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February, 2016 Archives

Is Inflation Around the Corner?

By Matthew Kerkhoff

 

The world is awash in worries about deflation, but here in the U.S. it appears that inflation is making a comeback. If this new trend continues, it may catch a lot of investors off guard.

 

Inflation, or the lack thereof, drives financial markets with an unforeseen force. It has strong implications regarding everything from long-term interest rates to capital spending plans to Federal Reserve monetary policy.

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Richard's Thoughts on the Fed

By the Dow Theory Team

 

Richard's Comments

 

In the Constitution they specifically warned against fiat money. But a greedy and ruthless group of bankers decided to operate outside the Constitution and capture the money of the United States.

 

It was an outrageous theft, engineered through a collection of clueless and ignorant Congressmen. The following paragraphs are copied from an old pamphlet that I have kept.

 

 

 

 

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Earnings Update

By Matthew Kerkhoff

 

Today we’re going to dig into the state of corporate earnings, but before we do, consider this.

 

For the last however many decades, investors have generally turned to stocks for capital appreciation, and bonds for income. Has this dynamic reversed? Think about it for a moment.

 

Currently over $7 trillion worth of sovereign bonds trade at negative yields. That doesn’t translate into very much income. Why would investors own negative yielding bonds? They’re either trying to make a profit from capital appreciation (bond prices continuing to rise and yields drop further below zero), or they’re pretty confident they’ll lose more money elsewhere.

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Two High-Yield Safe Havens in an Overlooked Sector

By Dr. Carla Pasternak

 

With the S&P 500  down 6% this year amid heightened volatility, investors have been rotating into defensive plays with reliable earnings that pay dividends.  Utilities, telecoms, and consumer staples that dole out steady dividends are the only sectors with positive year-to-date returns. Utilities and telecoms are up 8%, and consumer staples gained nearly 1%, versus a loss for the broader market.

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There's No Place Like Home

By Jon S. Strebler

 

But then, you can never go home – they say. What to make of these two conflicting statements that we so often hear? 

 

Well first of all, many people can’t wait to leave home, whether we define that as the household they grew up in or the town they’re originally from. But focusing on the geographic idea of home, most people like the area they grew up in because they “fit in” there. And many who couldn’t wait to leave it find, in later years, that it wasn’t so bad after all. Which leads us to the second thesis that “you can never go home.”

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Market Prozac

By Matthew Kerkhoff

 

The market experienced a broad countertrend rally last week. Let’s go over the catalysts and identify whether the move is likely to continue.

 

To begin, here is a short-term daily chart of the S&P 500, followed by a longer-term daily chart that helps put the most recent action in context.

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