With the market’s momentum from 2019 continuing on into 2020 so far, I wanted to provide a valuation update. Please remember that valuations are not reliable at all for short-term market timing but are very reliable for subsequent 10-12 year return projections.
First, we have a couple price-to-revenue measures. Continue reading “Stock Market Valuation Update”
Yesterday, the Federal Reserve confirmed the market’s expectations and announced they would be cutting rates for a third time this year. The rate cut is an addition to the recently-announced program of supplying $120 BILLION in liquidity each night AND announcing the resumption of QE whereby they’ll be buying $60 BILLION of short-term Treasurys each month.
In other words, the Fed is pursuing policy that, until the recent Great Financial Crisis, was unprecedented. Why? Why are they pursuing emergency policy actions when the economy is supposedly strong, stock market is near all-time highs, unemployment near all-time lows and inflation supposedly around 2%? Continue reading “The Fed Cuts Rates for a Third Time…And Zombies”
Back in February, I summarized a few potential recession signals. In that commentary I also stated;
“However, I’ll start to get really concerned when this ISM Purchasing Manager’s Index drops below 50, which would round out a trifecta of recessionary signals.”
Today, it was announced that the ISM Manufacturing PMI has contracted with a reading at 49.1 (below 50 indicates contraction). Continue reading “Final Shoe Drops”
Last week the Federal Reserve announced it would cut interest rates by 0.25%. This is major news because it signals the end of the “tightening” cycle and is the first rate cut since the Great Recession fallout. I wrote about the stock market’s action during rate cutting cycles a few weeks back here.
Here’s another great chart showing market performance during the last two rate cutting cycles.
Continue reading “Painkillers Are Not Cures”
Executive Summary: The price you pay for an asset determines your return.
I came across this chart over the weekend from @OddStats. The chart shows the returns of the S&P 500 by decade.
Continue reading “U.S. Stock Market Returns by Decade”