MARKET OVERVIEW The global sell-off in financial markets accelerated during Q2. Global equities officially entered a bear market, breaching the technical definition of a -20% decline. US stocks were down most, but all major equity regions were down double digits year-to-date. Even the US bond market was off by -10% for the year. Figure 1: … Continue reading Q3 2022 Update
I've been paying close attention to the US Treasury yield curve since last year because it is, historically, a reliable bellwether for economic conditions. After threatening an inversion for months, the 2-10 year curve finally did so in late March. The inversion was short-lived, however, lasting only days. Figure 1: 2-10 Year Treasury Curve It … Continue reading Splitting Straws on Recession
After improving economic prospects earlier this year, Japan has abruptly reversed course. A third-quarter annualized GDP reading of negative -.8% puts Japan back in a technical recession (defined as two quarters of negative GDP growth). Following stimulative policies (aka "Abenomics") by Prime Minister Shinzo Abe and a blossoming recovery from 2014's technical recession, many assumed … Continue reading Japan’s Footsteps
Following a choppy third quarter, global markets have made a comeback. Since October 1, the S&P 500 and EAFE have both rebounded over 5%, and emerging markets have bounced by more than 8%. Strangely enough, the same fears that stoked the sell-off also seem to be fueling the rally. Investors who disliked the uncertainty … Continue reading Full Swing Voting
The third quarter is officially in the books, and it ended a dicey one. Global stocks ended the quarter squarely in correction territory, the FTSE Global All Cap Index was down 10.5% for the period. Meanwhile, the S&P 500 was down 7.3%, the EAFE was down 10.1%, and emerging markets were the worst at … Continue reading Rolling the Dice
Speculation has been rampant about when Janet Yellen and the Federal Reserve will finally begin raising interest rates. Last month all the buzz was focused on whether Yellen would drop the word "patient" (with respect to rate increases) from her scheduled Fed policy statement. She did, and ever since strategists and traders all up … Continue reading Has Janet Lost Her Patience?
US stocks got off to a choppy start in 2015. The S&P 500 ended January down 3% and some took it as an omen for the year ahead. But the market bounced back 6% in February and is now up 2.88% for the year. So much for the "January Barometer?" Whether you use them … Continue reading The February Barometer?
After almost six years and over $4.4 trillion in asset purchases, the Federal Reserve plans to end its unprecedented monetary policy known as quantitative easing, or “QE,” in November 2014. Though the end of QE has been widely anticipated, the actual termination of the policy represents a major turning point for financial markets, a point … Continue reading The End is Near
Despite a surprise slowdown of US economic growth in the first quarter, the stock market has continued to climb higher. The S&P 500 is up by over 7% year-to-date. US equity REITs have been especially strong, already returning more than 17% so far in 2014. Meanwhile, the benchmark 10 year US Treasury yield has fallen … Continue reading Mid-Year Summary
The markets are quivering in anticipation of what the Federal Reserve may or may not announce later today. The consensus is that it will decide on implementing "Operation Twist." In this situation, the Fed would maintain short-term rates while reaching out to lower long-term rates, effectively "twisting" the yield curve. The idea is that lowering long-term rates will encourage borrowing, spending, and investment. However, … Continue reading Twist and Shout
The markets seem to be hoping that good ol' helicopter Ben will come through with another round of quantitative easing (QE) tomorrow. Doing so would extend the legacy of the "Greespan Put" and probably ignite a speculative risk-on rally. Analysts like Dave Rosenberg and Bill McBride have pointed out how equity markets seem to be dancing around the Fed's QE activities, shown for … Continue reading Bernanke Put
This morning Ben Bernanke, Chairman of the Federal Reserve (the US central bank aka the Fed), delivered his semiannual report on monetary policy to Congress. During the report, Bernanke said, “the possibility remains that the recent economic weakness may prove more persistent than expected, and that deflationary risks might reemerge, implying a need for additional policy support.” … Continue reading The Game Must Go On