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June, 2017 Archives

Richard's Thoughts on the Bull's in Charge

Richard's Comments

 

If the market changes, I change. I'm always trying to construct a scenario based on the latest "market language" as I interpret it.

 

For instance, if the Dow, the Transportation Average, the S&P, GDOW and bonds all break out to new highs on increasing volume, then the markets will be telling me that we will be enjoying good times for at least the next six months to maybe a year out.

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What's Going on in Europe These Days?

By Chuck Butler

 

In 2011, the world woke up to a hornet’s nest that had been stirred up by an announcement that Greece couldn’t pay their debts. Oh no! The markets cried, the humanity!

 

I tried to calm the readers of my daily letter, A Pfennig For Your Thoughts, down by showing them that Greece’s GDP was about the same size as Kentucky’s… But then more countries, mostly in the South Region, of what I call the Eurozone, came forward with their collective hats in their hands looking for bailouts too, and soon, these countries were known as the PIIGS…   Portugal, Ireland, Italy, Greece and Spain…  And the euro tumbled mightily…

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Daily Recap

The Asia Dow lost only 0.05%, even as every major Asian stock exchange was lower by more than that amount.  Don’t ask me!  In Europe, the Europe Dow was UP 0.74%, while the three largest exchanges were lower (huh?).  The STOXX 600, at least, was down a little bit – 0.02%.  American exchanges were all higher, with Chile’s being the key exception.

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Random Ramblings

by Jon S. Strebler

 

This week Britain’s Sunday Times offered the view that stock markets, especially in the US, are “set to fall after years of artificial support.” The artificial support they refer to, of course, is years of central banks buying fixed income assets, thus flooding world economies with cash and pushing interest rates near to and even below zero. High bond (and stock) prices have been accompanied by historically low volatility levels – a situation that cannot last forever and carries huge risks when reversed. Such as the US Fed is now doing in an economy that may not be inflating (the desired background for such a move) and remains at risk of deflating.

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Richard’s Thoughts on the Bond Market

Richard's Comments

 

It's hard to do well in the markets when interest rates are rising. The reason, as every old-timer knows, is that interest rates (via bonds, notes, bills) are always competing with stocks.

 

When you buy a Treasury bill or a note or bond, you’re facing only one risk -- loss of purchasing power. But you can be sure of one thing, you're going to get your money back. Sure, you may be paying more for a loaf of bread ten years from now when your 10-year note matures. Worried? Then stay closer to home -- buy a five year note or a two-year note. Still worried? Then stick with 91-day Treasury bills.

 

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