US Economy

  • 23 Aug
    Are You An Investing Optimist? Check Your Portfolio

    Are You An Investing Optimist? Check Your Portfolio

    • Investors are very optimistic in bull markets and allocate much of their portfolio to stocks, increasing their risk.
    • Analysts and economists expect more spending which will consequently push GDP and inflation up, but low rates push people to save more for their retirement.
    • If the GDP and earnings don’t grow as expected, we could see a bear market in 2017.

    Introduction

    Stock markets keep going up while fundamentals keep going down and the economic situation isn’t that great either. The S&P 500 is dancing around new highs despite corporate earnings for Q2 falling by 3.6%, and the economy only growing by 1.2% on an annualized basis. Economic growth for the whole of 2016 is only at 1%. More →

  • 19 Aug
    The U.S. Dollar: Should You Stick To It Or Diversify Now?

    The U.S. Dollar: Should You Stick To It Or Diversify Now?

    • The dollar has been positively correlated with stocks for the last 4 years which is unusual.
    • Potential FED interest rate increases don’t make international diversification a great idea right now.
    • Any sign of a U.S. recession should be a good time to think about international diversification with emerging markets.

    Introduction

    On big news sites like Bloomberg you often come across headlines related to the movement of the U.S. dollar. The headline below is a good example. More →

  • 08 Aug
    Signs of Fragility in the Economy Point to an Impending Bear Market. What To Do Now To Protect Yourself.

    Signs of Fragility in the Economy Point to an Impending Bear Market. What To Do Now To Protect Yourself.

    • The last jobs report was good news but it also indicates higher costs and full employment.
    • An “easy to hire, easy to fire” mentality is in the air.
    • Healthcare, cash or short term trades should be the best options in this situation.

    Introduction

    Last week the Nasdaq and S&P 500 reached yet another record high. Aggressive central bank stimulation pushes investors to disregard risks and look for any kind of yield or growth. Not looking at risk is the worst thing an investor can do, but they also shouldn’t fight the trend. More →

  • 05 Aug
    Where The Risks Are: It’s Not Where You Might Think…

    Where The Risks Are: It’s Not Where You Might Think…

    • Car sales are in a downtrend and PMI is falling, which ties the FED’s hands.
    • Japan has just entered into direct economic stimulus with $273 billion.
    • The Bank of England behaves like the economy is in a depression, cutting rates and printing money.

    Introduction

    Yesterday we discussed how China isn’t as big of a risk as many would like to make it out to be. Today, we are going to go through the latest data from the U.S., Japan and Europe in order to assess their riskiness. 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 →

  • 26 Jul
    The Economic News is Very Good, But Keep An Eye On the FED and GDP This Week

    The Economic News is Very Good, But Keep An Eye On the FED and GDP This Week

    • Housing is showing inflationary signs but still offers an opportunity to profit from the rising trend as a downturn is unlikely and not expected in the short term.
    • Amidst all the positive news, manufacturing turned negative. Yet despite this, stock valuations keep going up, increasing the risk.
    • In the week ahead: the FED’s decision and GDP data. It looks like stable weather in the near future.

    Introduction

    The last sequence of economic data was very positive. In this article we are going to discuss the important data coming out this week and analyze the information released last week. Then we’ll combine it with the current situation on the market and, as always, analyze the risks and rewards. More →

  • 14 Jul
    As The S&P 500 Reaches New Highs, Asset Inflation Continues

    As The S&P 500 Reaches New Highs, Asset Inflation Continues

    • All factors are indicating an artificially created asset inflation.
    • Earnings are expected to decline with economic outlook being constantly revised downwards.
    • Gold is gaining alongside stocks which confirms that all assets are inflated.

    Introduction

    Amidst all the turmoil from BREXIT, negative interest rates and global downward economic growth forecasts, the S&P 500 has reached a new high. On Monday it closed at 2,137.16 points, overtaking the previous high of 2,130.82 from May 21, 2015. The Monday record was surpassed again on Tuesday and Wednesday, with Wednesday closing at 2,152.43. More →

  • 13 Jul
    Negative Yielding Debt: A Party for Investors or Pure Stupidity?

    Negative Yielding Debt: A Party for Investors or Pure Stupidity?

    • Almost 30% of global sovereign debt comes with a negative yield.
    • The situation is much worse in Japan and Europe than it is in the U.S.
    • Investors should enjoy the asset inflation party while it lasts but also be prepared for the worst.

    Introduction

    Negative yielding debt seemed impossible and illogical for a long time, but it suddenly became a reality a few years ago and now we are seeing it slowly become the new normal.

    This isn’t just strange, it’s dangerous as risk averse investors—like pension funds and insurance companies—are forced to invest in assets that have traditionally been considered safe but that have now become risky, and their returns minimal. Those low returns will result in lower pensions and lower savings which will create new troubles in the future. 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 →

  • 11 Jul
    Watch Out: The FOMC’s Current Stance Could Impact Your Portfolio in the Long Term

    Watch Out: The FOMC’s Current Stance Could Impact Your Portfolio in the Long Term

    • Bonds are becoming riskier as yields are falling.
    • Inflation is at 1.2% and very likely to get higher as full employment is approached.
    • The FOMC predicts stability which could create a great environment for traders.

    Introduction

    On July 6 the Federal Open Market Committee (FOMC) June meeting minutes were released. As they give clear insight into how the controllers of our monetary policy think, it is very important to analyze the minutes in order to better position one’s portfolio and also execute short- and medium-term trades. The FOMC gave a clear indication of their expectations in relation to future GDP growth, unemployment, inflation and its federal funds rate. All of the mentioned indicators will have different effects on various investments. More →

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