Saturday , August 24 2019
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Tag Archives: Stocks

Mauldin – MMT Could Destroy This Nation

I am back from my 14th annual Maine fishing camp. The private event at Leen’s Lodge is generally called Camp Kotok in honor of David Kotok of Cumberland Advisors who started these outings many years ago. CNBC and others began calling it the “Shadow Fed,” but it is really just a meeting of wickedly smart people focused on economics and markets. (I am allowed to attend for comic relief.) We discussed the world’s problems and the general mood was that many of those problems are beginning to...

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Corporate Debt Is At Risk Of A Flash Crash

The world is awash in debt. While some countries are more indebted than others, very few are in good shape. The entire world is roughly 225% leveraged to its economic output. Emerging markets are a bit less and advanced economies a little more. But regardless, everyone’s “real” debt is likely much bigger, since the official totals miss a lot of unfunded liabilities and other obligations. Debt is an asset owned by the lender. It has a price, which—like anything else—can go up or down. The main...

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Investors Dilemma: Pavlov’s Dogs & The Ringing Of The Bell

Classical conditioning (also known as Pavlovian or respondent conditioning) refers to a learning procedure in which a potent stimulus (e.g. food) is paired with a previously neutral stimulus (e.g. a bell). What Pavlov discovered is that when the neutral stimulus was introduced, the dogs would begin to salivate in anticipation of the potent stimulus, even though it was not currently present. This learning process results from the psychological “pairing” of the stimuli. What does this have to...

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Inverted Yield Curve Is Actually Bullish

My favorite meme following last week’s yield curve inversion was captioned, “I survived the yield curve inversion.” My favorite tweet (from @jfahmy) was, “The next Jobs Report should be very strong with the 50,000 “Yield Curve Experts” that were added this week.” Last Wednesday, the day the Dow dropped 800 points, the yield curve inverted for a few hours. There is a lot to unpack in that sentence, so let’s get to it. First, I have to briefly define what the heck a yield curve is so if you...

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Making Sense Of 100-Year Bonds At 0% & 30-Year Bonds At Negative Yields

Over 50% of European gov’t bonds have a negative yield. Globally there’s $15 trillion in negative-yield debt. $15 Trillion in Negative-Yield Debt Excluding the US 44% of Bonds Have a Negative Yield European Negative Yield Government Bonds As of mid-June, over 50% of European government bonds have a negative yield. The total is higher now. Negative-Yield 30-Year Bond Yesterday, Germany issued a 30-year bond yielding less than 0%. Held to maturity you will not even get your...

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Monthly Macro Monitor: Does Anyone Not Know About The Yield Curve?

The yield curve’s inverted! The yield curve’s inverted! That was the news I awoke to last Wednesday on CNBC as the 10 year Treasury note yield dipped below the 2 year yield for the first time since 2007. That’s the sign everyone has been waiting for, the definitive recession signal that says get out while the getting is good. And that’s exactly what investors did all day long, the Dow ultimately surrendering 800 points on the day. I don’t remember anyone on CNBC...

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No Recession In Sight? But Cutting Rates To Avoid One

President Trump and his economic advisor Larry Kudlow have important announcements. I can help with translations. Please consider Trump ‘Not Ready’ for China Trade Deal, Dismisses Recession Fears. Consumers Doing Well Trump: “We’re doing tremendously well, our consumers are rich, I gave a tremendous tax cut, and they’re loaded up with money.”Trump Translated: The “tremendous tax” cut primarily benefited the wealthy. Consumers are tapped out. That’s why housing and autos are on the...

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Technically Speaking: This Is Still A “Sellable Rally”

In last Tuesday’s “Technical Update,” I wrote that on a very short-term basis the market had reversed the previously overbought condition, to oversold. “This could very well provide a short-term ‘sellable bounce’ in the market back to the 50-dma. As shown in the chart below, any rally should be used to reduce portfolio risk in the short-term as the test of the 200-dma is highly probable. (We are not ruling out the possibility the market could decline directly to the 200-dma. However, the...

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Superforecasting A Bear Market

There’s an ongoing debate about whether or not the U.S. is approaching a recession. As an investor, this question is of utmost importance. It is precisely at these times when fortunes can be made and lost. There’s no shortage of pundits with strong opinions in both the affirmative and negative camps armed with plausible narratives and supporting data sets. How to decide which side to take? Applying some proven forecasting methods to historical data can help bring clarity to this question....

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Financial Success Formula Failure

The US economy grew at a 2.1% annualized pace in the second quarter, according to data released last week. That was better than economists expected but hardly impressive. Even President Trump recognized this, tweeting the growth rate was “not bad considering we have the very heavy weight of the Federal Reserve anchor wrapped around our neck.” That’s the same Federal Reserve of which Trump himself appointed the chair and a majority of board members. But I guess he has to blame somebody. Sadly,...

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