Diversification is a core principle of investing intended to spread risk of loss by investing in numerous asset classes instead of one or two, like stocks and bonds. Investment managers look at a statistic called “correlations” to gauge the extent to which asset prices move together in the financial markets. The basic idea is to … Read more
Today’s market environment is rife with uncertainties about the economy. Economists describe it as a “K-shaped” economy— divided prosperity with strong high-end and languishing low end consumer spending. The truth is the current monetary system was built upon continuous 2% inflation and perpetual monetary expansion. Over the years it has bankrolled wealth division by favoring … Read more
Analysts of every persuasion are predicting a Great Reset due to the world’s enormous debt levels, the imbalances in international trade and the extreme skew in wealth held by the top 5% versus the bottom 95% of people. The inevitability of a new monetary regime is close to 100% because the Global South, led by … Read more
The spectrum of economic forecasts for the economy and financial markets ranges from robust to bust. Most of the differences of agreement pivot on whether Trump’s polices will bring growth or put us into recession. The facts, so far, appear to be that the economy continues to look resilient with inflation falling, unemployment holding steady, … Read more
We are in a Market Correction triggered by Tariffs on countries having export trade surpluses with the US. The formula used by the Trump administration was a surprise because it targets every country looking at their ratio of Imports to Exports. China was hit with an additional 34% tariff and immediately retaliated imposing reciprocal 34% … Read more
Surveying the range of analyst’s forecasts for the stock market in 2025, there are two camps: those who see a market bubble and expect the market to fall 70% and those who see Artificial Intelligence fomenting a new industrial revolution forecasting higher S&P500 returns. Both forecasts are anchored on convincing arguments. The World Economy. Most … Read more
The world is cutting interest rates to stimulate their economies and thwart a recession. This reversal from high interest rates is good for stocks but because they are at all-time highs exceeding P/E levels of 2000 and 2008, vigilance and caution is prudent and necessary despite prices likely to go higher. There are two wars … Read more
The financial Markets are reacting to geopolitical events not to an impending hard landing for the US economy. The events distressing the markets are Japan’s recent interest rate hike, a 35-year reversal of their monetary policy to keep interest near zero. Higher Japanese interest rates increase the value of Yen and cause the unwinding of … Read more
US economic news has been impressive, causing the stock market to make historical, new highs led by the Towering 10—Apple, Amazon, Eli Lilly, Google, Meta, Microsoft, Netflix, Novo-Nordisk, Nvidia, and Tesla. Price Earnings (P/Es) ratios are generally supported by 2024 earnings expectations and AI is expected to bring a tidal wave of productivity improvements. All … Read more
Since the Fed’s announcement last week to pause interest rate hikes for a third time, the stock and bond markets have started a broad rally. This is a welcome sign because for most of this year, the breadth of the market has been extremely narrow and the Treasury Yield Curve has been inverted indicating potential … Read more