Raymond James

Review the latest Weekly Headings by CIO Larry Adam.

Drew O’Neil discusses fixed income market conditions and offers insight for bond investors.

While economists have been lowering their employment forecast month over month over month, the U.S. labor market has continued to disappoint those forecasts and has remained relatively strong as well as relatively stable, with jobs growing at an average of 392,000 per month during 2022.

Key Takeaways

• S&P 500 sector dispersion is at multi-year highs
• The Dow is strongly outperforming the S&P 500
• Active management outperforming YTD

Review the latest portfolio strategy commentary from Mike Gibbs, managing director of Equity Portfolio and Technical Strategy.

Better than expected inflationary data and corporate earnings reports helped boost S&P 500 to back-to-back rallies for first time since mid-2021.

Doug Drabik discusses fixed income market conditions and offers insight for bond investors.

As we approach Thanksgiving, it’s the perfect time to reflect on all we are grateful for. From an investor’s perspective, this year’s bear market will certainly not make this list. But even though it has been a challenging year performance-wise, we still believe that investors have a cornucopia of economic and financial market blessings to count!

Review the latest portfolio strategy commentary from Mike Gibbs, managing director of Equity Portfolio and Technical Strategy.

Doug Drabik discusses fixed income market conditions and offers insight for bond investors.

Review the latest Weekly Headings by CIO Larry Adam.

Chief Economist Eugenio J. Alemán discusses current economic conditions.

Doug Drabik discusses fixed income market conditions and offers insight for bond investors.

Review the latest portfolio strategy commentary from Mike Gibbs, managing director of Equity Portfolio and Technical Strategy.

Although the economy is showing signs of slowing down, inflation has remained higher than expected.

The U.S. economy is weak, as GDP numbers in both the second quarter and the third quarter have shown. The fundamental reason why the U.S. economy grew 2.6% during the third quarter of the year was because Net Exports, which is exports of goods and services...

Review the latest Weekly Headings by CIO Larry Adam.

It is difficult to convince yourself that if things are going a certain way they will not continue down the same path indefinitely.

With mortgage rates more than doubling from ~3% to over 7% today the difference in cost between buying a home twelve months ago compared to today is very big.

Key Takeaways

• The third quarter 2022 earnings season may be better than feared
• The consumer is healthy but becoming more discerning
• Strong earnings expected from the energy sector

Review the latest portfolio strategy commentary from Mike Gibbs, managing director of Equity Portfolio and Technical Strategy.

Review the latest Weekly Headings by CIO Larry Adam.

As billions of fans eagerly await the 2022 World Cup, CIO Larry Adam draws parallels between the globe’s most popular sport and the current investing environment.

Review the latest Weekly Headings by CIO Larry Adam.

The S&P 500 had its worst day since March 2020, but don't lose sight of the bigger picture, said Larry Adam, chief investment officer at Raymond James.

Chief Economist Eugenio J. Alemán discusses current economic conditions.

Review the latest Weekly Headings by CIO Larry Adam.

Downside volatility has reappeared with markets responding sharply to Federal Reserve comments about the future of interest rates.

Stocks started the month on an upswing but ended with volatility.

Review the latest Weekly Headings by CIO Larry Adam.

Review the latest Weekly Headings by CIO Larry Adam.

While inflation fears remain high, it is likely that we are past peak inflation and the largest interest rate increases are behind us.

We believe that the Fed is going to increase the federal funds rate by 75 bps.

Born in the 1980s, special purpose acquisition companies (SPACs) are growing up. A surge in SPAC activity that started in 2019 only grew in 2020, bolstered by the market volatility brought on by the pandemic – but also by an influx of more serious investors in a previously niche space. By the end of 2021, SPACs had raised $160 billion on U.S. exchanges – a new record that nearly doubled the level of the previous year.

Rough water is ahead, but equity markets may sail higher over the next 12 months...

Where can investors turn when the markets are a riddle? Raymond James CIO Larry Adam seeks advice from antiquity.

Review the latest Weekly Headings by CIO Larry Adam.

Markets flailed in May, seeking certainty amid conflicting signals.

As market volatility rages, Raymond James CIO Larry Adam believes the Fed will likely engineer a soft landing and avoid a severe recession.

The equity market was on cruise control, but now headline congestion has the S&P 500 down more than 17% year-to-date—its worst start to a year in at least 25 years.

The nature of the economy is that there are always causes for concern in strong markets, just as there are reasons for optimism in weaker ones.

Chief Economist Scott Brown discusses the latest market data.

With all eyes on earnings, Raymond James CIO Larry Adam stresses the importance of strong underlying fundamentals.

Chief Economist Scott Brown discusses the latest market data.

Review the latest Weekly Headings by CIO Larry Adam.

Underlying oil market fundamentals – good ol’ supply and demand – are as bullish as they have been over the past decade, says Pavel Molchanov, Managing Director and Energy Analyst for Raymond James Equity Research.

With the US Federal Reserve (Fed) and other central banks going down the path of increasing policy rates, it seemed a good time to look at market impacts over the last 40 years or so.

The March Employment Report was strong. Nonfarm payrolls rose by 431,000 – less than expected but with upward revisions to January and February (a 562,000 monthly average in 1Q22).

Volatility is likely to persist but the U.S. economy has room to grow.

Chief Economist Scott Brown discusses current economic conditions.

Shoots of green are showing up in the markets amid the gloom of geopolitical strife and monetary policy tightening.

Chief Economist Scott Brown discusses the latest market data.

In his monetary policy testimony to Congress, Fed Chair Pro Tempore Powell solidified market expectations that the Federal Open Market Committee will raise short-term interest rates by 25 basis points on March 16 (and not by 50).

Review the latest Weekly Headings by CIO Larry Adam.

While the Russia/Ukraine conflict is troubling, investors need not overreact.

Chief Economist Scott Brown discusses the latest market data.

Review the latest Weekly Headings by CIO Larry Adam.

Review the latest Weekly Headings by CIO Larry Adam.

Chief Economist Scott Brown discusses the latest market data.

Chief Economist Scott Brown discusses current economic conditions.

Punxsutawney Phil—the most famous groundhog—saw his shadow!

Review the latest Weekly Headings by CIO Larry Adam.

Chief Economist Scott Brown discusses the latest market data.

In his renomination hearing, Fed Chair Jerome Powell stressed that the key to maximum sustainable employment and financial stability was keeping inflation low.

This Monday would’ve been Muhammed Ali’s 80th birthday!

The opening ceremony for the Winter Olympics is just four weeks away, but the athletes have spent years training to ultimately experience either the thrill of victory or the agony of defeat.

“Investors should be prepared for the ground to shift repeatedly in 2022,” says Raymond James Chief Economist Dr. Scott Brown.

What can investors expect this year? Above-trend economic growth, at least two interest rate hikes and continued earnings strength among technology stocks, says Raymond James CIO Larry Adam.

The year ended on a high note for the Dow and S&P 500 despite economic challenges posed by the coronavirus and extreme weather events.

As expected, the Federal Open Market Committee accelerated the reduction (“tapering”) of its monthly asset purchases (now expected to end in March rather than June). The policy statement indicated that “job gains have been solid in recent months and the unemployment rate has declined substantially.”

As the end of 2021 draws near, investors are pleased with the impressive performance posted by most asset classes, but we are still awaiting the transition to the endemic state of the virus.

In his congressional testimony of November 30, Fed Chair Powell seemed to shift from cautious to hawkish. However, the evolution of the inflationary outlook had been underway for a while. The spike in inflation in the spring was narrow, the gain concentrated in a few categories.

Have the tables turned? The S&P 500 is just shy of its level prior to the World Health Organization declaring Omicron a “variant of concern.

What’s on the market’s wish list for 2022? Raymond James CIO Larry Adam provides a festive perspective.

The November Employment Report was a mixed bag. Nonfarm payrolls rose less than anticipated, but the unemployment rate fell sharply. The shortfall in payrolls (relative to expectations) likely reflects the usual noise in the monthly data, it might reflect difficulties in hiring, but it certainly doesn’t reflect weak labor demand.

Though the equity markets likely will experience some volatility, the outlook for economic growth remains positive: above-average growth should lead to above-average earnings growth for companies in 2022.

You can learn a lot by talking to people. The economy is “strong,” but also “terrible.” Higher inflation is “transitory,” but also “likely to persist.” Fed policy is “behind the curve,” but also “appropriately positioned.” In truth, the outlook for growth, inflation, and monetary policy is evolving.

Thanksgiving is the time to reflect on all we are grateful for, and given the strides the economy and markets have made over the last year, we have a cornucopia of blessings to count! Between the economic expansion and the S&P 500 up 27% year-to-date, there is quite a long list.

October inflation figures were higher than expected. More troublesome, the range of items with higher inflation, relatively narrow in the spring, appears to be widening. Inflation expectations for the next five years have risen. Higher inflation is dampening consumer sentiment.

Inflation figures surprised to the upside. The Consumer Price Index rose 0.9% in October (+6.2% year over year), up 0.6% (+4.6% year over year) excluding food and energy. Gasoline rose 6.1% (+49.6% year over year). Used vehicle prices rose 2.5% (+26.4% year over year).

Its National Young Readers Week! Whether your favorite childhood author was C.S. Lewis or Judy Blume, you likely remember the joy of reading your favorite book and turning through the pages of witty rhymes and colorful illustrations. I know for me, the times spent reading with my three daughters will always be some of my fondest memories.

As expected, the Federal Open Market Committee (FOMC) announced it would begin reducing (“tapering”) the monthly pace of asset purchases – currently $120 billion – by $15 billion per month but could go faster or slower depending on economic conditions.

As was widely expected, the Federal Open Market Committee announced the tapering of its monthly pace of asset purchases. The criteria for the lift-off in short-term interest rates is more stringent, but as Chair Powell admitted in his press conference, reaching full employment by the second half of next year is “certainly within the realm of possibility.”

This month marks 30 years since the release of the Disney Classic, Beauty and the Beast! Those fondly recalling the film probably remember the iconic songs and cast of household objects that came to life; but the moral of the story is to not be deceived by appearances. Ironically, this same message is quite applicable for investors.

As expected, the advance estimate of 3Q21 Gross Domestic Product showed a sharp slowing in growth. More timely data suggest that the economy regained some momentum into early 4Q21. Still, there are important questions regarding the labor market, inflation pressures, and Federal Reserve policy over the near term.

Earnings reports were mixed. Bond yields declined, as market participants generally expect the Fed to raise short-term interest rates earlier to get inflation under control.

Jeepers Creepers! It’s hard to believe that Halloween is just days away, and as the month of October comes to a close investors will be anxiously awaiting the release of the jobs report next Friday. There has been some ‘toil and trouble’ in the labor market due to the vast number of jobs available yet an inability to fill the openings.

Treasury reported a federal budget deficit of about $2.8 trillion (about 12% of GDP) for FY21. Barring a major unforeseen event, the deficit will fall considerably next year. By itself, that will be a negative for GDP growth, but a further strengthening in private-sector demand should more than offset that.

Expectations of the Fed’s liftoff in short-term interest rates have continued to inch forward and bond yields have moved moderately higher. However, investors remain optimistic, looking beyond recent concerns (the delta variant and supply chain and labor issues).

Tomorrow is National Dictionary Day! Whether spoken or written, the power of words is undeniable. And as your Investment Strategy Team, we choose ours wisely, as to not create confusion when communicating our views.

There was another “disappointing” gain in nonfarm payrolls in September (up 194,000, vs. a median forecast of +500,000), but it’s not as bad as it looks. Less hiring at the start of the school year resulted in a decline in (adjusted) education jobs.

While unlikely to occur, a default on U.S. debt would have serious impacts for global financial markets. Learn more.

As we sit atop our prosperous peak, admiring the views of the fastest economic growth since 1984, the best start to a bull market and the record-breaking quarter of earnings growth, it’s wise to remember that not too long ago we began our uphill journey from the depths of the COVID-19 ravine. Often, the best views come after the hardest climbs.

Chief Economist Scott Brown discusses the latest market data.

Following the strong performance in the first half of the year, economic growth was bound to moderate in the second half. Growth is still expected to be strong by historical standards. Yet, it may be disappointing for some investors.

Review the latest Weekly Headings by CIO Larry Adam.

In a win (but not a complete victory) for “team transitory,” the Consumer Price Index rose less than expected in August (+0.3%, up just 0.1% excluding food and energy). Areas that were running hot a few months ago (used cars, vehicle rentals, car insurance, airfares) retreated.

In addition to football, this fall will be eventful for our team of monetary policymakers at the Federal Reserve. Quarterbacked by Chairman Powell, the Fed will draft its route to easing its accommodative stance now that the economic recovery has put some points on the scoreboard.

Chief Economist Scott Brown discusses the latest market data.

As of the end of August, the index's year-to-date gains exceed 20%.

Chief Economist Scott Brown discusses the latest market data.

Review the latest Weekly Headings by CIO Larry Adam.

“We have production bottlenecks and supply shortages in every economic recovery,” says Raymond James Chief Economist Scott Brown, but those issues – and inflation – are expected to ease with time.

“We have production bottlenecks and supply shortages in every economic recovery,” says Raymond James Chief Economist Scott Brown, but those issues – and inflation – are expected to ease with time.

From school bells to the bells of New York Stock Exchange—the ringing of bells often signifies the beginning and/or conclusion of an event.

Optimism around GDP growth, employment and earnings has, for now, outweighed worries related to COVID-19 variants.

Chief Economist Scott Brown discusses current economic conditions.

Chief Economist Scott Brown discusses the latest market data.

Review the latest Weekly Headings by CIO Larry Adam.

Raymond James Chief Investment Officer Larry Adam examines the current investing environment through the lens of classic games.

Chief Economist Scott Brown discusses the latest market data.

Review the latest Weekly Headings by CIO Larry Adam.

Chief Economist Scott Brown discusses current economic conditions.

Chief Economist Scott Brown discusses current economic conditions.

Chief Economist Scott Brown discusses the latest market data.

Review the latest Weekly Headings by CIO Larry Adam.

Chief Economist Scott Brown discusses current economic conditions.

Chief Economist Scott Brown discusses current economic conditions.

Review the latest Weekly Headings by CIO Larry Adam.

The CPI rose more than expected in April, adding to inflation worries.

The markets continue their upward trend, supported by accommodative fiscal policy from the Federal Reserve, strong gross domestic product (GDP) numbers and solid earnings reports.

Chief Economist Scott Brown discusses the latest market data.

Today marks 100 days since President Biden was sworn into office, a time often referred to as the ‘honeymoon period’ for a new president’s tenure.

Review the latest Weekly Headings by CIO Larry Adam.

Review the latest portfolio strategy commentary from Mike Gibbs, managing director of Equity Portfolio & Technical Strategy.

Chief Economist Scott Brown discusses current economic conditions.

On Monday, the Treasury Department is expected to report a March budget deficit of about $658 billion, bringing the 12-month total to nearly $4.1 trillion, about 19% of GDP. Proponents argue that the added spending, with more to come, will help to ensure the recovery.

As a backdrop, we’ll bring a bit of scientific language to our analysis this quarter as we celebrate the amazing feats of our scientific brothers and sisters.

As the pandemic recedes and the economy reopens, we can expect strong job growth in the months ahead.

Economic data rarely follow a smooth path. Weather and external events have effects.

As expected, the Federal Open Market Committee left short-term interest rates unchanged and did not alter its monthly pace of asset purchases.

What sustained low interest rates could mean for the economy and your wallet.

Chief Economist Scott Brown discusses the latest market data.

In an online discussion, Fed Chair Powell repeated that the central bank is a long way from achieving its inflation and employment goals (implying no change in short-term rates or the money pace of asset purchases anytime soon).

Long-term interest rates have continued to rise. While part of the increase has been fed by inflation fears, those concerns are overdone.

Though rising yields may be indicative of an economic recovery, market volatility and inflationary fear could produce future hurdles.

Despite the recent weakness in equities, Raymond James CIO Larry Adam expects positive stock growth over the next 12 months.

The details of the January Producer Price Index showed a further surge in prices of raw materials. Breakeven inflation rates (the yield spread between inflation-adjusted Treasuries and fixed-rate Treasuries) have continued to move higher.

For a variety of reasons, many investors are worried about higher inflation. While we may see reflation (a pickup in prices that were restrained due to the pandemic), a significant increase in underlying inflation appears unlikely.

• Rescue package isn’t the one & only deal expected
• Still smitten with emerging market equities
• The health care sector still has our heart

The U.S. economy lost 2.77 million jobs in the initial estimate for January, which is on par with what we saw a year ago (-2.79 million). Seasonally adjusted, this was recorded as a 49,000 gain (with private-sector payrolls up just 6,000).

With the previous week’s short-squeeze headlines behind us, investors remained optimistic about a fiscal support package, which passed the Senate by a vote of 51-50, with Vice President Harris breaking the tie.

February begins with a stack of important economic scorecards. Among them are the last of the fourth-quarter corporate earnings reports, last week’s assessment of the 2020 gross domestic product (GDP), unemployment figures, consumer spending, as well as all the other regular reports that give us a snapshot of our recent economic history.

Real GDP rose at a 4.0% annual rate in the advance estimate for 4Q20, a much more moderate pace of recovery than was seen in the third quarter. Details were mixed, but consumer spending showed a significant loss of momentum and monthly figures reflected weakness in November and December.

As expected, the new administration has hit the ground running. In his first two days in office, President Biden issued executive orders which rescinded a number of previous directives or were aimed at ending the pandemic and easing the pandemic’s economic impact.

Judging by recent phone calls and email queries, inflation is a serious concern among investors this year.

For stock market participants, weak economic data has often been taken as a positive, since that implies more fiscal stimulus. However, investors have grown more concerned about possible stumbling blocks. Democratic majorities in the House and Senate are very narrow, some lawmakers are worried about running up the debt, and the window for bipartisan agreement may be short.

What can investors expect this year? Positive (but unsteady) economic growth, a powerful boost in earnings and continued success for information technology stocks, says Raymond James Chief Investment Officer Larry Adam.

The December Employment Report reflected an impact from the pandemic surge and further job losses in state and local government, but wasn’t bad otherwise.

Raymond James Chief Economist Dr. Scott Brown reflects on the trials and tribulations of 2020 and discusses his outlook for the new year.

The holiday shopping season is critical for most retailers. For some, the season is make or break for the whole year. The November retail sales report was weaker than expected, although amplified by the seasonal adjustment. No surprise, consumers are increasingly shopping online.

As the end of 2020 draws near, many of us are anxious to put this tumultuous year behind us, choosing to look ahead to 2021 in hopes that happier, healthier, and more prosperous times will be had by all.

The news on vaccines has boosted optimism for the economy for 2021. In contrast, near-term developments have been unfavorable. COVID-19 cases have surged and in all likelihood will rise further in upcoming weeks.

With apps designed for entertainment, travel, business, fitness, productivity, and more, the slogan ‘there’s an app for that’ sure seems to be true. But just as our daily lives are engrained in technology, the equity market’s performance has been reliant upon technology too.

The November Employment Reports was a bit disappointing. Nonfarm payrolls rose by 245,000 (vs. a median forecast of 485,000). The increase was held back by the loss of 93,000 temporary census workers.

Chief Economist Scott Brown discusses current economic conditions.

The Dow, NASDAQ and S&P 500 are now all in positive territory for the year.

Whether you’re celebrating in-person or virtually, we’re wishing you and your family a Happy Thanksgiving! Giving thanks may seem difficult to do in a year that’s resulted in the loss of so many lives, jobs, and businesses, but we believe this holiday is the perfect time to reflect on all we are grateful for.

Election results (a divided Washington) and good news on a potential vaccine boosted share prices, although there were some concerns about surging COVID-19 cases (163,402 reported on November 12) and possible difficulties in distributing the vaccine.

With a likely split-Congress outcome lowering the chances of substantial policy shifts, investors are refocusing on supportive fundamentals and the recovering economy. Raymond James CIO Larry Adam offers his perspective.

Recent data reports have been consistent with a further rebound in economic activity, but we still have a long way to get back to where we were before the pandemic and the pace of improvement has moderated.

The market through October continued to make the case for a steady approach to investing, especially as this is a historically volatile time – the months surrounding a U.S. presidential election – amid a historic, complicated year.

Your voice, your vote! With only four days remaining until Election Day, more than 84 million voters have already voiced their choice—over 61% of the total turnout of the 2016 election.

The S&P 500 posted its worst daily decline since late September but didn’t entirely erode October gains.

It’s the final countdown! Between the flared debate tensions and President Trump testing positive for COVID-19 on the campaign trail, the 2020 presidential election has arguably been one of the most contested and unique battles for the presidency in history.

There are a number of uncertainties heading into the November 4 election and many more as we look ahead into 2021. There’s a long held belief that the stock market abhors uncertainty. There’s also an old adage that says the market often climbs a wall of worry.

Key Takeaways

• Not all industries ‘reaping the benefits’ of the recovery
• 3Q20 earnings season may ‘plant the seeds’ for 2021
• ‘Don’t bet the farm’ on yields moving substantially higher

By now, it should be clear that COVID-19 is not going to go away anytime soon. Consumers and businesses are getting used to living and working under the pandemic and some changes, such as the tendency to work from home, will likely be long-lasting. The economy is always evolving. However, rapid changes can be destabilizing. There will be a number of challenges in the new year.

The initial efforts by policy makers positioned the economy for a robust rebound off the depressed levels, but there are still many moving pieces in order for the economy to return to pre-COVID levels.

Job losses in the early stages of the pandemic were more concentrated among low-wage workers. About half of those jobs have come back. For high-wage workers, who have been more able to work from home, job losses were less severe and have rebounded much better.

Key Takeaways

• Voters may focus on COVID-19 concerns instead of economic
• Digital platforms may be used to capture new voters
• Congress may be closer to a stimulus compromise

Nonfarm payrolls continued to recover in September, although the pace of improvement has slowed and we are unlikely to return to February levels until the pandemic is well behind us. The impact of COVID-19 has been uneven, with job losses remaining more severe in lower-paying service industries. Consumer spending has improved, though mixed across sectors. Further fiscal support will be critical for the unemployed.

Many factors feed into the relative strength or weakness of the U.S. economy, but the president traditionally receives the credit or blame. Fiscal policy – taxes and gov­ernment spending – have an important role in economic activity, and confidence can drive consumer spending and business investment decisions.

The fastest, most economically destructive recession is now in investors’ rearview mirrors. CIO Larry Adam shares his perspective on the unfolding recovery.

Despite a September slump, the S&P 500 and NASDAQ wrapped up the third quarter with gains of 8.47% and 11%, respectively.

The first of three presidential debates is set for the evening of September 29. The topics, chosen by the Chris Wallace, the moderator, will be the Trump and Biden records, the Supreme Court, COVID-19, the economy, racial tensions, and election integrity.

Today is National Family Health and Fitness Day! The COVID-19 outbreak undoubtedly brought our health and the health of our loved ones to the forefront of our minds, and with many states closing fitness centers in the initial stages of the lockdowns, the virus certainly challenged our traditional methods for exercise too.

The death of Supreme Court Justice Ruth Bader Ginsburg ignited a fight over her replacement. The increased animosity in Washington lowered the odds that lawmakers will reach agreement on a further fiscal support package and dampened investor sentiment.

The Dow Jones Industrial dipped almost 3% on Monday, and the S&P 500 slid more than 2% from the previous week, off about 7% from its recent highs earlier this month.

There were no significant surprises following the September 15-16 Federal Open Market Committee meeting. As expected, short-term interest rates were left unchanged and the FOMC did not alter its asset purchase plans.

The start of this year was calm with the economic expansion reaching a record duration, unemployment at record lows, and earnings growth set to reach all-time highs. However, a ‘Black Swan’ event—COVID-19—erupted, driving market and economic volatility to unprecedented levels.

The major stock market indices were choppy on a day-to-day basis, as investors continued to reevaluate the rally off the lows. The economic data reports were inconsequential.

Review the latest Weekly Headings by CIO Larry Adam.

Chief Economist Scott Brown discusses current economic conditions.

Private–sector payrolls rose by 1.027 million in the initial estimate for August. Normally, such a gain would be considered outstanding. However, in this recovery, that comes as a disappointment.

Led by technology and large-cap companies, the S&P 500 is on pace to post its best summer performance in over 80 years.

Key Takeaways

• Worst quarter of growth may be followed by the best
• More records in store for the equity market
• Highs and lows for oil while gold soars on uncertainty

The Fed updated its monetary policy framework, moving to a flexible average inflation target. That means that the central bank will target an average inflation rate of 2% (as measured by the PCE Price Index) over time.

While a panoramic view of broader economic and market developments will always be a crucial shot when constructing our outlook, sometimes it is important for us to bring certain sectors into focus.

In the minutes of the July 28-29 FOMC meeting, participants expected no change in policy rates anytime soon, but officials saw a need for more clarity regarding the likely path, such as adopting output-based forward guidance.

Initial claims for unemployment benefits fell below one million for the first time since mid-March (20 weeks). However, unadjusted claims had already dipped below that level a week earlier. Unadjusted claims totaled 831,000.

The overall economic outlook depends on the virus, efforts to contain it, and the degree of fiscal support. We’ve had a sharp- but-partial rebound in May and June, following a steep decline in March and April. The pace of improvement is expected to moderate. The impact of the pandemic has not been felt evenly.

This upcoming Wednesday is National Aviation Day, a holiday established by President Franklin Delano Roosevelt in order to honor the birthday of Orville Wright—inventor of the first airplane. While it’s hard to believe we’ve had the ability to fly for more than 115 years, it is even harder to comprehend the havoc that the COVID-19 pandemic has wreaked on the airline industry.

Nonfarm payrolls rose about as expected in the initial estimate for July, even as economists’ forecasts were widespread and risks to their job outlooks were generally seen to the downside. The unemployment rate fell a bit more than anticipated, but labor force participation stalled.

The pandemic has undoubtedly brought about a number of challenges for investors, but constructing a well-founded economic outlook and identifying opportunities in the midst of this unprecedented time are “always on my mind.” Until we can announce that COVID-19 ‘has left the building,’ our team will strive to do exactly that.

The U.S. economy contracted 9.5% through the second quarter, the worst single-quarter decline in gross domestic product (GDP) since the Commerce Department started tracking it in 1947. It was expected the report would show a dip, but it’s important to recognize what that dip represents.

Real GDP was reported to have fallen at a 32.9% annual rate in 2Q20. Nobody should have been surprised by that. Component data had already indicated massive and broad-based weakness and most economists’ estimates fell in the -30% to -35% range. News reports had generally implied that the downturn was ongoing. That’s clearly not that case...

Between the biggest week of earnings, the Fed meeting, and key economic data, there were plenty of headlines ‘hot off the press’ for the financial markets to handle this week, and as we look ahead, some of these same developments, as well as a few others still have the potential to ‘turn up the heat’ on market volatility.

The Federal Open Market Committee (FOMC) is expected to leave monetary policy unchanged. Officials won’t release revised economic projections until the mid-September FOMC meeting, but Chair Powell will provide an assessment of current economic conditions in his post-meeting press conference.

• Hopes policymaker action will ‘expedite’ the recovery
• Investors view earnings beats as a ‘special delivery’
• Not all states successful in ‘handling’ COVID-19

We distance ourselves from the chaos and panic of the crowd during pullbacks and from the ‘amusement’ and euphoria of rebounds and instead focus on providing a steady, reliable outlook that remains focused on risks on the horizon.

The pandemic had a significant impact on household spending in March and April, with a sharp contraction in consumer services (basically anything where people come into close contact with each other). The relaxation of social distancing guidelines has contributed to a sharp-but-partial rebound in May and June.

The economic calendar was thin. Investors remained concerned about rising cases of COVID-19. A return to a full lockdown appears unlikely, but the pace of improvement in the economy is expected to slow.

The U.S. Treasury is expected to announce a June budget shortfall of about $863 billion, bringing the 12-month total to nearly $3 trillion (or about 14% of pre-pandemic GDP). The red ink will continue. Lawmakers are expected to approve another round of federal stimulus later this month. None of that is worth losing sleep over.

The June job market report and other indicators remained consistent with an unprecedented steep drop in economic activity in March and April, followed by a sharp-but-partial rebound in May and June. Many of these data were collected before the recent surge in COVID-19 cases.

It’s all about the pandemic. Rising cases in a number of states fueled fears of a second wave of infections and a more protracted economic recovery.

As states ease their COVID-19 lockdown measures, rising case numbers have put pressure on equity markets.

The initial economic rebound seen in recent weeks won’t bring us back to pre-pandemic levels, explains Chief Economist Scott Brown. “A full recovery will take time.”

Efforts to contain the coronavirus have had a major impact on the global economy. There is still a lot of uncertainty in the outlook, which has three elements. First, there was a sharp decline U.S. Gross Domestic Product in 2Q20. Second, there was a sharp-but-partial rebound off the lows in May. Third, improvement after the initial rebound will slow, barring a vaccine or effective treatment for COVID-19...

In her recent book, “The Deficit Myth,” Stephanie Kelton, a professor at Stony Brook University, writes about many of the common misperceptions surrounding government debt and deficits.

Tomorrow is the summer solstice, the longest day of the year and the official start to summer! For those who are still fortunate enough to travel with friends and family this year, the trip may look a little different than usual given ongoing restrictions and social distancing guidelines still in effect.

The National Bureau of Economic Research (NBER) has formally declared that a recession began in February. The expansion lasted 128 months, the longest on record (at least back to 1854). Economic data reports should suggest that the downturn may have ended in April. That doesn’t mean everything is okay.

• Robust Recovery Is The General ‘School Of Thought’
• Investors Hope A Second Wave Is ‘The Road Not Taken’
• Valuations Require Investors To ‘Put Their Thinking Caps On’

Equities suffered a heavy single-day decline amid rising jobless claims and continued coronavirus concerns.

Stock market participants remained optimistic about the economy, further encouraged by a surprisingly strong employment report for May. Bond yields moved above their recent range.

This week marked the 50th trading day since its March 23 low, with the S&P 500 rallying ~40% —the best 50 day rally since 1932. While the index has recovered ~85% of its virus-induced losses, there is still a distance to go, and if you are like me, the further the race goes, the more challenging it gets and the slower I advance. 

In contrast to expectations of further deterioration, the May Employment Report suggested significant improvement in labor market conditions. No doubt, the economy has turned the corner as states have re-opened.

U.S. equity growth has been led by companies benefiting from heavy exposure to technology and an increase in remote work.

With state economies opening up, activity is expected to pick up the final two months of 2Q20. Real-time indicators show improvement. However, the figures for April are consistent with a sharp contraction in 2Q20, which won’t come close to being offset by May and June.

Our ears are ringing as the iconic bell on the New York Stock Exchange is dinging – in person – once again! This week, Governor Andrew Cuomo had the honor of reopening the trading floor for the first time in two months, but of course, there were a few new rules in place.

The Bureau of Labor Statistics reports that all 50 states experienced a decrease in payrolls and an increase in unemployment in April.

• Leaders are an ‘open book’ when discussing future action
• Equity market will not ‘turn the page’ on volatility just yet
• A vaccine would alter the COVID-19 ‘narrative’

The stock market was choppy as investors bounced between hopes for a successful reopening of the economy and fears of a more prolonged slowdown.

In his May 13 webcast on the economic outlook, Federal Reserve Chairman Jerome Powell struck a cautious tone. That mood was reinforced by the economic data reports that followed. The economic outlook depends on the virus and efforts to contain it. There’s hope that monetary and fiscal support will carry us through and the virus will be checked.

Formula 1 celebrated the 70th anniversary of its first World Championship this week! More than four million spectators attended last year, many of whom were looking forward to commemorating the start of the landmark season this past March. Unfortunately, like many other events, COVID-19 forced Formula 1 to postpone its events for the foreseeable future.

After a significant recovery from March lows, coronavirus-driven fluctuations have reappeared in equity markets.

The April Employment Report was flawed, reflecting issues with data collection, classification, and methodology. However, results were consistent with an unprecedented, sharp deterioration in labor market conditions, mostly at the lower rungs. Payrolls fell by more than 20 million, nearly erasing the number of jobs gained since the financial crisis.

In a world filled with challenges there is no truer phrase than “Save one life, you’re a hero. Save a hundred lives, you’re a nurse.” And if we need any more reasons to celebrate and honor our nurses, this past Wednesday was National Nurses Day and next Tuesday will be 200 years since the birth of Florence Nightingale—the originator of modern nursing.

The April Employment Report was flawed, but signaled a sharp deterioration in labor market conditions. Nonfarm payrolls fell by 20.5 million, nearly erasing all of the job gains since the last recession.

We rely upon the ‘history’ of the market and the ‘science’ of evaluating economic indicators, but this period of uncertainty has pushed us to ‘think outside the box,’ and add an element of creativity to our investment views.

In recent weeks, the unprecedented surge in claims for unemployment benefits pointed to a horrific economic impact from COVID-19. That sinking feeling has been reinforced by the major economic releases, which have shown a sharp deterioration in economic activity in March – enough to substantially weaken the first quarter as a whole.

All three major U.S. equity indices saw double-digit recovery in April, though most levels are still far from pre-coronavirus highs.

COVID-19 has affected the data collection process for the major economic reports, including employment, consumer prices, retail sales, and industrial production. However, the incoming economic figures imply a stunningly swift, sharp decline in economic activity.

The broad range of economic data signal that a recession began in March. Real Gross Domestic Product (GDP, the total of final goods and services produced in our economy) is expected to have fallen in the advance estimate for 1Q20. The 2Q20 figures will show an unprecedented decline in activity.

Additional relief packages are expected to take shape in coming weeks, which may provide additional support for the markets and economy.

Lawmakers, business leaders and healthcare professionals around the country are searching for solutions to curtail the spread of COVID-19 and reopen the U.S. economy.

Economic data reports are generally backward-looking. There’s a lot of noise, reflecting statistical uncertainty and seasonal adjustment difficulties. Reports for March 2020 present a greater challenge.

Though it may not feel like it, the S&P 500 index just experienced its strongest 16-day period since 1938.

Initial claims for unemployment benefits totaled 6.61 million in the week ending April 4, down from 6.87 million in the week before. Prior to seasonal adjustment, 15.1 million people have filed claims in the past three weeks – that’s 9.2% of the labor force – and the figures understate the degree of job losses (as not every laid-off worker can file a claim).

For the most part, assessments of the economic impact of COVID-19 have been more qualitative than quantitative. Data reports are backward-looking and often distorted. However, in recent weeks, the unprecedented surge in jobless claims has helped us to begin assessing the economic damage from social distancing.

While we still hope “April showers bring May flowers,” more so we are wishing that “April distance will bring May existence”—so continue social distancing!

Although the full extent of the economic impact from COVID-19 and social distancing measures remains uncertain, some things appear to be taking shape.

The phrase “a picture paints a thousand words” seems truer than ever as images of lockdowns flood our newsfeeds. From the eerie emptiness of Time Square to closed retailers, there is concrete evidence that all are doing their part to combat the outbreak.

There’s always a story behind the economic data. The Employment Report understated the labor market deterioration in March, while seasonal adjustment amplified the level of job losses in the first half of the month. More importantly, claims for unemployment benefits doubled from the astronomical level of a week earlier.

CIO Larry Adam discusses the COVID-19 outbreak and emphasizes that investors should exercise patience, not panic.

To say that a lot has changed in the last month is a tremendous understatement. The markets are playing a weak supporting role to the worst healthcare challenge in our generation, as well as the worst economic problem since 2008.

The US economy will likely struggle temporarily, but the combination of aggressive monetary policy and substantial fiscal stimulus should deter the worst case scenarios from occurring. These efforts will serve as a ‘bridge’ to a place not too far in the future (hopefully June) where the virus is contained, a therapeutic response is developed and the economy returns to normality.

The economic impact of COVID-19 has been shockingly large and swift, but most of the information has been anecdotal. Economic data reports are by their nature backward-looking. However, the latest unemployment claim figure and the University of Michigan’s Consumer Sentiment Index point to a sharp contraction in economic activity.

Lawmakers in Washington struck a compromise on a major fiscal stimulus package to help combat the effects of the COVID-19 pandemic. The bill, already passed by the Senate and awaiting House vote, packs in a lot, with upward of $2 trillion slated to provide important support for the economy.

The economic and financial market carnage of the coronavirus continued in yet another unbearable week for investors. The S&P 500 suffered its worst daily decline since October 1987 on Monday, and has fallen ~30% from its February 19 high—the fastest decline and entrance into bear market territory in the history of the US equity market.

The economic and financial market carnage of the coronavirus continued in yet another unbearable week for investors. The S&P 500 suffered its worst daily decline since October 1987 on Monday, and has fallen ~30% from its February 19 high—the fastest decline and entrance into bear market territory in the history of the US equity market.

In recent weeks, COVID-19 has led to escalating economic concerns. What started as a seemingly sharp, but likely temporary, reduction in Chinese activity, including disruptions to global supply chains, became more worrisome as the coronavirus moved to the rest of the world.

In recent weeks, we’ve seen economic concerns about COVID-19 moving from supply chain disruptions, to expectations of softer global growth, to fear of the impact from social distancing. The odds of a recession have been rising day by day. Some economists believe that we’re already in one.

The S&P 500 triggered the week’s second trading halt by falling more than 7% during Thursday’s market hours.

The markets seem to be vacillating between concerns for the extent of economic damage and hopes the federal government will intervene to stimulate the economy or support certain businesses affected most by the spread of the coronavirus.

COVID-19 fears continued to drive the financial markets. Share prices were volatile and bond yields dove further into record lows. 

Volatility will persist until we get more clarity around the pace of contagion and the potential impact on the US economy – which could take time. Patience, not panic, is essential in order to make well-informed decisions.

The Federal Open Market Committee (FOMC) cut rates by .50% in preparation for potential coronavirus impacts.

Equities have fallen on continued news of the virus’ spread, and bonds have rallied as investors seek safety.

Markets have been skittish following the news of a coronavirus case in California with no clear point of origin.

As coronavirus cases continue to escalate in several new regions, like South Korea, Italy, Japan, Iran, Singapore and the United States, Raymond James Healthcare Policy Analyst Chris Meekins believes we are now in the midst of a COVID-19 pandemic. The word itself isn’t intended to cause panic, but rather to prompt increased awareness of the potential economic and health effects of this rapidly spreading virus.

Once again, China adjusted the criteria for recognizing COVID-19 cases (over 76,000 reported cases as of February 21, with 2,248 deaths). The immediate direct impact on the global economy is through supply chain disruptions and reduced travel/tourism (in China and throughout Southeast Asia).

The economy was mixed in 2019. Consumer spending, while uneven, was relatively strong, supported by solid fundamentals. Business fixed investment and manufacturing were weak, but not “recessionary weak.” January data are to be taken with a grain of salt – seasonal adjustment is huge and weather (good or bad) can exaggerate – but figures point to more of the same.

The spread of the coronavirus COVID-19 appeared to be slowing, but adjustments in the criteria for recognizing cases changed, boosting the reported number of infections. The change increased anxiety and uncertainty about the economic impact.

While red may be the color of the day, it’s a color investors have not seen from most asset classes over the last twelve months. For example, the S&P 500 rose ~26% and investment-grade bonds gained ~14%. However, just as in a healthy relationship, we cannot take this excellent performance for granted and become complacent about the future returns we expect to come our way.

The January Employment Report remained consistent with the broader range of labor market indicators. Job conditions are tight. Wage growth has picked up relative to a few years ago, but is not particularly high by historical standards. Thus, the Fed is widely expected to keep short-term interest rates steady in the near term.

President Trump delivered his third State of the Union address Tuesday night. In accordance with the US Constitution, the president has the responsibility to update Congress on measures deemed “necessary and expedient.” The event is not without tradition, but prior presidents have not hesitated to deliver their message in their own unique way.

Domestic stocks had a strong start to the year but soon ran into headwinds related to geopolitical risks in Iran and the Wuhan coronavirus.

With U.S. growth anticipated to be moderate this year, little was expected in the way of fiscal policy (taxes, government spending) and monetary policy (short-term interest rates), but life comes at you fast.

Trade policy uncertainty, slower global growth, a decrease in energy exploration, and problems at Boeing had a negative impact on business fixed investment in 2019. So what’s different in 2020?

Read the latest Weekly Headings by CIO Larry Adam.

Chief Economist Scott Brown discusses the latest market data.

Chief Economist Scott Brown discusses current economic conditions.

Read the latest Weekly Headings by CIO Larry Adam.

Job growth slowed last year, partly reflecting a tighter job market. However, wage growth, while higher in 2019, has remained moderate, much lower than one would expect given the low unemployment rate.

A year ago, the baseline scenario for the economy was moderate growth, but with an elevated level on uncertainty, with risks skewed to the downside. Trade policy uncertainty and slower global growth were dampening factors, but Fed policy was supportive. Investors were willing to look beyond the uncertainty.

Investor optimism remained strong in the first day of trading 2020, but news that the US. Military had assassinated an Iranian general sent share prices lower. The price of oil rose and bond yields fell in response to heightened uncertainty.

What can investors expect this year? Continued economic expansion, unaltered interest rates and new equity highs, says CIO Larry Adam.

Trade policy uncertainty and slower global growth may persist, but moderate expansion is anticipated for the U.S. economy overall in 2020.

We’re still missing a lot of information on the fourth quarter, but recent reports paint a picture of moderate growth in the overall economy. That picture will become clearer as December data arrive next month. The economy was mixed in 2019, and should remain mixed into the first half of the year.

Read the latest Weekly Headings by CIO Larry Adam.

Stock market participants remained optimistic, despite impeachment. The economic data were mixed, but consistent with moderate growth in the overall economy.

The Fed’s policy statement, the revised dot plot, and Chair Powell’s press conference reaffirmed expectations that monetary policy will remain on hold for the foreseeable future. That doesn’t mean that rates won’t be changed. The Fed stands ready to provide further accommodation if conditions warrant. However, the hurdle for a rate increase appears to be relatively high.

Read the latest Weekly Headings by CIO Larry Adam.

The Federal Open Market Committee left short-term interest rates unchanged and indicated that the current stance of monetary policy was “appropriate” to support economic growth, a strong job market and inflation near the Fed’s 2% goal. The revised dot plot showed that 13 of 17 senior Fed officials anticipate no change in rates in 2020.

U.S. economic activity is expected to remain mixed in 2020, with moderate strength in consumer spending and general softness in business fixed investment and manufacturing.

What's on the market's wish list for 2020? Chief Investment Officer Larry Adam provides a festive perspective.

Read the latest Weekly Headings by CIO Larry Adam.

Nonfarm payrolls rose more than expected in the initial estimate for November (+266,000), with upward revisions to the gains for September and October (a net 41,000 higher). In contrast, the ADP estimate of private-sector payrolls rose more modestly (+67,000). What to believe?

The S&P 500 is up more than 25% year to date and has notched 26 record highs since January.

There are two broad approaches to forecasting current quarter GDP. Some economists will estimate a number and stick with it. Most will adjust their forecasts as new data arrive. This may seem fickle to the casual observer. Estimates will change week to week and even day to day...

Consumer attitude measures are divided by political affiliations. That’s nothing new. Sentiment readings have long depended partly on which party occupies the White House. Republicans currently rate economic conditions better, just as Democrats did during the Obama years (Independents fall somewhere in the middle).

Key Takeaways -Plentiful Jobs Harvest Should Help Economy Trot On -Low Turkey Prices Means More to Gobble Up -All S&P 500 Sectors Part of The Positive Parade

Shifting trade policy perceptions remained the dominant factor for the stock market.

Theoretically, there is no single variable more important to the economy than productivity, or output per worker. Productivity growth is how we get improved living standards over time. Faster productivity helps to offset the impact of wage growth, supporting gains in corporate profits.

• Info ‘Technology’ Boasts the Strongest Aggregate Beats
• The ‘Art’ of Interpreting Earnings & Future Guidance
• Lower for Longer Yields Provide ‘STEAM’ for Equities

Once again, the economic data reports were dominated by shifting trade policy perceptions, but this time things were flipped. It was the Chinese indicating a possible rollback of tariffs on both sides, sending the stock market higher. However, that was refuted by the White House the next day.

Nonfarm payrolls rose more than expected last month, despite being held back by the strike at General Motors (which subtracted 42,000) and the exit of 20,000 temporary workers for the 2020 census. There is some uncertainty in these data.

• The Fed Rate Cut To ‘Spring’ The Economy Forward
• Economic Data Releases Put Recessionary Fears to ‘Rest’
• Signing Date for Phase One Trade Deal Still ‘In The Dark’

The month ended positively for the S&P 500, Dow Jones Industrial Average, NASDAQ and the Russell 2000 Index.

It was a thin week for economic data. Both new and existing home sales were reported lower in September, although the trends are generally higher. Durable goods orders fell 1.1% in September, reflecting the strike at GM and ongoing problems at Boeing. Ex-transportation, orders slipped 0.3%, with mixed results across industries.

The 115th World Series began this week, the culmination of a 162-game regular season. While this season is long relative to other sports, the Investment Strategy season never ends. We are constantly evaluating economic and market data and ensuring that our forecasts, strategies, and outlooks are prepared for ‘primetime.’

The National Bureau of Economic Research (NBER) defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

As we saw in the Summary of Economic Projections released in September, the Fed’s economic outlook is similar to most outside economists. The baseline scenario is for moderate growth in 2020, with growth in real GDP near 2%, and inflation moving gradually toward the Fed’s 2% goal.

The Treasury Department is expected to report that the federal budget deficit for FY19 (which ended in September) fell short of $1 trillion. That’s a lot of money, especially with an economy running full tilt. However, the government currently doesn’t have any problem borrowing.

Read the latest Weekly Headings by CIO Larry Adam.

Chief Economist Scott Brown discusses current economic conditions.

The ISM Manufacturing Index fell further into contraction in September, while the Non-Manufacturing Index slowed (consistent with a continued expansion in the overall economy, but at a slower pace). The Employment Report was a mixed bag. Nonfarm payrolls rose by 136,000 in the initial estimate for September, with a net upward revision of +45,000 to July and August.

On the 80^th anniversary of the iconic movie’s release, CIO Larry Adam draws parallels between the film’s themes and today’s financial markets.

Currently, a simple yield curve model puts the odds of entering a recession within the next 12 months at about 40%.

Though many market-influencing variables remain in play, the S&P 500 neared all-time high levels in September.

The economic data reports were mixed and had a limited impact on the financial markets. Investors were generally optimistic about potential progress in trade talks and mostly ignored the turmoil in Washington.

• Hopeful the US & Major Trading Partners Will ‘Come Together’
• Here Comes Seasonality to Help Equity Market Be ‘All Right’
• US Consumer to ‘Move’ the US Economic Expansion Further

Chief Economist Scott Brown discusses current economic conditions.

As expected, the Fed lowered short-term interest rates and officials remained divided about what to do next. The policy meeting came in a week that saw elevated funding pressures in money markets, which drove the effective federal funds rate above the top of the target range.

• GDP and Interest Rates Have Fallen Over the Last 50 Years
• People Living Longer is a Positive for Health Care Sector
• Tech Revolution Supportive of Tech and Communication Services Sectors

The Federal Open Market Committee will meet this week to set monetary policy. It’s widely expected that the FOMC will lower the federal funds target range by another 25 basis points, although that’s not a done deal.

• Fed ‘Poised’ to Extend Economic Expansion
• Positive Earnings Growth to ‘Feed’ the Equity Market
• There is ‘Protective Glass’ Between Equities & the Sleeping Bear Market

Nonfarm payrolls rose by 130,000 in the initial estimate for August, less than expected and despite a 25,000 boost from census hiring. For production workers, average hourly earnings advanced by 0.5% (+3.5% y/y). Monthly wage and payroll figures can be choppy, but the underlying trend in job growth is lower.

The ISM surveys for August were mixed and the employment report disappointed, but investors were encouraged by prospects for U.S./China trade talks, which are set to resume at a high level in early October.

Market volatility remains elevated, reflecting trade tensions and continued concern around the yield curve.

Recent economic data reports have continued to paint a mixed picture of the U.S. economy, with strength in consumer spending and a mild recession in manufacturing. On top of this, investors remain concerned about several issues, including global growth, geopolitical uncertainties, trade policy, and an inverted yield curve.

The minutes of the July 30-31 Federal Open Market Committee (when the Fed lowered short-term interest rates by 25 basis points) showed that officials were split. “A couple” preferred a 50 basis point cut, while “several” favored no change.

Read the latest Weekly Headings by CIO Larry Adam.

In his speech at the Kansas City Fed’s annual monetary policy symposium in Jackson Hole, Fed Chair Powell discussed the challenge of keeping the U.S. economy “in a favorable space” in the face of significant risks.

Read the latest Weekly Headings by CIO Larry Adam.

The spread between the 10-year Treasury note yield and the 2-year yield briefly dipped below 0. An inverted yield curve signals a strong likelihood of entering a recession within the next 12 months, but the odds of a recession had already been rising as the yield curve has flattened.

A 2-year/10-year Treasury inversion has left markets shaken – but don't let short-term volatility get the better of your long-term financial focus.

On August 5, China allowed its currency, the yuan, to depreciate against the U.S. dollar. It wasn’t a particularly large move, a little more than 1.5%, but it breached 7 yuan per $ -- a level seen as “psychologically important.”

• Equity markets entering the ‘Dog Days of Summer’
• Below average trading volumes can lead to exacerbated price swings
• Remain patient and position for buying opportunities

Readers should be aware that tariffs are a misguided way to deal with bilateral trade deficits and misbehavior on the part of certain trading partners. Tariffs are a tax on U.S. consumers and businesses. Tariffs raise costs, invite retaliation, disrupt supply chains, and dampen business fixed investment.

Real (inflation-adjusted) GDP growth rose at a 2.1% annual rate in the advance estimate for 2Q19, a bit better than the median forecast (+1.8%), but growth was concentrated in just two components, consumer spending and government. Everything else was down.

• The S&P 500 is off to its best start to a year (19.9%) since 1996.
• A budget deal and earnings have been recent catalysts.
• The fed, earnings, and data are key items to watch next week.

With the future of technology remaining bright and necessary for the U.S. to remain the dominant global superpower, we continue to view technology as one of our favorite equity sectors.

Retail sales results for June were stronger than expected, consistent with a pickup in consumer spending growth in 2Q19 (although that follows a weak 1Q19). Industrial production was flat, but manufacturing output picked up a bit in June (still in an overall downtrend in 2019).

We often talk about how difficult predicting can be, even for the financial industry experts. Today’s markets have many influencing variables from the traditional economic releases and transforming population dynamics to the more recent global influences. Perhaps one of the greatest modern day market influences are the world’s central banks.

• Macro trade and monetary policy optimism have lifted the U.S. equity market to record levels
• Second quarter earnings growth likely to be lifted from negative to positive territory
• With elevated equity valuations, positive forward guidance needed to maintain momentum

Nonfarm payrolls rose more than expected in the initial estimate for June. The news sent equity futures lower, bond yields higher, and reduced the odds of more aggressive Fed policy action later this month.

All right, one more time. Tariffs raise costs for U.S. consumers and business, disrupt supply chains, invite retaliation, and undermine business fixed investment.

Like Batman, investors cannot resort to superhuman powers when investing. Instead, knowledge, analytical skills and ingenuity are paramount for success. Asset allocation, diversification and risk management are essential dynamics to consider as volatility moves higher.

Senior Fed officials were divided on whether it will be appropriate to lower short-term interest rates by the end of the year, although even those expecting no change felt that the case for easier policy had strengthened.

While the federal funds futures market is pricing in some chance (about 24%) of a rate cut this week, the Federal Open Market Committee is widely expected to leave rates steady.

The sharp increase in geopolitical risk, potential action by OPEC to boost crude oil prices (through further supply cuts), and our view that concerns surrounding global growth are overdone support our year-end WTI forecast of $70/bbl.

The May job market report disappointed, but it was hardly a disaster. Nonfarm payrolls were reported to have risen by 75,000 in the initial estimate, following a 224,000 gain in April.

The “inconvenient truth” of equity market pullbacks is that investors tend to want them in order to invest at more favorable prices, but when they actually occur, investors get nervous, question their conviction and postpone their purchases.

After my father, a Pearl Harbor survivor, died in 2011, we found a shoebox. It contained items that belonged to my Uncle Bill (my mother’s brother), who had also served in WWII. There was Bill’s birth certificate and baptism record, an address book, and some pages that looked like they were torn out of a diary.

The partial government shutdown, poor weather, and the late Easter appeared to dampen the underlying pace of growth in the first quarter. However, April data on retail sales, industrial production, and durable goods orders suggest the softness will be longer lasting.

Memorial Day is also the “unofficial” start to summer as the temperature heats up, school ends, and vacation season begins. With more people on vacation there is a tendency for investors to lose focus on the financial markets. However, this particular summer presents numerous events, deadlines, and potential headlines that we believe investors cannot ignore as they could lead to increased volatility, both to the upside and downside.

Tariffs have had a negative impact on the U.S. economy, but a relatively limited one to date. Pain is obviously felt more in some areas than others, but the cumulative impact is growing and a continued escalation in trade tensions would further dampen growth.

As the Friday early morning deadline (12:01 AM EST) expired, tariffs on an additional $200 billion of Chinese imports have technically gone into effect. However, as we go to press, negotiations are ongoing with the hope that a compromise can be brokered.

Equities remain near all-time highs, as the S&P 500 closed at a record high two times this week and is now up 17.1% year-to-date, the best start to a year on a price return basis since 1987.

The April Employment Report was not as strong as it seems, but still consistent with moderate growth in the overall economy, tighter job market conditions, and moderate wage growth. Wage growth is likely being offset by faster productivity growth (although results will vary by firm and industry), restraining inflation pressures from the labor market.

On the back of 1Q19 solid earnings results and healthy economic data releases, the S&P 500 continued its remarkable move higher this week and closed at a record high (2,933) for the first time since September 2018.

The advance GDP report was a mixed bag. The headline figure was stronger than expected, but boosted by faster inventory growth and a narrower trade deficit, both of which are likely to reverse in the second quarter. Consumer spending and business fixed investment slowed, while residential fixed investment fell for the fifth consecutive quarter.

The advance estimate of 1Q19 GDP growth will arrive on Friday (April 26). There’s always a lot of uncertainty in the advance figure (we’re missing a number of components) and that is especially so this time.

Emerging markets, particularly in Asia, remain one of our favored regions for several reasons including...

Tax receipts were up 0.7% in the first six months of FY19. Individual tax receipts were down 1.7%. Corporate tax revenues fell 13.5%. Payrolls taxes rose 4.7%.

Clearly I have been “sitting here in limbo” for the last few weeks relaxing in Key West, which is a profoundly different planet. I love it! We stayed at Casa Marina, a resort I would highly recommend to anyone. So while I was limbo, it would seem as though the stock market was in limbo, as well.

Nonfarm payrolls rose a bit more than expected in the initial estimate for March. While the monthly data are subject to statistical noise and seasonal adjustment difficulties, the underlying trend in job growth is likely moderating. That shouldn’t be a surprise.

As anticipated, the estimate of fourth quarter GDP growth was revised lower (to 2.2%, vs. +2.6% in the “initial” estimate). All major components grew a bit less than in the previous estimate. Recent figures have generally been consistent with a lackluster pace of growth in 1Q19.

“Ark Invest” is a money management firm that manages money in ETFs, mutual funds, and separately managed accounts. Ark believes that innovation is the key to growth and alpha.

Last Friday I spoke to a number of money managers. One of the attendees was Linda Bradford Raschke, a professional trader, who used to trade on the Pacific and Philadelphia Stock Exchanges, founded a number of hedge funds, well you get the idea.

As expected, the Federal Open Market Committee left short-term interest rates unchanged and provided some details on the unwinding of the balance sheet. The revised dot plot showed that a majority of senior Fed officials expect no change in rates in 2019 (but a majority also anticipate one or more hikes in 2020).

A long time ago in a galaxy far far away I began working on Wall Street. The year was 1971 and I had joined a small firm making markets in over-the-counter stocks and options. My salary was $100 a week and it was Camelot.

Nonfarm payrolls rose by a disappointing 20,000 in the initial estimate for February, following a strong 311,000 gain in January. However, it appears that mild weather helped to boost the January figure and depressed the February data.

As I wrote on Friday, the weak economic outlook from the ECB, continuing reduced earnings estimates, worries about the Mueller Report, renewed Chinese trade war tensions, and the underperformance of the cyclical sectors bringing on cries of recession all proved too much for stocks...

Economic data releases that were delayed due to the partial government shutdown, including fourth quarter Gross Domestic Product, have been rolling in.

Sacagawea lived from May 1788 to December 1812. She was a Lemhi Shoshone woman who is best known for her help guiding the Lewis and Clark Expedition in achieving their mission objectives by exploring thousands of miles from North Dakota to the Pacific Ocean.

I was traveling last week seeing portfolio managers and doing gigs for our financial advisors and their clients. I have been doing such events for much of the past six months. The recurring question from clients is, “What about the national debt?”

Fed Chairman Jerome “Jay” Powell will deliver his semiannual monetary policy testimony to Congress on Tuesday and Wednesday. In past decades, this testimony was a huge deal for the financial markets. These days, not so much. The Fed is a lot more forthcoming.

Despite Friday’s Fling, there was a very negative NYSE breadth divergence which appeared during the final two hours of trading. It feels like a blow off trading top to me.

Data delayed due to the government shutdown have begun to arrive, filling in the picture for 4Q18, and we’re also getting fresher data on the economy in early 2019. The figures have been mixed, and often surprising, which allows one to make about any kind of argument one wants.

We revisit this “Who do you trust” meme this morning because of what I have been saying the past few weeks. After identifying the selling climax low of December 24, when 48.5% of stocks made new lows, I recorded two 90% upside days (90% of volume and upticks came on the upside).

In the next few weeks, economic reports that were delayed due to the partial government shutdown will continue to trickle in, helping to piece together the fourth quarter picture. That’s fine but investors are more interested in the future.

In his post-FOMC press conference on December 19, Fed Chairman Powell said that low inflation would allow the Fed to be more patient in adjusting rates. The stock market fell. He said essential the same thing in his January 30 press conference.

So, I need to apologize to everyone for not being able to do a verbal recorded call last week, or write a missive the last three sessions of the week. The problem was that while in NYC my media events began around 6:00 a.m., followed by more media events, then it was portfolio manager meetings.

"Time is Archimedes’ Lever in Investing - Archimedes is often quoted as saying, 'Give me a lever long enough and I can move the earth.' In investing, that lever is time. The length of time investments will be held, the period of time over which investment results will be measured and judged, is the single most powerful factor in any investment program.

During an economic slowdown, the government often employs fiscal stimulus to “prime the pump.” In such cases a burst in aggregate demand boosts income, which adds to consumer spending, which adds to income, and so on. This process can work in reverse.

For investors, the year began in fear. The global economic slowdown, the yield curve, Fed policy, trade policy, and the partial government shutdown generated risk. Last week, the news was mixed. There is no sign that the budget stalemate in Washington will end soon. There were renewed reports that President Trump is considering imposing tariffs on all imported motor vehicles.

Ned Davis wrote the book “Being Right or Making Money” in 1991. As most of you know, Ned is one of the best on Wall Street. The book resides on my desk, because I often refer to it.

In the last couple of years, Nobel Laureate Robert Shiller has championed the idea of economic narratives. Economic data describe “the fundamentals,” but stories are often the key drivers of activity. Investors are currently faced with two competing narratives. 

Recently, much has been written, and said, about a retest. The reference is about the major indices pulling back to their recent December closing lows, creating a double-bottom in the charts.

Everyone knows how to win. Few know how to lose. Yet the secret to making money in the various markets is knowing how to lose. How to control your losses.

Financial market volatility remained elevated in the first few days of 2019, but it’s much more palatable when it is to the upside. Market participants remained concerned about a number of issues (global growth, trade policy, dysfunction in Washington), and fear remains a key factor in the outlook. Whether that fear abates or intensifies will tell the tale.

The Federal Open Market Committee raise short-term interest rates for the fourth time in 2018 and signaled more to come in 2019, albeit most likely at a slower pace. Market participants overly focus on what the Fed will do instead of why the Fed will do what it does.

Watch out indeed, for 2017’s December low was violated in February 2018 and the rest, as they say, is history. Accordingly, it will be interesting to see what the December Low Indicator says in 2019.

Recently, our email box has been filled up with questions like this one from one particularly bright Raymond James financial advisor, namely, Michael McCormick of the venerable Chicago-based money management firm of McCormick Retirement Group, who wrote, and we responded...

Looking around, we don’t see many people who used to be in this business. Maybe they just couldn’t take being wrong. Or, maybe their clients couldn’t take their claiming they were always right. Or, maybe they got tired of issuing lots of predictions while, at the same time, watching the stock market going nowhere this year.

Nonfarm payrolls rose less than expected in November. The three-month average remained relatively strong, although below the pace of the first half of the year. That's not surprising. As the job market tightens, the number of available workers decreases.

The key phrase in Fed Chairman Powell’s speech to the Economic Club of New York was widely misinterpreted by thefinancial press and, in turn, the markets. That’s not unusual. The markets don’t do nuance. Stock market participants were likelylooking for an excuse to rally.

For years we have quoted Benjamin Graham’s book The Intelligent Investor, which Warren Buffet has said is the best book ever written on investing. The operative quote from said book is “The essence of portfolio management is the management of risks, not the management of returns.” He closes that thought by saying, “All good portfolio management begins, and ends, with this premise.”

Years ago we studied the tactics of Jesse Livermore, along with a number of other stock market operators, and have found many of those strategies to be just as valid today as they were decades ago.

The recent data releases continue to suggest moderately strong economic growth in the near term and little threat of higher inflation. However, investors remain anxious about a wide range of issues.

The Leonid meteor shower hit its zenith over the weekend, and you didn’t even need a telescope to see it. You did need a warm blanket, but all you had to do was lay down on your back to enjoy a great show.

The midterm election results were about as anticipated, with Democrats gaining control of the House and Republicans retaining control of the Senate. Peace, love, and everyone sings Kumbaya, right?

We could almost hear our history professor espousing Hoffer’s works recently when we were asked by a particularly smart media type if trust and character would really command a “premium” price earnings (P/E) ratio in today’s environment? Our response was “of course,” and as an example we offered up a quote from John Pierpont Morgan...

The year-over-year increase in average hourly earnings was a bit exaggerated in the October employment report, but the underlying trend is higher. Growth in nonfarm payrolls rebounded from the effects of Hurricane Florence, while Hurricane Michael “had no discernible effect,” according to the Bureau of Labor Statistics.

Up until last Monday (October 29, 2018) we had focused on our short-term model’s “sell signal” of October 2, 2018. The “S” word alone makes most investors uneasy. They find the “B” word, “buying” more pleasant.

Real GDP rose at a 3.5% annual rate in the advance estimate for 3Q18, about as expected. However, there were a few surprises in the details. Consumer spending growth was even stronger than anticipated. However, business fixed investment was unexpectedly weak.

And the perfect storm has hit the equity markets over the past month. However, we had an early warning of such events when, on October 2, 2018, our short-term proprietary model registered a “sell signal” and we said to sell trading positions.

Periods of low market volatility (or complacency) are often followed by turbulent readjustments, including sharp intraday moves lower and higher. There has been a long list of concerns in the last few months: the November 6 election, tighter Fed policy, higher long-term interest rates, trade policy disruptions, risks to the global economy, labor market constraints, and so on.

My friend and mentor Ray DeVoe use to say that going over old reports can be an exercise in humility, as you cringe while reading some errant forecast of another time. “How could I have been so stupid?” is the unsaid reaction. On the other hand it can be an ego trip, as you proudly go over some forecasts that were right on target.

We really like Rudyard Kipling’s line, “If you can trust yourself when all men doubt you, but make allowance for their doubting too;” and clearly “men” doubted us when on October 2 our short-term proprietary model flashed a sell signal and we subsequently advised selling trading positions.

It was the best of times, it was the worst of times. Why did the stock market fall? No reason, and every reason. There doesn’t need to be a catalyst. Sometimes the market is simply going to do whatever the market is going to do, but the list of worries was already there.

The United Stated Mexico Canada Agreement (USMCA), which must still be approved by Congress, is mostly the same as the old agreement, but don’t call it NAFTA 2.0. The agreement should not have much of an impact on overall economic growth or inflation, but it is a hurdle cleared.

John Maynard Keynes, the British economist whose ideas fundamentally changed the theory and practice of economics, once said, “When the facts change, I change my mind - what do you do, sir?” So on a short-term trading basis, we came into last week believing the S&P 500 (SPX/2885.57) was going to grind higher into our envisioned mid-November’s “energy peak.”

We have heard the statement, “Nobody can consistently time the stock market’s ups and downs;” and, for the most part we agree with that. However, if one listens to the message of the market, one can certainly decide if one should be “playing hard,” or not playing so hard.

Judging by incoming calls and emails, investors are becoming more concerned about the possibility of recession. The flatter yield curve may be partly to blame, but there are growing concerns about the impact of the president’s trade wars and Fed rate increases have created some anxieties.

Well, “you did it,” as the senior index followed most of the other indices to new all-time highs. We have repeatedly written that this was going to happen given the Advance-Decline Line’s continuing new highs, as well as the stock market’s strong breadth.

There is currently little doubt that the U.S. and China are in a trade war, where retaliation begets retaliation. Conflicts with Mexico, Canada, and the European Union are effectively in a temporary ceasefire, but remain unresolved.

Federal Reserve officials will meet on September 25-26 to set monetary policy. It’s widely expected that the Federal Open Market Committee will raise the federal funds target range by another 25 basis points, to 2.00-2.25%.

After nearly 48 years in this business, we have seen a number of cycles and developed a long-term perspective. We have often spoken about the difference between a “secular bull market” and what many consider to be a bull market because it is up 20%+. The reciprocal is that a 20%+ decline represents a bear market.

Being wrong and admitting it, what a novel idea, yet as Bernstein states, “It helps to know that being wrong is inevitable and normal, not some terrible tragedy, not some awful failing in reasoning, not even bad luck in most instances. Being wrong comes with the franchise of an activity whose outcome depends on an unknown future.” Indeed, the real trick is to be wrong quickly for a de minimis loss of capital.

Nonfarm payrolls averaged a 185,000 gain over the three months ending in August, a relatively strong pace considering that labor market constraints are more binding and reports of worker shortages are rising.

The Endless Summer (1966) is the crown jewel to ten years of Bruce Brown surfing documentaries. Brown follows two young surfers around the world in search of the perfect wave, and ends up finding quite a few in addition to some colorful local characters (Endless Summer).

For financial market participants, the ten-year anniversary of the financial crisis will bring back a lot of bad memories, chiefly among them is the failure of Lehman Brothers (Sept. 15, 2008). In the weeks ahead, we’ll see retrospectives on the events that led to the crisis, the failure to predict how bad things would get, and how we should prevent a similar setback.

The minutes of the July 31-August 1 Fed policy meeting and Chairman Powell’s Jackson Hole speech reinforce the view that the central bank will raise short-term interest rates again on September 26. The pace of monetary tightening beyond that is unclear, reflecting a number of uncertainties.

We have used the “Not Afraid” story many times over the past 48 years, but we dredged it up again this morning because of the many questions about “being afraid” we got in Boston two weeks ago and New York City last week.

The Kansas City Fed’s annual monetary policy symposium begins later this week in Jackson Hole, Wyoming. Around 120 people attend the conference, including central bankers from around the world. In the past, the Fed chair’s speech has often been a big deal for the financial markets.

So, as most of you know we were on a road trip last week. We flew into Albany, New York on Sunday only to be greeted with hotter temperatures than what we left in Florida. The mountain drive to Manchester, Vermont was spectacular, but hereto the temperatures were hotter than Florida.

We don’t know how long ago we met Frederick “Shad” Rowe, but we are glad we did, because our conversations with him have been net worth changing.

Nonfarm payrolls rose less than anticipated in the initial estimate for July, but figures for May and June were revised higher. The unemployment rate edged down, but the trend has been relatively flat this year – at odds with the strong trend in nonfarm payrolls.

Real GDP rose at a 4.1%, annual rate in the advance estimate for 2Q18, about as anticipated. That followed a 2.2% pace in the first quarter (revised from +2.0%). Second quarter strength was concentrated in consumer spending (rebounding from a soft 1Q18) and a surge in agricultural exports (which may have been in anticipation of an escalation in trade tensions).

“Do you have the mental fortitude to accept huge gains?” is a line from The Elliott Wave Theorist’s Robert Prechter in an era gone by. But it is as true today as it was when first penned in the 1970s. And to do that, one has to ignore the ticker and hold stocks through a long market swing.

Recent economic data reports, while mixed, continued to paint a picture of a strengthening economy in 2Q18. This improvement, expected to be seen in the GDP report to be released this Friday, partly reflects a rebound from a “soft” 1Q18. Averaging the two quarters should show a robust pace of growth in the first half of the year.

Readers of these missives know that we have been favorable on the midstream Master Limited Partnership (MLP) space for a number of months. The reasons for that strategy have often been mentioned in these letters. First, the midstream MLPs sold off when the upstream MLPs blew up with most of them going bankrupt.

On CNBC last Friday, we stated that we have been in a stealth bull market. Indeed, after anticipating the stock market’s bottom in early February, the stealth bull market emerged.

Fed Chairman Jerome Powell will deliver his semi-annual monetary policy testimony to Congress on Tuesday and Wednesday, but he’s not expected to cover any new ground.

Nonfarm payrolls rose more than expected in June, but the unemployment rate rose and average hourly earnings rose moderately. That’s a seemingly sweet combination for investors. The economy remains strong, but not so much that the Fed has to slam on the brakes.

Clearly the stock market’s “internals” are pretty perky with the NYSE Advance/Decline Line continuing to point the way higher, and in the process made yet another new all-time high last week.

The year began with two key themes. The first was that the economy ended 2017 with a good deal of momentum that should have continued into early 2018. The second was that the outlook for the second half of the year was considerably more clouded, reflecting fiscal stimulus, more binding constraints in the labor market, and tighter monetary policy.

Personally, I start with a base position of actively managed mutual funds, but not just any fund. The funds I want to own are the ones where I know the portfolio manager.

It was a relatively thin week for economic data. Housing starts rose 5.0% (±10.2%) in May – a strong gain, but not statistically significant. Single-family permits, the key figure in the residential construction report, fell 2.2% (±1.0%) in May, but were up 7.7% (±1.3%) from a year earlier.

It was back in November 2010 when James Howard Kunstler first wrote the aforementioned quote. We recalled that quote while spending last week in Nashville seeing institutional accounts and speaking at events for our financial advisors and their clients where the question du jour was, “What’s going on with the potential trade war?”

As expected, the Fed raised short-term interest rates following the June 12-13 policy meeting. Investors were more concerned about the pace of future rate increases and the revised dot plot showed a median of four rate increases in 2018, although (as in the March plot), most fed officials were divided between three and four.

We have used this quip from the book Why You Win or Lose: The Psychology of Speculation by Fred C. Kelly many times in our missives over the past nearly five decades because the wisdom of its message is timeless. We recalled it last week in many of our meetings in New York City when we heard certain individual investors, as well as portfolio managers (PMs), say “I should have!”

The Federal Open Market Committee is widely expected to raise short-term interest rates by another 25 basis points following its June 12-13 policy meeting (bringing the target range for the federal funds rate to 1.75-2.00%).

You might think institutions with their large staffs of highly-paid and experienced investment professionals would be a force for stability and reason in financial markets. They are not; stocks heavily owned, and constantly monitored by institutions, have often been among the most inappropriately valued.

Nonfarm payrolls rose by 223,000 in the initial estimate for May, stronger than expected, but not statistically outside of the moderately strong trend of the last year. We need a little less than 100,000 jobs per month to absorb new entrants into the workforce. Hence, it’s no surprise that the broad range of data has indicated a further tightening in labor market conditions.

I can’t quite remember how I met Craig Drill, captain of Drill Capital Management, but meet him I did over a decade ago and we have become kindred spirts. Maybe it’s because we both have been in the business a long time, or maybe it is because of our connection to First Boston in a life gone by.

Readers of these missives should know our fundamental energy analysts have been bullish on oil for quite some time, as have we. In fact, we have been bullish on commodities in general, often noting they are the cheapest relative to equities as they have been since the 1960s. Yet last week crude oil’s decline spooked energy investors, raising the question, “Is the crude oil rally over?”

The rise in oil prices is expected to have mixed effects on the U.S. economy. Higher gasoline prices will restrain consumer spending growth to some extent. However, increased energy exploration implies more capital spending, adding to GDP growth. For Federal Reserve policymakers, the key question is whether higher costs of transporting goods may be passed along to consumer prices.

We have always liked the movie “City Slickers” and particularly one scene. It’s the scene where Curly (Jack Palance) turns to Mitch Robbins (Billy Crystal) and says, “Do you know the secret of life?” The punchline is, “It’s just one thing” (one thing). For investors we agree, all you need to know is just one thing.

The April inflation reports were a bit on the soft side of expectations, reducing somewhat the fears that we’re on the verge of an upside breakout in inflation. There’s no sign that a strong economy is putting much upward pressure on consumer prices.

Today, we revisit the military preparedness question following President Trump’s nearly $700 billion military budget to attempt to make our military readiness better. We think the recent weakness in the defense sector stocks provides an interesting entry spot for investors.

So we headed to NYC early Thursday morning in search of the “Teenage Mutant Ninja Turtles.” After touching down at LaGuardia we climbed into a yellow taxi held together by duct tape, rode over potholed streets with our cell phone cutting in and out (gosh I love New York City), and arrived at Grand Central Terminal around 11:00 a.m.

Nonfarm payrolls rose by a little less than one million in April – that is, prior to seasonal adjustment – up by 2.932 million from January to April (vs. +2.708 million for the same three months a year ago). Seasonally adjusted, the trend in private-sector payroll growth has remained strong in recent months.

Real GDP rose at a 2.3% annual rate in the advance estimate for the first quarter, a bit stronger than anticipated (the median forecast was +2.0%), but “close enough for government work.” These figures will be revised, but the underlying story is unlikely to change much.

“A long time ago in a galaxy far far away” I was running three separate departments at then Richmond-based Wheat, First Securities. Subsequently, Tom Dorsey and Watson Wright decided to leave Wheat, First and form the now legendary firm of Dorsey Wright. When they left, that department fell under my management.

The Bureau of Economic Analysis will report the advance estimate of 1Q18 GDP growth on April 27. These figures will be revised, but the underlying story is not expected to change much. Growth was likely moderate, not horrible, but far short of the lofty expectations that some had put forth at the start of the quarter. Nobody appears too worried about that.

The March reports remained consistent with the view that inflation will move toward the Fed’s 2% goal, perhaps sooner than expected. The FOMC minutes were not expected to surprise, but several Fed officials felt that it might be appropriate to move the federal funds rate above a neutral level for a time.

These are two of the most important paragraphs we have encountered in more than 47 years of studying markets. DO NOT read them just once. Go off to a quiet spot that invites contemplation and READ THEM SEVERAL TIMES. Then reflect on all of the mistakes you have made in trading and investing.

Nonfarm payrolls rose less than expected in March (+103,000), but the trend remained strong, well beyond a pace consistent with the growth in the labor supply.

The definition of a China syndrome is, “A hypothetical sequence of events following the meltdown of a nuclear reactor in which the core melts through its containment structure and deep into the earth; hypothetically to China.”

When we were kids, we used to love having our parents read to us, especially from books written by Lewis Carroll. Through the Looking Glass and Alice in Wonderland were our two favorites. One of the quotes that has always stuck with us is, “Down the rabbit hole,” which is a metaphor for an entry into the unknown, the disorienting, or the mentally deranging, from its use in Alice's Adventures in Wonderland. Unfortunately, the same can be said about the stock market recently.

Recent economic data suggest the overall growth was at a moderate pace in the first quarter, respectable, but short of the very lofty expectations seen at the start of the quarter.

Financial market participants took the Fed policy meeting outcome as “dovish,” but the end result was a little more hawkish. The Fed’s revised economic projections weren’t much of a surprise, but they illustrate the thinking behind the expected monetary policy outlook. Of course, there are risks, notably a major misstep on trade policy. Gulp!

Many of you will recall that T. Boone Pickens and I know each other. In fact, three years ago he and I did a “fireside chat” on stage at Raymond James’ Summer Development Conference in front of a few thousand financial advisors.

The Federal Open Market Committee is widely expected to raise the federal funds target rate on Wednesday (to 1.50-1.75%). For investors, the key question is the pace of tightening that will follow.

The Three Prisoners problem appeared in Martin Gardner’s “Mathematical Games” column in Scientific American in 1959. It is mathematically equivalent to the “Monty Hall problem” with the car and goat replaced with freedom and execution, respectively, and equivalent to, and presumably based on, Bertrand’s box paradox.

It has been said that an investor will experience three secular bull markets in their life time. In the first one you will not have enough money to take advantage of it. In the third one you will be too old to take the amount of risk to really take advantage of it.

Nonfarm payrolls rose by 313,000 in the initial estimate for February, with a net revision of +54,000 to December and January. The unemployment rate held steady at 4.1%, despite a rise in labor force participation. 

Tariffs on imported steel and aluminum are unlikely to have a major direct impact on U.S. economic growth. However, President Trump’s decision last week has significantly raised the risk level for the U.S. and global economy.

“Smoot-Hawley Tariff was an act implementing protectionist trade policies sponsored by Senator Reed Smoot and Representative Willis C. Hawley and was signed into law on June 17, 1930. The act raised U.S. tariffs on over 20,000 imported goods.”. . . Wikipedia

The House Financial Services Committee has shifted Fed Chair Powell’s monetary policy testimony to Tuesday, February 27.

What a great question! I recently reread the above quote from Bob Prechter. It’s an excellent quip and virtually everybody can identify with it. On the surface the question seems laughable; who can’t accept huge gains? But in order to set yourself up for such gains you have to possess the courage to take an oversize position and maybe even leverage it.

As readers of the missives know, the three sectors we have really liked are Financials, Technology, and Industrials. Therefore, we were excited to arrive in Boston last week to see portfolio manager (PMs) and renew friendships.

Recent stock market volatility was partly blamed on fear that inflation will soon “take off.” Simple supply and demand arguments would suggest that pressure on resource markets (labor mostly, but also raw materials) would lead inflation higher.

So most know we took one of our South Florida speaking tours last week. Such tours consist of meeting with portfolio managers, presentations to clients of Raymond James, branch visits with our financial advisors, doing the media thing, well you get the idea.

The recent uptick in average hourly earnings (+2.9% y/y) and the surge in the government’s borrowing needs ($1 trillion plus in the current fiscal year) have had some implications for the underlying fundamentals. However, the outlook hasn’t been tumultuous enough to explain multi-100-point intraday swings in the Dow. Something else is clearly going on.

Last week, Treasury announced that it expects to borrow $617 billion in the first half of 2018, vs. $75 billion in the first two quarters of 2017, and announced increases in the sizes of its regular monthly auctions of notes and bonds. It should then be no surprise why bond yields are rising.

We have long been big fans of the books about Sherlock Holmes ever since our misbegotten youth. Strangely enough, being a strategist/analyst is much like being a detective. One has to gather the evidence, pour through it, decipher it, eliminate the “noise,” and come to a conclusion that tips the odds of making money in our favor.

A strong economy, a booming stock market, and tighter monetary policy are all dollar positive. So why is the dollar down more than 12% since the start of 2017?

“You’ve Got Mail” is a 1998 romantic comedy-drama starring Meg Ryan and Tom Hanks. The film is about two people involved in an online romance who are unaware that they are also business rivals. In this morning missive, however, we are not referring to the movie, but rather some recent emails we have received.

The year was 1963, the singer was Lesley Gore, and the song was “It’s My Party.” Clearly, that song seems appropriate given the government shutdown over the weekend. Indeed, “It’s My Party” and the blame rests with both parties in the political equation.

The economic impact of the partial government shutdown will depend on how long it lasts. Government workers will still get paid, but those supporting government workers (food service, etc.) will not. Economic data reports and Treasury auctions may be delayed.

Retail sales figures for December showed a relatively strong trend in 4Q17, although part of that reflects a rebound from hurricane effects in 3Q17. Core CPI inflation was a bit higher than anticipated in December, but that doesn’t mean that the low inflation trend is over.

Nonfarm payrolls rose by 148,000, less than expected, in the initial estimate for December, but the increase was hardly “weak.” There is a fair amount of noise in the monthly figures, but the underlying trend is lower. Despite a tight job market, average hourly earnings were up just 2.5% year-over-year.

Much has been written recently about the yield curve. It is espoused that the flattening yield curve is telegraphing the potential of a recession in the not too distant future.

Four times per year, at every other Federal Open Market Committee meeting, senior Fed officials submit projections for growth, unemployment, and inflation. They also put forth their expectations of the “appropriate” federal funds rate for the end of the next few years. What do the dots in the dot plot tell us about the course of policy action? Not a lot.

In 1981, The Leuthold Group was founded by the sagacious Steve Leuthold. It is an independent stock/economic research firm that produces disciplined, quantitative financial and contrarian financial research for investors. The research team is led by CIO Doug Ramsey, who is one of Wall Street’s best and brightest.

The appointment of Jerome “Jay” Powell as Fed chair should result in a smooth transition for monetary policy into early 2017. However, other personnel changes mean greater policy uncertainty as one looks beyond the middle of next year. This comes at a time when the risks of a policy error are increasing.

We have used the aforementioned quip from our departed friend Jerry Goodman (aka Adam Smith) a number of times over the past 47 years because of the wisdom it imparts. We dredged it up this morning after reading an article in Barron’s over the weekend titled, “Man and Machine,” which was an interview with Omar Selim, the CEO of Arabesque Asset Management, a quantitative and sustainable investment management firm.

So, we are now in the ebullient month of December and as often stated, “It is tough to put stocks away to the downside in December. It can happen, but it’s pretty rare.” In fact, there were only two years that saw negative returns for the S&P 500 (SPX/2642.22) in December.

On Friday, the Commodity Futures Trading Commission (CFTC) approved bitcoin futures trading on the Chicago Mercantile Exchange (CME) and the CBOE Futures Exchange (CFE). Bitcoin has risen by a factor of ten since the start of the year.

Robert Penn Warren (April 1905 – September 1989) was an American poet, novelist, and literary critic who once said, “History cannot give us a program for the future, but it can give us a fuller understanding of ourselves, and of our common humanity, so that we can better face the future.”

Nothing causes more anger, confusion, and bewilderment than the trade deficit – that is, except for the federal budget deficit. In past decades, these were often called “the twin deficits.” They are not identical, but they are related.

Charles Merrill issued the aforementioned memo to clients on March 31, 1928. At the end of the first quarter in 1928 the D-J Industrial Average was around 240. It subsequently rose to a September 3, 1929 peak of 381.17, which was the price peak for the Industrials that would not be surpassed until 1954, not that we are predicting anything like that here.

We have always liked the clip from the movie Animal House where in the “Deltas on Trial” scene the smooth talking Eric “Otter” Stratton get up and says, “Point of parliamentary procedure.” From there Otter goes on a diatribe ending with the comment, “Isn’t this an indictment of our entire American society?

Economists view the growth in labor productivity, or output per worker, as the single most important variable in an economy. It’s what lifts the standard of living, helps keep prices low, reduces government budget strains, and drives corporate profits. Over the next few decades, achieving faster productivity growth will be key as labor force growth slows. The outlook is encouraging, but uncertain.

As expected, nonfarm payrolls rebounded from hurricane-related effects. The unemployment rate edged lower, but that may have been noise. Leisure and hospitality was the sector most affected by Hurricane Irma, which might explain the choppiness in average hourly earnings (up 0.5% in September, flat in October).

So I am sittin’ on a dock of the bay here in Boca Raton Florida watchin’ the tide roll away as I wait to speak at a conference of insurance CEOs and CFOs. I have spoken at this annual event for the past 10 years, and it is always a “gas” because the attendees are terrific people.

We have used the aforementioned quote many times over our nearly 50 years in this business, but surprisingly, it is just as relevant now as it was when first written. Bet it surprised you that the quote is dated 1935! Read it a few times away from the maddening crowd and reflect on it, because certain phrases will grab you with their wisdom.

The economy grew at a 3.0% annual rate in the advance estimate for the third quarter, as the hurricanes appeared to have both positive and negative effects. The figures will be revised, but the story is unlikely to change much.

The Bureau of Economic Analysis will report its advance estimate of 3Q17 GDP growth on Friday. The figures will be revised, but investors should be aware that hurricane effects are likely to distort many of the GDP components.

Money is a vital life enhancer. If you have it, you can enjoy life incomparably more than if you don’t. The great storehouses of travel, leisure, rest, refinement, appearance, health, above all, peace of mind – all of these are open to you if you have money.

Beyond all the twists, turns, and quirks in the economic data reports, the overall picture appears largely the same. Growth remains on a moderate track, somewhat beyond a long-term sustainable rate (as the job market continues to tighten).

I first became aware of Frederick “Shad” Rowe, captain of Dallas-based Greenbrier Partners, by reading his brilliant comments in Forbes magazine decades ago. While Shade no longer writes for Forbes, his stock market insights are available via his monthly letter to the clients in his investment partnership.

Shakes off bad news and listens to good news! That’s how the past two weeks have been since the “melt up” began.

As expected, hurricanes Harvey and Irma had a significant impact on the nonfarm payroll data. However, it’s impossible to say exactly how much. The distorted September payroll figures were never going to be a factor in the Fed policy outlook. There will be two more employment reports before the mid-December policy meeting and we can expect a recovery from hurricane effects.

We recalled these sage words from GMO’s (Grantham, Mayo & Van Otterloo) Jeremy Grantham as we watched the end of the quarter performance gaming and portfolio restructuring late last week. His comments are particularly cogent now that we have entered the month of October, since many money management firms close their fiscal year “books” at the end of this month.

Investors don’t pay much attention to the monthly report in personal income and spending. We already have a good handle on income from the employment report. Unit auto sales and the retail sales data tell us a lot about consumer spending.

As expected, the Federal Open Market Committee left the federal funds target range unchanged (at 1.00-1.25%) after its September 19-20 policy meeting. The FOMC also announced the beginning of balance sheet reduction. The Fed had outlined how this would work in mid-June, and officials did a good job of telegraphing when it would start.

“Managing risk,” what a novel concept, but regrettably many investors fail to do just that. My father taught me to manage risk, a trait emphasized in the sentinel book by Benjamin Graham, The Intelligent Investor, which Warren Buffett has deemed, “The best book ever written on investing” and where the aforementioned quote resides.

Reflecting on the months of travel as we wing our way back to Tampa at 38,000 feet, one of the more interesting encounters in those travels was spending time with Steve Forbes (Forbes Magazine). Although Steve is a staunch Republican, he suggested that Republicans worship at the altar of the CBO (Congressional Budget Office). 

In her post-FOMC press conference, Federal Reserve Chair Janet Yellen is expected to provide a concise evaluation of the current economic situation. That includes a discussion about the recent trend in low inflation and the economic impact of hurricanes Harvey and Irma. She is not expected to signal what the Fed will do with short-term interest rates in the months ahead.

So, I am sitting here in downtown Saint Petersburg, Florida at 7:30 a.m. Sunday morning awaiting the “great flood.” It was just a few days ago the computer models had hurricane Irma heading up the east coast of Florida, but Irma changed her mind.

Summer is normally a pleasant time, but most Americans are likely to be happy to have August 2017 in the rear view mirror. Civil unrest, tensions abroad, devastation and destruction – yet, the stock market continues to improve. 

As many of you know, we have been on holiday in South Africa for the past three weeks. The trip began with a long plane ride to Cape Town where we were gathered up and taken to the five star rated Ellerman House (Ellerman).

I have written before how fantasy football is one of my favorite hobbies. For an analytical, data-obsessed sports fan like myself, it doesn’t really get any better than diving into statistics to try to draft a team of players that will beat my friends and win the trophy at the end of the season (and yes, we do have a real trophy).

The development of a personal trading or investing philosophy is usually an evolutionary and highly personal process. Through a combination of experience, trial-and-error, and the attainment of knowledge, successful market participants hone their skills until they find a strategy that works for them and that is consistent with their general mindset.

The exodus of CEO support following President Trump’s response to Charlottesville shook the foundations, but the stock market outlook has remained constructive. Every administration has its share of difficulties early on, many self-inflicted, before settling down.

The development of a personal trading or investing philosophy is usually an evolutionary and highly personal process. Through a combination of experience, trial-and-error, and the attainment of knowledge, successful market participants hone their skills until they find a strategy that works for them and that is consistent with their general mindset.

Right now, we don’t know if we can put this North Korea news in the same category of past market shocks, but looking back at history, major market collapses generally occur because of economic and financial deterioration, not geopolitics.

The July CPI data were a bit softer than anticipated, due partly to a drop in the price index for lodging away from home. Granted, if you exclude everything that went down, the CPI always looks higher, but the underlying trend is not far from the Fed’s earlier expectations (of a gradual move toward the 2% goal).

Ladies and gentlemen, investing is a lot like whaling. Investors are constantly searching for that whale of a stock with the “right stuff” . . . aka the “ambergris factor.” Indeed, there have been many such “whales” on the Street of Dreams since the Royal Bank of Scotland’s “sell everything” advice at the January/February of 2016 stock market lows.

There’s a fair amount of noise in the monthly employment data, but July figures remained consistent with expectations of moderately strong growth in the near term. One glaring weakness remained.

One hour after beginning a new job which involved moving a pile of bricks from the top of a two story house to the ground, a construction worker in Peterborough, Ontario suffered an accident which hospitalized him. He was instructed by his employer to fill out an accident report.

The advance GDP report for 2Q17 contained few surprises. Growth was largely in line with expectations, leaving growth for the first half of the year at a 1.9% annual rate. Recent reports suggest some loss of momentum for the consumer, but rising real wages ought to provide support.

Psychologists have uncovered a surprising number of idiosyncrasies from making the soundest choice in many situations. These lapses explain some of the mysterious up and downdrafts that can lift and lower stock prices. Understanding them can make successful investing easier. The most important findings arise from answers to a pair of questions.

Samuel Blodget was an early American merchant, amateur architect, and economist. He wrote Economica: A Statistical Manual for the United States, considered to be the first American book on economics.

Fed Chair Janet Yellen covered no new ground in her monetary policy testimony to Congress, but that didn’t stop financial market participants from trying. While the CPI report drew a closer focus, past inflation figures don’t tell us a lot about future inflation.

I am not quite sure how I met Leon Tuey, but meet him I did a few years ago, much to my benefit. My guess it was through either a mutual friend or a Canadian reporter that we both speak to.

The June Employment Report was about as much as stock market participants could have hoped for. Nonfarm payrolls rose more than expected, helping to offset fears that the economy is weakening.

We first published this in 2014, but decided to republish it today given the cover story of Barron’s that reads “The Machine Driven Market,” which intuitively means the era of those machine driven models is nigh. I like this story.

Recent economic data reports have helped to fill in the picture of the economy in the first half of the year. However, investors should be more concerned with the prospects for the second half of the year.

Heading into the second half of the year, there are a number of key policy uncertainties in Washington. For the Fed, a clear near-term picture is a contrast to the longer-term outlook where views of the market and the Fed have diverged.

“Active funds are now 71% overweight in the FANG companies after making the biggest move from value to growth since 2008.". . . Bank of America

The June 14 Fed policy decision was expected to overshadow the mid-month economic figures. Instead, the soft data reports contrasted with the relatively more upbeat central bank. Did the Fed make a mistake? Or are the financial markets placing too much emphasis on the short-term data?

Recently the word “they” has surfaced with the media; THEY are influencing elections, THEY colluded with the Russians, THEY are selling U.S. dollars, THEY are manipulating markets, THEY are buying bonds, and a week and a half ago THEY sold the tech stocks causing sort of a minicrash as whispers of a “bubble” careened down the canyons of Wall Street.

The market odds of a June 14 Fed rate hike have risen in recent weeks. Another 25-basis-point increase in short-term interest rates is seen as a near lock.

One of the good things about traveling is one gets the chance to read, think, and reflect on events that have taken place. To that point, while traveling last week I had the chance to read the transcript of ex-FBI director Comey’s testimony to the Senate intel committee.

Currently, we believe a trading high is due here with a subsequent 'hover' around the recent highs in the offing over the next few weeks. Following that, if correct, there should be another whole new leg to the upside.

In today’s Morning Tack, however, we are referring to “Better Call Shad,” not Saul, meaning Frederick “Shad” Rowe, the founder of Dallas-based Greenbrier Partners and also a “fixer of sticky situations.” The current short-term “sticky situation” would be the stock market flat-lining for a few weeks and in the process frustrating both bulls and bears alike. After our talk, I went back and re-read Shad’s April letter to shareholders. There were a few lines that really resonated with me.

On a craps table, if a 7 or 11 rolls on the first throw of the dice, you are an automatic winner if you are betting the “pass line.” But, if you roll a 2, 3, or 12 on the first roll, you lose.

Following the election, stock market participants gained optimism on the view that the new administration would push through a reduction in regulations, sharply boost infrastructure spending, and achieve broad tax reform.

Some inflation numbers were reported last week. They read: April PPI jumped 0.5% month/month, +2.5% year/year; +2.2% year/year was expected. Meanwhile, core PPI increased by 0.4% month/month, +1.9% year/year; +0.2% month/month and +1.6% year/year were expected.

Growth in nonfarm payrolls rebounded in April, following a soft increase in March, consistent with a longer-term downward trend. The unemployment rate fell to 4.4%, the lowest level in over a decade.

So Andrew and I received a plethora of emails wanting to know what we meant about “A Seinfeld Market,” which was the title of Friday’s “Morning Tack.” As disclosed in that report, the concept was not ours, but rather Dr. Ed Yardeni’s as scribed in his insightful blog.

I had the pleasure of listening to Pippa Malmgren speak last week at the Raymond James Financial Services National Conference. Philippa "Pippa" Malmgren, according to Wikipedia, is “an American policy analyst.

Real GDP rose at a 0.7% annual rate in the advance estimate for 1Q17, below the median forecast (+1.1%). Relatively speaking, that’s not a huge forecasting error. The headline growth figure will be revised and revised and revised over the next few months.

Years ago we read a book that a Wall Street pro told us would give us good judgement by benefitting from the experiences of others who had suffered hard hits.

Consumer spending accounts for 69% of Gross Domestic Product. Last week, the data on the household sector were mixed. The Conference Board’s Consumer Confidence Index surged to a 16-year high.

It’s a long-standing adage in Washington that the federal debt is a problem only when the other party is in charge. Republicans label Democrats as the party of “tax and spend,” while Republicans are deemed the party of “borrow and spend.”

Back in 1983 I was enthralled with the movie “War Games.”

Nonfarm payrolls were reported to have risen by “just” 98,000 in March, while the unemployment rate fell to its lowest level (4.5%) since May 2007. The March 14-15 FOMC minutes “revealed” that officials plan to begin reducing the size of the Fed’s balance sheet later this year.

I spoke with uber investor Frederick “Shad” Rowe, captain of Dallas-based Greenbrier Partners, last Thursday. Shad always has great investment insights, and his March letter to investors was no exception.

Consumer spending accounts for 69% of Gross Domestic Product. Last week, the data on the household sector were mixed. The Conference Board’s Consumer Confidence Index surged to a 16-year high.

I lived in and around the D.C. Beltway for years, and still have a good network on Capitol Hill. I have been thinking a lot about Ms. Duncan’s comments concerning people in D.C. easily being able to relate to fantasy given the current “fantasies” swirling around the “Beltway” since the presidential election.

Upcoming data reports will help to fill in the near-term picture of the economy, while developments in Washington will lead to a reassessment of the intermediate outlook.

“Pull” comes from an era long gone by when they actually had real birds in cages and the shooter would say “pull” to have the cage cord pulled and release the bird. The term “pull,” however, took on a whole new meaning last Friday when Speaker Ryan “pulled” the Republican healthcare bill (H.R. 1628) from consideration.

I spent last week climbing the mountains of Idaho and Utah, seeing accounts and doing presentations for our financial advisors and their clients. In my absence, the stock market did some climbing of its own...

The Fed’s outlook on the economy hasn’t changed much since December. In turn, policy expectations are largely the same as well. Officials are comfortable enough in their outlooks to continue gradually normalizing monetary policy, but they don’t see enough pressure to move more rapidly.

Prior to seasonal adjustment, the U.S. economy added more than a million jobs in February (unadjusted payrolls rose by 831,000 in February 2016 and by 832,000 in February 2015).

I was a mere “pup” in this business when my father would tell me, “Son, if you think the market is going up be bullish. If you think it’s going down be bearish, but for gosh sakes make a call. And when you make a ‘call’ you are going to be wrong at times.

The majority of U.S. economic data are based on statistical samples and the various figures are typically adjusted for seasonal variation. That means that the numbers are subject to some level of uncertainty.

Around the turn of the century a bandit rode in from Mexico, robbed a small Texas bank, and fled back across the border. A Texas Ranger picked up his trail and nabbed him in a Mexican village. The bandit spoke no English and the ranger no Spanish, so another villager was asked to interpret.

The majority of U.S. economic data are based on statistical samples and the various figures are typically adjusted for seasonal variation. That means that the numbers are subject to some level of uncertainty.

Jesse Livermore was one of the legendary icons of Wall Street speculation. Known as the “boy plunger,” because he began trading at the tender age of 14, he was subsequently banned from many “bucket shops” for winning too often. Therefore, he moved to New York City to swing in the big leagues.

President Trump is expected to announce a revised tax cut plan soon. In the meantime, it’s worth revisiting how the sausage gets made in Washington. By law, tax code changes must originate in the House of Representatives, and the Senate will have its say.

Something similar to this “new queen bee” story is happening now. The “old queen” has been the Federal Reserve and monetary policy. The “new queen” appears to be the White House and fiscal policy.

Fed Chair Janet Yellen will present her monetary policy testimony to Congress on Tuesday and Wednesday. We may not learn much new regarding the pace of future rate increases (which will remain data-dependent) and she’s certain to avoid getting into any discussion of fiscal policy.

“Unseasonably mild and clearing,” was the weather forecast going into the Ides of March back in the year of 1888. And it was true, as temperatures hovered in the 40s and 50s along the East Coast. However, torrential rains began falling...

“You have enemies? Good. That means you've stood up for something, sometime in your life.” . . . Winston Churchill

January economic data are relatively unreliable, but recent figures paint a fairly consistent picture of where we are headed in the near term. While there is reason to be optimistic, it’s still a mixed bag, with some concerns about what we’ll see coming out of Washington over the next several months.

Real GDP rose at a 1.9% annual rate in the initial estimate for 4Q16, with the headline growth figure held down by a wider trade deficit. That does not mean that foreign trade is a drag on the U.S. economy.

As most of you know, I was in Europe for 19 days seeing institutional accounts and speaking at conferences. However, the last few days of the trip were spent with our new institutional affiliate Oscar Gruss & Son in Israel, where Avi Avital and Ronen Cohen met me at Ben Gurion Airport along with Bena Mantel.

It goes without saying that there is a sharp contrast between the economic views of the incoming administration and those of the Federal Reserve. President Trump, and most of the individuals who voted for him, sees a weak economy, devastated by job losses in manufacturing. The Federal Reserve sees an economy nearing full employment. So who’s correct?

We have often written that when everyone is asking the same question, it is usually the wrong question. However, I have also found the converse to be quite true – if no one is asking a question, it is probably one that you want to at least ask yourself just in case.

Since the November election, the financial markets have priced in a more friendly business environment, with growth boosted by expansionary fiscal policy. However, the White House does not have absolute power.

By now, you have likely heard something, either directly or indirectly, about “The Great Rotation” from bonds into stocks.

The December Employment Report showed the job market to be in good shape. The pace of job growth slowed in 2016, partly reflecting tighter labor market conditions.

We live in a modern world of acronyms and buzzwords, and the financial industry is certainly no exception. In fact, it may be one of the worst culprits, what with FANG, ZIRP, TINA, BREXIT, QUITALY, BRIC, etc. all entering the lexicon over the last few years.

“It’s what you learn after you know it all that counts.” - Earl Weaver

As we enter 2017, we expect the current economic rebound to continue suggesting GDP growth will likely move toward the 3% level by the end of the year based on less monetary stimulus, more fiscal stimulus, a reduction in the corporate tax rate, and deregulation.

“Miracle on 34th Street” is a 1947 movie whose plot takes place between Thanksgiving Day and Christmas in New York City. It focuses on a department store Santa Claus who claims to be the real Santa.

The outlook for 2017 is now shaping up as a battle of ideas, though few seem to be realizing it yet. The stock market has risen since the election.

The absolute price of a stock is unimportant. It is the direction of price movement which counts.

Federal Reserve policymakers are widely expected to raise short-term interest rates this week. The policy statement should continue to suggest that, while the pace of tightening is expected to be gradual, action will remain data-dependent.

The November job market report was a mixed bag. Nonfarm payrolls were in line with expectations, continuing to reflect a more moderate pace of job growth in 2016 (although still relatively strong).

One of the funnier shows in the Seinfeld comedy series was “Serenity Now.” The show centered on that phrase (serenity now) as George’s father, Frank Costanza, repeats the phase numerous times every time he gets upset.

Around the turn of the century a bandit rode in from Mexico, robbed a small Texas bank, and fled back across the border. A Texas Ranger picked up his trail and nabbed him in a Mexican village. The bandit spoke no English and the ranger no Spanish, so another villager was asked to interpret.

In honor of the Thanksgiving holiday this week, I thought I’d reshare the fabled Wall Street tale about a character named “old Turkey” from the 1923 classic Reminiscences of a Stock Operator.

Following the surprising election of Donald Trump and the news that Republicans had held on to the House and Senate, the stock market rallied.

So, last week was interesting, huh? If nothing else, it was definitely a far cry from two or three months ago when investors could check in on the markets only every few days and not really miss much of anything.

The ultimate dream of market mavens is discovering a method that predicts the price movement of the major common stocks such as the 30 Dow Jones Industrials.

The October job market data were not far from expectations, consistent with a further tightening in labor market conditions.

Many shrewd investors who were nervous about overvalued shares had lost out before by selling too early and were coming back into the market.

The U.S. economy is complex. Most people want to sum it up in one simple number: real GDP growth.

Recent data reports have added little color to the economic outlook, but that may change soon enough. The advance GDP report should show the economy advancing at a moderate pace, but results are likely to remain mixed across sectors.

There was the king who held a chess tournament among the peasants and asked the winner what he wanted as his prize.

The analogy between the stock market and poker has always been irresistible. Interestingly, the stock market increasingly resembles a low-stakes recreational game among friends and less the sort of ‘there goes the ranch’ game favored by cutthroat professionals.

Nonfarm payrolls rose at a moderately strong pace in the initial estimate for September, a bit less than expected, but well within the usual range of uncertainty.

I knew that I had to adopt a cold, unemotional attitude towards stocks; that I must not fall in love with them when they rose and I must not get angry when they fell; that there are no such animals as good or bad stocks.

One of the rarest traits on Wall Street is patience, yet patience is one of the biggest secrets of successful investing.

Investors place far too much emphasis on the GDP figures. However, digging into the components suggests a less optimistic (not pessimistic) outlook for growth in the near term.