Posts filed under “Cycles”

Market Sell Off May Not Have Run Its Course Yet

The change in tone in the equity markets is unmistakable: There is a palpable tension that leads some money managers to shoot first and ask questions later. The net result of that anxiety can be seen in the flood of new money into U.S Treasuries, which ever so briefly drove the yield on the 10 year to less than 2 percent yesterday.

Certainly, fund managers can hide in fixed income, but only for so long.

What caused this shift?

The macro folks call out their favorites: Fed taper! European weakness! Pricey stocks! ISIS! Soft retail sales! Plummeting oil! Slowing China! Even the dreaded Ebola Virus! gets the blame in some quarters.

These are all well-known. There isn’t one single surprise on that list. In fact, many of these macro issues have been on the radar for more than a year. Why now?

The change in tone isn’t the result of any headline or news story. Rather, it more likely reflects the shift in balance between supply and demand for equities. I hope my repeating this doesn’t seem boorish, but what is going on beneath the headlines is far more important than the headlines themselves.

So what is happening beneath the surface?

Continues here

 

 

Category: Cycles, Investing, Markets, Trading

Stock Market Since 1900

click for ginormous chart Source: JP Morgan     One of my favorite charts to show people is the long-term market returns since 1900. I find it is incredibly telling in the information provided by a very simply line chart. Have a look at the chart nearby. It is from JP Morgan’s quarterly chart book…Read More

Category: Cycles, Markets, Technical Analysis

Correction or New Bear Market ?

Here we are, 10-plus months into the year, and we have nothing to show for it. At least, that is the case if we measure our progress by the gains (or losses) of the Dow Jones Industrial Average. The index is now unchanged for the year after last week’s losses. The previously one direction market…Read More

Category: Cycles, Investing, Quantitative, Trading

Is the Bull Market Turning Bear?

Yesterday’s sell off has the bulls worried. Major U.S. indexes fell about 1.5 percent. Ten of the past 12 trading sessions saw swings of 100 points or more in the Dow Jones Industrial Average. The list of worries ranges from the strengthening dollar’s harm to U.S. earnings, the end of quantitative easing, Europe’s weakening economy…Read More

Category: Cycles, Investing, Trading

Business Cycle Chart

I love this chart from Fidelity:   How to Invest Using the Business Cycle Source: Fidelity

Category: Cycles, Investing

NDR: 1980s Gold Pattern Suggests $660/oz

Gold is one of those topics that always generates fierce pushback whenever I write about it. Yesterday’s column How Low Can Gold Go? was no different. A deluge of emails and over 150 comments soon followed. I may post some of the more informative, vociferous and misguided comments / emails from readers later today as…Read More

Category: Cycles, Gold & Precious Metals, Technical Analysis, Trading

How Credit Came to Rule – and Ruin – Our Economy

On this day 56 years ago, the U.S. economy began to undergo a momentous change. It was Oct. 1, 1958, and the company known best for its Travelers Cheques introduced a new product: The charge card. Although American Express technically wasn’t the first company to introduce a charge card, it was the first to make…Read More

Category: Bailouts, Consumer Spending, Credit, Cycles

Business Cycle Index

Interesting trio of charts from Russell showing the Business Cycle Index (BCI).

The goal of the BCI is to forecast the strength of economic expansion or recession in the coming months, along with forecasts for other prominent economic measures. How well it does that is a subject of debate.

Inputs to the model include non-farm payroll, core inflation (without food and energy), the slope of the yield curve, and the yield spreads between Aaa and Baa corporate bonds and between commercial paper and Treasury bills. A different choice of financial and macroeconomic data would affect the resulting business cycle index and forecasts.

 

 

 

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Category: Cycles, Economy

Our Bifurcated Recovery

The Standard & Poor’s 500 Index closed yesterday at a record high of more than 2,000. Yet many people feel that the economy is weak. There are numerous reasons for this, but the one I want to focus on has to do with employment and wages. The economy feels weak because, depending on your education,…Read More

Category: Bailouts, Consumer Spending, Cycles, Economy, Employment

Structural Bull Market ?

Source: Raymond James Research       This morning, I made note of the difference between secular bull and bear markets. I described secular bear markets as being longer-term, characterized by strong rallies, vicious sell-offs and earnings contractions. Secular bull markets include an investor willingness to pay more and more for the same dollar of…Read More

Category: Cycles, Markets