Lessons From Another Tough Week & The Big Day Ahead

It was another challenging week for the market. Overall, risk assets across various market segments moved steadily lower throughout the week. And those that had been heavily punished the prior week mostly struggled to find their footing. Capital markets are notably weak heading into the main event looming in the coming week. This, of course, is the latest meeting of the U.S. Federal Reserve’s Open Market Committee, which is expected to set the table for raising interest rates in the coming months. Given the market dependence on central bank liquidity, it is a meeting this Tuesday and Wednesday that has the potential to set the tone for the markets throughout the spring and into the summer.

Please click on the link to read more of my article on Seeking Alpha.

Beware Chasing QE

Investors are rushing to the European side of the global stock market ship. In a world that seemingly values the next dollar being printed by a global central banker more than underlying fundamental growth prospects, capital markets in the eurozone have been scrambling higher in recent months following the announcement by the European Central Bank (ECB) that they too are implementing their own quantitative easing program. The case for overweighting Europe is certainly reasonable, particularly given the attractive stock valuations relative to those found in the U.S. With that said, investors should beware of pouring into European stocks simply because QE is now underway. ECB QE is not necessarily the same as Fed QE. And recent history has shown that a QE program is not necessarily a sure fire guarantee to send stock prices higher.

Please click on the link to read more of my article on Seeking Alpha.

Friday’s Sell-Off: Assessing The Damage And Opportunities

Capital markets demonstrated clearly on Friday how upside down the investment world has become so many years after the outbreak of the financial crisis. Following the parade of generally disappointing U.S. economic news throughout the past month, investors were treated to a blockbuster February employment report that exceeded expectations. But instead of providing a lift to the markets, the positive news that the U.S. economy was adding jobs at a faster rate than anticipated sent investment markets reeling across the board. In the end, Friday was the worst trading day for stocks since January 5. But with such sell-offs, it is worthwhile to both assess the damage as well as consider the opportunities for what might lie ahead.

Please click on the link to read more of my article on Seeking Alpha.

Elevate My Market

It has been an extraordinary month of February for the U.S. stock market. It has received a steady stream of challenging if not outright gloomy economic news throughout the month. At the same time, corporate earnings growth forecasts for the coming year that were once positive by double digits only a few weeks ago have turned firmly negative. And the Chair of the U.S. Federal Reserve has made it rather clear, most recently in her testimony before Congress this week, that interest rates will soon be on the rise, most likely in June, which is earlier than market expectations. All the while, U.S. stock valuations have now crested the 20 times as reporting earnings mark on a trailing twelve month basis and are closing in on this frothy level on a forward basis too. But despite the fact that all of the news seems kind of gray, the U.S. stock market has only one place where it wants to go. It wants to go higher.

Please click on the link to read more of my article on Seeking Alpha.

Hawks Take Flight

U.S. Federal Reserve Chair Janet Yellen is scheduled to appear in front of Congress this week to present her semiannual testimony on monetary policy. And following a dovish interpretation by the markets of the minutes from the Fed’s Open Market Committee meeting in late January, investors should not be surprised if Ms. Yellen takes to the microphone on Tuesday and Wednesday with a more hawkish-than-expected tone about the Fed’s intentions for raising interest rates. The Fed wants to raise rates as early as June, and it seems they are running into a credibility problem in getting the markets to actually believe it.

Please click on the link to read more of my article on Seeking Alpha.


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