I’ve been reading Fed announcements for decades but found yesterday’s to be as inscrutable as any. They recognized the economy is weaker than they expected. They said they were still expecting greater growth. They didn’t raise interest rates. They didn’t promise any more quantitative easing. They didn’t promise anything, other than to keep interest rates … Continue reading Compare and Contrast
The Flinchum FileThoughtful Economic Analysis and Existential Opinions
The Dow is down 390 points as I write this. It is normal that the market falls the day after a big rally, as some investors are always waiting to “sell into a rally.” After such a roaring rally at the close yesterday, a rumor hit the market in the wee hours that the French … Continue reading Still Loving Instability?
The market started off strongly this morning, then stabilized and drifted down in anticipation of the Fed announcement at 2:15PM. The Fed announcement was largely a non-event, in that they didn’t announce any new measures to stimulate the economy or the stock market. The market immediately tanked, losing over 200 points, before recovering and finishing … Continue reading Loving Instability
Imagine standing on your garage, holding a dead cat, which you then toss onto the driveway. It will likely hit the concrete and bounce up slightly. That does not mean the cat is alive. It just means the dead cat bounced. That tasteless old Wall Street adage describes that situation where the market is dead … Continue reading A Dead Cat Bounce?
According to Investopedia, capitulation occurs “when investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into less risky investments. True capitulation involves extremely high volume and sharp declines. It usually is indicated by panic selling.” Going further, it says “after capitulation selling, … Continue reading Thud . . . Hitting the Bottom?
Admittedly, I know nothing about advertising, but I do think the S&P downgrade of our short-term credit was a brilliant marketing move! There are three primary bond-rating agencies, i.e., S&P, Moody’s, and Fitch. All three did a miserable job of rating bonds secured by sub-prime mortgage bonds. Last year’s financial re-regulation bill aimed to correct some of their … Continue reading $100 Million of Free Advertising?
Everybody agrees that we need economic growth. Originally, the Austrian or Classical school of economics argued that profligate spending by governments depresses growth. Following the Great Depression, conventional wisdom found that the deficit spending of Keynesians really helped end the ten-year depression. Following the stagflation in the late 1970s, Supply-siders successfully created some economic growth … Continue reading Triangulating Economics
Do you remember Mr. Spock, the Vulcan on the original Star Trek TV series long ago? He prided himself on being entirely rational and devoid of human emotion. Being an investment advisor, I’ve always tried to emulate that thought process. However, his dirty little secret is that he sometimes felt those emotions, and so do I. … Continue reading Apologies to Mr. Spock
What a day! Before the market opened, the Jobs Report was unexpectedly strong, and the Dow went up 172 points. As the morning passed, that euphoria also passed as the mounting fears of European sovereign debt increased. The Dow lost all 172 points and then lost another 245 on top of that, a spread of … Continue reading Pass the Dramamine
That’s how investment legend Mohamed El-Erian described today’s Jobs Report, which was a pleasant change indeed. According to the Department of Labor, America produced 117 thousand new jobs in July, well ahead of the expected 60-80 thousand. Subtracting the continuing losses in government jobs, the private sector produced 154 thousand. Even better, the poor jobs report … Continue reading “A Pause in the Negative Feedback Loop”
It is one of those long-time market truths that the market must hit the point of capitulation before recovering. Today, the Dow fell 512 points, the worst daily performance in 2 1/2 years. We are now down 10% from the April highs, which makes this an official “correction.” (An official bear market is a 20% … Continue reading Euro Whiplash
After getting her certification as a scuba diver, I took my daughter to Cozumel for some breath-taking reef dives. Although I’m not a person who normally reads at the beach, I packed a very small book on investing. While I don’t recall the title, it was one of those “the only thing you need to … Continue reading Cozumel, 1988
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