Value stocks, those equities that have fallen out of favor, have made a comeback this week. These underpriced orphans have become the new darlings of Wall Street, while high-flyers (think software and some tech) have sold off. What does this say about the markets? The short answer is that we have more room to run. It means, in my opinion, that we will reach and break historical highs in the U.S. averages and that we should have fairly smooth sailing into October. If, at that point, there are breakthroughs in the trade issue and the Federal Reserve Bank cuts interest…
At the Market
The European Central Bank (ECB) announced a major new stimulus package on Thursday. A key interest rate was reduced, and a new bond-buying program was announced, amounting to $22 billion per month. In the past, those efforts would have been enough to boost the European Economy, but will it be enough this time around? It is not as if we haven’t seen this before. Through the years, ever since the Financial Crisis of 2009, the ECB, as well as other central banks around the world, have stimulated their economies to avoid recession, or something worse. The problem is that monetary…
Investors received a bucketful of good news this week. Brexit got a reprieve, Hong Kong authorities caved-in to protestors demands, and another round of trade talks is set for October between the U.S. and China. Welcome to September. As of Friday, the S&P 500 Index was less than 2% from all-time highs. The other indexes are close as well. And while September is historically not a good month for the markets, this time around, September is starting off with a big bang. Can it continue? Yes, in my opinion. We could see all three averages break out into new, all-time…
Now that the media is on to more interesting topics, the August announcement by the Business Roundtable deserves further examination. After all, it is not every day that a group of the nation’s most powerful chief executives redefines the goals of American corporations. The maximization of shareholders’ profits, above all else, has been the motto of the Business Roundtable (BRT) since the 1980s. Critics claim that this attitude has led to all kinds of negative consequences for society overall. The environment, the individual worker, suppliers (think underage Bangladesh garment workers), consumers and local communities have been needlessly harmed by this…
As we close out the summer, investors have had anything but a sleepy three months. The volatility caused by the Fed’s actions, Donald Trump’s tweets, Brexit, and tariff threats had markets gaining and losing billions–if not trillions–of dollars in assets on a weekly, and sometimes, daily basis. The question you might ask is “Will it continue?” The short answer is yes, at least into October, unless a trade deal is signed. And what are the chances of that happening? Not very high, if you listen to the experts who profess to know and understand China. A respected Deutsche Bank economist,…
If you think the equity markets have been volatile over the course of the last few weeks, take a look at what is happening to bonds, not only here in the United States, but elsewhere in the world.
Donald Trump’s announcement on Thursday that an additional 10% tariff will be levied on the remaining $300 billion in Chinese exports to the U.S. on September 1 did not sit well with investors. The news could very well trigger the stock market decline that I have been expecting.
It was a week of chop. That was to be expected, given it was the first week of second quarter earnings results. While some individual big-name stocks made substantial moves, the overall indexes traded up and down but ended the week about where they started.
Two steps forward, one step back, it’s the nature of things. Unfortunately, stock markets are susceptible to this pattern as well. As such, investors should be gearing up for a bit of downside in the near future.
The math is simple. As long as the Federal Reserve Bank is neutral to positive on lowering interest rates, investors who want any kind of return are forced into the stock market. Until that changes, equities are in the buy zone.
The S&P 500 Index finished up 18% for the six months ending June 30th. That was the best first half since 1997. Historically, that kind of return is three times the gains investors can normally expect from the market in an average year. The chance of a repeat performance in the next six months is, at best, remote.
It wouldn’t be a normal weekend in the financial markets without something to worry about. This weekend, it is the meeting of the two presidents, Trump and Xi, in Japan with $350 billion in new tariffs hanging on the outcome. What are the odds that they clinch a deal?
It was a good week for investors. The S&P 500 Index hit an all-time high. The Fed indicated that they might cut interest rates sometime soon, and the President is once again optimistic about a China trade agreement. That’s a heady cocktail that could see markets gain another 3-5% over the next few weeks.
Investors can credit the Fed once again for the market’s revival thus far in June. The buying is fueled by expectations of three rate cuts by no later than December. Is that wishful thinking?
You would think that a non-farm payroll report that was way below expectations would give investors pause. After all, when the pace of employment slows, it usually means that the economy is slowing as well. So why did the stock market spike higher?
No question about it, the President’s decision to impose 5% tariffs on all Mexican imports by June 10 caught investors flat-footed. Combined with the on-going war of words with the Chinese on tariffs, markets worldwide fell sharply this week. Is a relief rally in the cards?