Thanks to everyone who has participated in the survey! I received a suggestion asking to talk more about what is driving markets in the short-term. For example, why were stocks down yesterday. Here’s a short video looking at the investment capital flows over the past few weeks. It shows that we had a very strong…
Inflation or Deflation?
I’ve noticed lately that inflation continues to “surprise” to the downside, to a small degree here in the US but mainly overseas (notably Europe, Australia and Canada), creating expectations of further monetary easing. This is leaving many people who have been calling for hyperinflation and the collapse of fiat currencies scratching their heads. They say…
Market Round Up
Stocks & the Japanese yen I’ve had my eye on the Japanese yen the past few days. For years, the yen has been at the center of the “carry trade,” where traders will borrow in yen at near zero interest rates to leverage their investment in markets that are moving higher – like stocks. The…
Market Trends
This morning’s market reactions to the unexpected jobs number gave me even more conviction that the current capital trends are in place. Gold, bonds and currencies all moved in anticipation of further Fed easing, while stocks did not. For a while now, bad news has been good news for stocks because it has meant continued/more…
Muni Bonds & Risk
I’ve had growing concerns over the looming pension liabilities that so many local and state governments face and the recent Detroit bankruptcy could be changing things… It now appears likely that the Michigan courts will rule in favor of the pension/benefit obligations, knocking the “senior” General Obligation (GO) muni bonds down a peg. GO muni’s…
Bonds & Rates
A very important part of investing is recognizing when you’re wrong as quickly as possible to minimize losses. After watching Bernanke’s Q&A session yesterday after the close, I’m ready to admit I was wrong on interest rates. I’ve never seen someone stumble through questions like that before. It was almost hard to watch! It’s as…
Market Update: Everything Takes a Slide
Literally every asset class (but US dollars) has been falling since yesterday’s FOMC announcement. This shows how far things have been driven by excess liquidity – not fundamentals. In my humble opinion, the US bond market is overreacting to the announcement and has this one wrong, creating an opportunity. I think intermediate bonds offer nice…
Interest Rates
Bonds have been in a bull market for over 30 years, culminating with multiple Quantitative Easing efforts by the Fed to suppress interest rates at all-time lows. The big question since 2009 has been: when and how quickly will rates rise? It’s a concern because it will have a big impact on bond funds since…