Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: stocks

Despite Stock Sell-off, Few See Recession

This article appeared online at TheNewAmerican.com on Friday, February 9, 2018: 

Barbara Friedberg must be feeling pretty good right about now. Last October she made “10 Bold Stock Market Predictions for 2018,” and already she is scoring five out of 10:

Value stocks will triumph;

Cash will be king;

Inflation will inch up;

Market volatility will return; and

Bonds will offer higher yields.

The jury is still out on her prediction that “the Bull Market [in stocks] will end in 2018.”

Friedberg is no lightweight. She is a former portfolio manager and has taught finance and investments at several universities. She authored a popular book in 2014, How to Get Rich Without Winning the Lottery.

Despite the mantra that stocks’ performance is often a harbinger for future economic performance, few at present agree with her about the bull market in stocks being over.

The sell-off (which appears to be continuing as this is being written) in stocks is impressive. The Dow Jones Industrial Average (DJIA, or The Dow) has lost 3,227 points since its high on January 26, or 12 percent, while the S&P 500 Index (SPX) has dropped by 290 points, or 10 percent, since then as well. This is into “correction” territory and should be drawing negative outlooks on the future of the U.S. economy from every quarter.

But they can’t be found. Aside from perma-bears Michael Snyder and David Stockman, few of the usual suspects can be found who agree with Friedberg. When the Wall Street Journal polled its economists, they remained adamant about the health of the economy: GDP will continue to grow and unemployment will continue to drop:

Keep Reading…

Sorry, Inflation Worries are Not Behind the Selloff in Stocks

This article was published by The McAlvany Intelligence Advisor on Wednesday, February 7, 2018:  

All manner of explanations for the recent market selloff in stocks have come out of the woodwork: the market has gotten ahead of itself; it was due for a correction anyway; it’s been 400 days since a three percent correction; and so on. The least informed is that all of a sudden there is inflation! See? The yield on the 10-year Treasury is up 80 basis points since September! That must mean there’s inflation! Couple that with the “surge” in wages just reported by the Bureau of Labor Statistics (2.9 percent year-over-year compared to 2.2 percent reported previously) and – voila! – inflation is back. Time to take profits!

Most commentators didn’t bother to check with the Fed, specifically the Cleveland Fed and the St. Louis Fed, which report the real numbers on inflation and money supply. First:

Keep Reading…

Treasury Advisory Committee Says U.S. Must Borrow Trillions, Sending Stocks Down

This article appeared online at TheNewAmerican.com on Monday, February 5, 2018:

When an obscure advisory committee announced last Wednesday that the U.S. Treasury would have to borrow billions to fund Trump’s tax reform program, the stock market pitched headlong into a selloff, dropping Thursday, Friday, and early into Monday. Before the selloff, the Dow was approaching 26,300, but by the close on Friday it had lost 760 points. The rout continued into Monday, with the Dow down more than 1,200 points from Wednesday’s high. [Note the rout continued into Tuesday but found some footing by the end of the day.]

Much handwringing by commentators blamed the selloff on various technical factors:

Keep Reading…

Tax-Reform Ripple Effect: Hundreds of Companies Recalibrating, Raising Employee Benefits, Investing in New Projects

This article appeared online at TheNewAmerican.com on Friday, January 26, 2018: 

Workers at Camp Construction, the construction giant headquartered in Houston with sites all across the southern United States, received a note along with their last paycheck. Signed by the company’s president, Roger Camp, it read:

Because of the reduction in corporate taxes we, as will all businesses, benefit from this tax cut. We believe that YOU are the reason for our success. And now that we will be giving less of our hard earned income to the federal government, we can share some of it with you.

 

Please look for a $500 tax cut bonus in your next payroll run.

There are now more than 240 companies who are doing the same for their employees. At current count this will brighten the paydays of more than three million workers.

And the ripple effect of the tax reform law is just starting to be felt.

Keep Reading…

Final Tax Reform Bill: The Goods Outweigh the Bads

This article appeared online at TheNewAmerican.com on Tuesday, December 19, 2017:

With victory over tax reform clearly in sight, President Trump on Sunday tweeted, “As a candidate, I promised we would pass a massive TAX CUT for the everyday working American families who are the backbone and the heartbeat of our country. Now, we are just days away.” From the White House came more details:

Keep Reading…

“Trump’s” Stock Rally Best Since 1945

This article appeared online at TheNewAmerican.com on Wednesday, November 8, 2017: 

Before the market opened on the day after Donald Trump won the election a year ago, futures were predicting a precipitous drop in the Dow Jones Industrial Average of 900 points. By the close of business that day, sentiment reversed and the market closed up 250 points, to 18,500.

That was 5,000 points ago,

Keep Reading…

Dow Crosses 23,000 for the First Time in History

Performance of the Dow Jones Industrial Index ...

Performance of the Dow Jones Industrial Index during Black Monday

This article appeared online at TheNewAmerican.com on Tuesday, October 17, 2017:

The Dow Jones Industrial Average (DJIA), colloquially called “The Dow,” crossed over the 23,000 benchmark level early Tuesday morning for the first time in history. The Dow, which tracks the stocks of 30 major corporations, has gained 25 percent since the election while the NASDAQ (which tracks the stock performance of a vastly larger and more diversified range of companies across the globe) is up 27 percent. The S&P 500 Index (which tracks the stock performance of 500 American companies) is up 19 percent.

The Wall Street Journal had no trouble finding money managers who were willing to comment positively on the news. Mark Freeman, chief investment officer and portfolio manager at Westwood Holdings Group (which invests $22 billion for its customers), told the Journal:

Keep Reading…

Jump in Jobless Claims Following Harvey Is Just the Beginning

This article appeared online at TheNewAmerican.com on Thursday, September 7, 2017:

View of the eyewall of Hurricane Katrina taken...

View of the eyewall of Hurricane Katrina taken on August 28, 2005 as the storm made landfall on the United States Gulf Coast.

The jump in unemployment claims for the week ending September 2, as reported by the Department of Labor (DOL) on Thursday, not surprisingly exceeded economists’ consensus of just 241,000. The increase of 62,000 for the week to 298,000 nearly broke a claims record that has been in place for 131 weeks: 300,000.

That record will surely be broken in the weeks to come. The unemployment claims are just beginning to come in, and they are a predictor — a proxy — for job layoffs. Some workers

Keep Reading…

OPEC Getting Some Help from Nervous Energy Company Bondholders

This article was published by The McAlvany Intelligence Advisor on Friday, July 21, 2017:

It’s no wonder that investors owning bonds of companies in the energy business are getting nervous. They purchased high-yield bonds issued by them, seeking income when there was little to be had elsewhere. Last year they were rewarded with 38 percent gains in their holdings as the industry rebounded.

But in June Bloomberg reported that those same bondholders saw their values drop by two percent. This is on top of energy stocks that have tanked 16 percent so far this year.

It’s the vicious circle facing frackers.

Keep Reading…

Fracking’s Vicious Cycle Making Bondholders Nervous

This article appeared online at TheNewAmerican.com on Thursday, July 20, 2017:

King Abdullah ibn Abdul Aziz in 2002

King Abdullah ibn Abdul Aziz

Investors in high-yield bonds issued by small fracking companies are getting nervous. Last year those bonds, according to Bloomberg, gained some 38 percent as they rebounded from lows set earlier. In June they slipped two percent. In the bond business, that’s enough to make bond fund managers and individual investors nervous. It’s bad enough that the S&P 500 Energy Sector Index of energy stocks has lost 16 percent so far this year. What’s worse is the vicious cycle that frackers find themselves in.

For instance,

Keep Reading…

Goldilocks Stock Market Making Forecasters Nervous

This article appeared online at TheNewAmerican.com on Thursday, July 13, 2017:  

At the moment, Wall Street investors are enjoying a “Goldilocks” economy: not so hot that it pushes prices up and not so cold that it causes a recession. Translation: Unemployment is low, wages are rising, interest rates are still near record lows, the gross domestic product (GDP) continues to grow (although not as fast as President Trump would like), and inflation is under control.

It isn’t a perfect world, but to Wall Street investors it’s close.

Keep Reading…

More “Fake News?” Trump Behind Wednesday’s Stock Market Dump

This article was published by The McAlvany Intelligence Advisor on Friday, May 19, 2017:

Cover of "The Intelligent Investor: The D...

It’s almost too trite to say that the mainstream media engages in “fake news,” but its nearly unanimous claim that Wednesday’s selloff in stocks was due to Trump’s troubles borders on fake news. It certainly violates a primary rule of logic: post hoc, ergo propter hoc – after this, therefore because of this.

Here is a perfect, but certainly not the only, example. From Marketwatch one learns that “The sell-off came in the wake of a bombshell report in the New York Times that notes from fired FBI Director James Comey revealed President Donald Trump had asked Comey to stop the FBI’s investigation into fired National Security Adviser Michael Flynn’s ties to Russia.”

The tortured logic is this: Trump’s controversies, including those concerning Comey, are going to distract him and his administration from accomplishing many of the policy goals upon which the stock market was banking. Hence, the market will be disappointed.

Other MSM outlets lined up:

Keep Reading…

Trump Didn’t Cause Stock Market Decline

This article appeared online at TheNewAmerican.com on Thursday, May 18, 2017:  

According to nearly every major news outlet, Wednesday’s 372-point decline in the Dow Jones Industrial Average was Trump’s fault. CNN Money said “Trump drama rattles market” while CNBC blamed the selloff “on Trump fears.” NPR said the decline was because “Trump remains embroiled in controversy” with CBC News saying it was due to “uncertainty around Trump.”

Precious few deviated from their mission to blame everything on Trump to look at the real reason behind Wednesday’s modest selloff:

Keep Reading…

Pew Research: Gap Between Promises and Assets Widens for State Pensions

This article appeared online at TheNewAmerican.com on Monday, April 24, 2017:

A RETIRED COUPLE FROM CALIFORNIA STOP TO FISH ...

After reviewing the investment results for 230 public pension plans for the last two years, Pew reported last Thursday that, despite strong recent stock market performance, the gap between liabilities (promises) and assets for those plans widened by 17 percent, to $1.4 trillion. Put another way, those plans should have nearly $4 trillion in assets to enable them to keep their promises. The latest data shows them with just over $2.5 trillion instead.

Said Greg Mennis, director of the project,

Keep Reading…

Three Stock Market Indicators Spell Trouble for Pension Fund Managers

This article was published by The McAlvany Intelligence Advisor on Monday, April 24, 2017:

Warren Buffett speaking to a group of students...

Warren Buffett

Michael Lombardi is a bear. Canadian-born, Lombardi has been dishing out investment advice for decades. He is getting nervous. And so should pension fund managers trying to make up for lost time.

In his March newsletter, Lombardi looked at the Warren Buffett Indicator:

Keep Reading…

Harvard’s New Endowment Manager Shakes Things Up After Dismal Performance

This article appeared online at TheNewAmerican.com on Tuesday, February 28, 2017:

English: Harvard University Harvard Yard Harva...

Harvard University Harvard Yard

The new CEO of Harvard Management Company (HMC), N.P. “Narv” Narvekar, fired half of his staff last December, and in a letter announcing the moves, stated:

Major change is never easy and will require an extended period of time to bear fruit. Transitioning away from practices that have been ingrained in HMC’s culture for decades will no doubt be challenging at times.

 

But we must evolve to be successful, and we must withstand the associated growing pains to achieve our goals.

To each of those approximately 115 staffers who were let go, Narv offered his condolences: “It is exceptionally difficult to see such a large number of our colleagues leave the firm, and we will be very supportive of these individuals in their transition. We are grateful for their committed service to Harvard and wish them the very best in their future endeavors.”

Narvekar is the eighth permanent or interim chief executive in the last decade at the helm of HMC as returns from its $35 billion endowment continue to under-perform not only the stock market in general but its peers at Yale, Columbia, and other Ivy League schools, as well.

The company’s performance was so bad that

Keep Reading…

Teamsters’ Pension Plans Seek Massive Cuts to Retirees to Stay Solvent

This article appeared online at TheNewAmerican.com on Monday, January 2, 2017:

Logo of the United States Pension Benefit Guar...

The Central States Teamsters pension plan, covering more than 400,000 participants, expects to receive permission shortly from the Treasury Department to cut benefits to those participants, possibly by as much as 30 percent. At the end of 2014 the plan had $35 billion in liabilities (future promises to participants as they retire) compared to less than $18 billion on hand to pay them.

Right behind Central States was the New York State Teamsters Conference Pension and Retirement Fund, which is also in trouble. Owing nearly $3 billion to its 35,000 plan participants, it has less than $1.3 billion to meet this obligation. Its plan, in its request to the Treasury Department, spelled out just how great the cuts would be:

Keep Reading…

Trump Likely To Pick Larry Kudlow as Chief Economic Advisor

This article appeared online at TheNewAmerican.com on Tuesday, December 20, 2016:  

Speaking to the Lansing Regional Chamber of Commerce last week, Trump transition team advisor Stephen Moore let the cat out of the bag: The president-elect would shortly be naming Larry Kudlow (shown) as his chief economic advisor. Moore enthusiastically endorsed the pending nomination: “Who better than Larry? He’s one of the great economists in this country.”

Kudlow may be many things, including enjoying a long-running affiliation with CNBC and host of The Kudlow Report, but he is not an economist.

Keep Reading…

“Upside Sensitivity” the New Buzzword as Companies Plan for Trump Economy

This article was published by The McAlvany Intelligence Advisor on Friday, December 9, 2016: 

English: Photo of the AT&T Midtown Center in M...

AT&T Midtown Center in Midtown Atlanta, Georgia.

AT&T’s Chief Executive, Randall Stephenson, spoke to a UBS investment conference on Tuesday, introducing a new phrase that more and more American companies will shortly be adopting: “upside sensitivity” studies. He spoke of how less government oversight and lower taxes would impact his business, expressing optimism that “a more moderate approach to some of those regulations is in the making under a Trump administration.” He then added:

Keep Reading…

Investors Remember Black Monday 1987: Dow Loses 22 Percent

This article appeared online at TheNewAmerican.com on Wednesday, October 19, 2016:  

Wednesday is the 29th anniversary of the largest percentage sell-off of stocks in the history of Wall Street, including the sell-off that triggered the Great Depression on October 28, 1929. On that day in 1929, the Dow dropped 13 percent. In 1987, it dropped 22 percent.

Concerns abound about whether a repeat is likely to take place this month.

Keep Reading…

Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.