The Independent Market Observer

Improving Fundamentals Lead to a Strong Third Quarter

September 29, 2017

As we close out the third quarter of the year, here’s what we know. It has been a great year and a great quarter for stocks around the world. We’ve seen a really good month for all areas except emerging markets, which pulled back a bit but still posted the strongest quarterly gains overall. Financial assets have been doing much better than expected across the board, and investors remain extremely confident this trend will continue.

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Appearance on TheStreet, September 28, 2017 [Video]

September 29, 2017

Since the beginning of 2017, the S&P 500 is up about 12 percent. Is it on its way to reaching 2,700? 

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What Does the Tax Proposal Mean for the Markets?

September 28, 2017

The big economic news today is the tax reform proposal that the Trump administration unveiled yesterday. For once, we have a proposal that really does live up to the hype. If passed (a big assumption!), this would be the most consequential revamp of the tax system since 1986 in the Reagan administration.

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North Korea: A Slow-Motion Crisis?

September 27, 2017

Yesterday, I spoke with an advisor who told me that a potential confrontation between the U.S. and North Korea is creating a lot of fear among his clients. In fact, one client wants to sell everything and go to cash due to concerns over what might happen. I certainly understand this, particularly in light of the rising level of rhetoric from both sides. That being said, I don’t think we need to be as worried as all that.

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Why the German Election Matters

September 26, 2017

Sitting here in the U.S., Europe seems pretty far away. With everything that is going on with our government and the high-profile military risks (North Korea, anyone?), it would be easy to pass over the results from the German election. But I think that would be a mistake, as the outcome of this election reveals several important signs for the future.

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Monday Update: Hurricanes Continue to Affect the Data

September 25, 2017

Last week, the economic data was all about housing. While disappointing overall, there were signs of future improvement. Plus, the potential effects of the hurricanes make it hard to determine if there is real decay or only passing damage. The Fed remains confident, which suggests that the weakness might be short term, rather than something worse.

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Is Debt Risk Moving Back into the Spotlight?

September 22, 2017

With the front-page news dominated by politics and the hurricanes, there is actually not a lot to report on the economic front. This is a good thing, as it signals that economy continues to do well. It does, however, make it necessary to dig a bit deeper to find out what we should be paying attention to.

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Oil Prices Collapse: Is the Energy Industry Going Back to the Future?

September 21, 2017

Energy, in particular the oil and gas industry, has always been one of the foundations of both the economy and the financial markets. The world has run on oil and gas for decades, to the extent that oil prices have been among the key determinants of recessions and market crashes. In recent years, that impact has been just as strong. The rise in oil prices in the 2000s—and the recent collapse—shook economies and governments around the world.

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Where Does the Fed Go from Here?

September 20, 2017

Today, the Federal Reserve’s two-day meeting on monetary policy will come to an end. With a news conference already scheduled, markets will be turning toward Washington to see what the Fed is doing today—and where it is likely to go from here.

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What Are Investors Worried About?

September 19, 2017

Yesterday, I spent the day in New York talking with a number of people, including many in the media. I always find this incredibly interesting. Media folks are invariably intelligent and very well informed about what a wide variety of players, including investors, are worried about—and what they are actually doing about it.

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Appearance on CNBC's Squawk Box, September 18, 2017 [Video]

September 18, 2017

In the past few weeks, we've seen North Korea launching missiles over Japan and the two worst storms in U.S. history. So, why are the markets still at all-time highs?

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Monday Update: Hurricane Harvey Leads to Disappointing Data

September 18, 2017

Last week presented a wide range of data—from the consumer, to manufacturing, to the economy as a whole. Although the results were generally disappointing, much of that weakness appears to come from the effects of Hurricane Harvey. Historically, major storms have resulted in weak data for a month or two. So, while it is worth watching, we will likely see a bounce back in the coming months.

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Is the Bitcoin Ride Over?

September 15, 2017

Recently, I announced that bitcoin was the winner of the “Bubby,” an award I made up for the bubble of the year. I kind of like the idea—and will do it again—but it was certainly done at least a bit tongue in cheek to highlight the appreciation over the recent past. Sometimes, however, you get it right almost by accident. Events since then have made that post seem somewhat prescient.

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A Broader View on Inflation: Looking at the Forest, Not the Trees

September 14, 2017

Among economists and investors, one of the biggest problems out there is inflation. It should be rising, but it isn’t. Related to this and contributing to the problem is that wages—according to theory and past history—should also be rising. Together, these would push all prices higher but are not. What's going on?

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What’s Behind Recent Stock Market Records?

September 13, 2017

This morning, you may have heard that the U.S. stock market eked out another new record yesterday. Indeed, this is great news and certainly a big deal—as it comes just days after two major hurricanes hit the U.S. and under the mushroom cloud of a simmering North Korea confrontation (remember that?).

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Monthly Market Risk Update: September 2017

September 12, 2017

Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. What will the risk levels look like this month? Let’s take a closer look at the data.

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Monday Update: Strong Business Confidence Continues

September 11, 2017

There were only two major data releases last week, but they were important in terms of the business sector: durable goods orders and the Institute for Supply Management (ISM) Nonmanufacturing index. Both were quite positive on the whole and suggest business confidence remains strong, which may result in faster business investment growth. Overall, the data indicates that the economy remains healthy and that economic growth is likely to continue at current rates or even accelerate over the near term.

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Economic Risk Factor Update: September 2017

September 8, 2017

August’s data was mixed, as improvements in business and consumer confidence were offset by a flattening yield curve and jobs numbers that were weaker than expected. These results were mildly disappointing. But the overall positive trends and, in particular, the high levels of confidence point toward faster growth toward the end of the year. 

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Investing in Troubled Times: Navigating North Korea, Harvey, and Irma

September 7, 2017

The past few weeks have been unusually turbulent. North Korea has tested what is reportedly a hydrogen bomb and launched a missile over Japan; as a result, the U.S. is openly considering war. Hurricane Harvey has been the most damaging storm ever, devastating both Texas and Louisiana. And now we have Hurricane Irma, the most powerful Atlantic storm in history, approaching Florida. Given these events, there are certain questions that investors should be asking themselves. That is, should we be doing something different? If so, what?

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Market Thoughts for September 2017 [Video]

September 6, 2017

August was a solid month for the economy and financial markets. International markets were mixed, but U.S. markets were up across the board, despite rising tensions with North Korea and the effects of Hurricane Harvey. Plus, retail sales came back, employment grew, and consumers seemed willing and able to spend.

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Monday Update: Outlook Positive for Faster Growth

September 5, 2017

Today's post is from Sam Millette, a fixed income analyst on Commonwealth's Investment Management and Research team.

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Is the Employment Boom Still On?

September 1, 2017

Early last year, I made a rather bold statement: the employment boom was on. I had been hinting at it well before that, but in April, I finally felt that I could make a good case. Now, more than a year later, concerns about the economy are rising. So, is the employment boom still on?

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