Posts filed under “Cycles”
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 has suddenly recalled what volatility looks like, having for the most part forgotten.
Yes, stocks go up AND down.
At the beginning of the fourth quarter, the Standard & Poor’s 500 Index was up about 7 percent for the year; those gains have now been cut by more than half. The Russell 2000 small cap index was already almost 5 percent, and the past few weeks have added to the red. The Nasdaq 100 is still positive on the year, but the has given back some of its gains.
I can’t tell you what will happen in the coming weeks or months, nor can I tell you what to do, not knowing your time horizon, risk tolerance and client base. I can, however, bring to your attention some interesting data points you may not have been aware of:
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
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
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
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.
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
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