Article Category: Gold

Jobs Up, Stocks Down

A stronger than expected monthly jobs report is causing markets to sell off. At face value this may seem counterintuitive, but there are many moving pieces to this puzzle. Here is what job growth looks like based on the Bureau of Labor Statistics. Last month 290,000 jobs were created, extending a long stretch of hiring. Every sector of the economy added jobs with the exception of mining.

Naturally, one would assume that continued robust jobs growth signals a green light to own stocks. After all, if corporations are hiring it means demand is strong, and more people working means more spending, higher corporate earnings, higher GDP, and the need for more workers. We've seen this virtuous feedback circle take corporate profits and stock prices to all time highs.

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Posted in: Economy Federal Reserve Gold Inflation Momentum Volatility

The Tides are Changing

It's amazing how the tone of the markets can change so quickly. January started out on a negative note as volatility persisted and major indexes declined. The precipitous fall in oil was showing no signs of abating, ramifications of another Greek crisis were being factored in, and Europe appeared fated to endure yet another recession. Investors were piling into defensive sectors of the market, buying up Treasuries like they were on a Black Friday sale, and diving head first into the most precious of the precious metals.

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Posted in: Bonds Earnings Economy Gold Oil Volatility

An Encouraging Week

Encouraging developments drove stocks higher this week. Let's start with oil, which, at least for the moment, is showing signs of stability. Earlier this week, reports of rig counts declining and oil producers scaling back production triggered what initially appeared to be a short-covering rally. Many investors wrote this off as a dead cat bounce, but the bounce has held its ground.

When oil prices are falling with no end in sight, it triggers feelings of hopelessness among money managers. Oil prices have long been seen as a barometer for global demand, and regardless of the true causes for oil's decline, many can't help but be apprehensive. Stabilization of prices provides a light at the end of the tunnel, a feeling that perhaps all is not lost.

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Posted in: Economy Gold Inflation Oil

The Importance of Owning Stocks

It's often touted that gold is a great, perhaps the best hedge against inflation. I'm not sure why this belief is so widespread among precious metal enthusiasts, but a quick look at the chart below, courtesy of Jeremy Siegel, Professor at the University of Pennsylvania and Senior Investment Strategy Advisor to Wisdom Tree Investments, should help put things in perspective.

This is a long-term chart looking back more than 200 years at the real, inflation adjusted returns of major asset classes.

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Posted in: Bonds Gold Inflation Volatility

Matt’s Market Insights

There are various frameworks through which the business cycle can be analyzed and interpreted. The chart below is based on Sam Stovall's book, S&P's Guide to Sector Rotation. Stovall is the Managing Director, US Equity Strategy of S&P Capital IQ's Global Markets Intelligence Group. He is also Chairman of the S&P Investment Policy Committee.

None of the information below is groundbreaking, but this graphic does a good job of conveying a few key concepts with regard to longer-term investing. As we all know from experience, the economy moves in cycles. There are boom periods and bust periods which occur with regularity. During the various phases of that cycle, different sectors tend to over and underperform.

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Posted in: Federal Reserve Gold Interest Rates Momentum Oil

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