The Independent Market Observer

Main Street Vs. Wall Street

March 29, 2019

I was thinking again about the interesting times post. I want to give another slant on it that might help people get through the interesting times that are likely ahead: to separate our Wall Street thinking from our Main Street thinking. If we keep our minds firmly on Main Street, we can ride out quite a bit of news without getting derailed. It is when we start listening to Wall Street that we can get into trouble. This may seem a bit odd, coming from me. I’m a Wall Street creature, right?

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What Does Q1 Tell Us About the Rest of 2019?

March 28, 2019

As we move to the close of the first quarter, we now have some data to think about what the rest of 2019 will hold. Let’s take a look at what we can reasonably conclude.

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How to Think About Investing in Interesting Times

March 27, 2019

There is supposedly an old Chinese curse that states, “May you live in interesting times.” We certainly have been doing just that—and times look likely to get even more interesting going forward. But how do we think about investing (and living) in interesting times?

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Yield Curve Inversion: Evaluating the Risk

March 26, 2019

"More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly." — Woody Allen

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Appearance on Yahoo Finance Live: On the Move, March 25, 2019 [Video]

March 25, 2019

Do I think consumer confidence is a key economic statistic? I discussed this, the yield curve, and more today on Yahoo Finance's On the Move.

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Monday Update: Housing Does Well, But Fed Surprises Markets

March 25, 2019

The big economic news last week was the inversion of the yield curve (i.e., when the yield on 10-year U.S. Treasuries dropped below the yields on shorter-term notes). This warrants—and will get, tomorrow—a more detailed discussion, but the short version of the story is that inversions can indeed signal trouble in the next six to eighteen months, but not right away. This is one more sign of weakness, and something to watch, but not a sign of imminent doom.

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Is Corporate Debt the Real Risk in the Room?

March 22, 2019

Recently, I’ve had a lot to say about debt. Back in December, at the height of the holiday season, I wrote about consumer debt and concluded that it really wasn’t a significant risk. That’s the good, relatively speaking. Government debt, which I discussed about a month ago, is a bigger risk. That is certainly a problem but not an immediate one. My best guess is that it becomes an immediate problem at some time in the next three to five years. That’s the bad. Now, it’s time to move on to the ugly—corporate debt. Here, the bad news comes in several flavors

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Appearance on Yahoo Finance Live: The Final Round, March 21, 2019 [Video]

March 21, 2019

Is there something the Fed sees that the average investor is missing? Earlier today, I appeared on Yahoo Finance Live: The Final Round to discuss the Fed’s impact on the market, what areas of the market I'm interested in right now, and more.

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Fed to Economy: We’ve Got Your Back

March 21, 2019

Yesterday’s Fed statement and press conference revealed a significant reversal from previous meetings. When Chair Powell told markets to “drop dead” a few months ago, the consensus was that the Fed was committed to normalizing policy despite the market risks. Since then, and especially with the most recent statement and conference, the Fed has done a full 180. Now, it is acting to support markets and the economy.

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A Focus on Gratitude

March 20, 2019

This will be a short post as I am on a plane headed back home from Florida. For me, this brief time in the air is a great opportunity to do something I try to do a couple of times a year here on the blog: focus on gratitude. Gratitude is one of the easiest and most effective ways to improve your life. Doing a daily gratitude practice, where I write down three things I am grateful for every day, has changed my life immeasurably for the better. Gratitude is not usually associated with air travel, I admit, but let’s see what we can do here.

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What’s Behind the Latest Market Bounce?

March 19, 2019

With the market recovery continuing and after the decline at the end of last year, the market is once again moving close to new highs. The multibillion dollar question here is why that is—which hopefully will give us some guidance as to whether it will continue.

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Monday Update: Inflation Under Control, But Data Still Weak

March 18, 2019

Last week was a busy one for economic data. But the week ahead will be slower, consisting of housing reports and the regular meeting of the Fed.

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Are the Economy and Markets More Fragile Than They Seem?

March 15, 2019

To follow up on my most recent Economic Risk Factor Update and Monthly Market Risk Update, as well as on my colleague Anu’s post on whether the Fed might resort to negative rates, I want to think about where the economy is headed. As I pointed out in the risk updates, the headline news is positive. All the economic indicators that I follow are outside the risk zones, market risk indicators have improved over the past month, and, in general, things are good. At least markets certainly think so. But as I look beyond the headline data, there is a strong case to be made that the current good conditions are much more fragile than they seem.

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Will the Fed Cut Rates to Negative?

March 14, 2019

Brad here. With the Fed widely perceived as having hit pause on rate increases, with the European Central Bank launching stimulus again, and with rates declining around the world (back into negative territory, in many cases), it is time to start thinking about what the Fed might do in the next recession. Anu Gaggar of our Research department put some relevant ideas together that we should be considering as we contemplate the next couple of years. Thanks, Anu!

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Monthly Market Risk Update: March 2019

March 13, 2019

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 March? Let’s take a closer look at the numbers.

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Economic Risk Factor Update: March 2019

March 12, 2019

After signs of weakness in January, the question was whether we would see a rebound in February. In some areas—consumer and business confidence—we did, largely driven by the end of the government shutdown. This confidence rebound has reduced risk going forward, although we need to pay attention to whether it holds.

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Monday Update: Weak Trade and Jobs Data, But Business Confidence Improves

March 11, 2019

Last week was a busy one in terms of economic updates, including the very important jobs report. This week, we’ll get a look at retail sales and manufacturing.

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Disappointing Jobs Report Not the End of the World

March 8, 2019

There’s no getting around it: the jobs report, with only 20,000 jobs added last month across the entire U.S., stinks. This is a terrible report, and it should strike fear and loathing into the hearts of every economist and citizen in the country. This opinion is the bulk of what I suspect you will be hearing, and it is largely correct.

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19 Years Ago, Dot-Com Hit Its Peak

March 7, 2019

Yesterday, I wrote about how we’re approaching the 10th anniversary of the market bottom, when the S&P 500 touched 666 and then started to rebound. Today, I want to talk about a different market milestone: March 10, 2000 (19 years ago this weekend). That’s when the Nasdaq Composite, the tech index that exemplified the dot-com boom, peaked and started to decline.

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10 Years After the Market Hit Bottom, Where Are We Now?

March 6, 2019

I am in Colorado this week at a Commonwealth conference, spending some time at high altitude when I normally live pretty much at sea level. The altitude seems somehow appropriate, though, when I look at where the markets are right now compared with where they were 10 years ago. We have climbed to astonishing heights since the bottom—heights almost no one expected back then.

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A Look Back at the Markets in February and Ahead to March 2019

March 5, 2019

From a financial markets perspective, last month was a good one. U.S. markets were up between 3 percent and 4 percent, developed international markets were up 2 percent to 3 percent, and even emerging markets managed to notch a small gain. Overall, February was another step forward from the decline at the end of last year, suggesting markets have regained their footing.

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Monday Update: Economic Data Weak, But Signs of Improvement

March 4, 2019

Last week was a busy one in terms of economic updates, as we continue to see the release of data that was delayed by the government shutdown. This week should also be full and provide further insight on whether the recent spate of weak data is likely to continue.

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Market Thoughts for March 2019 [Video]

March 1, 2019

February was another good month, with U.S. markets, developed markets, and fixed income showing gains. Still, the housing market continued its slowdown, and business investment softened. We also saw a terrible retail spending report. But the market was able to bounce back from the lows seen at the close of 2018, buoyed by the end of the government shutdown.

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