There is much debate as of late on the current market cycle. Is it a bear market? Maybe. But what if this is just a correction within a 40-year secular bull market? It is a question posed by Jacques Cesar previously. “The cyclical bull started in late March of 2020, after the market plunge sparked […]
A recent whitepaper by the Federal Reserve warns of “significantly lower profit growth and stock returns in the future.” In his article, End of an Era: The coming long-run slowdown in corporate profit growth and stock returns, Michael Smolyansky explains how the interest rate and corporate tax rate trends for the last thirty years provided […]
Does stock risk decline the longer the holding period is? It’s a great question and something I received a comment about. Blaise Pascal, a brilliant 17th-century mathematician, famously argued that if God exists, belief would lead to infinite joy in heaven, while disbelief would lead to infinite damnation in hell. But, if God doesn’t exist, belief would […]
The June 2024 Fed Funds futures contract implies that the Fed will only cut interest rates slightly between now and the summer of 2024. If the Fed Funds forecast proves correct, then it’s highly likely the yield curve will remain inverted and or longer-term yields will rise sharply. Pick your poison. Both will cause economic […]
Leading economists, Federal Reserve Presidents, and most investors pay close attention to the shape of Treasury yield curves. They follow them, not necessarily because they care about the inner workings of the bond market. Instead, they are proven predictors of recessions. All six of the last recessions were preceded by an inverted Treasury yield curve. […]
Is the recent rally a “bull trap,” or are we in a new “bull market?” Such was a question I recently received on Twitter. Of course, understanding the term “bull trap” is needed for those not deep into technical analysis. “A bull trap is a false signal, referring to a declining trend in a stock, […]
“Signs” was a song by the Five Man Electrical Band in 1970 about the hippie movement. The song came to mind as I was looking at the economic data recently. There are “Signs, Signs, Everywhere A Sign” of a recession, but no recession yet. For example, as of the end of May, 100% of the […]
The current market speculation surrounding artificial intelligence (A.I.) has garnered everyone’s attention. You can’t turn on a television or pick up a newspaper without a mention of “artificial intelligence.” The “F.O.M.O.” (Fear Of Missing Out) in stocks associated with developing and implementing artificial intelligence is evident. The chart below shows the performance differential between the basket of […]
“It’s a ‘New Bull Market’!” Over the past few days, the call of a new bull market has plastered headlines and media commentary. To wit: “The S&P 500 rallied Thursday to end the day in a bull market, marking a 20% surge since its most recent low, reached on October 12, 2022. That brings to […]