Market Perspectives

by Ken South, Founder/CEO

Ken's Latest Article

After a Historic Run, a Pause. What Happens When It Is Done?

After a Historic Run, a Pause. What Happens When It Is Done?

April 19, 2024

US stock market investors had been enjoying a period of historically low downside volatility (unabated advance) and consistent upside of late. The S&P 500 Index had not endured a 3% correction since 10/27/2023, the longest stretch since the 308-day streak ending on 1/26/2018. Almost on cue, the S&P 500 dipped more than 3%, ending the streak at 105 trading days...

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Happy Unnecessary Government Donation Day

Happy Unnecessary Government Donation Day

April 17, 2024


To say that it is infuriating reading about all the government spending, and the United States financing of external causes, is an understatement. This is only exemplified by the amount of taxes that we must pay and particularly what we deal with in the lovely state of California! How ‘bout those gas prices! OK, enough about that. I start almost every note with some reminder of...


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The Last Leg of the Inflation Fight Is Not Won Yet

The Last Leg of the Inflation Fight Is Not Won Yet

April 10, 2024


The market does not “need” a catalyst to fall (or to rise), and narratives explaining why the market does what it does are often only clear in hindsight. There could be any number of factors that lead to the pullback that I keep on warning of. It could even be a combination of reasons: liquidity drain, higher than expected inflation, higher interest rates, geopolitics, politics, banking crisis, recession odds going up, etc. Interim high points usually form when it feels like prices can only keep going up, which is one of the many reasons I think extra caution is warranted here.

 

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Powell Preaches Patience as Inflation Concerns Raise Their Ugly Head Again

Powell Preaches Patience as Inflation Concerns Raise Their Ugly Head Again

April 3, 2024


I hope everyone had a terrific Easter. Except for the rain, it was pretty nice on the Southern California coast. Last week proved to be another week of record highs in the major US stock indexes. Over the last few weeks, I have kept on talking about how it is about time for the equity markets to take rest. Clearly the markets haven't been ready as they have continued to...


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Why Interest Rates Are Both Too High- and Too Low

Why Interest Rates Are Both Too High- and Too Low

March 27, 2024

We are faced with a very clear dilemma currently. The media, the Fed, and the market prognosticators appear to be solely focused on interest rates and inflation.  At the beginning of the year the expectations were for as many as seven interest rate cuts this year. This was based on the expected slowdown in the economy that was a result of...

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Fed Discussions Should Bring Clarity on What’s To Come

Fed Discussions Should Bring Clarity on What’s To Come

March 20, 2024


Equity markets finally adjusted from their ascent last week, albeit by a small margin. The closing on Friday March 1st was a smidge higher than on March 8th, which was a whisker higher than last Friday. So tight in fact it almost makes the advance seem like it is moving in on week 21 vs. ending at week 19. As extended as this rally might seem, there are a couple of points that still speak to the health of the advance in the markets. The first is that there is clearly no...


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Inflation Remains The Focus of The <br/>Analyst Community

Inflation Remains The Focus of The
Analyst Community

March 13, 2024

Last week I reiterated that I had an expectation that we would see some kind of a contraction or pullback in the equity markets in the near future, as it has been 19 weeks straight up in the S&P 500. As I had shown in the chart, this is longer than the previous two upward runs since the October 2022 lows. It was a run higher that has not only lasted longer but extended further. To refresh the illustration...


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Is this a Bubble or Just a Bull Market?

Is this a Bubble or Just a Bull Market?

March 6, 2024


For the last number of weeks, I have been writing to be prepared for the feared seasonal correction / digestion. As of yet, it just has not happened. The media has continued to expound on the point that the fuel that they say would be "necessary" to get the market to its new highs would be the Fed lowering interest rates. Well, no such luck here as...


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Ides of March Are Just Around The Corner

Ides of March Are Just Around The Corner

February 28, 2024


For the last number of weeks, I have been talking about how it could be expected that the markets are prepared for a digestion or a minor correction. I have expressed caution and the possibility of this as a result of the length of time of the current advance, the cyclical / historical precedents at this point in the year and the fact that the Fed remains quite stingy with their desire to lower interest rates. In today's note, I wanted to take a moment and discuss where the markets are currently and then...


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The Cycle Remains Positive Despite Current Inflation Measures

The Cycle Remains Positive Despite Current Inflation Measures

February 21, 2024

For the last few weeks, I have been talking about the “expected” pullback in the markets that seems timely in its occurrence. As of yet it really hasn’t appeared. It makes one wonder what the stock market knows that most investors don’t? There have been some landmines in individual names given that earnings reports can be less than stellar at any given moment, but for the most part...


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It&#8217;s Never Fun, Even When It Is Expected

It’s Never Fun, Even When It Is Expected

February 14, 2024

In last week's newsletter I gave a lot of perspective on the markets and that it appears that it might be time for a “digestion." Given that I have received many calls and emails about this term "digestion" and how to quantify it, I thought it might be good to take another look at the markets overall and really think about where things could go. Obviously, nobody knows exactly where and how high or how low the markets will go, but there are some breadcrumbs that often give some hints based on history, current performance statistics, and internal measures. I always caution against...


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The First Market Correction of 2024 Could Be Upon Us

The First Market Correction of 2024 Could Be Upon Us

February 7, 2024


In last week's newsletter, I covered a few important points. The first point was that earnings have started off being pretty solid. The second point was that February, March, and April; in an election year, have historically proven to be a bit difficult. The third point was what tends to happen in an election year and, more specifically, an election year that follows a year that has been a good one. Now that we are in February, and have finished the first month of the year, several new statistics have popped up allowing us to see what the probabilities are for markets moving forward. But before I begin...


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Analyzing the Election Year &#38; Stock Market Conundrum

Analyzing the Election Year & Stock Market Conundrum

January 31, 2024


The economy is still growing.  Real GDP rose at a solid 3.3% annual rate in the fourth quarter, and consumer spending was strong in December meaning the first quarter is off to a good start.  New home sales came in above expectations and initial jobless claims remain low. What’s not to like!

All eyes are now on this Friday’s jobs report, the Fed meeting on Wednesday and most specifically all the big technology companies announcing their earnings beginning this week.  If we... 


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Earnings Acceleration Is Important For the Longevity of the Bull Market

Earnings Acceleration Is Important For the Longevity of the Bull Market

January 24, 2024 


As you read this note, the S&P 500 is entering the heart of Q4 2023 earnings season. This allows us to step back and look at the earnings rebound to date and the trajectory for 2024. The earnings recovery is approaching its one-year anniversary. The year/year change in the S&P 500 hit its low point at a decline of -12.7% in the fourth quarter of 2022. As of the third quarter of 2023, the growth rate had rebounded nicely to a -1.5% decline. It is expected to end the calendar year of 2023 at +11.1%. This rebound is expected to continue into this calendar year, with a consensus growth rate of 12.8%. One of the points that I want you to really remember is...


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2024 Could Be Somewhat More Difficult Than 2023

2024 Could Be Somewhat More Difficult Than 2023

January 17, 2024


We've just finished the second week of 2024. After nine weeks straight of an up-stock market to end 2023, 2024 has started with some twists and turns. In this past weekend's Barron's, there was the annual Barron's RoundTable discussion with a group of older market sages like Abbey Joseph Cohen and Mario Gabelli, to name just a couple. The discussion begins with the overall tone of the group being one of disappointment with what to expect in 2024. They come to the conclusion that... 


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A Cautious Start

A Cautious Start

January 10, 2024


I always get a kick out of the annual projections from all the talking heads and research departments on Wall Street. I mean think about it. They are all reading the same tea leaves, so how are they usually so separated in what they project for year-end S&P 500 targets? The reports tend to be pretty and the public eats them up, but I find them to be of absolutely no practical value. So much can and usually does happen throughout the year that expecting to be able to decide in advance what the financial markets will do and what will outperform or underperform I think should be left at the bar during the cocktail parties.

In my opinion...


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Can the Bull Continue Raging Into the New Year?

Can the Bull Continue Raging Into the New Year?

January 3, 2024


Happy New Year to All! As we turn the chapter on 2023, we are faced with the constant dilemma of "what have you done for me lately?" To rest on the laurels of 2023 does little help anyone on their financial journey to create the best life for themselves possible. Last year was a great year to be sure. The "Magnificent Eight" had a continuous run and ended up being the small group of huge companies that pulled the markets higher for the year. Besides the late October of year-end advance being truly impressive and leaving many non-believers flat footed, we noticed...


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Cautiously Planning For A Happy New Year

Cautiously Planning For A Happy New Year

December 27, 2023


Just to fill everyone in on the temperature of investors, the only thing I have heard from everyone that is calling in is when we should sell. Not one person has said that they are prepared to invest more capital. Usually the crowd is wrong, maybe not this time, but usually the crowd is wrong. The stock market has refused to provide any sort of lower-risk entry point to add more exposure. If one wants to buy, he or she has been forced to do so while...


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Fed Chair Powell Played Santa and Not Scrooge

Fed Chair Powell Played Santa and Not Scrooge

December 20, 2023


Overall, despite my 2023 expectations for the S&P 500 and other component parts of the US equity markets have clearly been met. So much so that even though I have been positive on the markets, I am a little hesitant to throw more fresh capital at the market after a straight run from 4,100 to 4,700 in a matter of 6 weeks. I say this to...


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Inflation Is Abating and Markets are Ebullient

Inflation Is Abating and Markets are Ebullient

December 13, 2023


I’m not a big baseball fan, but I had to take a pause when I saw that Otani was signing a contract for $700 million over a 10-year period. I mean, what does the team have to charge for a seat, a hotdog, and a beer if they are paying players this much! To repeat a very common phrase, “We live in unprecedented times.” Since the COVID pandemic, the economy has been deeply influenced by a massive increase in government spending, COVID-related shutdowns, and a huge increase in the money supply.  In all our years of economic forecasting, the task of identifying where we are and where we are heading has never been so difficult...


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We Could See Positive Q4 Advances If Textbook Market Trends Continue

We Could See Positive Q4 Advances If Textbook Market Trends Continue

December 6, 2023

If one were to look at the S&P 500 from January 1 of this year till last Friday, the returns have been quite impressive. Given that the annual return since 1900 on the S&P is a little over 10% per year, the 18% return this year (and it ain't over) is really pretty respectable. Considering the returns from international and bonds, they appear even more impressive. But, in my opinion, the difficulty this year has been down to the fact that...


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Narrow Leadership Is Not Narrow Growth&#8212;Rally Should Continue

Narrow Leadership Is Not Narrow Growth—Rally Should Continue

November 29, 2023

Last week, the equity markets weren't the Thanksgiving turkey, instead they were a bit of Thanksgiving champagne, as is the norm for the week of Thanksgiving. As I have been saying throughout November, the heavily oversold readings in October sort of set the stage for the November / year-end rally.  In late October several technical measures of the S&P 500 broke down to highly pessimistic levels. As of now, the market has come out the other side of this critical period in pretty good shape...


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We Could See Positive Q4 Advances If Textbook Market Trends Continue

We Could See Positive Q4 Advances If Textbook Market Trends Continue

November 22, 2023

 2023 has been quite a ride. The S&P 500 checked off many boxes early on and held true to probability expectations afterwards. The first 5-day rule. The first month rule. The "January Effect" rule, and so on. The market rallied until late July, and then pulled back into late October, as is the norm. Throughout the year I have been providing statistical data of what "usually" happens when the market acts as it has, and to be honest, it is a little scary when things seem to work out so darned textbook! Before I go into exactly what I am looking for next...


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S&#38;P 500 Performance Masked by International Friction and Domestic Turmoil

S&P 500 Performance Masked by International Friction and Domestic Turmoil

November 15, 2023

2022 put the Wall Street cliche' "It's always a bull market somewhere" to the test for sure. For the first time on record both stocks and bonds fell. In 2023 the decline in bond market prices has continued for a third consecutive year! Again, a situation that has never been experienced.  Yet, the first five days of this year the S&P 500 was up, followed by numerous other measures of time suggesting that this year could be quite a good one...


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What a Strange, Strange Trip It's Been

What a Strange, Strange Trip It's Been

November 8, 2023

To say that this has been an exceedingly strange year would be a gross understatement. Throughout 2023 I have highlighted unusual market developments. It started with the strongest first seven months in 26 years. To be followed by the steepest rise in interest rates in 16 years. The breadth of the market has been equally strange in that the market was seemingly...


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<br/><br/>Bearish Models Versus Bullish Seasonals



Bearish Models Versus Bullish Seasonals

November 1, 2023

For the last couple of months, as the equity and bond markets have been taking it on the chin, I have consistently mentioned the seasonal expectations while at the same time trying to scream my message over the relentless drum beat of negativity and negative market action. This is what I intend to cover in this week's note. At the end of the first half of the year (July 19th to be exact) the US equity market, as measured by the S&P 500 and NASDAQ 100, absolutely ripped to the upside. Many negative market prognosticators said...


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Investors Remain Cautious as We Wait for Markets to Bottom on Bad News

Investors Remain Cautious as We Wait for Markets to Bottom on Bad News

October 25, 2023

Unfortunately, equities are still caught in a buyer's strike. That is, investors are sidelined as the uncertainties abound and cumulatively are preventing investors from adding growth / risk to their portfolios. As the films of atrocities in Israel and 10-year interest rates hit 5% these uncertainties seem to be gaining strength rather than hitting a high point and rolling over. In looking at what I feel is the most important moniker of concern, I focus on...

 

 

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<br/>Potential Effects of Another Conflict in a Seasonally Positive Period


Potential Effects of Another Conflict in a Seasonally Positive Period

October 18, 2023

As I reflect on the past week's activity, top of mind is the widening Israel-Gaza conflict. In my view, this tragedy touches every investor personally. For many, this is because of personal knowledge of someone impacted. My son has a player from his water polo team from Cal Berkeley. He and his family are in a shelter in Tel Aviv. This personal connection also means markets will reflect this human aspect, particularly as...


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<br/>Will October Be a Successful Bear Killing Month?


Will October Be a Successful Bear Killing Month?

October 11, 2023

The question I keep asking is, "What can happen next?" We go from a US Government shutdown (see special report two Fridays ago), to the ousting of the Speaker of the House, and now the outright attack on Israel by Hamas. This is getting quite frustrating...

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Good Riddance September&#8212;Let&#8217;s Hope for a Rocktober

Good Riddance September—Let’s Hope for a Rocktober

October 04, 2023 

Thus far, 2023 has been characterized by skepticism of the economy and markets and yet equities have risen. The best entry points have been when market skepticism has been the highest, á la March 2023 or even Oct 2022, and if history is a guide, we are getting close to a one in this month. This is the perspective I have been harping on in my weekly comments as we look towards the final 3 months of 2023...


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Good Riddance September&#8212;Let&#8217;s Hope for a Rocktober

Good Riddance September—Let’s Hope for a Rocktober

October 04, 2023 

Thus far, 2023 has been characterized by skepticism of the economy and markets and yet equities have risen. The best entry points have been when market skepticism has been the highest, á la March 2023 or even Oct 2022, and if history is a guide, we are getting close to a one in this month. This is the perspective I have been harping on in my weekly comments as we look towards the final 3 months of 2023...


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Potential Government Shutdown: Going Back to 1960, What Does History Say?

Potential Government Shutdown: Going Back to 1960, What Does History Say?

September 29, 2023

In today's Special Report, I wanted to give a bit of attention to the US Government Shutdown. I went back to 1960, compiled and summarized the data and added some brief comments on how this might effect the markets and our economy. 


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October Could Kick Off Market Climb Despite Interest Rates' 16-Year High

October Could Kick Off Market Climb Despite Interest Rates' 16-Year High

September 27, 2023

Since July, the S&P 500 has dropped down to Friday's low of 4302. This is a decline of almost 7%, following a quite ferocious run for the year of up over 15%. This makes me think of basically three things:

  • How much further should the decline go? 
  • What has been the cause of the decline?
  • What should be the focus of equity portfolios when this cyclical decline is over? 

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Do September Showers Bring October Flowers?

Do September Showers Bring October Flowers?

September 20, 2023

True to form, September remains difficult. There have been no negative surprises, yet interest rates have remained frustratingly sticky, and every slice of our economy is dealing with gasoline prices at new highs. This last week I paid around $6.50 for premium. Still doesn’t make me want to be driving an electric car but didn’t make me happy either! Today, the Federal Reserve is set to release a new statement on...


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Is The Market Micromanaging September?

Is The Market Micromanaging September?

September 13, 2023

We are about two weeks into September, and all eyes are still focused on the Fed and various measures of inflation. A month ago, many people were pretty sure serious inflation concerns had passed.  After the equivalent of 22 quarter-point rate hikes and the biggest drop in the money supply since the Great Depression, consumer prices rose only 0.2% in July, with the year-over-year rate of increase down to 3.2. Today’s nemesis to this progression is...


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September is Looking To Defy Historic Negativity in 2023

September is Looking To Defy Historic Negativity in 2023

September 6, 2023

August was a tough month as I have been saying. Markets closed down 2%, not a change in direction, but I don’t like declines no matter what. Up until August 22nd, the S&P 500 was acting like it was going to take quite a drubbing. Then we got the much-anticipated earnings from the...


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Are We Waiting for a September to Remember?

Are We Waiting for a September to Remember?

August 30, 2023

August continues to be a trying month, and before discussing September, it’s right to look back at August. Interesting as it may be, this August seems to have largely traded in-line with the historical tendencies since 1929...


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Special Market Update:&#160;<br/>Let&#8217;s Talk About Debt Baby, Let&#8217;s Talk About You and Me

Special Market Update: 
Let’s Talk About Debt Baby, Let’s Talk About You and Me

August 11, 2023

Last week when the news broke that Fitch had downgraded the United States’ long-term debt rating, I thought I would provide some high-level thoughts. I mentioned it in this week’s Market Perspectives...


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Fitch Takes Aim At U.S. Debt, Blames Mistakes Of Policy Makers

Fitch Takes Aim At U.S. Debt, Blames Mistakes Of Policy Makers

August 9, 2023--

August started with a bang, but not the bang that makes investors happy. True to form, the first week of August followed the previous Thursday’s negative reversal, engulfing day (a negative engulfing day is when the market is...


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$5.5 Trillion Sidelined As The Fed Explores An End To Further Tightening

$5.5 Trillion Sidelined As The Fed Explores An End To Further Tightening

August 2, 2023 --

Before I go into detail on August, I wanted to take a minute and talk about what has investors, both individual and institutional, on edge. If we take a step back and look at the last major correction period, it was the 2008 Financial Panic. Was that market breakdown a failure of bank risk management and borrower evaluation or was it the US Government?


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Are Stocks Really Ready For a Correction?

Are Stocks Really Ready For a Correction?

July 26, 2023 --

We are in the final week of July. In the final week, not a lot of economic reports to be particularly concerned about, but a very important Fed meeting just after you get this report (Wednesday, July 26th at approx. 11:00 EST). The other thing that is important this week is that we are now in the thick of earnings season and more specifically the earnings are flowing from the "Magnificent Seven" big-cap technology companies. Last week the markets sort of wobbled...


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Slipping into Expansion as Fears of Recession and Inflation Wane

Slipping into Expansion as Fears of Recession and Inflation Wane

July 19, 2023 --

The first two weeks of July have come and gone. With them the massive fear of recession/inflation / Russia/China has seemed to abate. As a result, this has provided breathing room for both the stock and bond markets throughout the world. In the most recent notes, I have made an attempt to focus on...


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A Softening Labor Market Means Good News For The Fed

A Softening Labor Market Means Good News For The Fed

July 12, 2023 --

The June jobs report was released Friday, and, overall, it paints a softer picture of the jobs market compared to the “hot” ADP June jobs report released the day before (7/6). Thursday, there was a sharp reaction in the bond market and the stock market. 


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Recap of the First Half and Expectations for the Remainder of 2023

Recap of the First Half and Expectations for the Remainder of 2023

July 6, 2023 --

Gains of 10-15% more are likely in 2H 2023 for US Equities - Recent broadening out in market breadth has not yet been followed by an equal broadening out in bullish sentiment. Bull markets are not linear. I expect there will be some pullbacks and even a potential shock that might make the scared investor even believe that a move to new lows is in the cards. This is not a bold expectation but rather...


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The COVID Epilogue Is Coming For Us (And It's About Time)

The COVID Epilogue Is Coming For Us (And It's About Time)

June 28, 2023 --

It's official, we are now halfway through 2023 here we are with the S&P 500 up around 12%. Who'd thunk? I mean with 10 rate hikes back-to-back, the Russian war, Chinese tensions, and rampant inflation- just to name a few...


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FOMC Signals 'Green Light' For More Bottom Bounces

FOMC Signals 'Green Light' For More Bottom Bounces

June 21, 2023 --

In the last three weeks, I have brought focus to the current state of the equity markets and how inflation is the focus of the Fed. What we are observing and investing in the midst of is a subtle balance that exists between the motivations of the Fed as a result of their rescuing effort on the economy due to the COVID shutdown, while at the same time trying to...


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Like The 1996 NBA Finals, The Bulls Are Back In Town

Like The 1996 NBA Finals, The Bulls Are Back In Town

June 14, 2023 --

The backdrop for the equity markets is continuing to be a quite good one. In last week's report, I tried to touch on a point that I am going to expound on a little bit more before I get started this time. I had mentioned a factoid that in the last 80 years when the equity markets have turned from a negative (bear market) market to a positive one, it has started with less than 10% of the companies of the major index going up. This one is no different...


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Seasonals Support A Summertime Rally

Seasonals Support A Summertime Rally

June 07, 2023 --

Today’s market concerns involve the S&P’s ongoing struggle to rally through 4,200 resistance. Although this hurdle was accomplished last week, the difference in performance between large-cap growth and the balance of the equity market is truly “the” issue. This has led some to see vulnerability...


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Markets Wild For AI But Debt Questions Provide No Relief

Markets Wild For AI But Debt Questions Provide No Relief

May 31, 2023 --

The S&P 500 ended a tough week, last week, down 1%. Markets don’t like unknowns, and therefore can never properly discount the binary outcome of a debt ceiling/default. As Tom Block, Head of Policy Strategy at FundStrat research notes, “Getting a deal has many challenges and with a fast approaching “x date”...


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Debt Ceiling Debate Carries On As Interest Rates Continue To Rise

Debt Ceiling Debate Carries On As Interest Rates Continue To Rise

May 24, 2023 --

If you have been to a high school or college commencement lately, then you know the drill: at some point, at least one speaker will urge the graduates to be instrumental in bettering society. They are suggesting they'd like to see these students make the world a better place through some sort of conservative organization and work effort....


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All Eyes On The Debt Ceiling And The Fed's Next Move

All Eyes On The Debt Ceiling And The Fed's Next Move

May 17, 2023 --

In this week’s note, I am going to pretty much take you from soup to nuts on what has gone on, what is going on, and where it “appears” we could / should be going. Since this is clearly an imperfect science, I ask you to indulge me with your patience and allow me to give you what I glean to be most important...


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Banks Are Now Competing With The Fed

Banks Are Now Competing With The Fed

May 10, 2023 --

The Fed's job was never going to be easy. Taming inflation is not something it's particularly good at. It tends to raise rates too far, throw the economy into a tailspin, hit the gas again, and surely needs to squash inflation...


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Markets Tend To Bottom Before Fundamentals

Markets Tend To Bottom Before Fundamentals

May 3, 2023 --

The Fed's job was never going to be easy. Taming inflation is not something it's particularly good at. It tends to raise rates too far, throw the economy into a tailspin, hit the gas again, and surely needs to squash inflation...


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Tighter Credit Adds Further Pressure On Small Businesses

Tighter Credit Adds Further Pressure On Small Businesses

April 26, 2023 -- 

The economy seems to be humming along OK. Not too hot and not too cold. The raising of rates by the Fed has been very abrupt and due to the pain it has created within the financial system it is what all remember. But, so was the rate at which money was dumped on the US (and other global economies as well for that matter) financial system at stressful points since the Great Financial Crisis yet this was a help so it is not as...


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A Bullish Market Despite Persistent Fear Of A Bear

A Bullish Market Despite Persistent Fear Of A Bear

April 19, 2023 --

Despite the mild pullback on Thursday of last week, last week once again managed to put in a positive return. Four of the past five weeks have been up weeks even though the institutional investors have been more negative and have a higher short position than has been seen in some time. The number of reasons why this market should continue to be stronger, based on statistics, keeps on stacking up...


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Can the Fed Adjust its Inflation Target and Adopt a New Normal?

Can the Fed Adjust its Inflation Target and Adopt a New Normal?

April 12, 2023 --

Despite the mild pullback on Thursday of last week, last week once again managed to put in a positive return. Four of the past five weeks have been up weeks even though the institutional investors have been more negative and have a higher short position than has been seen in some time. The number of reasons why this market should continue to be stronger, based on statistics, keeps on stacking up...


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S&#38;P Makes Headway as Data Show April Likely Favorable

S&P Makes Headway as Data Show April Likely Favorable

April 05, 2023 --

At the start of 2023, the street consensus was bearish on equities; both institutional investors and the man/woman on the street were not excited about the year to come. I began 2023 by giving historical statistics of what changes were happening in the markets and then of late (since the last interim top on February 2) the negatives that the negative nabobs were espousing....


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In The Banking Crisis Of 2023, There's Plenty Of Blame To Be Shared

In The Banking Crisis Of 2023, There's Plenty Of Blame To Be Shared

March 29, 2023 --

In only two weeks, the stresses to the markets have gone from inflation and the possibility of recession due to higher interest rates to an utter banking crisis. In my last two letters, I addressed the banking issues and attempted to explain what was "different this time." These were different than my normal missives due to the clear importance of the sovereignty of banks that all depend on. 


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"Big Daddy" Federal Reserve Comes To The Rescue... Again

"Big Daddy" Federal Reserve Comes To The Rescue... Again

March 22, 2023 --

Given the gravity of the situation in our global banking system, I am going to expound a little bit more on Friday’s note. To say that the last few weeks have been action-packed in finance land would be a gross understatement...


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A Banking Kerfuffle And The Fight To Thwart Inflation

A Banking Kerfuffle And The Fight To Thwart Inflation

March 17, 2023 --

As interest rates have risen over the past couple of years, bond prices have dropped since all those bonds yielding, say, 1% when issued back when rates were lower are no longer attractive compared to the higher-yielding bonds of today.


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Up Early After Down Year Suggests 'Buy-The-Dip' March, April

Up Early After Down Year Suggests 'Buy-The-Dip' March, April

March 08, 2023 --

With February in the rear-view mirror and the rest of the statistics still firmly in place, we can make some judgments about what comes next. The next eight weeks is a time for “buying the dip,” as far as historical data is concerned. This statement does not account for the Fed’s current tilt and the still overabundance of capital sloshing around.


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Stuck Between A Bear And A Bull

Stuck Between A Bear And A Bull

March 01, 2023 --

We are at the end of the second month of the new year. A year that has started far differently than 2022. As of last Friday (2/24), 94% of the S&P 500's companies had reported their Q4 2022 earnings. Here’s what we know...


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Late-February Lull Looms As Inflation, Wage Pressure Persist

Late-February Lull Looms As Inflation, Wage Pressure Persist

February 22, 2023 --

The last two weeks have not been a continuation of the New Year celebration that has been experienced in the first six weeks of 2023. There has been some “hotter” inflationary economic data lately, and it is too easy and tempting for the inflation-istas to jump on this and think inflation is surging ahead...


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Too Early To Call A Bull, But Markets Have Played Ball In 2023

Too Early To Call A Bull, But Markets Have Played Ball In 2023

February 15, 2023 --

Investors should be feeling pretty good at this point. In California, the rain storms seem to have passed (for now at least), Super Bowl LVII was filled with drama and decided by a last-second field goal, and bonds, US Stocks, and Foreign Stocks seem to be rebounding from the lows of the last quarter (4Q2022)....


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January Jobs Report Catches Economists In Groupthink Trap

January Jobs Report Catches Economists In Groupthink Trap

February 08, 2023 --

If you pay any attention to Federal Reserve Chairman Jerome Powell’s comments you’ll know that his primary measurement of progress against inflation is by looking at the domestic labor market and the cost thereof. Going into the recent jobs report...


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Weaker Inflation, USD Data Lend Support For Rate Hike Easing

Weaker Inflation, USD Data Lend Support For Rate Hike Easing

February 01, 2023 --

I have been able to understand how negative the equity markets of the world can be by listening to CNBC in the mornings, at about 5:15 west coast time. When the commentators are interviewing random politicians or business owners about mundane subjects it is clear that there is not a tremendous amount of substance, to pay attention to. We are in such a time...


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Equity Markets Rise As Falling Earnings Still Eye Recession

Equity Markets Rise As Falling Earnings Still Eye Recession

January 25, 2023 --

This year has started quite well. In the first week and a half, the equity market was going up in an organized and methodical fashion. Then came last week when the indexes had poked their noses above their respective 200-day moving average lines (after spending a year below this level) only to be broadsided by a decline last week that felt similar to the false starts we experienced in February, June, and October of last year...


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Two Weeks In And 2023 Already Looks Different Than 2022

Two Weeks In And 2023 Already Looks Different Than 2022

January 18, 2023 --

With the first two weeks of trading for 2023 in the books, and deep scares from 2022 deeply engrained in memory, we are welcoming how this year is starting. Opportunities seem to be presenting themselves in both the fixed-income and equity markets, yet vivid memories of the short-term rallying...


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The Fed Still Appears To Hold All Of The Cards

The Fed Still Appears To Hold All Of The Cards

January 11, 2023 --

As we come to the end of 2022, the US equity market (as measured by the S&P 500) appears locked in a range of 3800-4100. The question we’re asking now is what is it that will cause a move out of this range in 2023? At present, the major issues concerning us are as follows:


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2022

Incoming Labor Data Sets The Tone For The Year 2023

Incoming Labor Data Sets The Tone For The Year 2023

January 04, 2023 --

The end of a calendar year should have little influence on the directional move of markets, yet tax considerations and general emotional motivations often exaggerate moves at the turn of the year. Several key economic events over the next few weeks will set the tone for incoming data and interest rate policy in 2023. Below are a few that I am paying attention to...


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Good Riddance 2022, Welcome 2023

Good Riddance 2022, Welcome 2023

December 28, 2022 --

The stock markets of the world are struggling into the close of 2022, capping what has proven to be a horrible year for equities. In our view, US core inflation has apexed (mid-2022) and now running at closer to 2%. But due to lags in how price-level series works (inflation is a price level), inflation will not be officially "2%" (year over year) until Sept 2023. Will markets and Fed wait until...


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Bringing 2022 Home: Trends To Watch In The New Year

Bringing 2022 Home: Trends To Watch In The New Year

December 21, 2022 --

As we come to the end of 2022, the US equity market (as measured by the S&P 500) appears locked in a range of 3800-4100. The question we’re asking now is what is it that will cause a move out of this range in 2023? At present, the major issues concerning us are as follows:


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Unresolved Policy Issues Leave Markets With More Questions

Unresolved Policy Issues Leave Markets With More Questions

December 14, 2022 --

Predicting market values in 2023 is tougher than normal. To give a brief recap; COVID declines led to a substantial bounce in the markets following the March 2020 low, this was then followed by an additionally strong market in 2021, this was then capped by a Fed rate hike cycle induced decline for the entirety of 2022. Now we sit with still unfinished international and domestic policy issues that are...


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When Will This Correction End?

When Will This Correction End?

December 07, 2022

Investors are incredibly inventive in their thoughts and solutions, which is why all crisis situations get dealt with. When all seems lost, the market finds a low and starts higher once again. The pain point needs to become enough of an issue that...



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Bear Market Rallies Are Great Exercises in Prudence

Bear Market Rallies Are Great Exercises in Prudence

November 30, 2022 --

This week is very interesting as it follows a Holiday week with extremely low volume yet a lot of information.  The data from last week seems to be setting the stage for year-end. To begin with, I wanted to go over what we got last week...


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The New Economy In The Wake Of The Pandemic

The New Economy In The Wake Of The Pandemic

November 23, 2022 --

With a surprising level of consistency over the past 100 years or so, stocks have followed a broad pattern that coincides with presidential terms. The months leading up to midterm elections have generally been the worst in what is known as the four-year presidential election...


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<span>Is A Market Bottom Confirmed By Global Interest Rate Moves?</span>

Is A Market Bottom Confirmed By Global Interest Rate Moves?

November 16, 2022 --

We knew that last week would be quite a week with the Election on Wednesday and CPI released on Thursday. Not to be outdone, we also had the crypto disaster of FTX going on at the same time. At the end of the week, we had a massive...


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Yes! The Election Is Finally Over...Now What?

Yes! The Election Is Finally Over...Now What?

November 09, 2022 --

If we're right about the election outcomes, or even close, many stock market investors might take it as a reason to be bullish. The result would be "gridlock," which means no major federal legislation could be enacted unless it got significant bipartisan support going forward...


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Mid-Term Makeover: Will Markets Rally Post-Election?

Mid-Term Makeover: Will Markets Rally Post-Election?

November 02, 2022 --

With a surprising level of consistency over the past 100 years or so, stocks have followed a broad pattern that coincides with presidential terms. The months leading up to midterm elections have generally been the worst in what is known as the four-year presidential election...


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Will The Markets Be High On Tricks Or Treats This Halloween?

Will The Markets Be High On Tricks Or Treats This Halloween?

October 26, 2022 --

At present, it isn't entirely clear whether we are, or are not, in a recession. The first two quarters of this year had negative GDP growth, which usually marks a recession. Now we have politicians debating the very definition of recession...


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<span>Sidelined Capital Keeps Its Eyes on Bottom Indicators</span>

Sidelined Capital Keeps Its Eyes on Bottom Indicators

October 19, 2022 --

Before Monday and Tuesday of this week, we have had six times where the markets tried to rally only to reverse and decline once again. Thursday of last week appeared to be a bit different in that it was what is called a "positive...


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An Interest Rate Top Could Telegraph A Market Bottom

An Interest Rate Top Could Telegraph A Market Bottom

October 12, 2022 --

Looking back to the start of October, Monday, and Tuesday of last week were clearly different from what we experienced in the month of September. The 4% level on the 10-Year US Treasury yield is sort of looking like a line in the sand. In the market decline of...

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This Is What A Sale On Wall Street Feels Like

This Is What A Sale On Wall Street Feels Like

October 05, 2022 -- 

"Unpredictable price movements are part of long-term investing, which is distinct from the concept of risk.” I meant that when I wrote it in September, and the actions of late cannot be any clearer evidence of this. Since the market has been in its correction, I have mentioned time and again that this is typical...


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Desperate Times Call For Desperate Measures...Is That The Case Now?

Desperate Times Call For Desperate Measures...Is That The Case Now?

September 28, 2022 --

To say that 2022 has been a tough year would be a gross understatement. From remnants of COVID mandates to delayed air travel to spiking interest rates, this has been a year of numerous and never-before-seen combinations...


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Fed Up: Market Lows

Fed Up: Market Lows

September 21, 2022 --

At present we are clearly in a battle. On one hand, we have the Federal Reserve trying to rein in inflation by raising interest rates and on the other side, we have the economy as measured by the GDP and the stock market. The Fed keeps raising rates, and the GDP has turned negative as has the stock market...


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No Hurricane...Yet

No Hurricane...Yet

June 7, 2022 -- Last Friday, JP Morgan CEO, Jamie Dimon made one of the most irresponsible public displays I've seen in some time. He talked about a "hurricane" hitting the US economy. The drama of this is clearly typical with social media being what it is today, but the equity markets of the world are discounting...


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Rubber Band Snap Back?

Rubber Band Snap Back?

May 31, 2022 -- After seven down weeks back-to-back, the markets finally had a positive one! Unfortunately, this is how Bear Market rallies usually work. They tend to be swift and sharp, a manner which catches most investors flat-footed and then scared to get back to looking for upside.... 


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Is The Bear Market Getting Tired?

Is The Bear Market Getting Tired?

May 25, 2022 -- Last Friday I put out a special report titled, "Market at a Crossroad." To my analysis and the various market measurements that I have been presenting the last few weeks, it was sort of looking very extended to the downside. This is why I brought up the point that it was at a crossroads...


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Stocks at a Crossroads

Stocks at a Crossroads

May 20, 2022 -- In the spotlight today: economic expectations due to domestic retailer weakness, sentiment, and valuations — here are the big things you need to know...


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Plan for the Week

Plan for the Week

May 18, 2022 -- In this week’s letter, I believe that we have enough meat on the bone to address a few of the different issues that have been plaguing markets and set up a road map for an investor going forward....


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Perspective on Market Decline

Perspective on Market Decline

May 11, 2022 -- This week I really don't have a whole lot to share with you. I really don’t need to restate that we have a market that has a number of different issues raining on its parade. So, I am going to put some things into perspective as this is really what we should be doing now more than ever, but daily as well...


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Is the Fed "Hiking" into an Economic Slowdown?

Is the Fed "Hiking" into an Economic Slowdown?

May 4, 2022 -- Last Thursday, when the Commerce Department announced that the 2022 first-quarter GDP dropped 1.4%, many market commentators voiced surprise. As many observers should know, after so many negative concerns this should have been far from...


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We've Come (Back) a Long Way Since 2019

We've Come (Back) a Long Way Since 2019

April 27, 2022 -- There's nothing like a brace of uncertainty to cause a surge of worry. Thus far, 2022 has been a year in which equities and bonds have had the proverbial "kitchen sink" hurled at them. Given all this, the US equity market is about where it should be; beat up but not dead...


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Commodities - Opportunity, Diversifier, or Waste of Time?

Commodities - Opportunity, Diversifier, or Waste of Time?

April 22, 2022 -- After a decade of robust market gains, 2022 has begun much differently, with inflationary fears and conflict in Ukraine sapping the strength from animal spirits and sending US markets to their first negative quarter since COVID began in early 2020...


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Russia, Ukraine and Commodities

Russia, Ukraine and Commodities

April 20, 2022 -- At the end of last week, we started getting the parade of earnings for the first quarter of 2022beginning with the large money center banks, regional banks, and investment banks. It appears that almost across the board the numbers are coming in better than expected. Even still, the financial sector and the financial technology companies are still in a significant decline...


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Only Time Will Tell

Only Time Will Tell

April 13, 2022 -- Last week, I went into extensive detail on what I am noticing and paying attention to. We are in quite a precarious situation here stateside, but there is a far more precarious situation in developed Europe and parts of Asia and Africa. I believe that they are on the cusp of some very painful times when it comes to their economies trying to recover, yet they are faced with skyrocketing...


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Stock Market Final Four

Stock Market Final Four

April 6, 2022 -- It's clear that the buzz of the last few weeks has been college basketball's Sweet Sixteen tournament, and Monday of this week was the last game of the season's Final Four. Needless to say, it was very exciting with Kansas coming from the largest first-half deficit in tournament final history to win! Let’s hope the markets do the same after a dreadful first quarter....


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Inflation or Economic Growth: Which One Wins?

Inflation or Economic Growth: Which One Wins?

March 30, 2022 -- Domestic growth continues to be strong. Since our economy is very diverse, growth can be categorized in many ways. Some are growing off the charts (commodities), some are growing at normal rates...


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A Bad Start To A Year Isn't A Death Sentence

A Bad Start To A Year Isn't A Death Sentence

March 22, 2022 -- In today's newsletter, I am going to cover what I believe to be the important points to cover that should be focused on instead of focusing on the continued death and destruction being espoused by the media. As far as I see it, these...


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The Market Seems To Be Losing Velocity On The Downside

The Market Seems To Be Losing Velocity On The Downside

March 15, 2022 -- Vladimir Putin's diabolical invasion of Ukraine has succeeded in turning Russia into a rogue state, and with his nuclear threats, he is playing an insanely dangerous game. The nations of Europe have placed themselves in a...


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Did Warren Buffet Help Describe A Bottoming Process?

Did Warren Buffet Help Describe A Bottoming Process?

March 9, 2022 --There is so much going on right now that I’m not even sure where to begin. By now, anyone plugged into the news and financial markets should have a rough idea of what has been happening: The war in Ukraine...


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News Aside, Can We Please Get to the Root Of the Problem?

News Aside, Can We Please Get to the Root Of the Problem?

March 8, 2022 -- As humans, we are inherently emotional animals. As such, right, wrong, or indifferent, we want an answer to a problem. Why did it happen? How bad will it get? How do we fix it? This year has not been pretty for the broad markets...


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Should We Fear The Ides of March?

Should We Fear The Ides of March?

March 1, 2022 -- It has been some time since we have had the “darlings” of Wall Street be the “heels” of the market for such an extended period of time. It could have been due to their unabated runs higher or maybe their...


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Fear Worked Better Than Greed last Week

Fear Worked Better Than Greed last Week

February 24, 2022 -- As the heat held strong on the Russian invasion of Ukraine, I have to wonder if Putin and China’s Xi bought index puts against the US stock market to benefit from the decline experienced last week? Most textbooks omit the chapter...


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What If Democrats Lose Seats

What If Democrats Lose Seats

February 22, 2022 -- One of the most popular questions we’ve received lately is what could happen in the upcoming midterm election? Although we are a long way away from Election Day, it is important to note that a new president has historically...


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