Relative rotation entails shifting among stocks, sectors, and stock factors. The strategy adds significant value to portfolio management if done well.
Central bank digital currencies (CBDCs) are the next step in financial innovation. The government will do what it deems in its best interests. CBDCs will replace physical currency; it's just a question of when.
The Fed failed to recognize the danger of its loose monetary policy in 2021. We are seeing its pernicious effect, as the money supply and velocity combined to inflict non-transitory inflation.
Long-term Treasury bonds are an excellent investment. But timing the purchase of bonds is difficult because three headwinds are keeping rates higher.
With the Fed purposely trying to slow economic growth and a banking crisis in full swing, do the heightened risks argue for accepting the current bond yields and reducing equity exposure?
Bank stocks have underperformed conservative sectors and the broader S&P 500. Despite the broad risks, there are good banks that can be investment worthy.
Four reasons, the rule of law, liquid financial markets, and economic and military might, all but guarantee the death of the dollar will not occur anytime soon.
There are four critical reasons why the dollar will not lose its global reserve status anytime soon.
I get many inquiries from bond investors on whether they should buy bills, notes, or bonds based solely on expected Fed policy.
Stock investors wishing for the Federal Reserve to pivot should rethink their logic and review the charts below.
Lower interest rates and more liquidity are the keys to boosting confidence in the financial sector, but they impede the Fed's ability to fight inflation.
The banking earthquake is sending shockwaves through the financial markets. The financial and economic aftershocks, soon to follow, are underappreciated and will prove worse than the earthquake.
Having raised rates by over 4% over a short period and in a very leveraged economy, the Fed no longer has the big stick it used to have. Therefore, speaking loudly with hawkish rhetoric and narrative must become a priority.
Maybe UFOs are carrying wealthy aliens wanting to buy a lot of stuff and boost our economy. More likely, those forecasting a no landing have a false sense of optimism that the economy will continue to be resilient.
Gold investors are betting the Fed will continue to be negligent with its monetary policy.
History tells us it's a matter of when and not if tighter monetary will send the economy into a recession.
Suppose recession warnings, such as the yield curve and manufacturing surveys, prove prescient, as they reliably have. In that case, this will be a rough year for the Goldilocks soft-landing believers.
A trading tool like portfolio insurance is poised to trigger a stunning display of market instability.
Successful investment management can be Impaired by perverse incentives, which are what now plagues value funds.
You read that right. The Fed wants lower stock prices.
Let's examine the three paths the Fed might take in 2023 and what they mean for stock prices.
Extremely harsh weather conditions from winter storm Elliot resulted in thousands of flight cancellations last weekend.
The Fed’s repeated manipulation of the price of capital has weakened productivity growth and reduced economic activity. Ultimately it is the citizens that pay the price.
Capital represents the resources and labor used to produce goods and services.
The key takeaway from Wednesday’s FOMC meeting: despite encouraging inflation news, the Fed believes they have a long inflation fight ahead.
The financial foghorn is blowing. Historical odds greatly favor a recession, stock market drawdown, and a much lower Fed funds rate.
Equity investors are not being adequately compensated for the economic, geopolitical and financial risks they are bearing. The equity risk premium is too small.
Whether foreign nations want or need tightening or easing, they are stuck with the monetary policy that the Fed decides America needs.
To foresee what crisis might be next, it is vital to understand the dollar's role in global finance and economics and the resulting role that the Fed plays in influencing global monetary policy.
About 90% of this year’s S&P 500 loss was attributable to higher interest rates.
Bond yields may keep rising, but a significant driver of yields is done selling.
I look back to other periods when bonds outperformed stocks. This analysis allows us to assess specific stock traits and specific industries that over- and underperformed in those eras.
With Treasury yields around 4% and corporate bonds yields even higher, fixed income is the better alternative to stocks.
If one is watching CNBC to figure out where markets are headed, they will be better served looking to the bond market for direction.
In the long run, stock prices and returns are anchored by the cash flows that companies provide investors. If profits grow slower than expected, stock return projections must be recalibrated.
The leading tail-risk potential is the increased odds that high inflation remains stubborn, and the Fed continues to fight those odds aggressively.
When the supply and demand for bonds normalize, bond investors will realize that economic, inflation and other factors warrant much lower yields.
I explore consumer staple and discretionary companies to see how they are navigating the inflation storm.
This article considers a change in behavior that would generate a price-wage spiral.
The S&P 500 could be close to 3,500 by year-end if the Fed follows through with its QT plans.
Stocks are rallying on hopes the Fed will stop increasing interest rates this fall, pivot, and start reducing them next year. Investors are blindly buying into this pivot narrative.
Given the Fed's enormous impact on markets and its extremely hawkish stance due to inflation, a well-reasoned inflation forecast is imperative for investors.
The market’s inflation concerns are taking a back seat to recession fears.
Valuations help investors gauge the downside risk and upside potential in a stock or market. At the same time, assessing liquidity conditions, including technical analysis, defining short term trends help with investment timing and asset selection.
While the situations in the U.S., Europe, and Japan are different, all three are paying the price for years of fiscal and monetary tomfoolery. Using monetary policy to ensure low-interest rates encouraged unproductive debt growth. As liabilities grew faster than GDP, their ability to service debt became harder without continually having to administer lower interest rates and more QE.
The trolley car problem is a well-known ethical question that forces one to choose between two poor consequences. For the Fed, it is whether to allow inflation to fester or to force the economy into a recession.
Given the Fed's hawkish monetary policy agenda and its effect on asset prices, I thought it might be helpful to share my thoughts on Fed-based trend analysis.
Recent experience shows that a third mandate – preventing financial instability – trumps the Fed’s two congressional mandates of full employment and low inflation.
Will the plight of consumers drag GDP lower in the second quarter, resulting in a recession?
The tale of Bear Stearns’ rally and investors' myopic vision in the spring of 2008 is a valuable lesson for today.