Buy the Rumor, Sell the News

The markets saw some back and forth this month but the S&P 500 closed the quarter up about 5% and even bonds managed to eek out a small gain.  The "Trump rally" is moving along, and the market still buys the president's campaign promises. But following the capitulation of repeal and replace, Trump's ability to … Continue reading Buy the Rumor, Sell the News

Surprise, Surprise

Yesterday, the US made history with an upset of presidential proportions.  Despite being a huge underdog, Donald Trump clinched the presidency from strongly favored Hillary Clinton (who pollsters estimated had a 90% probability of winning).  Following the upset, investor uncertainty spiked and Dow futures traded down more than 800 points. Yet the S&P 500 actually … Continue reading Surprise, Surprise

Following the Brexit Signs

Yesterday the United Kingdom made history by delivering a surprise vote to leave the European Union. Though the odds were close, market pricing was tilted towards a "Bremain" vote -- so "Brexit" was an unexpected outcome.   Markets reacted commensurately today,  European equity markets were down more than 7% and the Sterling down more than … Continue reading Following the Brexit Signs

Japan’s Footsteps

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

Big Trouble in Little Athens, Revisted

It's been over five years since Greece's current financial crisis started making public headlines. Since then Greece has received more than 240 billion Euros of bailout loans from the ECB, the IMF, and the EU (aka the "Troika").  That figure doesn't include the "phantom" aid that Greece also received in the form of the debt … Continue reading Big Trouble in Little Athens, Revisted

The Best Policy

Last week JP Morgan stunned the world by announcing that it suffered over $2 billion in losses from derivative trades gone awry.  Ironically, JPMorgan was considered to be one of Wall Street's more responsible banks - one that avoided the derivative disasters of the financial crisis. Even more ironic, JP Morgan's CEO, Jamie Dimon, has been one of the most outspoken bankers fighting against increased regulation of financial services.  Unfortunately … Continue reading The Best Policy

Old Euro Dogs

This morning Euro Zone policymakers announced an agreement where certain private investors (mainly banks and insurance companies) would take 50% haircuts on their holdings of Greek debt.  This is basically a managed default.  And though it runs totally contrary to what policymakers were promising earlier this year (aka that Greece would not default), it really should have been expected. Back … Continue reading Old Euro Dogs

Here Comes the Sink

It was a wild week for US markets. Volatility was off the charts and on Thursday the Dow dropped 512 points - its ninth largest single-day drop in history.  Stocks are down about 7% from their peak in April and are now negative for the year.  Then on Friday, adding insult to injury, Standard and Poors stripped … Continue reading Here Comes the Sink

What’s up with the Debt Ceiling

We are within an arm's length of reaching a "debt ceiling" in the United States.  In other words, the government has basically maxed out the national credit card (based on limits established by US law).  The Treasury Department has indicated that unless Congress authorizes additional borrowing (which only Congress can do through its lawmaking functions), the United States will not … Continue reading What’s up with the Debt Ceiling