The Independent Market Observer

Slow GDP Growth: A Trick of the Numbers?

October 30, 2015

Yesterday, the quarterly growth figure for the economy as a whole, known as gross domestic product (GDP), came out at 1.5 percent. This figure was in line with expectations but was nevertheless disappointing since it declined from 3.9 percent in the second quarter. This gives rise to certain questions: Why did the GDP decline, and is this is a harbinger of future trouble?

Continue reading → Leave a comment

The Fed Surprises Again—But with a Treat, Not a Trick

October 29, 2015

As I wrote on Monday, no one expected anything of substance from the Federal Reserve. But, once again, the Fed surprised us. The September meeting was a trick, when it chose not to raise rates. But the October meeting looks like it may end up being a treat. I don’t mean in a policy way (rates remained unchanged, as expected). Instead, the Fed has very explicitly ruled out economic risks to the extent that a rate increase for December—which most had written off—is back on the table.

Continue reading → Leave a comment

Debt Ceiling News: Washington Steps Back from the Brink

October 28, 2015

In case you’ve forgotten, the Treasury Department has said that, as of November 3 (that’s five days from now), it will no longer have the money to pay all the bills that come due. That could lead to a U.S. default on its obligations, which could be a big deal.

Fortunately, Washington has now taken a step toward a solution.

Continue reading → Leave a comment

Is China Selling U.S. Treasuries, and Do We Care?

October 27, 2015

It’s surprising how worries come and go. Not that long ago, there was a real fear that China could—by dumping its vast store of U.S. Treasury bonds on the market—drive rates up and cripple the U.S. economy. As China’s economy has weakened, however, we haven’t heard so much of that, and worries have shifted to other ways that China could tank the world economy. But, in fact, could this be a more serious issue now than it was then?

Continue reading → Leave a comment

Monday Update: Housing Surprises, But Still Signs of Recent Weakness

October 26, 2015

As I wrote in a previous post, housing is a key reflector of consumer expectations. And even with recent signs of slowing in the economy, last week the housing market had some results that were much better than expected, pointing to continued growth. In today's Monday Update, I'll take a deeper look at the numbers.

Continue reading → Leave a comment

A More Detailed Look at Housing Supply and the Economy

October 23, 2015

Yesterday, I talked about housing demand and concluded that it is not only healthy but likely to increase. This represents only one-half of the picture, however. In many ways, the more important half is what that demand means for the housing supply. Home building requires labor, materials, financing, and most other sectors of the economy, so it can provide even more of a boost to the economy as a whole.

Continue reading → Leave a comment

A More Detailed Look at Housing Demand

October 22, 2015

I held a client webinar yesterday that included a look at housing demand. As part of my commentary, I made the point that housing is actually an excellent leading indicator for the rest of the economy and a key part of any future growth. At that point, I realized I had not done a detailed update on this topic in the blog for some time—so here we go.

Continue reading → Leave a comment

The Debt Ceiling Countdown Continues

October 21, 2015

Just in case anyone has forgotten, it’s projected that the U.S. will run out of money to pay its bills on November 3, which is less than two weeks away. Since we hit the debt ceiling some time ago, the Treasury has been using the “usual extraordinary measures” to pay the bills—including raiding other federal accounts (e.g., federal employee retirement system balances). But even that cash will run out in early November. Once again, a crisis is coming.

Continue reading → Leave a comment

Earnings Vs. Revenue: What to Look for This Earnings Season

October 20, 2015

I have talked about valuations quite a bit recently, and, as I have noted, they are certainly important. Valuations, however, are largely subjective and change over time; there is little you can do to manage or react to them.

Earnings, however, are objective—the numbers are what they are, come out every quarter, and reflect actual business activity. As such, we need to watch them even more closely.

Continue reading → Leave a comment

Monday Update: The Good and Bad—But No Ugly

October 19, 2015

Overall, the economic news last week was balanced. In this Monday Update, I’ll review the good and the bad, as well as what to watch for in the week ahead.

Continue reading → Leave a comment

Looking at Inflation: Objects in Mirror Are Closer Than They Appear

October 16, 2015

We know the Federal Reserve is worried about inflation being too low, and yesterday’s figures seem to substantiate that fear. With headline inflation over the past month down by 0.2 percent, and flat over the past year, it seems that prices are indeed just sitting there.

Continue reading → Leave a comment

Appearance on CNBC's Power Lunch, October 14, 2015 [Video]

October 16, 2015

Walmart's expected earnings decline is bad news for the company, but could it actually be good news for consumers? Learn what I think about Walmart's decision to raise wages, which I discussed in an appearance Wednesday on CNBC's Power Lunch program.

Continue reading → Leave a comment

Wall Street Vs. Main Street: Is Walmart Caught in the Middle?

October 15, 2015

One of yesterday’s big news stories was the surprise announcement by Walmart that, instead of growing by 4 percent (as expected), earnings per share were expected to decline by between 6 percent and 12 percent in fiscal year 2017. Shares, of course, dropped substantially, and the market as a whole took note. Lower earnings are bad, right? For the company, and quite possibly for the market, this is certainly true. But is it bad for the economy and the country? I don’t think so.

Continue reading → Leave a comment

Why the Trans-Pacific Partnership Is a Good Idea

October 14, 2015

The Trans-Pacific Partnership (TPP) is a major trade agreement among 12 countries, including most of the major economic powers in Asia, along with the U.S.—but notably excluding China. After five years of negotiations, the participating parties reached accord on October 5, and the agreement is now working its way toward approval in the various national legislatures. But is the TPP a good idea?

Continue reading → Leave a comment

Back to the Basics on Stocks

October 13, 2015

There are two components to stock markets: earnings and how much investors are willing to pay for them. Recently, much of the commentary has been on valuations, with the implicit assumption that earnings would more or less take care of themselves. Although this has been the case for the past several years, at least on a per-share basis, one of my colleagues and an investment research associate, Sam Millette, recently pulled some figures that gave me pause.

Continue reading → Leave a comment

Monday Update: Generally Positive, But Concerns Ahead?

October 12, 2015

Overall, last week’s data came in generally positive, but in this Monday update, I highlight some economic news in the week ahead that may be cause for concern.

Continue reading → Leave a comment

The Failure of Politics

October 9, 2015

Sometimes, I really hate being right. A few weeks ago, I wrote that the Washington, DC, political environment had deteriorated and that the current go-round on the debt ceiling was likely to be even more contentious than the last one, two years ago. Sure enough, with the resignation of Speaker John Boehner—and the withdrawal yesterday of his heir apparent—the House appears ungovernable. Without some type of Republican internal agreement on at least whom to elect as speaker, it’s hard to see any resolution to the debt ceiling debate, which is likely going to hit in the next couple of weeks.

Continue reading → Leave a comment

More on “Snowdown” Vs. Slowdown: What About the Markets?

October 8, 2015

I wrote yesterday about the economy and how I believe that, while we are seeing some weak data, we are likely experiencing a temporary “snowdown” (much as we saw the past two winters) rather than a true slowdown. Still, we have to ask ourselves, Is the market pullback similarly temporary, or is it the first stage of a deeper correction?

Continue reading → Leave a comment

Are We Really Seeing a Slowdown, or Is It More of a “Snowdown”?

October 7, 2015

There has been a lot of talk in the financial media about an economic slowdown, with a sense—explicit in some cases—that a recession is a real possibility. Some of that talk, I will admit, has come from me. Given some of the recent bad reports, particularly the jobs report, I do feel that there is a possibility that the trend has changed. After giving it a lot of thought, though, I do not think this is what’s actually happening.

Continue reading → Leave a comment

Appearance on Risk & Reward, October 5, 2015 [Video]

October 7, 2015

Is Wall Street bracing for the worst year since 2008? Watch my interview on Fox Business Network’s Risk & Reward to hear my thoughts on the state of the markets and hedge fund performance. 

Continue reading → Leave a comment

Economic Risk Factor Update: October 2015

October 6, 2015

Once again, it’s time for our monthly update on risk factors that have proven to be good indicators of economic trouble ahead.

We have actually seen some moves worth watching since last month, with signs of slowing, although the overall take remains positive.

Continue reading → Leave a comment

Monday Update: Disappointing News on Employment

October 5, 2015

Although last week started reasonably strong, it ended with a severe disappointment. This Monday update takes a closer look at the economic data.

Continue reading → Leave a comment

Looking for More Market Crash Signals in the Economic Data

October 2, 2015

In yesterday’s post, I reviewed the market data—including valuations, changes in margin debt, and changes in the market cap as a percentage of GDP—for some potential signals of a market crash. All seemed to provide valuable insight but were certainly not definitive. Part of the problem is that these signals can give false alarms or give correct signals that nonetheless result in only minor downturns. So, another set of filters is needed to help refine the analysis.

Continue reading → Leave a comment

Market Thoughts for October 2015 [Video]

October 2, 2015

In my latest Market Thoughts video, I discuss recent declines in U.S. and international markets, spurred by a slowdown in growth and declining consumer confidence. I also provide an update on U.S. economic performance, highlighting an increase in consumer spending.

Continue reading → Leave a comment

Are There Signs of a Potential Market Crash in the Data?

October 1, 2015

In a continuation of my post from yesterday, I am not aware of any single indicator that can tell us when a market crash will occur. (I wish I were!) So, what I have done is reviewed previous significant market downturns and determined some common contributory factors that make sense in theory, as well as empirically.

Continue reading → Leave a comment

Subscribe via Email

New call-to-action
Crash-Test Investing

Hot Topics

New Call-to-action



see all



The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly in an index.

The MSCI EAFE (Europe, Australia, Far East) Index is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.

One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.

The VIX (CBOE Volatility Index) measures the market’s expectation of 30-day volatility across a wide range of S&P 500 options.

The forward price-to-earnings (P/E) ratio divides the current share price of the index by its estimated future earnings.

Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided on these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.


Please review our Terms of Use

Commonwealth Financial Network®