The anticipation of lower interest rates has been driving markets for the entire year. Looks like we are finally there but the fat lady has not sung yet. A September cut by the Fed has been likely confirmed by chairman Powell at the annual Jackson Hole conference as expected. Even with markets typically discounting news about 6 months in advance, this news drove a substantial rally all week peaking on Friday. This anticipated rate reduction...
What a week in the stock market. Talk about volatility-we saw it this week as markets rallied toward their highs after a monumental sell off last week. The rally was encouraged by positive economic signs including bullish consumer spending at the same time new jobs numbers were lower than expected. Goldilocks economy appears again. We are seeing confirmation that the jobs market is weakening but consumer spending continues on the retail level increasing confidence that...
The past week started with a selloff in markets due to fear of a slowing economy and possible recession. It was a severe sell off because formerly good news (economy slowing and lower interest rates) turned into bad news. We have discussed many times the bad news is good news, and good news is bad news and then of course the bad news is bad news is what we witnessed this past week. Despite the...
Inflation numbers confirm market assessment that the Fed is headed to the first reduction in interest rates at their September meeting. The Fed is scheduled to meet in August, but markets feel the reduction in interest rates is more likely in September. The day before, we received the first numbers on GDP growth for the 2nd quarter indicating stronger economic growth than economists expected at 2.8%. Some might say this is a goldilocks economy with...
Don’t blink because you might miss it. Market strategy shifted at the end of last week and beginning of this week. The 7 winners that have lifted market averages to records as recently as two weeks ago became pariahs within a couple of days. Sentiment changed overnight from large cap growth (7 stocks) to small and midcap stocks. As far as growth vs. value there was no question that small cap and value were the...
Our clients have been telling us, and we hear you. You want to know what the impact of this year’s election may have on your portfolio management. We do not base investment decisions on politics. Markets certainly do react in the short term, to election results for instance, and those reactions can be short lived - very short lived with the election of Donald Trump in 2016. Back then, the Futures markets indicated an extreme...
Cash in money market accounts is yielding 5% or better. FDIC online savings accounts earn around 4.3%. Purchasing 1 year US Treasuries provides a yield of better than 5% and is state tax free. How long will this high rate continue? Of course, no one knows, and predictions have ranged from up to 5 rate cuts in 2024 to more recently, no rate cuts in 2024. Predicting interest rates is no more accurate than predicting...
Today the SP500 made a new high today Monday 6/17. Market optimism is at a high based on typical risk measurements such as the Volatility Index or VIX. Investors are optimistic about at least one interest rate reduction and maybe two this year. Three interest rate deductions next year are expected. Stock splits are in the news especially in the semiconductor area-Broadcom and Nvidia and with the announcement and then subsequent split, the stock values...
We have not discussed the yield curve in quite a while. The classic yield inversion that began in mid 2022 continues. Historically, as mentioned, this has led to a recession within the next year. Analysts developed a consensus in regard to the “inevitable” recession in 2023 that did not happen. How about 2024? Recession? What is the yield curve doing now? It is still inverted and there are now many signs that the economy is...
Read an interesting article in the SF Chronicle titled “No buy year spreads on social media”. I can’t say that I frequent personal social media such as Facebook, Twitter or X, TikTok, Instagram but for those who do this campaign for “No Buy Year….” is an interesting social/personal finance experiment where spending is a concern. Pick one item that is a usual purchase and meets a minimum amount and take the pledge and “just do...
The SP 500 breached the 5300 mark recently. Artificial Intelligence related stocks keep soaring. Inflation moderating. Goldilocks market? Not so fast. There appears to be continued nervousness in regard to inflation. Every piece of price and economic news is parsed for signs of the arc of inflation. This market vulnerability leaves the market subject to volatility. Today, after digesting the blow out earnings of Nvidia, a semiconductor stock benefiting from the artificial intelligence boom, markets...
How many times can I repeat bad news as good news? Last week, the Fed had its meeting-not every month but 8 scheduled per year-announcing no change in interest rates but expect cuts this year. Previous to the Fed meeting, inflation numbers caused concern in regard to any decline in interest rates this year. The fact that the Fed said it will lower rates do not raise rates was perceived bullishly by markets. Even more...
