Moribund Manufacturing data and slower growth guidance by Apple have exacerbated growing fears of recession, sending stocks plunging 3% on the January 3rd. However, exceptionally strong job growth and dovish support from Fed Chair Powell the next day sent stock soaring 4%. Making sense of the frequent news driven volatility is challenging,…
Frackers rule! The House of Saud may want to stabilize Brent Oil above $60 or $70 a barrel, but OPEC and Russia no longer control prices and haven’t since the 2015 energy recession. Every time OPEC cuts production they essentially transfer that lost output as a gift to the US. Despite our long…
While we have been medium term Bearish on stocks and oil since early October, we published a flurry of newsletters between December 7th and 12th signaling even more trouble ahead. Our 3 Tests and a Tumble letter a couple weeks ago further detailed the markets penchant to bust through support after a price…
Many years ago the “Three Steps and a Stumble” rule was popularized, referring to a pattern of three hikes in the Fed Discount Rate as a precursor to major stock and bond market downtrends. While not as a relevant, we adopted our own adage decades ago of 3 tests and…
Concerns of an escalating US – China Trade War causing earnings downgrade contagion in 2019 has been a major factor in lower stocks prices. The benchmark SP 500 and Dow stock indices have just finished their 3rd test of the 10% correction support levels since the October 3rd record highs and one…
The American Association of Individual Investors (AAII) measure of small stock owner sentiment has just reached the most pessimistic levels in 33 months at the closing lows of this market correction to date. The last time the average investor was this Bearish occurred in early 2016 at the end of the global energy recession….
Now that cash holdings are beating the stock market gains for 2018, “Goldman Says It’s Time for Equity Investors to Boost their Cash”(11-20-18). Headlines from Goldman Sachs, Wells Fargo and many analysts warn that investors should not Buy the Dips and remain defensive. Anecdotally this is one of the more…
The current prime age (25-54 years old) unemployment level hovers around multi-decade lows of 3% – essentially full employment – while the prime age labor force participation rate is far from its peak – implying less than full employment. Since the female workforce rose to maximum participation rates in the…
The Trump – China trade dispute, peak profit margins and downward earnings growth forecasts will keep stock prices on the defensive in the months ahead. The equity Bull market can be sustained and a recession avoided in 2019, however it will require a resolution on the trade front and likely further…
Our October report reviewed the limitations of the Phillips Curve in forecasting inflation as it relates to unemployment. Essentially economists interpretation of Phillips posit that lower unemployment equates to higher inflation. This view was created in the 1970’s post Gold/Currency Standard during the inflationary Baby Boom employment surge. Should the overall CPI rise above…
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