Executive Summary One Federal Reserve goal is maintaining an average of 2% inflation, which from around 2012 until the pandemic was a struggle (see first graph). Due to the massive government spending efforts and the supply constraints created from COVID19 and the Russia/Ukrainian war, inflation finally began [...]
Executive Summary One indicator for determining stock market valuation is the Price-to-Earnings ratio (P/E). In this missive, I explain how the math (increases/decreases in numerator and denominator) impacts the ratio in changing market cycles. Generally, if price rises and earnings remain the same the ratio increases, and [...]
Executive Summary Between the 2008 Financial Crisis and the start of the pandemic, the Federal Reserve Bank increased its balance sheet from approximately $850 billion to about $4 trillion. From there the pandemic created a panic, and they further increased it to nearly $9 trillion (See first [...]
Executive Summary After falling about 23% for the year as of June 16th, the S&P 500 began a strong bear market rally of 17% (see first graph). Many pundits were calling the end of the bear, and the beginning of a new bull market. However, as shown [...]
Executive Summary Mortgage rates have nearly doubled from 2.65% to 5.22%, resulting in a slowing housing market. Add in a drop in real median household income, and now there is a record gap between housing prices and incomes (see 2nd graph). Meanwhile the supply of homes is [...]
Executive Summary On Saturday, August 6, the Senate passed what is ironically titled the Inflation Reduction Act, which outlines $485 billion in new spending. After massive stimulus packages during the pandemic (2020-2021), Federal deficits increased by 38% and inflation is now around 9%. The third chart below [...]
Executive Summary Over the past month and a half, the stock market has experienced its fourth “bear market rally” since the start of the bear market at the beginning of this year. In every bear market there are strong bear market rallies. The current bear market rally [...]
Executive Summary Stock analysts’ earnings estimates tend to error on the optimistic side, as shown in first graph below 2023 estimates start at the peak and go up. Analysts often revise estimates down so corporate earnings will “beat” estimates, even when earnings decrease over prior year. During [...]
Executive Summary This week I wanted to share a guest article from John Mauldin. He begins his analysis of "Forgotten Lessons" here: “Those who cannot remember the past are condemned to repeat it” is a well-known quote that’s also incomplete. You can remember the past vividly and [...]
Executive Summary Financial media proclaims the job market is strong, citing 372,000 jobs created in June according to the Establishment Survey. However, digging into the details reveals some ignored discrepancies. Since March 2022, the Establishment Survey shows 1.124 million jobs created where the Household Survey shows 347,000 [...]