Executive Summary As discussed in previous newsletters, economic growth is slowing. The Atlanta Fed GDPNow model reduced the first quarter GDP growth estimate to 0.0% from the previously reported .6% estimate. Now with Russia invading Ukraine, the effects of war could further negatively impact growth. Gas prices [...]

Executive Summary The current real GDP estimate from the Atlanta Fed’s GDPNow model for first quarter 2022 is 0.6%, which is a 6.4% drop from fourth quarter 2021. During 2020 and 2021 government stimulus money increased household’s disposable personal incomes, which resulted in their spending more, saving [...]

Executive Summary Multiple expansion means investors pay more per dollar of corporate earnings for a share of stock. The opposite would be the contraction or reduction in stock prices per dollar of corporate earnings. Multiple expansion results in overvaluation in stock prices from their long-term mean. One [...]

Executive Summary The Federal Reserve Bank (Fed) has two mandates: maximum employment and stable prices. However, their addition of a third unwritten mandate – propping up financial markets – has paralyzed them from addressing the current exorbitant price instability – or inflation. From 1970 to present, the [...]

Executive Summary Last week U.S. Federal debt surpassed $30 trillion! While notable, the more alarming fact is the rate of change since 2007 when it was under $10 trillion. Government programs designed to save the U.S. economy from the 2008 Financial Crisis and the 2020 Covid Pandemic [...]

Executive Summary For the month-to-date period ending January 24, 2022, the stock market indices have retreated from their highs while the Vix has been increasing. In December of 2021 I wrote when the Vix is above 20 market risk is building, and when it crosses 30 volatility [...]

Executive Summary In 2008 to combat the Great Recession, the Fed instituted a new program called Quantitative Easing (QE) in which they purchased Treasury Securities and Agency mortgage-backed securities. To pay for the purchases of these debt securities, the Fed credited the reserve accounts of the sellers. [...]

Executive Summary Former chief stock market analyst at Merrill Lynch, Bob Farrell, developed 10 timeless rules for investing which are listed below. These are very pertinent given today’s market cycle. Some investors have forgotten the two 50+ percent corrections in the last 20 years. Interestingly enough, over [...]

Executive Summary In September 1981, the yield on the 10-year Treasury Note peaked at around 15.8%, and the annual inflation rate was about 10.8% resulting in a “real” (after inflation) rate of about 5%. Today, the 10-year Treasury is yielding about 1.40%, and inflation in November rose [...]

Executive Summary Corporate profit margins are being squeezed by upward wage pressure and downward productivity, all while stock prices are rising. The second graph below of the Wilshire 5000 Index divided by GDP shows bubble values which are almost 50% higher than the peak of the 2000 [...]