Fed Rate Increase As Expected; Shrinking Balance Sheet Much More Interesting

As expected, The FOMC (Federal Open Market Committee) of the Federal Reserve raised the Fed Funds rate by 1/4-point to a range of 1% to 1.25%. They further projected that one more rate increase will be needed this year. This is all pretty much as was expected (the futures were indicating a 99%+ likelihood on a 1/4-point raise). What was much more interesting is that the Fed now plans to…

Fourth Quarter 2015 Review/2016 Preview

The fourth quarter ended on a sour note, with a 178-point drop on the final trading day of the year. The first day of trading for 2016 was far worse, with the Dow Jones Industrial Average down almost 500 points during the trading session, before rebounding to close down 267. As we enter 2016 the Federal Reserve will take center stage, as their interest rate raising actions will drive economic…

stocks continue yesterday’s losses

Stocks continue to slide, with the Dow losing 250 points, and the Nasdaq Composite off more than 100 points (more than 2%) so far today. I think there has been too much emphasis on the first rate hike (I am guilty of this also). If we look at the multi-year trend for rates, the U.S. has been in low interest rate mode for 7 years. If we look globally, other…

Could be the start of something, but stocks have a long way to go

Stocks are beginning to show signs of a change in trend, with the Dow experiencing it second major shunt in only a few trading sessions; now down 270+ points.  Both the NASDAQ and S&P 500 are also down more than 1 percent so far today, although all three major indexes are still trading at very expensive multiples and historically elevated levels.  Fears over pending rate hikes appear to be driving…

U.S. Stocks Rally to New Highs on Empty Greek Promises

Stocks rallied today to close at all-time highs (again) after a deal was announced that basically delays Greece’s responsibilities to repay loans and follow required austerity measures as part of their bailout.  The reality is that this changes nothing; it simply puts-off the pending implosion of the Greek economy and the probable end to the EU resulting from a Greek exit from the euro.  Nothing has changed – the risks…

Germany swiftly rejects loan extension request by Greece

Just hours after Greece submitted a proposal to extend their bailout loans, Germany rejected the request citing Greece’s failure to include an agreement to also extend the austerity measures that are a requirement of the original bailout.  Greece is clearly trying to avoid continuing the austerity measures, and obviously cannot afford to service their debt.  It is amazing to me that financial markets around the globe, and especially those of…

Economic Growth Is All About Wages – Published in Noozhawk on Monday, November 3, 2014

Although we witnessed the first glimpse of wage improvement last week, American workers are not seeing consistent pay increases. Until this changes, economic growth will remain lackluster, and as a result, earnings for U.S. companies will lag current stock valuations. The United States is adding jobs at the fastest pace since the end of the Great Recession, with the economy adding 248,000 jobs in September, and another strong month of…

Healthy GDP Report Could Put Nail in Economic Coffin for the Fed – Published in Noozhawk on Monday, October 27, 2014

The Commerce Department will release the first report for third-quarter gross-domestic product this week. Real GDP growth is expected to be 3 percent annualized, following the dramatic jump to 4.6 percent growth for the second quarter. A healthy GDP report on Wednesday could give consumers — who have been reluctant to spend — more confidence in the economy, but may also push the Fed to begin raising interest rates sooner rather than later. We began 2014…

Fed Gives Investors What They Wanted, But Is It Enough to Keep Stock Rally Going? – Published in Noozhawk on Monday, September 22, 2014

Last week, the Federal Open Market Committee of the Federal Reserve Bank met to discuss the U.S. economy. Investors anxiously waited for the statement following the meeting for direction from the Fed regarding the timing of interest rate increases to come. A question of when and not if, the Fed will certainly begin raising short-term interest rates in 2015. The timing of the beginning of those rate increases is the hot topic of the…

Start of ‘The’ Correction, or (Another) Buying Opportunity in Stocks? – Published in Noozhawk on Monday, August 4, 2014

This past week’s stock market performance shocked many investors who have grown accustomed to steady gains for stocks — week in, week out. The combined drop of nearly 400 points for the Dow Jones Industrial Average over the past two trading sessions (July 31-Aug. 1) led the stock market to its worst weekly performance since January. This result prompted some investors to ask: Is this the start of a major correction, or…