Executive Summary Forecasting corporate earnings seems to be an exercise in futility, and Wall Street analysts are always going to error on the optimistic side – even in an economic downturn. The second graph illustrates the profit drop of the pandemic, the resulting spike caused by extreme [...]
Executive Summary Some investors think “valuation” is a dirty word and is some type of market timing indicator. On the contrary, valuation determines whether prices are reasonable based upon historical standards. Economist Dr. John Hussman has done extensive research on the accuracy of valuation methodologies, and the [...]
Executive Summary As a result of the COVID19 pandemic, student loan payments were suspended. However, on October 1 the payments resume, which will affect around 28 million borrowers. On average these payments will be about $350 per month, which reallocates around $7-8 billion per month from consumer [...]
Executive Summary As a result of the COVID19 pandemic, student loan payments were suspended. However, on October 1 the payments resume, which will affect around 28 million borrowers. On average these payments will be about $350 per month, which reallocates around $7-8 billion per month from consumer [...]
Executive Summary Long-term (secular) bear markets are normally much shorter than long-term bull markets. However, they usually return stock prices to an undervalued state. Currently the valuation methodology of the Shiller P/E is 30, with the long-term average being about 16 (See first graph). Since the turn [...]
Executive Summary Recently crude oil prices have risen to over $90 per barrel, largely a result of production cuts by OPEC. Many have felt the pain at the pump (see 2nd graph). Demand has not dropped after the summer travel season, thus keeping prices on the rise. [...]
Executive Summary The Fed’s response to the 2008 Financial Crisis initiated programs which grew their balance sheet from $900 billion to $4.5 trillion by 2014. In 2018 the Fed began reversing course and reducing their balance sheet. However, by mid-2019 markets and the economy were showing weakness [...]
Executive Summary This week’s newsletter will be abbreviated as is the Labor Day work week. The inverted yield curve, which has preceded most recessions, seems to be indicating recession (see first graph). Two consecutive quarters of negative GDP is generally accepted as a recession. However, in 2022 [...]
Executive Summary With mortgage interest rates soaring, many people expected a sudden drop in home prices. The data shows the quantity of homes sold has decreased significantly (see first graph). Yet, according to the Zillow Home Value Index, home values have risen back to new highs (second [...]
Executive Summary Prior to the pandemic, household savings were trending upward and then spiked with multiple rounds of government stimulus money (see green in first graph). In 2022, the savings drawdown accelerated (see red in first graph). A study by the San Francisco Federal Reserve estimates at [...]