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Paulsen's Perspective

Oct 14 2019

Too Much Courage Or Fear?

  • Oct 14, 2019

The underlying character of the financial markets is often a good indication of investor sentiment. It takes courage (or stupidity in retrospect?) to buy certain assets, while the purchase of other investments is driven mostly by fear. In this fashion, a good read on whether the stock market is being propelled by excessive hope or angst can be obtained by monitoring the character of its leadership. 

Oct 07 2019

A “Mini-FANGs” Swap?

  • Oct 7, 2019

Despite a slowdown in old-era business investment (manufacturing) during the last year, new-era business spending (information processing equipment and intellectual products) remains healthy. This argues for continued leadership among technology stocks. 

Oct 03 2019

ISM or CYC?

  • Oct 3, 2019

The ISM manufacturing and services reports have significantly increased recession anxieties and have been wreaking havoc with the stock market over the last couple days. And, who knows, the real pain for equity investors may come tomorrow morning when the monthly payroll employment numbers are released?

Sep 30 2019

Preemptive Policy

  • Sep 30, 2019

One of the features arguing for an extension of this economic recovery and its corollary bull market is aggressive and “preemptive” economic policies! Hesitancy has frequently spelled trouble during past economic expansions. 

Sep 23 2019

Earnings Set To POP?

  • Sep 23, 2019

Several factors helped the stock market resume a climb to marginal new highs this year. Valuations came down, inflation pressures moderated, yields collapsed, and policy officials became universally supportive. However, a key element remains elusive and, without it, a further significant advance in this bull market seems doubtful. 

Sep 19 2019

Private Sector Press Conference

  • Sep 19, 2019

Yesterday, the Federal Reserve held one of its regularly scheduled press conferences, which are “must see TV” for investors. We all tune in to hear what the Board thinks about the economy and what they plan do about it. 

Sep 17 2019

A Shift In Leadership?

  • Sep 17, 2019

In the last couple weeks, the stock market has undergone a significant shift in leadership. Perhaps it is the long-awaited swing from “growth” to “value,” but so far it appears more like a shift from “defensive” to “cyclical.” 

Sep 12 2019

A Silent Productivity Miracle

  • Sep 12, 2019

Lost in the roar surrounding the trade war, the inverted yield curve, an expanding wave of negative global bond yields, and persistent recession chatter, is a “silent U.S. productivity miracle!” Largely AWOL in this expansion until recently, and despite being barely acknowledged due to widespread recession fears, productivity has finally arrived, adding yet another wildcard to the remaining years of this economic recovery. 

Sep 05 2019

A Low-Vol Signal SWITCH!

  • Sep 5, 2019

Investors have been playing defense in recent months, piling into bonds despite low yields, sleeping well at night with gold purchases, staying with the perceived safety of U.S. stocks, avoiding risky small cap companies, and buying traditional low-risk sectors including Utilities, Consumer Staples, and REITS.

Sep 03 2019

Stock Market STIMULUS!

  • Sep 3, 2019

What’s driving the stock market? Trade wars, inverted yield curves, Presidential Tweets, manufacturing weakness, negative yields, Fed confusion, earnings woes? Yes, all the above! 

Aug 30 2019

Segmenting Seasonality

  • Aug 30, 2019

Investors have long recognized that the stock market often does better in certain months compared to others. That is, stocks have a seasonality which can be exploited. The January Effect, the Santa Rally, “Sell in May and Go Away”; and, the carnage created by August, September, and October are appreciated and feared by “seasoned investors.” 

Aug 20 2019

Will Stimulus “Strike Out”?

  • Aug 20, 2019

Many increasingly fear the global economic recovery is in severe peril because overused economic policies have become futile. Bloated central bank balance sheets, large fiscal budgetary fiascos, and the unprecedented global phenomenon of widespread negative bond yields leaves an impression that economic help is spent!

Aug 16 2019

Positive Economic Surprises With... ANGUISH!

  • Aug 16, 2019

The stock market is re-testing its August 5th collapse low, the U.S. 10-year bond yield is nearing its lows of this recovery, yet another yield curve inversion (tens vs. twos) was breached this week, silence from the Federal Reserve, negative yielding global debt now totaling more than $15 trillion, an escalating riot in Hong Kong, and trade-war negotiations hanging by a thread as ongoing communications are now only by phone! Whew, it’s tough being a bull. Maybe foolhardy?
 

Aug 15 2019

Investment Bifurcation

  • Aug 15, 2019

Adding to current anxieties are the growing fears that businesses may be curtailing spending plans. Real nonresidential investment spending declined in the second quarter for the first time since early 2016. However, this decline was due entirely to ‘old-era investment spending’ while ‘new-era spending’ remains healthy. 

Aug 07 2019

Conflicting Counsel?

  • Aug 7, 2019

This is why financial market prognostications are so difficult and why some believe fruitless! Currently, two recession indicators – both with equally impressive accurate historical prowess – are giving entirely contradictory signals? As shown by the accompanying charts, the yield curve has inverted while fiscal stimulus has been expanding. At least since 1965, this has ‘never’ happened. 

Aug 05 2019

Show Me The Money!

  • Aug 5, 2019

Despite the current drama, the stock market will not likely be sustainably driven by the Federal Reserve, ongoing trade negotiations, or by presidential politics. Although these spectacles will continue to bounce the market around, ultimately, its direction will most likely be tied to corporate earnings. 

Aug 02 2019

Try To Relax, Policy Uncertainty Is UP And This Is Good For Stocks?

  • Aug 2, 2019

Whew, what a week! Confusion reigned surrounding monetary policy on Wednesday after Chairman Powell’s press conference, and then trade policy uncertainty surged on Thursday when President Trump announced new tariffs on Chinese goods

Jul 26 2019

The BH Ratio (not to be confused with the BS Ratio?)

  • Jul 26, 2019

Despite a widespread impression that business confidence is declining under the weight of ongoing global uncertainties, it was reported yesterday that, after being flat for almost a year, new orders for nondefense ex-air capital goods (core business capital goods spending) rose to a new recovery high in June. 

Jul 25 2019

Putting Humpty Together Again?

  • Jul 25, 2019

When Humpty Dumpty fell from the wall, all the king's horses and all the king's men could not put Humpty together again.

Jul 19 2019

Some Optimism For Earnings?

  • Jul 19, 2019

Little is expected from the current earnings season. At best, corporate profits may eke out a small gain compared to last year’s second quarter. Moreover, with Trump’s trade war still threatening to worsen, the yield curve still inverted, and because the U.S. economy is now in the longest expansion in its history, many are understandably worried that earnings growth may remain challenging. 

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