Margin debt again escalated in June, putting some emphasis back into the smaller caps and their high beta compatriots. After surpassing the dot-com bubble’s previous levels for both nominal margin usage and negative investor net worth in February, some caution was re-admitted if only briefly. There wasn’t much discernable impact on the broader market indices, more than suggesting that margin [...]
The Committee recognizes that low interest rates may provide incentives for some investors to “reach for yield,” and those actions could increase vulnerabilities in the financial system to adverse events. While prices of real estate, equities, and corporate bonds have risen appreciably and valuation metrics have increased, they remain generally in line with historical norms. In some sectors, such as [...]
If there had been an actual recovery delivered as it was intended, promised and offered, the idea of inequality would be an afterthought in an otherwise prosperous age. Inequality, however defined, is a necessary feature of a dynamic economic system. We want inequality because that defines opportunity. A healthy economic system produces disparities due to prices, risk and value. Such [...]
By now the bond market is really starting to annoy all the “right” people. The bear flattening that has taken place since operational taper commenced is a direct contradiction to those that implore dismissal of recent GDP (after pleading quite the opposite during the inventory build last year). Mainstream, orthodox economists have settled that Q1 is an aberration, a speed [...]
The S&P 500 made a new high last week, finally closing over the 1900 level. European stocks were also higher on the week and have continued the rally today even after election results over the weekend showed an uncomfortable gain for some parties that are, well, let's just say that some of their ideas are not exactly in keeping with [...]
This is probably unusual in that posts intended as a discussion about the stock market typically feature stock prices or market indices. Rather, I intend to use here only bond market prices and indications and still make interpretations about stock market risk. My colleague Joe Calhoun has pegged stock investors as threading the needle – looking for data that is [...]
The stock market had a good week, up all four trading days, despite the continued mixed picture from the economy and earnings. Last week's economic reports continued the recent pattern of some seemingly strong reports mixed with some pretty obviously weak ones. Retail sales were better than expected but the year over year core growth rate is still at levels [...]
In many ways, though, the overall stock market, economy and Federal Reserve policy don't suggest that a bear market is looming, say longtime money managers and economists. While continued turmoil in stock prices is likely, bear markets usually occur "when the Fed is trying to slow the economy down and other events intervene to make things worse," says Ethan Harris, [...]
Herb Stein was an economist that drew the unenviable task (though I don’t think he saw it as such) of being chair of the Council of Economic Advisors under Presidents Nixon and Ford. He was a man who knew imbalance up close and personal. To that end, he once quipped, “Economists are very good at saying that something cannot go [...]
While most everyone in the investment world has been focused like a laser beam on the amazing US stock market, some subtle shifts are happening that could have major implications for investors. These shifts are not large yet but they are significant if they are the beginning of a trend. For the last couple of years the investment landscape has [...]
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