Article Category: Inflation

QT (Quantitative Tightening) on Deck this Week

The Federal Reserve is set to meet later this week, with the latest FOMC announcement coming on Wednesday. While no change is expected in rates, investors are expecting to learn more details about the Fed's plan to wind down their balance sheet.

Part of the reason no rate hike is expected is that inflation has been weak as of late. The chart below shows both headline and core (excluding food and energy) inflation, and as you can see, the recent trend has been toward disinflation.

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Posted in: Bonds Economy Federal Reserve Inflation Interest Rates

Where Did TINA Go?

A few years ago, TINA was everywhere ... she was the life of the party. Whenever people wondered why stocks kept rising, she'd show up and people would scream, TINA!

But I haven't heard anyone mention her recently ... did she take off? Or did she drink so much from the punch bowl that she's passed out, sleeping somewhere?

Of course I'm talking about TINA the acronym, not Tina your old drinking buddy. As in, There Is No Alternative ... to stocks.

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Posted in: Bonds Earnings Economy Inflation Interest Rates Volatility

Technical Damage

Most averages are creeping higher today, but the last couple of weeks of volatile price action has caused some significant damage to the charts. In particular, there are concerns developing in the S&P, the small-caps and the Transports.

Let's begin with the S&P.

Below you can see a daily chart of the S&P 500 showing the development of a possible head and shoulders top. The left shoulder and head have been completed, with this latest downswing taking prices back to the neckline, near 2420. The index has also fallen below its 50-day moving average, which is starting to roll over.

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Posted in: Dollar Earnings Inflation

It Doesn’t Pay to be a Pessimist

Sound familiar?

For many of us, myself included, the desire to become a sophisticated and successful investor quickly leads into the world of economics and geopolitics. As we learn more about the world around us, it becomes evident just how many dangers lurk around each corner, threatening to shock the global economy and extinguish massive amounts of wealth.

In some cases, the naïve investor who doesn't pay attention to any of this is actually better off than those of us who do. That's because the more you learn about the precarious state of global economies, the more reluctant you become to invest.

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Posted in: Bonds Dividends Dollar Federal Reserve Gold Inflation

Short-Term Expectations vs. Long-Term Realities

Equity prices around the world have been hitting new highs recently, as the global bull market continues to push higher. But considering that stock prices track economic fundamentals over the long-run, and global economic growth remains modest at best, how much higher are prices likely to go?

Those who have had the benefit of studying markets for some time know that asset prices tend to be volatile in the short-term, as they are driven primarily by investor psychology. But take a step back, and it becomes evident that over the long run asset prices are heavily constrained by economic growth ... if the whole pie doesn't grow larger, then companies are really just fighting each other for market share.

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Posted in: Economy Inflation Interest Rates Psychology Volatility

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