The Volatility Index or VIX is an option allowing investors to make bets (as opposed to investing) on the volatility of the stock market. It is often called the “Fear Index” – as fear rises, so does the VIX. The VIX has been low and boring since the November election. But, it suddenly spiked almost 50% last week — actually in just two days —…
Imagine a tsunami of corn, for example, being dumped on the market. The value of corn per bushel would plummet because supply greatly exceeded the demand for corn. That is one of the worries overhanging the bond market right now. The Fed could release a tsunami of government bonds on the bond market IF they suddenly reduced their balance sheet to a more normal level.…
6,160,000 Six million, one hundred-sixty thousand — think about that number a while. That’s the number of job openings in the United States. It is the highest in history. There has never been so many jobs available. It is no wonder that our unemployment rate is only 4.3%. In fact, hiring is decreasing only because the supply of available workers is shrinking. There would be…
We took a road trip recently. Like any long-suffering but loyal fan of the Dallas Cowboys football team, I was wearing a white golf shirt, with a blue star on the left side, At the first stop for coffee, I was standing at the coffee bar pouring a cup, when an older man leaned over to quietly whisper in my ear “Be careful — this…
My first course in economics was during my junior year of high school. It was the first time the course was offered at that school and should be required in all high schools. However, the teacher was often less-than-serious. He once joked that the reason you never see fortune-tellers and economists together is because they are the same people. Of course, he was the only…
Three scholars — Brinson, Hood, & Beebower — published a study in 1986 of 91 large pension funds’ investment performance from 1971-1983. They consolidated individual investments into asset classes, i.e., stocks, bonds and cash. They found that 93.6% of their investment performance resulted from their asset allocation, i.e., the percentage allocation to stocks, to bonds, and to cash. Investment performance was not a function of…
Gold has enjoyed a nice run so far this year. Technicians believe gold may soon enjoy another run up. Take a look at this graph: Technicians see that the price approached the red line of resistance once last year and once again this year. Each time it approaches that line, it is more likely to break that line than the time before. I’m not inclined…
He was as tough as anybody I ever met,as tough as any crusty Special Forces sergeant. Yet, he was only 19 when he died last week,barely five feet tall and still wearing diapers. A victim of severe Autism and probably Down Syndrome,he could not walk and barely recognized his own name. A survivor of countless surgeries, treatments, and procedures,he never complained. Always happy to see…
I have long believed that the dysfunction in Washington is a reflection of gerrymandering. It doesn’t matter whether it favors Republicans or Democrats. What does matter is that it favors extremists over moderates. A “safe” Republican district is more likely to elect a purist than a competitive Republican district, with the same being true for a “safe” Democratic district, of course. Over the last twenty…
Dr. William Phillips was a New Zealand-born economist who died in 1975. However, his name lives on with the famous Phllips Curve, which looks like this: Basically, it says there is an inverse relationship between unemployment and inflation. If you want to decrease unemployment, all you have to do is increase inflation. If you want to decrease inflation, all you have to do is increase…
Bob Doll is the Chief Equity Strategist for Nuveen, and I try to study his thinking whenever possible. His latest weekly commentary remains bullish. As long as corporate earnings remain positive and consumers remain financial healthy, he sees the bull market continuing. I have mused that, if the “Trump Bump” really existed due to the expectations related to healthcare, tax cuts, and infrastructure, then why…
As I watched my father adjust to his hearing aids, I focused on his embarrassment, the inconvenience, and the cost. Yesterday, I took a two-hour walk in Seashore State Park and wondered why I did not also focus on the deprivation — he was slowly being deprived of life’s little pleasures. There are more bird sounds than I can catalog. Tiny waves make very little…
Since the days before air-conditioning, when Wall Street moved en mass to the Hamptons to escape the heat, pundits have been saying “sell in May and move away” until the Fall. Summer swoons are not unusual. Given how “hot” the market is now, I have been expecting it to cool off during this Summer. At the same time, it is increasingly apparent that the President is…
There may only be one person in Washington that I truly respect — John McCain — and I am profoundly sad to learn he has an aggressive brain tumor. Although I’ve never met him, it would be an honor to salute him. There is nothing I can write that is half as poignant as this short note from his daughter: View image on Twitter Follow…
I have been expecting a traditional “summer swoon” in the stock market, especially since the “Trump Bump” no longer exists, if it ever did. While second quarter earnings have been somewhat stronger than expected, those earnings were not enough greater to justify new market highs, especially during the summer doldrums. When things seem illogical, look abroad! Sure enough, $119.7 billion flowed into the U.S. from…
Classical economic theory suggests that, as demand for a product decreases, then the price of that product will also decrease. Why then is the price of land-line telephone services going up? There was a time, back when dinosaurs roamed the Earth, that early-adaptor American households had a rotary telephone. As they began putting telephones into other rooms, as new technology allowed touch-tone dialing, caller-ID, call-waiting…
Generalizing, the “greatest generation” makes the assumption the economy is weak and weakening, which reflects their youthful impressions during the Great Depression. Baby-boomers make the assumption that inflation is wracking the economy, which reflects their youthful impressions during the late 1970’s and early 1980’s. Millennials/Gen X’ers make the assumption that the economy can never be trusted, which reflects what happened to their parents during the…
Dust-bunnies multiply even faster as eyes age.Trash cans are harder to “hit” — or even find.Finding the right file becomes a hunt in the dark.It becomes further to bend over to pick up any droppings. Maybe, dust-bunnies become pets?When does clutter become comforting?One can never have too much paper laying around.Does one ever get over that “depression-mentality”? As a financial planner, I help people prepare…
Long ago, Mark Twain realized that the truth is often hidden by “lies, damn lies, and statistics.” Of course, he was right then and still is. Jack Bogle is the crusty, venerated founder of investment giant Vanguard Funds. He has long argued that investment returns are badly hurt by high fees. Of course, he was right and still is. For the last 15-20 years, there…
In 1998, Tom Brokaw permanently branded the generation that fought in World War II as “the greatest generation.” Given the enormous historical sweep of the war, it is not surprising. They returned home to parades and hugs. The generation that fought the Korean War went almost un-noticed, dwarfed by the sheer number of World War II veterans and lost in their shadow. The generation that…
As we approach the 242nd birthday of the Great American Experiment, there is a new study by the Pew Research Group, suggesting that partisan intolerance now exceeds racial intolerance. One-third of all Democrats would be upset if their child married a Republican, and fully one-half of all Republicans would be upset if their child married a Democrat. This is crazy! As a boy, I remember…
Bitcoin is a solution in search of a problem. Warren Buffett called bitcoin a mirage, urging investors to “stay away.” Railing against the cost, slowness, and open transparency in the international movement of money, bitcoin was one of the original crypto-currencies, which are stateless currencies backed by nothing, not even by bankrupt governments. They are the ultimate “fiat” currencies, which means they have no value…
A respected Wall Street analyst just predicted the Dow would end the year at 27,000. This would require 25% growth in six months. I cannot quite get my head around that. For the nerds out there, the formula most commonly used to forecast the stock market is to multiply earnings-per-share (EPS) times the price-earnings (PE) ratio. To find EPS, you take average net earnings and…
What would happen if they repealed laws under cover of darkness and didn’t tell anybody? When I learned economics, one “law” was that there was a relationship between unemployment and inflation. It was a trade-off. If you wanted less unemployment, you had to accept more inflation and vice versa — if you wanted less inflation, you had to accept more unemployment. (This was illustrated by…
My parents worked for the Federal government. One was a good, conscientious worker, who received multiple promotions. The other felt that any minimal effort was “good enough for government work.” I am intimately familiar with both perspectives. The Veterans Administration has about 350 thousand employees. I don’t think of 50% of VA employees are useless and should be terminated. I have met many, many fine…
Philosophies can be described as overly-intellectualized coping strategies or ways to deal with the world and other people. Maybe. My intellectual drug-of-choice has long been existentialism, which sees the world through the prism of absurdity. I have read many books on the philosophy, some were good and some were awful. Still, it colors my views.Recently, when I predicted the President would be impeached, my Republican…
According to Wikipedia: “Regulatory capture is a form of political corruption that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating.”I would only add one word . . . Airlines . . .
I was a teenager when I read Leon Uris’ classic Exodus, about the Holocaust survivors making their way to Israel and building their own nation. Though it was fiction, I enjoyed the story and learned a great deal of history. As a young veteran when the Yom Kippur war between Israel and Egypt broke out in 1973, I was massively impressed with Israel’s defense capability.…
While I wish a full and speedy recovery, both physically and psychologically, for those victims of yesterday’s horrific attack on Republican politicians as well as their families, I also hope this tragedy will jump-start a discussion on our worsening inability to disagree. Some see the attack as another example of our gun problem. One sarcastic pundit said, since there are more guns than human beings…
A reader asked why Wall Street obsesses constantly about interest rates? Whenever the Fed changes interest rates, they only do it by a quarter point, so what’s the big deal? Simple question? Yes. Simple answer? No! Entire text books have been written on interest rates, but here are a few factoids. Interest rates determine the amount of interest you pay on mortgages and other loans.…
When the President withdrew the United States from the Paris Accord on Global Warming, he understandably argued that the U.S. had tougher goals than China, which is the world’s greatest polluter. Why shouldn’t they have the tougher goals? It is a good argument. From the Chinese perspective, the U.S. has historically been the world’s greatest polluter. The U.S. grew wealthy and powerful by burning fossil…
For some years, I have advocated a “news-free” day. Most of us keep close tabs on the news provided by our favored news source. Of course, it is essential to gather news from those news sources that both agree AND disagree with your point of view. However, it is also important to maintain perspective. To do so, you must be free of the news habit…
I have been a member of the National Association of Business Economists for many years and always read their quarterly survey of members. Here are some of their latest forecasts: 1. There has been a minor slowing of economic activity. Despite a weak Q1, they expect Q2 to bounce back with a 3.1% growth rate. Full-year GDP growth is estimated at 2.2% this year and…