201504.13
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Unextrapolating Bubble Expectations

No inflection is ever expected in the real economy since everything is always extrapolated in straight lines by orthodox economists using econometrics. Similar interpretations are being used in stocks, and not just in the “earnings recession” that is already declared “unexpected.” In terms of share prices, there is little doubt about what is holding up…

201504.12
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Fast Money, Fast Markets

I should have known better than to write an article about the possibility of a correction in US stocks. I took a lot of abuse from the bulls this week as the US stock market shrugged off – again, for now – the weak economic data that just keeps coming. That light at the end…

201504.08
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If Sentiment Were A Currency

The ECB having announced and then implemented at least some kind of QE plan, the entire economist community has adjusted their economic projections upward in uniform, flocking fashion. They haven’t had to make much of an adjustment because they never downgraded economic expectations much to begin with. That is why almost every news story about…

201504.07 0

Bernanke Supercycles

The frightening possibility that the US economy, and the world with it, remains still bound by a single “cycle” dating back to at least 2007 (and you could even argue 2000 or 1995) brings with it nothing good about future prospects. If 2009 wasn’t really the ultimate end then that would mean the true trough…

201504.05
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Bonds or Equities? Haters going to Hate

Our strategic macro economic research partner has a max underweight recommendation for bonds. Why the hate? For starters, real yields are 0%. While certainly better than the first quarter of 2013, is 0% the best we can hope to earn from our savings and investment dollars? Given current levels of GDP and current earnings yields for equities,…

201504.05
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Is The Long Awaited Correction At Hand?

It’s been almost 4 years since the last 10% correction in US stock prices, one of the longest stretches on record. Historically, on average, we get a 10% correction about every 18 months. More severe bear markets, declines of 20% or more, are associated with recessions which are hard to predict and fairly rare. Corrections…

201503.29
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Shifting Momentum

US stocks continued their recently more volatile ways this week giving up almost all the gains of last week. In fact, the S&P 500 is now basically flat for the last four months, making no headway since late November despite a series of nominal new highs along the way. As the Fed has backed away…

201503.27
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Cash Flow Seems To Explain Why 5% GDP Was A Myth (Among Other Discrepancies)

Coincident to the “final” release of quarterly GDP are the updated estimates for corporate profits. While the Q4 headline didn’t much alter from the preliminary version sent out a month ago, there was much in the profit section relevant to both economic cycle and structure. The BEA provides several different breakouts of business profits, but…

201503.26
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FOMC: Not Only Is There No Recovery, Don’t Ever Expect One

Taking a look back at economic projections from orthodox models (and the theories they incorporate and encompass) is more than just a review of past econometric failures. That is the most obvious component as the ability of mainstream models to forecast actual economic conditions is inarguably flawed beyond repair. That calls into question, certainly, current…

201503.22
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Macro Observations

Dollar strength may be over extended. Dollar action after the Fed announcement last week seemed to indicate that investors (speculators) were ready and willing to sell the greenback. Looking at the chart, one can see a potential peak in the Dollar Index earlier this month. And, our macro economic partner’s indicators are a short term extended…