Market technicians put a great deal of faith in the “Golden Cross,” which occurs when the 50-day-moving average of the market rises above the 200-day-moving average. It is thought that momentum is then changing for the better. Many technicians consider that cross to be a strong BUY signal. We are getting close to that point. It has happened 26 times since 1962. Based on that…
Let’s see . . . 24 divided by 17 equals 1.4. There have been 17 summit meetings of European leaders in the last 24 months. That sounds more like regular monthly meetings instead of important summit meetings. Another is being held today, and it is important! This crisis could take a major turn for the better if the Germans don’t over-reach and try to take control…
On the last Friday of each month following a quarter-end, we get the advance estimate of GDP growth in the past quarter. For the third quarter, the final estimate was 1.8%. For the fourth quarter, which was just announced this morning, GDP growth was 2.8%. While that was a substantial improvement, the market was expecting 3% . . . thus, a disappointment. Closer examination reveals…
Readers with gray hair may remember Jim Fix, the father of the “running revolution” and author of numerous books on running. They will recall he was the paragon of fitness, very lean and trim, with a low resting heart rate. Everything was fine, until the day he dropped dead from a heart attack while running. (Those were the days before all males routinely began taking…
A friend gave me a copy of an article that appeared in The Wall Street Journal last week called “The Great American Divide” by Charles Murray. He looks at the world of non-Latino whites between the ages of 30 and 50, normally the prime working years, and sees it dividing into the two parallel universes of “white collar” (WC) and “blue collar” (BC). While the…
Don’t you love it? The Fed throws a wet blanket on the good economic data recently and openly frets about the damage to the U.S. economy from the European financial crisis. Wouldn’t you expect the stock market to go down? Nope, it was down about 50 points at the announcement but then closed up 85 points. The reason for this irrational behavior is that the Fed…
A client in Texas emailed me a week or so ago, asking why I don’t discuss politics on this blog. I remembered the last few weeks of Officer Candidate School in the Army, when they tried to make gentlemen of their almost-graduated new officers. They told us that a young officer should NEVER discuss politics, religion, or child-rearing. (They never said if that advice applied…
A few weeks ago, I wrote about the shape of bottom for the European financial crisis as being similar to the last U.S. recession, which was not V-shaped, nor U-shaped, but looked more like the Nike Swoosh, i.e., bumping along the bottom before beginning a long, slow recovery. After such high expectations for a deal to be announced yesterday, the market has been very well-behaved…
President Reagan’s Director of OMB was David Stockman, a life-long Republican. I’ve always had a good deal of respect for him. He was on CNBC this morning, saying that although “Obama is a failure, the Republicans are even worse.” Because of that, he predicts the U.S. will face the same financial crisis next year that Europe is facing right now. He warned we should keep our finger…
I’ve been a member of the National Association of Business Economists (NABE) for years. One of the benefits is their Industry Survey,which was released this morning. Overall, it indicates a slowly improving economy, with the percentage of economists expecting sub-2% GDP growth decreasing from 70% to only 28%. A year ago, there was considerable concern about deflation. This year, the majority of economists expect neither…
It is said the fantasies of young men involve “wine, women, and song.” The fantasies of a much older man look like this: Monday: The European Union, ECB, IMF, and Greek government announce a definitive, binding deal to supply liquidity and institutionalize austerity in Greece. The Dow rises 500 points! Tuesday: The European Union, ECB, and IMF announce a definitive, binding agreement to stimulate growth, supply…
United Capital is a California-based financial services company that has developed a pleasantly short online exam to determine your attitude toward money, which obviously has investment implications. Understanding yourself is the first step to investing. Are you a Giver . . . a Protector . . . or a Pleasure Seeker? Now, to find out, go to: http://findyourmoneymind.com/ You don’t have to enter any personal information…
The second, third and fourth weeks following a quarter’s end are called “earnings season,” when corporations report their quarterly earnings. We are in the middle of that season right now. So far, earnings have been strong, although the rate of increase is slowing. The stock market is often considered a predictor of the economy. (Of course, January is usually the best month of the year, as new…
This is an interesting chart. It shows that the earnings history of the S&P 500 companies since the Great Depression. At first blush, it appears that an all-time high is approaching and is a good reason to be bullish on the stock market. But, if you look at it awhile, you’ll also notice that volatility is greater than anything we’ve ever seen before. Warren Buffett believes his…
During the last quarter, one of the best performing sectors was homebuilders, such as Pulte and Ryland. Last week, Jamie Dimon, CEO of giant JP Morgan, said the housing sector had hit bottom and was improving. Yesterday, the Builder Sentiment Index rose to its highest level since June of 2007. This morning, housing starts were down, which helps to clear the supply of competing foreclosed…
The third week of the month is often called “Inflation Week,” because we get data on both the Producer Price Index (PPI) and Consumer Price Index (CPI). Wednesday is PPI-Day, and Thursday is CPI-Day. This morning, we learned that producer prices actually fell 0.1% last month, while core prices were up 0.3%, the highest since July. The first number was a little weaker than expected, while…
Thanksgiving Day comes once a year, but being thankful everyday is very good.! I was reading a survey by Yahoo! Finance. As we know, Yahoo is a troubled public company that owns the highly-popular web portal, Yahoo! A related website is an excellent financial research tool, called Yahoo! Finance. Although not discussed in the survey, I would expect Internet users of the portal would be younger and more…
Europe is going thru a well-publicized transition from a welfare state to forced austerity. At the same time, China is going thru a barely-publicized transition from an export-driven economy to a consumption-driven economy, like the U.S. Despite the credit downgrade of nine European nations last Friday, the European markets are up nicely overnight. In fact, sovereign bond rates actually dropped slightly this morning, and the…
For those who do not receive the print edition of Inside Business, you can read my latest column here: http://insidebiz.com/news/sp-500-1257-1257
As every husband knows, women are definitely the smarter gender. Years ago, I studied some research that showed all-female investment clubs signficiantly out-performed all male investment clubs. That difference was attributed to overly-confident males who make investment decisions too quickly. Last night, I was studying some more research that showed women are less likely to sell. A study of single-party investment accounts at a discount…
Decades ago, I enjoyed reading The Kiplinger Letter, as it was passed around the office. When I left that job, I didn’t read it again until recently, when an old friend asked me if I’d like to read his copy. Since then, he has faithfully shared each copy. I always appreciated the clarity of Kiplinger’s expectations, which means it was not written by a lawyer. Today, I…
As you know, I’ve been expecting the market to suffer in the early part of this year, which has been generally good so far. Today, negotiations have broken down over the Greek debt. The probablility of disorderly default has increased considerably. This afternoon, it is expected that France will also lose its AAA credit ratings and rumored other European nations will also be downgraded. As a…
Last night, I listened to a juvenile court judge describe his job, mentioning how painful it was for him to remove a person’s parental rights or taking away their child. Before removing a parent’s rights, it is customary to order the individual to go thru psychological counselling or drug counselling. Failure to do so is grounds for removing the child permanently. He even mentioned one…
If you haven’t been to http://www.usdebtclock.org/ lately, it is your duty to check it periodically. Of course, it might be useful to keep a supply of barf-bags handy.
Over the years, I’m confident I have written over a million words, probably way more. But, I’ve never written a movie review . . . until now. Last night, we went to see The Descendants starring George Clooney. The only reason I went is because Investment News magazine did their first-ever movie recommendation, urging wealth managers and trust officers to see the movie. The law…
A few years ago, economists argued over what shape the bottom of the recession would be. Would it be V-shaped, which suggested a quick recovery? Or, would it be U-shaped, which suggested bumping along the bottom for awhile before starting the recovery? I argued the bottom would look more like the Nike Swoosh, which suggested bumping along the bottom before starting a slow recovery. I…
During the current Congressional recess, the President used his authority to appoint the head of the new Consumer Financial Protection Bureau, whose appointment has been languishing in Congress for months. Immediately, there was much huffing and puffing, which is all that Congress does anyway. The Republicans justifiably objected that this recess appointment bypassed the Senate’s constitutional responsibility to “advise and consent.” The President justifiably responded that…
For anyone who would rather read my forecast directly from the editor instead of reading it here, the link is http://www.insidebiz.com/news/inside-business-story-263
As a former Army officer, I feel very protective of the military, especially the Army. When I read of major re-organizations, especially by a Commander-In-Chief who is not a veteran, I become very worried, indeed. But, when I put on my economist hat, I understand the urgency. The inability of Congress to either raise taxes or cut entitlements strangled our military. We could preserve the military…
The most closely watched economic report each month is the Jobs Report, which was just released, and it was good news. A survey of economists expected 155 thousand jobs were created in December. Instead, it was 200 thousand. Most of us were expecting the unemployment rate to increase from 8.6% last month to 8.8% this month, as discouraged workers returned to the labor force. Instead,…
The most important economic data is jobs. Tomorrow will see the release of the all-important monthly Jobs Report by the Department of Labor. A survey of economists shows expectations are that 155,000 thousand jobs were created in December. This morning, the Challenger, Gray headhunting firm said the number of job cuts continues to decease. After that, ADP, the huge payroll company estimated a whopping 325…
Historically, January is the best performing month for the stock market. When the S&P is up for the month, history tells us there is a 90% probability, it will be up for the year. When it is up the first five days of the year, that is also a favorite bullish indicator. Yesterday, the Dow was up almost 180 points. So, we’re off to a…
The Iowa caucus is over. The long-expected winner won, albeit barely, proving once again the importance of money and organization. Whether you approve or not, I’m sure you’re exhausted by the withering 24/7 breathless news coverage. The bad news is that there are still 307 days of that 24/7 breathless news coverage ahead, before the presidential election. Can’t we just vote tomorrow and get it over…
