The Independent Market Observer

Monday Update: Amid Disappointing Data, Economy Still Growing

October 31, 2016

Last week’s economic data was a mixed bag, focusing mostly on the consumer but also touching on business and the economy as a whole.

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Strong GDP Report: Treat or Trick?

October 28, 2016

This is the season of ghosts and goblins, scary monsters, and small children roaming around in packs to loot the neighborhood of candy. In other words, it’s very much like the typical investment environment, with everyone looking to get something sweet but nervous about what might leap out of the bushes.

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The Employment Boom Gets Louder

October 27, 2016

After taking a look at the bright side yesterday, more data has come across my desk that confirms just how reasonable (but not, of course, certain) that perspective is. One data point in particular puts some direct context around the reasons for optimism.

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Reasons to Be Cheerful About the Market

October 26, 2016

Yesterday, I wrote about the stock market risks that the AT&T/Time Warner merger might be signaling. Each month, I review market risks as suggested by several other key metrics. And over the last year or so, I’ve been giving a presentation to investors on the causal factors behind a sustained bear market.

Overall, my commentary on the markets has been decidedly risk-centric.

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What Does the AT&T/Time Warner Merger Mean for the Market?

October 25, 2016

There have been a lot of headlines in the past couple of days about the proposed mega-merger between AT&T and Time Warner. In fact, I was on CNBC yesterday discussing it. At $85 billion, this would be the sixth-largest merger of all time, so it is indeed a big deal. Does it have any larger meaning, though?

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Appearance on CNBC's Power Lunch, October 24, 2016 [Video]

October 25, 2016

Do big deals signal a market peak? Yesterday afternoon, I was on CNBC’s Power Lunch offering thoughts on the market amid the recent AT&T and Time Warner merger. 

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Monday Update: Industry Does Better as Housing Slows

October 24, 2016

Last week’s reports covered a wide range of the economy.

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What It Would Take to Rig the U.S. Election

October 21, 2016

The headlines this week are all about Donald Trump’s refusal to accept his potential defeat in the U.S. presidential race. He has reserved the right to contest the results of the election, doubling down on his claims that the process is rigged. Although this is the first time the issue has arisen in the presidential forum, claims of data rigging have been quite common in recent years.

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Inflation and Everything Else

October 20, 2016

It’s been a while since I wrote about inflation, the general increase in prices that makes everything cost more. Inflation has been so low recently that it hasn’t really been a priority. Indeed, there’s been more concern about inflation running too low than too high.

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Remembering Black Monday

October 19, 2016

Amazingly enough, after the concern about another Black Monday, the 1987 drop's anniversary today hasn’t generated much media attention. It’s almost like it never happened.

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For Halloween, Some Thoughts on Active Management

October 18, 2016

One of the investment industry’s most famous magazine covers is the August 1979 Businessweek that proclaimed “The Death of Equities”—right before one of the longest and largest bull markets of all time began. It was a perfect example of the investment truism known as the magazine cover effect: when something is widely enough known to be on a magazine cover, it’s already fully priced into the market (and likely about to reverse).

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Monday Update: The Consumer Is Back (Sort Of)

October 17, 2016

Last week’s reports remained modestly positive, although consumer demand showed signs of a slowdown.   

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Is Global Diversification Worth the Risks?

October 14, 2016

After I posted my piece on diversification last week, my colleagues Peter Essele and Anu Gaggar reminded me that they had done a study of some of the trends behind that post. Their analysis highlights a couple detailed examples of what I was talking about. This may be a more technical read, but the conclusions are compelling. Great job, guys! Over to Peter and Anu.

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The Market Today: Shades of 1987?

October 13, 2016

In the past couple of days, three different people have forwarded me an opinion piece that attempts to draw some parallels between the way the market acted in October 1987—before the infamous Black Mondayand the way it’s acting now. Some analysts are actually issuing alerts that we might get a significant pullback.

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What Does the Election Mean for Your Portfolio?

October 12, 2016

There’s no escaping coverage of the presidential election—what it means, whom to vote for, whom not to vote for. Many of us are deeply engaged in the process and passionately committed to one of the candidates.

At the same time, one of the most important personal consequences of the election will be its effect on our portfolios. Presidents come and go, but your retirement is on the horizon regardless of who’s elected.

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Monthly Market Risk Update: October 2016

October 11, 2016

Just as I do with the economy, I review the stock market each month for warning signs of trouble in the near future. Although valuations are now high—a noted risk factor in past bear markets—markets can stay expensive (or get much more expensive) for years and years, which doesn’t give us much to go on timing-wise.

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Monday Update: Business Sentiment Bounces Back

October 10, 2016

Last week’s economic reports showed a range of data, mainly focused on business. The news was surprisingly positive across the board, with business sentiment improving substantially while job growth continued at a more or less steady pace. Overall, based on last week’s data, the economy continues to move forward, with this month’s good news largely reversing the bad news from last month.

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Economic Risk Factor Update: October 2016

October 7, 2016

After the bad news last month, several major economic indicators have bounced back significantly. The service sector was the biggest positive surprise, but manufacturing also moved back into expansion territory, and consumer confidence jumped up in a big way. Although job growth was somewhat below expectations, it remained at a healthy level.

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September Jobs Report Preview

October 6, 2016

Tomorrow, the Labor Department releases the jobs report—probably the most important economic report of them all. After all, jobs drive everything. As an indicator of business confidence, job growth is predictive; as the engine of consumer spending, job growth is determinative. We learn a lot about the economy from this report every month.

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Should We Be Worried About Deutsche Bank?

October 5, 2016

As I’ve mentioned, the European banking system is a key risk, and Deutsche Bank—one of the largest banks in Germany and Europe—is catching headlines over its troubles. There’s been a great deal of speculation about what this means for the U.S. and world economies and for stock markets. Some have even suggested this might be a “Lehman moment” that could trigger another financial crisis. I asked our international analyst, Anu Gaggar, to take a look and report back on what she found. — Brad

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The Return of Diversification?

October 4, 2016

Writing my quarterly update the past couple of days, something occurred to me: international markets are beating U.S. markets for the first time in a while. This is big news, given that U.S. markets have dominated, unusually, for the past couple of years. Also noteworthy is that most asset classes are actually making money for the year—again, something we haven’t seen in a while.

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Market Thoughts for October 2016 [Video]

October 3, 2016

September was a volatile month, with markets dropping only to bounce back at month-end. Large companies in the S&P 500 were down slightly, while smaller companies and those outside of the U.S. did well. Plus, as I discuss in this month's Market Thoughts video, there was a larger-than-expected pullback in the service sector, yet consumer confidence reached a nine-year high.

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Monday Update: Consumers Stay Strong

October 3, 2016

Last week’s economic reports showed a range of data, mainly focused on the consumer. Consumer news was largely good, but business and industry continued to disappoint, although by less than expected. Overall, based on last week’s data, the economy seems to keep creeping slowly forward, showing little sign of either the acceleration or slowdown that many have been predicting.

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