Recession

  • 14 Oct
    BREXIT Is Slowly Unraveling, Don’t Get Caught Up In It

    BREXIT Is Slowly Unraveling, Don’t Get Caught Up In It

    • The pound didn’t just fall last week, it has been falling for two years.
    • As the UK imports 50% more than it exports, inflation is on the table for certain along with a high risk of stagflation.
    • We’ll analyze the potential risks and rewards for in the UK and the pound.

    The British Pound

    You probably know that the UK voted to leave the European Union back in June in a move called BREXIT. The UK government hasn’t yet started the procedure of leaving, so there haven’t yet been direct effects on markets, the economy, and jobs, but something investors don’t like is uncertainty. More →

  • 04 Oct
    Market Clues From The Short Term Credit Cycle

    Market Clues From The Short Term Credit Cycle

    • Comparing the current credit cycle with the last two may tell us exactly how close we are to a recession.
    • As productivity growth is slowing down, credit is the only thing keeping the economy up.

    Introduction 

    How often do you think of what happened during the Great Recession?

    Exactly 9 years ago, the S&P 500 was around 1500 points and everything seemed fine, and headlines looked like this: More →

  • 29 Sep
    What Do Investments, Yields & Buybacks Tell Us?

    What Do Investments, Yields & Buybacks Tell Us?

    • The 10-year and 2-year treasury yield spread is getting smaller.
    • Investments peaked last year.
    • The market is standing on legs of hope coming from positive expectations. What are you standing on?

    Introduction

    We will take a look at yields, investments, buybacks and valuations, and look for trends that might trigger a bear market. More →

  • 27 Sep
    Should You Worry About What’s Happening With Deutsche Bank?

    Should You Worry About What’s Happening With Deutsche Bank?

    • European stocks pushed global markets down after the German Chancellor said they will not help Deutsche Bank if it fails.
    • Europe still offers too much risk for the expected return.
    • In this article we’ll share two critical things you have to think about in order to weather all possible storms.

    Introduction

    After a long and quiet summer, stocks are showing increased volatility. Last week’s FED decision not to increase interest rates has quickly been forgotten as markets try to digest news from Europe where increased fears over capital requirements for Deutsche Bank, which sent European markets down on Monday.

    In this article, we’ll assess the depth of the issue and look for the real reasons behind the European 2% market move on Monday morning. More →

  • 22 Aug
    The Important Insights From The FOMC Minutes No One Is Talking About

    The Important Insights From The FOMC Minutes No One Is Talking About

    • The FED’s “protect the market at all costs” attitude minimizes the risk of a severe bear market but increases the risk for an inflationary environment.
    • Trade deficits and low productivity are not good signs for the long-term, no matter the positive data from the labor market.
    • Until the focus shifts from central banks to real structural reforms, sluggish GDP growth could easily turn into a recession.

    Introduction

    There are more important insights that can be gained by going through the FOMC minutes than by just reading the news about an eventual interest rate increase. An interest rate increase of 0.5% won’t change much. It will give the news something to talk about for two weeks and from then onwards it will be business as usual. Structural risks and what the FED is ready to do or not do in the case of turmoil is what will determine our investing returns. More →

  • 02 Aug
    Euphoria & Denial Point to the Last Days of the Bull Market

    Euphoria & Denial Point to the Last Days of the Bull Market

    • Risks are cumulating and getting bigger.
    • U.S. GDP growth is slower than expected, earnings and oil prices continue to decline.
    • Japan is unable to grow while BREXIT risks are still unfolding.

    Introduction

    It is difficult to find good news lately. The last really good news was the June jobs report when 287,000 jobs were added. Since then, most of the news seems dismal, however, it has yet to have a negative impact on financial markets. It’s as though investors are just hoping for something good to happen in the future. As hopes are an immaterial human feeling, they should not be the base for investment decisions. More →

  • 12 Jul
    Could the Economic Climate in Europe Be Contagious?

    Could the Economic Climate in Europe Be Contagious?

    • The first hard data after the BREXIT won’t be available until October, but property funds are already frozen.
    • The decline of the pound will lower UK GDP and will spill over into Europe.
    • Italian banks are in trouble as 25% of GDP are nonperforming loans.

    Introduction

    As two weeks have passed since the BREXIT debacle, most heads have cooled off and we can calmly look at the current situation in Europe, the repercussions of BREXIT and contagion risks. It is important to analyze the full potential impact of the BREXIT by analyzing the stability of the European financial system, business investments, hiring and the political risk premium. More →

  • 08 Jul
    Prepare for Earnings Season: Prices, BREXIT, GDP & Trends

    Prepare for Earnings Season: Prices, BREXIT, GDP & Trends

    • This article provides a list of companies whose earnings will be affected by the BREXIT.
    • The dollar is stable thus we should not expect strong global currency effects.
    • The probability of U.S. recession has hit an 8-year high which should be detrimental for earnings in the next two years.

    Introduction

    In the long term, stock returns are perfectly correlated with the underlying earnings and therefore the upcoming Q2 2016 earnings season is very important. Positive earnings could push the markets to new highs while bad news could indicate the start of a recession or bear market. More →

  • 07 Jul
    Major Indicators Are All Positive, But Is It Time To Get Fearful?

    Major Indicators Are All Positive, But Is It Time To Get Fearful?

    • Economic data is strong and positive.
    • Neither jobless claims nor consumer spending show signs of weakness.
    • The issues remain in valuations, optimism and low yields.

    Introduction

    In the post-BREXIT world, there is a lot of speculation but no one knows what will happen. This article is going to provide a general outlook on how the economy is doing and try to extrapolate trends while ignoring the noise provided by the media. More →

  • 24 Jun
    How to Prepare Your Portfolio For The Next Recession or Stock Market Crash

    How to Prepare Your Portfolio For The Next Recession or Stock Market Crash

    • The risks of a slowdown are higher than the upside.
    • Fundamental trends are negative in advanced economies while emerging markets show higher growth rates and are cheaper.
    • It is important to create a diversified portfolio with uncorrelated assets.

    Introduction

    In an environment where it seems maximum potential for the U.S. economy has been reached, the St. Louis FED chief, James Bullard, has said in his most recent report that he favors only one interest rate increase through 2018, which would at best keep things stable. His view is further supported by the fact that the unemployment rate is sitting at below 5%, and the Personal Consumption Expenditures PCE inflation—measured by the Dallas FED—is at 1.84%, both of which signal that the economy has reached its maximum potential. More →

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