Tag Archives: DIA

Coming Week Market Movers And Outlook For The Rest Of 2013

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By Cliff Wachtel:

In terms of actual scheduled economic calendar events, the week is light. That will leave traders and pundits alike with time to continue speculating on variations and aspects of The Great Question – how much can we trust the current bull market in stocks and other risk assets to continue, and is there still time to get it without excessive risk of buying at them top? See here (section: The Most Compelling Reason To Be Bullish On Stocks & Other Risk Assets) for our take on whether it’s still safe to open new long positions.

For all but the short term traders, all else is just commentary.

Drawing from lessons of the prior week, which we covered here, as well as other sources, we’ll briefly review what high-potential market movers you should monitor this week. We conclude with a few recommendations, and our updated forecast for the


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Market Outlook – Stocks Ignore Shaky Economic Data

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By Price Headley:

Another week, another record high. Nothing new there, though at this point the market’s gotten uncomfortably overbought.

The rationale side of your brain says that’s a reason to sell… or at least stop buying. Yet, the instinct to want to jump onto this rising rocket also makes sense – this may well be the beginning of a rarely-seen true melt-up. They always end badly, but what a ride they take you on while they’re in motion.

Which one are we seeing right now? We’ll talk about that in a moment. First, let’s slice and dice some recent economic data.

Economic Calendar

Whew! What a jam-packed week of economic data. There’s too much to look at each individual piece of information, so let’s just stick with the highlights.

First and foremost, not only are consumers feeling less and less inflation, they’re getting dangerously close to deflation. As of April, the annualized


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Weighing The Week Ahead: Are You Ready For Some Fedspeak?

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By Jeff Miller:

Ready or not, we should expect a week dominated by an even greater focus on Fed policy. There are four reasons:

  1. The economic data calendar is very light;
  2. Earnings season has ended;
  3. Many will be heading for the exits early, anticipating a holiday weekend; and finally
  4. Bernanke testifies on the economy before the Congressional Joint Economic Committee. There will also be other Fed speeches and the minutes of the last FOMC meeting.

What should we expect?

Fedspeak is described by former Fed Vice-Chair Alan Blinder as “a turgid dialect of English.” In the Greenspan era, the Fed Chair was intentionally ambiguous. (Blinder, who favored a more open exchange, did not last long in the Greenspan era). In the Bernanke era there is supposed to be more transparency. There certainly is more open disagreement among the FOMC participants.

Two Viewpoints

Among market participants there is widespread sentiment that current asset


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Beware Of Long-Term Damage From Stock Market Bubble Forming Now

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In the prior essay in this series, I demonstrated that US systemic liquidity is at frighteningly high levels and that this could become a key factor that enables the formation of a stock market bubble, as risk aversion and liquidity preference declines. In this regard, it will be helpful to review the following chart of systemic liquidity available in the US economy (the details of this metric are fully explained in the aforementioned essay):

(click to enlarge)

In the present essay I will show why the extraordinary levels of excess liquidity available in the US economy, under current conditions of declining liquidity preferences, could be extremely dangerous to the long-term health of the US economy.

The thesis of this article is that given the current course of events, broad stock market indices such as the S&P 500, Dow Jones Industrials and Nasdaq could very well rise by 30% or


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The Small, But Important, Flaw In The Tepper Analysis

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By Jeff Miller:

When David Tepper speaks, the market listens.

In Autumn, 2010, Tepper, the highly successful billionaire hedge fund manager, explained that for stock investors, the Fed had your back. Using options jargon, he said that there was a “put” (downside protection) regardless of what the economy did. While causation is always hard to prove, the comments came on a 2% rally day in the market and the rally continued from there.

Today Tepper went public again, with a very bullish prognosis. A key part of his analysis was that the Fed purchases under QE, even if tapered off, would be greater than the net new issuance of debt by the Treasury. You can check out CNBC’s site to see the entire interview.

Tepper goes on to discuss the historic highs in the equity risk premium and why this represents a major opportunity for investors in stocks.

Background

There is


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Implications Of Fed Tightening For Equities

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By Tim Duy:

Gavyn Davies at the Financial Times questions the Federal Reserve’s employment target:

On the wider issue of general monetary policy, the behaviour of inflation and unemployment remain the key drivers, and here the Fed has a headache. Its forward guidance on unemployment is in danger of giving misleading signals about the need for tightening, and it probably needs to be changed.

I agree. Davies cites research indicating that recession-driven underemployment makes the unemployment rate a poor measure of resource utilization. The policy implications:

What does this imply for policy? It implies that the Fed will have a bias to keep policy aggressively easy long after the unemployment rate has fallen below 6.5 per cent, and even after it has fallen below the estimated natural rate of 5.25 to 6 per cent, provided that the inflation threshold is still intact. This is because the reserve army of disguised unemployed people


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A Tired Bull Market

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By David I. Templeton:

Not much seems able to restrain the strength of the bull market in U.S. equities. On a year to date basis, the S&P 500 Index is up 15.43%. The advance has finally drawn investors into equity mutual funds as reflected in positive equity mutual fund flows the first three months of the year.

From The Blog of HORAN Capital Advisors


The positive market results continue to keep the S&P 500 Index in a positive uptrend channel that began in the middle of November of last year. Aside from the fact that company fundamentals and valuations look reasonable, at least not overvalued, higher equity prices could continue to unfold. However, we have noted in several recent posts the rotation that has occurred of late out of the more defensive sectors into the more cyclical ones.

From The Blog of HORAN Capital Advisors


Because of the significant amount of artificial stimulus


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Dividend Growth Investors – Prepare For The Correction

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ByCranky:

There have been many fine articles on how dividend growth companies (and portfolios) fared in the Great Recession. There is tons of statistical analysis to consider. And many articles paint a rosy picture, as there were many great dividend aristocrats (companies that had raised their dividend for 25 straight years and counting) that held up very well and even increased their dividends from 2007 through 2009.

But while many dividend growth companies breezed through the recession, there were many more that provided a challenge to investors. And what will separate those who succeed and those who fail will be how they react to the stress of the stock picks that don’t quite work out.

The Great Recession delivered the greatest period of dividend cuts and suspensions in over 50 years. In all of 2008, there were 61 cuts by S&P 500 companies totaling $40.6 billion in lost dividend income. From


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