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March, 2016 Archives

Daily Recap

It was the best of times; it was the worst of times.  Or so it seems according to some of the month-end figures.  US stocks scored the best monthly gains since last October, and are only a few percentage points away from new all-time highs.  Up 13% since the February lows, US shares eked out a modest 1% gain for the first quarter of the year.  

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Daily Recap

World stock markets continued to build on strength that came out of Fed Chair Janet Yellen's comments yesterday. A humorous way to view the current interest rate mania came from Victor Reklaitis on MarketWatch, who observed that investors are "obsessing over when rates might rise from diddly-squat to squat." Whether irrational or not, that's the world we live in now, and it does impact markets.

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Out of Gas?

by Jon S. Strebler

 

That was the general feeling I got while looking over the various markets’ performances and charts last week. The items that are most of interest to us look as if they’ve run out of gas after many weeks of strength and are rolling over, ready for a fall.   In a perfect world, this is great news; stocks, precious metals, oil shares and mining shares – all decline for the next few weeks, giving us the buying opportunity we’ve been waiting for.  But realizing just what sort of perverse world we live in, I’m worried about two other ways things could play out.  In the first, prices drop just a bit more, but then spin around to once more take off on the upside, again without us fully on board.  This has happened often enough as to be more than just an outside possibility. 


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The Fed's Next Move

By Matthew Kerkhoff

 

When it comes to anticipating Federal Reserve policy, there’s no better place to turn than former Fed Chair Ben Bernanke. No longer bound by office, Mr. Bernanke is now free to write about monetary policy as an outsider.

 

In a recent two-part post, the former Fed Chair took some time to explain what tools the Fed has left, and where they might turn in the case of another economic downturn. Why is this important? Because many believe the Fed’s hands are now tied as a result of short-term rates being near zero, and the Fed’s balance sheet sitting at over $4 trillion.

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Bombs and Brexit

By Benjamin J. Butler

 

Markets have seen a large short-covering rally since February 11th, which is reminiscent of the bear market rallies we witnessed in 2007/8 in the lead up to the GFC. The macroeconomic situation still looks weak to me and there are now some divergences appearing - such as the S&P 500 and the NYSE McClellan Oscillator. I think we are very overbought and we will extend a topping phase over the next few weeks, if not a more precipitous decline. Although I perceive many risks out there, Europe - and Brexit in particular - is a rising risk and could be the big spark that catalyzes a big fall  at some point.

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Daily Recap

Weakness in oil prices, following five weeks of upward moves, still leaves crude near $40/bbl.  But today's $1+ drop was enough to cast a bearish tone over many markets.  

In addition, "hawkish" comments, including those from the Fed's St. Louis head James Bullard, have investors thinking that maybe lower rates aren't the slam dunk future after all.  As we've commented from time to time, signs of incipient inflation have been popping up for weeks now, mostly ignored but perhaps now starting to gain some traction.

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