Stocks Up Dollar Down

Looking at the major stock market indexes it looks like the market has not cared that the U.S. macro surprise index has been negative while the European macro surprise index soars. Looking in more detail, there has been an underlying trend in markets which reflects the economic shift. The Russell 2000, which consists of firms…

The Unwind Policy Gets More Detailed

The Fed’s Minutes surprised many as it gave details about the balance sheet unwind. It was a smart idea to give some of the details since the FOMC has come to an agreement on the policy. Janet Yellen will have a press conference after the June meeting. Journalists and bankers can digest the new policy…

Stocks Have Become Bonds & Vice Versa?

The desire for yield seems to have caused an increase in the percentage of loans which are covenant lite. One of the biggest bubbles in this economy is in junk debt as the need for yield and the length of time since the last recession has made junk bonds highly coveted. The chart below shows…

Is This Market Cycle Different?

I think the best description of this current cycle is ‘this time is different.’ I’m not implying that the stock market will rally indefinitely and that a recession will never happen. I’m saying that most of the indicators I look at which have had a great track record have been wrong. The most pivotal one…

Housing And Auto Sales Have Peaked

This article will review the latest economic data. The chart below shows the latest seasonally adjusted annual rate of sales for lightweight vehicles and new homes. New home sales peaked in March at 642,000 and auto sales peaked in December 2016 at 18.3 million. April new home sales are down 11.4% from the peak and…

Bonds For Capital Gains & Stocks For Income?

The stock market has returned to where it has been this year as the VIX has gone back to below its median. The VIX is back below 11 and the S&P 500 is near its all-time high. Looking at the interplay between stocks and bonds, the bond market has undergone a seismic shift while the…

Neel Kashkari Argues Against Pricking Financial Bubbles

The Minneapolis Federal Reserve President Neel Kashkari is an outspoken thought leader on the Federal Open Market Committee. When he makes statements, it’s worth noting his points. I say he’s a thought leader, not because his points are correct, but because they can affect policy. I think his latest thesis was completely wrong. To summarize,…

Stocks Rebound Sharply After Last Week’s Selloff

The best analogy for last week’s decline in the stock market is a sun shower. The market was in a streak of record calmness, had one bad day, and is back to being calm just like how a sun shower comes and goes quickly. The chart below shows the changes in the VIX in the…

Bullard Calls For Only One More Rate Hike In 2017

The stock market rallied on Friday again as most of the Wednesday weakness has been reversed. It’s possible that the issuance of a special prosecutor to look into the Russian interference in the 2016 presidential election calmed the markets down. It’s also possible that the market was simply due for some volatility and finally got…

Most Fund Managers Seem to Think Stocks Are Expensive

Either the stock market’s action has become irrational or the financial press has made an error with describing the market’s action on Thursday. The headline is that a two-week-old video where James Comey said Trump didn’t obstruct the FBI’s investigations caused the rally. I’m not making a comment on the political implications of this, but…

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