The Independent Market Observer

Q&A with Brad

June 29, 2018

Whether it is in the Comments section of this blog, the Have a Question? form you see on the right, e-mails, or everyday conversations, people ask me a lot of great questions. It’s just the nature of the work I’m in. But since these questions come in from so many different places, I thought it would be useful to accumulate them—and my responses—and share them here for the benefit of all my readers. Today, we have two reader questions, so let’s dive right in.

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What Happens When the Yield Curve Inverts?

June 28, 2018

Recently, I have gotten a couple of questions about the inversion of the yield curve, prompted by media coverage. On the theory that one question means one hundred people would like to know, let’s take a look at this important indicator, what it means, and what it doesn’t mean.

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Some Thoughts on Technology and Risk

June 27, 2018

Today's post is going out a bit later than usual, as I’m experiencing some problems related to technology and distance. You see, I am lucky enough to be at the Commonwealth Leaders Conference, which is taking place on a cruise ship now located in the Gulf of Alaska. It is pretty close to the middle of nowhere from a tech standpoint. Wi-Fi, when we have it, is spotty. It is surprising to me just how much of a difference this makes in my life. My name is Brad, and I have an Internet problem. Something to think about when I return!

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Market Down Again, But Signs Remain Positive

June 26, 2018

Yesterday was a bad day for the U.S. stock market. But is it time to worry yet? The short answer is, “probably not.” “Not” because the economic and earnings fundamentals remain sound. “Probably” because the slow progression of trade worries may be starting to shake market confidence. The longer answer, however, gets more into the details.

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Monday Update: Housing Data Shows Signs of Slowing

June 25, 2018

Last week's economic reports were all about housing, and we’ll get some insight on the consumer in the week ahead.

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China and Technology

June 22, 2018

After our series on tariffs and trade wars, one topic remains that doesn’t really fit into that discussion: China and technology. One of the very real issues that often comes up in trade talks is what the U.S. can or should do about the fact that China is making a deliberate attempt, by hook or by crook, to acquire technology that it can use to compete with the U.S. Surely, this problem has to be considered when we look at trade.

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Italy: Reflections from an Informed Observer

June 21, 2018

Brad here. One of the problems we have in the U.S. is that we are largely forced to rely on the media to cover events abroad. While useful, this reporting can miss important details about what is really going on, as anyone who has been at an event and then later read coverage can attest.

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RIP General Electric

June 20, 2018

One of the big pieces of news in the financial world today focuses on General Electric (GE). The iconic American conglomerate has been removed from the Dow Jones Industrial Average, and its stock will no longer be included when the index is calculated. It will be replaced by the drugstore chain Walgreens.

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Tariffs and Trade Wars: Part 4

June 19, 2018

As we close out this series on tariffs and trade wars, let’s review what we’ve covered so far.

There is a case to be made for modifying the existing world trade system, and there are systemic imbalances and costs that need to be rectified. That being said, we need to ensure that we maintain as many of the good things about the current system as we can because, despite the costs, the U.S. is actually in a very favorable position overall.

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Monday Update: Inflation and Retail Sales on the Rise

June 18, 2018

Last week was a busy one for economic reports. The week ahead will be a bit slower, although we will get some news on housing.

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Tariffs and Trade Wars: Part 3

June 15, 2018

We closed part 2 of this series with a summary of the benefits of the current system of open trade: peace, prosperity, and, for the U.S., control of the world system. Although this has come at substantial financial and trade cost to the U.S., this cost has been more than offset by the benefits. Indeed, everyone has won from the current system.

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Appearance on CNBC's Power Lunch, June 14, 2018 [Video]

June 14, 2018

Earlier today, I appeared on CNBC's Power Lunch to discuss the Fed’s most recent rate hike and its impact on the markets. Listen in to learn more.

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Tariffs and Trade Wars: Part 2

June 14, 2018

In part 1 of this series, we discussed how, overall, tariffs can create localized benefits (e.g., helping a particular industry), but they do so by imposing higher costs on the rest of the economy. We also discussed the wider implications—primarily that when a country imposes tariffs, there is a real possibility that other countries will retaliate. This leads to a vicious circle that leaves everyone worse off. Economically, tariffs don’t make a lot of sense.

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Tariffs and Trade Wars: Part 1

June 13, 2018

Trade and tariffs just made the front pages in a big way with the confrontation between the U.S. and other countries at the recent G7 summit. Terms like trade war are being thrown around, and Canada (Canada!) is openly threatening retaliation. So, now seems a good time to take a look at what is really happening—and what it might mean for us and our investments.

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What’s Going on with Emerging Markets?

June 12, 2018

With emerging markets hitting the headlines once again, today we have a great piece from Commonwealth analyst Anu Gaggar on what is going on and—more important—what to do about it. Take it away, Anu! — Brad

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Monday Update: Service Sector Confidence Rises, Trade Deficit Down

June 11, 2018

There were only two major economic news releases last week, but the week ahead will be a busy one.

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Monthly Market Risk Update: June 2018

June 8, 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 June? Let’s take a closer look at the numbers.

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Economic Risk Factor Update: June 2018

June 7, 2018

May’s data improved over an already solid April. Job growth accelerated further, and consumer confidence remained strong. Business confidence also bounced back, taking the trend back to positive territory. Finally, Fed policy continues to be stimulative, which is helpful despite the likely rate increase this month. Overall, the economic data indicates that growth continues and that the recent soft spot may be passing.

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Black Swans!

June 6, 2018

This will be a short post as I am traveling. I spent last weekend in London, where I saw (to my delight!) not one but several black swans.

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A Look Back at the Markets in May and Ahead to June

June 5, 2018

As we head further into June, let’s take a moment to look back at May’s economic news, plus what to expect in the month ahead.

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Monday Update: Strong Spending and Job Growth

June 4, 2018

Last week’s reports gave us a broad look at the economy, from employment to manufacturing. This week, we will see two major releases.

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Market Thoughts for June 2018 [Video]

June 1, 2018

May was a good month, continuing the recovery from the pullback we saw at the start of the year. In the U.S., markets were up almost across the board. Consumers continue to spend, and businesses remain confident—with manufacturing doing particularly well. Plus, the government is contributing to this growth by cutting taxes and spending more.

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