The Independent Market Observer

Dow Drops 500 Points: Is the Sky Falling?

January 31, 2018

Over the past two days, we have had the first sell-off in quite a while. With the Dow falling more than 500 points, is it time to stock up on canned goods and supplies? I don’t think so.

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An Economic State of the Union

January 30, 2018

With President Trump scheduled to give the annual State of the Union address tonight, I thought it would be a good time to consider the economic state of the union. As usual, of course, I am going to pass on the politics and instead take a big-picture look at the economy. 

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Monday Update: Strong Data Continues, Despite Some Weakening

January 29, 2018

The government reopened quickly after a brief shutdown, so last week’s economic data was released after all. It included big-picture news from across the economy, with the signals remaining positive overall despite some weakening in several areas.

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What Does the Decline of the Dollar Mean?

January 26, 2018

One of the dominating economic headlines of late has been the weakness of the dollar. These stories have been exacerbated by Treasury Secretary Steven Mnuchin’s comment that the “dollar is not a concern of mine.” Reading through the news, there is certainly a great deal of concern over whether a weak dollar is a sign of trouble ahead and whether the decline could get even worse. So, should we as investors or as citizens be worried? In a word, no.

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Why Your Portfolio Didn’t Beat the Dow

January 25, 2018

When investors look at their final statements at year-end, there is bound to be lots of discussion about how their portfolios performed. And, as has become usual in the past couple of years, there will be questions about and comparisons between the U.S. stock indices and that performance. In other words, how can the Dow or the S&P be up by that much and I am “only” up by X?

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Should We Be Worried About a Trade War?

January 24, 2018

With the news that President Trump has imposed tariffs on solar panels and washing machines (an interesting combination), the prospect of a trade war has moved to the front of the risk parade. What do these tariffs mean for your investments and the economy? Should we be worried? Despite the headlines, the answer is “not yet.”

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Corporate Earnings for the Close of 2017: Good Despite the Headlines?

January 23, 2018

With the market surging and expectations high, I want to look at the actual corporate earnings numbers for 2017. Of course, it is early in the season to do any definitive analysis. But we can certainly set some context, which will be particularly useful for this year.

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Monday Update: Data Strong, But Pulling Back a Bit

January 22, 2018

Last week’s data included news from across the economy. Overall, the signals remained positive, despite some weakening in several areas.

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Waiting for the Government Shutdown (Again)

January 19, 2018

As I have been saying, things are pretty good, economically speaking, as we move into the new year. But there is one significant risk that we need to watch. I’m speaking of the pending deadline (midnight today) when funding for the government runs out. At that time, the U.S. debt ceiling extension ends, the government cannot borrow any more money, and—if Congress (including both Republicans and Democrats) can’t come to some sort of an agreement—the government shuts down.

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Appearance on CNBC's Squawk on the Street, January 17, 2018 [Video]

January 18, 2018

As the conglomerate General Electric weighs a breakup, what will be the effect on its shares? Yesterday, I shared my thoughts on CNBC's Squawk on the Street, including challenges on the fundamentals side.

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The Tax Bill Becomes Real: Cash Repatriation

January 18, 2018

This morning, the big news was Apple’s announcement that it will bring back what appears to be essentially all of its cash held abroad to U.S. jurisdiction. The immediate impact will be substantial, with Apple saying it will pay $38 billion in taxes. If the remaining U.S. companies with cash overseas were to do the same thing, more than $300 billion would be raised—which would certainly help with the deficit and be good for governmental finances. This is a real benefit of the tax bill.

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Dow 26K: Is This One Different?

January 17, 2018

With the Dow opening above 26,000 yesterday morning, I was all set to continue down the same path of my Dow 24K and Dow 25K posts. Alas, it wasn’t to be. Although markets are up, the Dow is below the magic number as I write this, which is certainly okay. It would not be a bad thing to take a little longer to hit another milestone, as I noted in those previous posts. But what was really interesting about yesterday was not that the milestone was cracked. Rather, it was that sentiment changed and pulled it down again. Past breaks, on the other hand, have driven the market higher. Is this one different?

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Monday Update (on Tuesday): Prices Steady, Consumers Spending

January 16, 2018

Last week was a slow one for data releases, with only consumer prices and retail sales. Overall, the news remained good. The expansion continued, with inflation maintaining a moderate pace and consumers spending freely.

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Appearance on CNBC's Nightly Business Report, January 11, 2018 [Video]

January 12, 2018

Yesterday, I appeared on CNBC’s Nightly Business Report (my segment starts at 11:09) to discuss the effect of rising interest rates on utility investments. Although there are some short-term concerns for investors, there is certainly no cause for panic. Listen in to learn more.

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What Do Higher Interest Rates Mean for Investments?

January 12, 2018

With interest rates rising recently, I have received a number of questions about what that means for our investments. It’s not as simple a question as you might think. As such, it is worth taking some time to think things through.

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Appearance on CNBC's Power Lunch, January 11, 2018 [Video]

January 11, 2018

Although many are talking about higher rates, I think the real market story is deregulation. I shared my thoughts on this and more earlier today on CNBC's Power Lunch.

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What Investors (Should) Know Ahead of Time

January 11, 2018

investorsI was thinking about demographics the other day, in the context of what they mean for economic growth over the next decade or so. One of the reasons growth has been so slow in recent years is simply because of the age mix of the population. Baby boomers are aging and retiring, so they are spending less. The rising millennial generation, on the other hand, has not yet hit its peak earning and spending years. As such, the drag from the boomers offsets the gain from the millennials. It will continue to do so for the next couple of years, but then that will change. The effect of demographics is one of the few things we really can know ahead of time in economics. We know who has been born—and when. After that, it is just a matter of counting.

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Monthly Market Risk Update: January 2018

January 10, 2018

Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for January? Let’s take a closer look at the numbers.

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Economic Risk Factor Update: January 2018

January 9, 2018

December’s data remained solid on an absolute basis, suggesting ongoing growth into 2018. With job growth showing signs of a slowdown and consumer and business confidence exhibiting signs of topping, however, the momentum of late 2017 may be fading. Fed policy remains stimulative, although less so than in previous months, but pending expected rate hikes may also start to erode that momentum.

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Monday Update: Economy Still Strong, But Signs of Slowing

January 8, 2018

Last week was a busy one for data releases, giving us a wide-ranging look at the economy. Overall, the news remains good and the expansion continues. But there are also signs that growth may be slowing.

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Dow 25K: A Look Beyond the Headlines

January 5, 2018

Here we go again!

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What to Watch for in 2018: Housing and Auto Sales

January 4, 2018

Yesterday, I noted briefly that I would be “keeping an eye” on how long the good times last in the new year. It was one of those offhand comments that, once you think about it, really requires quite a bit more thought and analysis than at first glance. As an example, my dog is now barking like crazy at the snow. Why is he barking? I don’t know, and I suspect he doesn’t either. He just knows things are different and therefore worrying, and he wants to let his people know he’s on the job. My aim is to be at least slightly smarter than the dog here, so let’s lay the groundwork for what we will be watching in 2018.

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A Quick Note to Start the New Year

January 3, 2018

Today’s post will be a quick note as I catch up after a couple of weeks out for the holidays.

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Market Thoughts for January 2018 [Video]

January 2, 2018

December was another month of good news for the markets. U.S. markets were up across the board, international markets did even better, and emerging markets hit it out of the park. As a result, we are entering the new year with a huge amount of momentum. Hiring continues to be strong, consumer confidence is very close to the highest level since the dot-com boom, and business confidence remains high.

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Monday Update (on Tuesday): Consumer Confidence Pulls Back

January 2, 2018

Last week was a short one, due to the Christmas holiday, with only one major data release. But the week ahead will be a busy one and will give us a wide-ranging look at the economy.

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