Janet Yellen

  • 24 Jul
    It’s Feeling A Lot Like 2007 – Are You Prepared For The Next Crash?

    It’s Feeling A Lot Like 2007 – Are You Prepared For The Next Crash?

    • There’s nothing to worry about. Everything looks exactly the same as it did in July 2007 when no one was worried because the S&P 500 was breaking new highs.
    • Even the statements from the FED’s 2007 chair and the chair of it today look alike.
    • This doesn’t mean there will be a crisis in 2018, but it sure means you have to be prepared for anything.

    Introduction

    Last week I published an article describing how strong the trend is that is pushing the S&P 500 higher. There is plenty of liquidity, corporations are doing big buybacks, and most investors are putting their money into passively managed investment vehicles. More →

  • 21 Apr
    Are We Already In A New Bear Market?

    Are We Already In A New Bear Market?

    • The biggest investor of them all just said that he will start cashing out. Hopefully, this won’t lead to a bear market, but it will certainly put the brakes on further growth.
    • Economic signals are mixed, the outlook is uncertain and as much as the low unemployment rate is positive, historically, that isn’t a good sign for the future.
    • As always, we’ll discuss what to do in this environment.

    Introduction

    It seems that the S&P 500 peaked on March 1, 2017. More →

  • 08 Mar
    Inflation Has Arrived – Here’s What That Could Mean For Markets

    Inflation Has Arrived – Here’s What That Could Mean For Markets

    • After 7 years of enjoying interest rates close to zero, the party is over.
    • There are several scenarios that can develop, but the long-term outcome is clear.
    • In the short term, higher interest rates should increase demand for the dollar and U.S. assets, so we could see a higher S&P 500 in combination with higher interest rates.

    Introduction

    For the past year I have been writing about how things are bound to change when inflation finally arrives. Well, inflation has arrived and it’s quickly going higher which means that we’ll have to start talking in nominal and real returns, the FED will be forced to take action no matter the economic environment, and it will have significant repercussions on the economy and markets.

    Usually when I’ve written about inflation, it was about something that will happen somewhere in the future. Now that inflation is finally here, I’ll discuss what will happen in the short term. More →

  • 28 Nov
    The FED Being Hesitant Isn’t Good News…

    The FED Being Hesitant Isn’t Good News…

    • The FED is telling us stressful times are on their way, why not position yourself in a win-win situation?
    • We’ll summarize the good, neutral, and bad news.
    • The reason why the FED is hesitant in raising rates is of global concern.

    Introduction

    In our article on Friday, we discussed how important interest rates are for the stock market as higher interest rates pull stocks down while lower interest rates push stocks higher because people have lower required return rates. More →

  • 22 Nov
    Things Are Finally Changing – Are You Ready To Seize The Opportunities?

    Things Are Finally Changing – Are You Ready To Seize The Opportunities?

    • Economic growth has been fueled by credit in the last 30 years with increasingly lower interest rates.
    • A reversal is inevitable and will lower consumption and investments as credit tightens.
    • A 100-basis point increase in corporate debt costs would lower S&P 500 pretax earnings by 6.3%.

    Introduction

    In her latest speech, FED Chair Janet Yellen clearly stated that she expects global economic growth to firm up, supported by accommodative monetary policies abroad, U.S. inflation to reach the targeted 2% level, and the FED to raise interest rates relatively soon.

    After seven years of low interest rates and low inflation, the impact of the above mentioned changes has to be assessed very carefully as there is no recent historical precedent. More →

  • 06 Sep
    Headlines Are Telling Us To Worry, But Is It Time For Greed Instead?

    Headlines Are Telling Us To Worry, But Is It Time For Greed Instead?

    • Jobs look great, more people than ever are employed and the number is consistently growing.
    • There is nothing to worry about with China as it has room to grow and incredible potential.
    • Economic scares based on short term news provide great investing opportunities; the macro trends are what you should worry about.

    Introduction

    As investors it’s important to know what’s going on in the economy, but what has to be clearly differentiated are single data points and trends.

    We are constantly bombarded with pieces of information that can mean anything. Last Friday’s jobs report—with 151,000 new jobs—was below the 180,000 expectation of analysts. Headlines like the Wall Street Journal’s “Soft Jobs Data Cools Market Expectations on Fed Rate Increase” were seen on every news site, but such data seldom has an actual influence on your returns. More →

  • 31 Aug
    Where To Look For Hope In Yellen’s Latest Speech

    Where To Look For Hope In Yellen’s Latest Speech

    • The FED is predicting long-term average interest rates of around 3%, not the 7% that used to be the case.
    • Even small increases in interest rates will have a huge effect on yielding assets’ values.
    • Even Yellen it telling us that productivity is the main factor for growth, so add it to your portfolio.

    Introduction

    There are two main drivers of what can be done to improve the economy. One is new inventions and structural reforms that increase productivity, while the other is monetary policy. As the former takes time to get results, we mostly talk about the latter. We can assume that increased knowledge and structural reforms take care of themselves. Companies are always investing in new technologies, and governments, no matter what kind, slowly push for social and political improvements. The results can only be seen if we look at it in the long term. The quality of our lives is much better now than it was 20 years ago and 20 years from now will be even better. More →