Dow Negative for 2015

For anyone concerned that they are missing out on some tremendous upside in stocks, the Dow is now negative for the year. We are six months into 2015, and stocks have basically not returned anything. Consider all of the risk inherent in the market after a 7-year bull market run and grossly extended valuations, and to now have nothing to show for assuming that risk for all of 2015. Investors…

Fed Meeting Provides Little New Information

The only new information released after the two-day Fed meeting that concluded yesterday was that the Fed intends to raise rates twice before the end of the year. While most economists expect the Fed’s first rate hike to come in September, the Fed statement revealed no specific guidance on the timing of either of the two raises to come in 2015. Stocks have reacted favorably to the lack of specific…

Fed Window for Rate Hikes is Now, Officially Open!

The long awaiting Fed rate raising cycle is now, officially upon us. The question of whether or not the Fed will raise rates has long been answered in the affirmative, and so, it is not a question of if, but when will the Fed tighten. June was almost universally forecast to be the first Fed meeting at which Fed governors would possibly vote to raise rates. The June meeting occurs…

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…

A June Fed Rate Hike Seems Most Likely Scenario

After today’s Fed meeting, Janet Yellen stated that she does not expect a Fed rate hike “for the next couple of meetings.”  The Fed meets in January, March, April and June, so this would make it seem that April would the first meeting where we could expect a reasonably high probability of a rate hike, with June looking to be the most likely meeting.  It is certainly possible that if…

Sinking Gasoline Prices May Be Too Late to Rescue Holiday Retail Sales – Published in Noozhawk on Monday, December 8, 2014

Last week’s jobs report was amazing, plain and simple. The U.S. economy added 321,000 jobs, far exceeding consensus analyst estimates of 235,000 jobs. The unemployment rate fell slightly to 5.8 percent, from a high just above 10 percent at the trough of the Great Recession. The stock market continues to set new, all-time highs. So why isn’t the economy growing at a robust pace? The answer is simple, although the…

Labor Market Improvements Include Increasing Quits, But Challenges Remain – Published in Noozhawk on Monday, November 17, 2014

Despite strong improvements in the unemployment rate, weekly jobless claims and quits, wage growth has been almost nonexistent so far in this 5½-year economic recovery. Still, recent data show coordinated improvement across multiple indicators, and the most recent wage numbers look promising. Rising quits — employees quitting their jobs voluntarily — rose sharply in September, jumping 243,000, the highest level since early 2008. Since layoffs have not changed significantly, the…

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…

Time for a Reality Check As Long-Awaited Stock Market Correction Arrives – Published in Noozhawk on Monday, October 13, 2014

It should be no surprise to any investor that stocks are showing signs of weakness after more than 5½ years-plus of the bull market rally. Many investors have been in denial, however, as the signs of a pending correction were quite visible, for those willing to actually look. The Russell 2000 small company index peaked in March. From that peak, this index has fallen 13.25 percent and is now at its 52-week…