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Tag Archives: financial markets

Technically Speaking: COT Positioning – Volatility, Oil, Dollar, & Rates (Q3-2019)

As discussed in the past weekend’s newsletter, we have been laying out the basis for a market correction. What has been most stunning is the rapid reversion in sentiment from “bearishness” this summer, to outright excess “bullishness” in just a few short weeks.  “But it isn’t just the more extreme advance of the market over the past 5-weeks which has us a bit concerned in the short-term, but a series of other indications which typically suggest short- to intermediate-terms corrections in...

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Corporate Profits Are Worse Than You Think

Corporate profits are worse than you think. In a recent post, I discussed the deviation of the stock market from corporate profitability. To wit: “If the economy is slowing down, revenue and corporate profit growth will decline also. However, it is this point which the ‘bulls’ should be paying attention to. Many are dismissing currently high valuations under the guise of ‘low interest rates,’ however, the one thing you should not dismiss, and cannot make an excuse for, is the massive...

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Technically Speaking: Everyone Is Swimming In The “Deep End.”

With the market breaking out to all-time highs, the media has started to once again reach for their party hats as headlines suggest clear sailing for investors ahead. After all, why not?   The Federal Reserve cut rates for the 3rd time this year. The Fed is also back in the “QE” game of buying bonds. President Trump has “surrendered” to China in order to end the “trade war.”  Corporate stock buybacks are on track for the second largest year on record. Earnings, due to buybacks, are beating...

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15-Extreme Risks & How You Can Navigate Them

Willis Towers Watson’s Thinking Ahead Institute (TAI) recently revealed what it considers the 15-extreme risks facing investors for 2019, as well as for the years ahead. The risks run the gamut from climate change to nuclear contamination. TAI’s research suggests, broadly, there are three hedging strategies available to institutions: Hold cash. Over long historical periods cash has held its real value through both episodes of deflation and inflation but there is no guarantee that this will...

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Dow 650,000? We Are Already There!

Just recently, CNBC ran an article touting the call of “Billionaire Investor Ron Baron” of the Dow reaching 650,000 in just 50-years. Billionaire investor Ron Baron sees the Dow at 650,000 in 50 years https://t.co/oPElm0nrHT — CNBC (@CNBC) October 25, 2019 As noted in the article: “Speaking from his annual investment conference in New York, Baron predicted the Dow Jones Industrial Average, based on historical moves over decades, will reach 650,000 in 50 years, with an over $500 trillion...

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Technically Speaking: 4-Risks To The Bullish View

When I was growing up, my father, probably much like yours, had pearls of wisdom that he would drop along the way. It wasn’t until much later in life that I learned that such knowledge did not come from books but through experience. One of my favorite pieces of “wisdom” was: “A sure-fire ‘no lose’ proposition is doing exactly the opposite of whatever ‘no lose’ proposition is being proposed.” Of course, back then, he was mostly giving me “life advice” about not following along with my...

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Why The Measure Of “Savings” Is Entirely Wrong

In our recent series on capitalism (Read Here), we were discussing how the implementation of socialism, by its very nature, requires an ability to run unlimited deficits. In that discussion was the following quote: “Deficits are self-financing, deficits push rates down, deficits raise private savings.” – Stephanie Kelton On the surface, there does seem to be a correlation between surging deficits and increases in private savings, as long as you ignore the long-term trend, or the reality of...

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Earnings Season & The Truth About Wall Street Analysis

Earnings results for the third quarter is fast approaching, and investors are getting excited for the “beat the estimate” game where Wall Street continually lowers estimates so companies can beat them. As I noted previously: One of the reasons given for the push to new highs was the ‘better than expected’ earnings reports coming in. As noted by FactSet:  “78% have reported actual EPS above the mean EPS estimate…The percentage of companies reporting EPS above the mean EPS estimate is above the...

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Peak Buybacks? Has Corporate Indulgence Hit Its Limits

Since the passage of “tax cuts,” in late 2017, the surge in corporate share buybacks has become a point of much debate. As I previously wrote, stock buybacks are once again on pace to set a new record in 2019. To wit: “A recent report from Axios noted that for 2019, IT companies are again on pace to spend the most on stock buybacks this year, as the total looks set to pass 2018’s $1.085 trillion record total.” The reason companies spend billions on buybacks is to increase bottom-line...

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The Disconnect Between The Markets & Economy Has Grown

A couple of years ago, I wrote an article discussing the disconnect between the markets and the economy. At that time, the Fed was early into their rate hiking campaign. Talks of tax cuts from a newly elected President filled headlines, corporate earnings were growing, and there was a slew of fiscal stimulus from the Government to deal with the effects of 3-major hurricanes and 2-devastating wildfires. Now, the Fed is cutting rates, so it is time to revisit that analysis. Previously, the...

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