A Once In A Generation Change For Stocks

The Federal Reserve is currently undergoing a monumental change in its monetary policy priorities. This shift marks a major departure from the focus that has defined the Fed’s work for more than a generation. And if the Fed actually follows through with this transition, it will have dramatic implications for years if not decades to come on financial markets that have become so heavily dependent on the persistently generous support of monetary policy for over a quarter century. Yet financial markets seem to hardly notice these recently explicit signs that we may be right now at the dawn of a new era for Fed policy. As for what lies ahead in the next phase, stock investors will almost certainly be required to work much harder to generate consistently positive returns than has been required over the past few decades.

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

Threats Remain Despite Wednesday’s Rally

What a fantastic afternoon. After threatening to break lower for much of the morning, stocks exploded to the upside upon the release of the Fed minutes from a meeting held three weeks ago. But today’s trading action obscured what has been the development of larger, more disconcerting trading pattern. For the stock market remains on an increasingly wild roller coaster ride that started several weeks ago. And in what has become an unfamiliar condition for those that hold publicly-traded equity in U.S. companies, the value of this ownership has actually been declining in value on net since the beginning of September. Even after today’s surge, the ongoing down drift in stocks represents the longest sustained correction in stocks since the fall of 2012. Despite this recent weakness, investors continue to have good reason for optimism, as fresh new highs remain well within reach. With that said, now is also not the time for complacency either, as the recent downtrend not only remains unbroken but may also represent the very beginning of what is to come over the next several years.

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

Are You Positioned For ECB Stimulus?

The European Central Bank (ECB) brought fireworks to their latest press conference this past Thursday. Not only did ECB President Mario Draghi announce a cut of its main lending rate to the “lower bound” of 0.05%, he also revealed that the central bank’s intent to enter into its own form of quantitative easing (QE) by purchasing asset backed securities (ABS) and covered bonds at totals estimated between $500 billion to $1.3 trillion as early as October. This targeted long-term refinancing operation (TLTRO) is being done with the stated objective of trying to more directly promote lending activity to small and mid-sized businesses across the euro zone. Given that we have seen so many of these monetary stimulus programs initiated by global central banks over the past few years, it is reasonable to consider whether a portfolio strategy is well positioned for this latest ECB stimulus plan.

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

A Market That Defies All Expectations

A constant refrain over each of the last six years has been the imminent bursting of the bond market bubble. But with each passing year, the bond market continues to defy the skeptics. Despite all of the talk about the Fed ending its quantitative easing program and the threat of rising interest rates in the coming year, the bond market has not only been holding its own but also has been rallying smartly in 2014. The bull market in bonds is now in its 32nd year and remains very much intact. And the latest rally in bonds has brought with it a new and unusual cast of asset class characters this time around.

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

The Good News From A Bad Friday

Friday was another down day for stocks following the notable -2% decline on Thursday. After a few feeble pushes to the upside in the early morning trade, stocks rolled over and were solidly down once again by midday before battling back into the close. But despite the generally poor performance of stocks for a second consecutive day on Friday, several important points of good news accompanied the bad. Overall, investors could find reassurance at least as we head into the weekend that the latest stock market correction is taking on a more orderly behavior.

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

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