Good News is Now Bad News for Financial Markets – Published in Noozhawk on Monday, September 29, 2014

Investors in both the stock and bond markets, throughout the recovery, beginning in mid-2009, have viewed positive economic data as positive for financial markets, and they have traded accordingly. With the clock ticking on the inevitable start to Fed interest rate increases, good news will become bad news for financial markets, and for investors. Despite the weak durable goods number this past week, which showed a larger than expected decline of 18.2…

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…

Unreliable Government Data Drive Stock Market Bubble

For a long time now, we have seen outsized revisions of government data, including the first quarter 2014 GDP figures, which the government initially reported at 0.1% annualized growth, only to revise that number down dramatically to -2.9% annualized growth.  Today, the government reported that second quarter GDP grew at a 4% annualized rate, and they (once again) revised first quarter GDP growth to -2.1% annualized growth.  Further, they have…

Rising Oil Prices Could Be the ‘X’ Factor for Securities Markets – Published in Noozhawk on Monday, June 23, 2014

With stocks setting all-time highs almost as frequently as World Cup fans leap from their seats to watch a shot for a goal, investors might get the sense that the market will keep advancing indefinitely. However, recent developments in Iraq, and their direct impact on oil prices, could be the “X” factor that throws a wrench in the now five-year-plus bull market rally. Iraqi militants, including members of ISIS (Islamic State of…

Fed Meeting Could Trigger Stock Market Correction, Or Not – Published in Noozhawk on Monday, June 16, 2014

This week’s Federal Reserve Open Market Committee (FOMC) meeting has all the earmarks of a stock market correction trigger, just waiting to be pulled. Although it is widely expected that the Fed will reduce its bond buying by another $10 billion per month, which would be the fifth such reduction, investors may view this move as reason enough to begin selling. It is not simply another notch down in the Fed’s quantitative easing (QE) that is…

Chance of Recession Will Increase if GDP ‘Second Estimate’ Shows Weakness – Published in Noozhawk on Monday, May 26, 2014

On April 30, the Bureau of Economic Analysis (BEA) released the “advanced” U.S. real gross domestic product (GDP) report — the output of goods and services produced by labor and property located in the United States. This report showed that GDP increased at an annual rate of 0.1 percent in the first quarter (that is, from the fourth quarter of 2013 to the first quarter of 2014). In the fourth…

Russell 2000 May Be Early Indicator for Market Direction – Published in Noozhawk on Monday, May 12, 2014

In last week’s column, we looked at theNASDAQ Composite Index and its recent divergence from the other two major indexes — the Standard & Poor’s 500 and Dow Jones Industrial Average. The Nasdaq has been showing clear signs of weakness, just as the other two indexes have been pushing to new all-time highs, all of this occurring as earnings season and GDP growth have reflected marked weakness, as well. As all of this has been unfolding,…

This Earnings Season, NASDAQ Composite Is the Index to Watch – Published in Noozhawk on Monday, May 5, 2014

The NASDAQ Composite Index ended last week with a 1.2 percent gain, but is still down 1.3 percent year-to-date, while theStandard & Poor’s 500 flirted with a new all-time high, and the Dow Jones Industrial Average closed at an all-time high during the week — its first new high for 2014. With so many influential earnings reports from major technology companies driving market performance, the tech-heavy NASDAQ will continue to dictate market direction as we…

Despite Virtual Hype, Bitcoins Are a Complete Farce – Published in Noozhawk on Monday, March 3, 2014

The recent bankruptcy of the Mt. Gox bitcoin exchange underscores the complete lunacy surrounding this virtual currency. Speculation on bitcoins has reached epic proportions, and some very smart people have invested in them, and in the exchanges and other trading infrastructure to try to develop bitcoins as a medium of exchange. Although the concept behind bitcoins makes sense — developing a single, universal medium of exchange that can be used for transactions over the…