The Federal Reserve raised interest rates by 75 basis points this week and Fed Chairman Jerome Powell reiterated its intention to get inflation back under control no matter the consequences to short-term economic growth or asset prices. After all, inflation affects 100% of the population while capital market assets affect a much smaller cohort globally. Read More
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A Bear Market Rally or a New Bull Market In Stocks?
Stock markets rallied sharply in July and have continued to climb in August in response to the cooling of record levels of inflation. Investors expect the Federal Reserve to ease back the frequency and magnitude of interest rate hikes in response, an apparent bullish case for stocks. According to Wednesday’s edition of The Wall Street Read More
From the Trading Desk: A Recession in All but a Name
This month’s CPI reading of 9.1% marked a 40-year high, despite the Fed’s efforts to tame inflation. GDP numbers for Q2 were published and the US economy shrank for a second consecutive quarter. GDP US Chained 2012 Dollars QoQ SAAR (GDP CQOQ Index) 12-months Despite the general rule to identify a recession, the fall of Read More
Spotting a Bear Market?
The bear market in stocks in 2022 began like most others in history: with a deterioration in the number of companies participating in the market uptrend. Initially weakness is seen in the smaller more speculative stocks and over time it migrates into the large capitalization companies. In the end, no stock is spared as selling Read More
A Fundamental Flaw: Psychology Trumps Fundamentals in a Bear Market
Psychology is the great underappreciated variable in investing and trading that magnifies the underlying fundamentals and consequently exacerbates price trends. Perhaps the following John Templeton quote states it best: “Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to Read More