The Flinchum File

There are many colorful expressions on Wall Street.  One is a “dead cat bounce.”  Imagine your cat dies, and you toss its carcass out the second story window and watch as it hits the driveway below.  It doesn’t land motionless, like a towel.  There is a slight bounce when it hits the concrete.  Yesterday, you witnessed a “dead cat bounce,” when the Dow rose 400…

This is the worst month for the stock market since January of 2016.  But, they are very different corrections.  I was nervous during the first one but am just annoyed at the current one. Glencore is a huge London-based commodities trader, and they were struggling two and a half years ago.  Because they were the fifth largest user of derivatives in the world, I recognized…

That creaking sound you hear is the stock market struggling under the weight of both geopolitical troubles and political troubles.  Think about it — our colossal trade war with China, the increasing probability that England will have a messy crash-out of the European Union, the Mid-East is being realigned as we watch in real time, not to mention North Korea and climate change — that’s…

Is it acceptable to punch somebody in the nose for insulting your late Mother? In an overly-long opinion piece inside yesterday’s Wall Street Journal, the writer alleged that leftists  hate “Mr. Trump’s vulgarity.”  Well, my Mother never used a vulgar word but prayed for those who did.  Vulgarity was not a small deal to her!  It was simply inexcusable. But, the insult was suggesting she was…

While I don’t like Goldman Sachs, I do have great respect for their research.  Their chief equity strategist just predicted the current October volatility is now over, and the S&P 500 will resume its climb, as the underlying fundamentals remain strong.  They predict the S&P will end the year at 2,850 or up about 3%.  He is correct that the underlying fundamentals are really strong. But,…

Perry Mason always found the murderer, but he had a big advantage, because it was after-the-fact. While the economic data is as good as I’ve ever seen it, at least during my lifetime, we should remember that “Bull markets never die of old age.  They get killed first!”  Hunting the killer is easier with a list of “the usual suspects.”  Certainly, the Fed is historically…

While it is somewhat dated, here is the link to my latest column for Inside Business https://pilotonline.com/inside-business/news/columns/article_2d091de2-cb3c-11e8-b55e-83e28276fafd.html

I understand patriotism.  I feel it from my toes to my nose.  I love our national identity, warts and all!  Britain also has a strong national identity, with minimal warts.  Of course, they feel pride in their national identity, and they should! My inner Republican imagines the damage to their pride when they had to surrender so much of their sovereignty to the bureaucrats in…

There is obviously a close relationship between the economy and the stock market.  Sometimes, it is not close enough.  During the second quarter, the economy grew earnings 25% year-over-year.  During the third quarter, earnings were expected to rise 15% and actually increased 21%.  The fourth quarter is running 20% up.  Does the stock market growth reflect that growth in earnings?  Nope! The economy is booming,…

Most everybody knows that prices are determined by the “Law of Supply and Demand”.  If supply of a product decreases while demand increases, then buyers will “bid up” the price.  Likewise, if demand increases more than supply increases, buyers will again “bid up” the price.  However, if supply increases more than demand, buyers will not “bid up” the price and will expect discounts, driving the…

The stock market held a SALE today, with the Dow stocks getting over 800 points cheaper.  No, it is not the beginning of the end.  More likely, it is a normal bull market correction.  Here is what happened: The European markets closed down sharply.  They were understandably frightened of rising interest rates.  The impact of rising U.S. interest rates on foreign borrowers of dollars should…

Most people hope to get old and die of natural causes, and most people do!  Bull markets don’t have that hope of a pleasant passage.  Bull markets never die of old age.  Like animals in nature, they get killed – by several different causes.  The most common is the Federal Reserve raising interest rates too much or too quickly or both.  Trade wars also have…

It is the pain that keeps on giving and giving. I watched a movie entitled Last Flag Flying.  It was a story of three veterans from Vietnam.  Like most, their shared memories kept them apart after the war, and they went different ways.  Thirty years later, one lost his son in Iraq, and he sought out his two lost buddies to help him reclaim his son’s…

There are precious few Americans who respect Congress.  Respect for the Presidency varies depending on the President, but most everybody I know respects the Supreme Court. When President Trump nominated Judge Kavanaugh for the Supreme Court, I thought that was fine.  While Kavanaugh’s perspective on expansive executive power worried me, I felt he was reasonably in the mainstream of legal thought and would have voted…

Just when you think that hyper-partisanship could not get any worse, along comes the Kavanaugh confirmation hearings.  For a long time, I have believed that hyper-partisanship was due to two factors.  First, politics become more poisonous when moderates are excluded, which is the result of gerrymandering.  Reliably red districts are not likely to produce moderate Republicans, just as reliably blue districts are not likely to…

I applaud the President on the signing of “Nafta II” or the “U.S., Mexico, Canada Agreement” or USMCA, as he prefers to call it. Critics will cite the minor differences between this new agreement and the TPP, which the President rejected immediately after coming into office.  For example, TPP gave U.S. farmers 3.25% of the Canadian dairy market, compared to 3.75% in NAFTA II.  While…

There is a tiny crack in the Fortress Economy of the United States.  Corporate earnings per share (EPS) are slowing.  They have been increasing at a 25% annual rate so far this year, but that is obviously not a sustainable rate.  It has to slow down somewhat. Most companies try to manage expectations and provide “guidance” on what they expect their EPS will be each…

The relentless flow of good economic data can become boring.  Indeed, the latest Consumer Confidence Index is the highest in eighteen years.  Remembering that a confident consumer will spend more money than a frightened consumer and that consumer spending is about two-thirds of GDP, this new data suggests continued strong economic growth and even stronger retail stocks.  Yea! However, this index has been even higher…

It seems unnatural to applaud bureaucrats anywhere, but the bureaucrats of the European Union are doing more to protect the privacy of their citizens than the august Congress of the United States.  Europe now has the General Data Protection Regulations (GDPR).  Fortunately, the state of California has rushed in to fill the American vacuum left by Congress.  They have now passed California Consumer Privacy Act…

Watching Will Ferrell reprise his impersonation of former President George W. Bush on Saturday Night Live, one is reminded of the first law of Political Economy.  His portrayal showed the formal President essentially saying “I know history says I was an awful President, but don’t I look pretty good now, compared to President Trump?”  Bush was blamed for the 2008 market collapse, but that was unfair. The…

Economics is about the allocation of limited resources to satisfy unlimited needs. There are about 35 thousand gun deaths each year in the U.S.  Another 45 thousand die of strokes, and about 35 thousand die from opioid abuse.  That is every year!  Only a cumulative of 120 people have died from terrorism attacks in the U.S. since 2012.  Yet, where do we spend the money…

Apparently, Mueller has “flipped” Manafort, who will now testify against Trump.  I would caution my Democratic friends to be less gleeful.  Impeachment is a terrible thing.  It is bad for the country.  I was opposed to the impeachment of Clinton, and I am opposed to the impeachment of Trump. With one exception! If Mueller finds Trump is merely another sleazy real estate developer, will anybody…

I listened to an interesting lecture yesterday.  Some laws of nature are immutable.  Water runs downhill.  Moths are attracted to lights, and poor people are attracted to wealth. Just as certain as death and taxes, there will be immigration.  Reflecting Paul Erlich’s iconic 1970’s The Population Bomb, the speaker predicted social chaos by 2030 or just twelve years hence. Unfortunately, rich women don’t have kids, but…

The bookstore at the University of Pennsylvania/Wharton has always been a favorite of mine.  It was always such a pleasure to leaf through the new books, but that bookstore has changed in two ways. First, there are fewer books.  Of course, many books are now electronic, on Kindles, etc.  In addition, information is now cheap.  We drink information from a fire hose and learn less.…

Sitting on my balcony here on the beach, the weather is delightful – warm, gentle breezes with low humidity.  Yet, I am looking at white sea gulls but thinking about Black Swans.  You know, Black Swan events are those events that happen suddenly, with no warning but seem utterly predictable in hindsight.  Far offshore right now, there is Hurricane Florence, hurtling toward my little piece…

On September 11th of each year, we stand and remember the almost three thousand people murdered by sick, crazed terrorists in New York and Washington.  Certainly, our hearts still go out to those victims and their families. But, I also think about the collaterally damaged people, like our next door neighbor, who worked in the Pentagon.  When the plane hit, thousands of employees began running…