The Independent Market Observer

Why the Weak GDP Report Is Nothing to Worry About

January 29, 2016

As expected, this morning’s GDP report wasn't cause for celebration. The initial estimate of economic growth in the fourth quarter of last year came in at 0.69 percent on an annualized basis—well below the previous quarter’s figure of 1.98 percent and even further below the fourth quarter of 2014, which posted growth of 2.07 percent.

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From Integration to Collapse: Technology and Global Trends

January 28, 2016

As we discussed yesterday, a number of countries depend on oil money to keep their populations happy, and lower oil prices are threatening those governments’ legitimacy. They lost control over the pricing mechanism as free markets took over, spurred by new technology—in this case, fracking.

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Low Oil Prices: The Big Picture

January 27, 2016

Following up on yesterday’s post, let’s take a look at what the oil price crash might mean for states in general. The problems in the Middle East and Africa are the most glaring, so we'll start there.

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The Costs of Low Oil Prices

January 26, 2016

Overall, the effects of low oil prices here in the U.S. have been positive—very positive, in fact. In the rest of the world, this is even more true. China and Europe, for example, import much more energy as a proportion of their economies than we do, and the positive effects have been proportionately greater. Whatever troubles China and Europe are having, they would be much, much worse with higher oil prices.

There are, however, real costs of cheap oil.

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Monday Update: Growth Remains Healthy, but Slowing

January 25, 2016

This past week had a light data calendar, with prices and housing coming into focus. Let’s take a closer look.

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The Road to Recession

January 22, 2016

One of the assumptions I’ve made in my recent analyses of the markets is that we are not in—or close to—a recession. Although I stand by this view, it’s common sense that, at some point, the U.S. will see another recession. When that happens, stocks are very likely to pull back, and we might enter the bear market everyone fears.

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The Bungee Jump Market

January 21, 2016

Yesterday was a wild ride. The market dropped steeply at the open, plunged even more at midday, and then came back strong, leaving us down just a little.

I was getting on a plane as it was dropping the most, and I have to admit it was an anxious flight. The market was the first thing I checked when we landed, and I was relieved to see the recovery.

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Low Oil Prices Hammer Markets

January 20, 2016

Oil prices continue to fall and are bringing markets down with them. We talked about why oil prices are dropping last week, so today, let’s take a look at why markets are getting hammered—and whether that is likely to last.

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Monday Update (on Tuesday): Despite Some Weak Data, Economy Doing Well

January 19, 2016

Overall, last week’s economic data was rather disappointing, marked by an industrial slowdown and lackluster retail sales. Let’s take a closer look.

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Market Plunges Deeper, but No Recession in Sight

January 15, 2016

The market sell-off continues, and as the slide gets more severe, we have to ask ourselves, once more, how worried we should be.

I’ve written over the past couple of days that it's not time to panic, and I still believe that's true. But it appears there may be more short-term damage than I initially thought. Now, the question is, how much worse might it get, and what does that mean for us as investors?

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What If I’m Wrong About the Markets?

January 14, 2016

If you’ve been following my posts lately, you know that I’m not panicking about the current market decline. In fact, despite yesterday’s drop, I believe the market situation is normal, reasonable, and not likely to turn into a 2008.

On the other hand, it’s always worth considering how and why you could be wrong. So let’s make the opposite case and argue for a crash. What evidence do we have that the world is coming to an end?

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Time to Sell Everything? Not Quite

January 13, 2016

This week, two major banks—the Royal Bank of Scotland and J.P. Morgan—issued some alarming advice for investors: sell your stocks, as the end is nigh. They didn’t use those exact terms, but the message was clear enough.

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Why Oil Prices Are Declining

January 12, 2016

Now that the equity markets seem to have stabilized a bit, let’s return to what underlies much of the current turmoil: the market for oil. The conversation usually centers on the price of oil, but the price is merely a symptom, not the cause.

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Monday Update: Strong Jobs, Weak Manufacturing

January 11, 2016

Last week was a big one for economic data, with important releases on business and jobs, plus insights into the Fed's outlook.  

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Economic Risk Factor Update: January 2016

January 8, 2016

Once again, it’s time for our monthly update on risk factors that have proven to be good indicators of economic trouble ahead. Last month, we got our first yellow light (in consumer confidence), which continues this month despite substantial improvement in that area. Although there were some indications of weakness in other parts of the economy in December, we also saw positive signs, notably in employment. Overall, the picture this month is somewhat better than last month.

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What’s Going On in China?

January 7, 2016

I still want to talk more about oil and the Middle East, and I will, but the more urgent topic is China. What is going on there, and what does it mean for us here in the U.S.?

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Market Thoughts for January 2016 [Video]

January 6, 2016

In my latest Market Thoughts video, I look back at 2015, which was actually the worst year for the markets since the financial crisis, but a solid year for the ongoing economic recovery.

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Market Downturn: How Bad Could This Get?

January 6, 2016

In shades of last August, the Chinese stock market breaks down, markets around the world drop, and everyone starts to wonder one thing: just how bad can it get? 

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Global Moment: Saudi Arabia, China, and the U.S. Markets

January 5, 2016

It certainly didn’t take long for markets to set the tone in 2016.

The first trading day of the year kicked off with big declines around the world, and investors were quick to start worrying. At 9:40 A.M. yesterday, someone asked me what I thought of the “January effect”—the notion that what happens in January determines the outcome for the year—and if I believed 2016 would be a washout. My response, in brief, was that 10 minutes probably isn’t a long enough time frame to judge the entire year.

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Monday Update: Consumers Confident, but Housing Slows

January 4, 2016

Last week was a short one thanks to the New Year holiday, with limited economic data released. Overall, the data was positive, indicating that improved consumer confidence should continue to drive the economy. But one of the major components, housing, may be slowing down, suggesting more of a slow but steady recovery.

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