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Paulsen's Perspective

Jan 13 2020

Profits Please?

  • Jan 13, 2020

Geo-political conflicts, an oil crisis, impeachment drama, and an upcoming presidential election are all currently rattling the stock market. Yet, what really matters for stocks this year is profits. For the stock market to make sustained progress in 2020, companies’ bottom-line performance needs to show renewed life.

Jan 07 2020

Super Cycles

  • Jan 7, 2020

Including those who are bullish for this year, few expect stocks to continue delivering superior returns during the next decade. The economic expansion and bull market are simply too long in the tooth, and valuations too extended, to produce another decade of solid results.

Jan 02 2020

2020 Outlook?

  • Jan 2, 2020

Uncharted Waters! That is the overwhelming impression entering a new year in the midst of the longest economic expansion and bull market in U.S. history! After all, every day is now another record performance as investors are forced to travel where no man or women has gone before. 

Dec 23 2019

A Profits POP?

  • Dec 23, 2019

Economic reports have improved in recent months. In the U.S., job creation has remained healthy, consumer and business confidence measures have improved, housing activity has surged, and the Markit Manufacturing PMI survey has risen in three of the last four months. 

Dec 19 2019

A New Bull Market?

  • Dec 19, 2019

The S&P 500 did not suffer a bear market last year. At least not by the conventional definition of a 20% decline. However, it was razor close—dropping 19.8% from its highest- to lowest-daily close. Given that, in every way except for -0.2%, the U.S. stock market did suffer a Bear last year, how does its 2019 rally compare thus far to the average “Bull Market Rally?” 

Dec 17 2019

Maybe Valuations Are Reasonable?

  • Dec 17, 2019

Since the early 1990s, with only a brief exception at the worst of the 2008-09 bear market, the U.S. stock market valuation has been considered “high” to “ridiculously high.” This is illustrated in Chart 1, which shows the Shiller CAPE Price/Earnings (P/E) multiple since 1900. 

Dec 10 2019

Small Biz Feeling Better About Profits?

  • Dec 10, 2019

The November NFIB Small Business Optimism Index rose by a healthy amount this morning. Among the 800 small companies surveyed, there were solid gains across an array of different business trends.

Dec 10 2019

What’s Wrong With LOW Yields?

  • Dec 10, 2019

Are incredibly low yields a signal of imminent peril and a clarion call for caution? Or, alternatively, could they represent an amazing investment opportunity?

Dec 05 2019

A New Recession Gauge

  • Dec 5, 2019

Tomorrow is another “Payroll Friday” and, after a disappointing ADP employment report yesterday, Wall Street will be watching for any indication that businesses are pulling back on job creation. 

Dec 02 2019

Unused Capacity?

  • Dec 2, 2019

Based on the calendar, both the economic recovery and bull market are the oldest in U.S. history. Other measures also support this view: 1) the unemployment rate is below 4%, suggesting the job market is at full employment; 2) compared to long-term benchmarks, both the U.S. stock market and bond market are richly priced; 3) several global bond yields are negative; 4) central bank balance sheets have been abnormally expanded; and, 5) the current U.S. federal deficit (as a percent of GDP) is one of the largest non-recessionary deficits of the post-war era.

Nov 21 2019

Cyclical Stocks?

  • Nov 21, 2019

True to their name, cyclical stocks are volatile. They are not to be used in big doses, they are not for the faint of heart, and they are not to be “bought and held!” The overall stock market and therefore most portfolios are exposed to some cyclicality. The question is always, “how much?” While it is admittedly challenging, well-timed tilts away or toward some cyclical sectors can add handsomely to total portfolio performance. 
 

Nov 19 2019

Discounted Destiny?

  • Nov 19, 2019

The dividend discount model is a popular, conventional method of valuing a stock using the present value of its future dividend payments. The two major components comprising this valuation approach are earnings (from which dividends are paid) and the bond yield (or discount rate used to determine the present value of the future dividend stream).  
 

Nov 14 2019

Powell’s PRESSURE?

  • Nov 14, 2019

After a tumultuous year trying to ignore the president of the United States’ constant public criticism, Federal Reserve Chairman Powell reported during his testimony yesterday, “Monetary Policy is in a good place!”
 

Nov 08 2019

If The U.S. Succeeds… Buy Foreign!

  • Nov 8, 2019

President Trump is focused on improving “fair” trade. He has renegotiated several U.S. trade agreements aimed at making U.S. producers more competitive, reducing significant U.S. trade deficits, and ensuring the U.S. dollar is priced appropriately. 

Nov 04 2019

A "Dollar Downer?"

  • Nov 4, 2019

Although it has been essentially flat since early 2015, dollar strength in 2019, in combination with a slowdown in the global recovery, has been particularly hurtful for the U.S. economy.

Oct 31 2019

We Need Some Manufacturing Momentum!

  • Oct 31, 2019

Tomorrow is the monthly jobs report. It’s always widely anticipated since it frequently moves the financial markets. Moreover, it concludes a week that has been filled with potential blockbuster events, including significant earnings reports, ongoing official trade-war commentary, a Fed decision, the elimination of an ISIS leader, and a formal Congressional presidential impeachment inquiry. 
 

Oct 28 2019

Cyclical Scarcity

  • Oct 28, 2019

Scarcity is a good attribute for an investment. A limited supply tends to curb downside risk and fuel upside price potential once the asset is in vogue. In the stock market, scarcity is often associated with a temporary restriction (e.g., an oil crisis) or with a company possessing a monopoly of an innovative must-have product. For an investor, a scarce asset that becomes popular when most don’t own it is a beautiful thing! 

Oct 22 2019

A Crescendo Of FEAR… And… CHANGE Afoot?

  • Oct 22, 2019

Despite a significant stock market rally, this year has been beset by escalating recession fears. The list of worries include broad-based slowing in the global economic recovery (centered in the manufacturing sector), a never-ending trade war, persistent political and geo-political drama, a chronic decline in global bond yields, a surge in negative yielding bonds, an inversion in the U.S. yield curve, and an expansion that recently celebrated a birthday which makes it the oldest ever in U.S. history!

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. 

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