investors who argue that earnings don’t matter. There is always going to be short term action which doesn’t work in concert with earnings growth, but that’s not a sufficient argument to say earnings…
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