Japan Stimulus: Not My Cup Of Sake

Friday highlighted once again the importance of maintaining a long bias to stocks at least for now in an investment portfolio regardless of your long-term outlook for the global economy and its markets. In a surprise revelation, the Bank of Japan announced that it was raising the stakes on its already unprecedented monetary stimulus program. In short, they have essentially decided to push the accelerator even further through the floor. The stakes are higher than ever with this latest policy move, and the stability of the global financial system may ultimately hang in the balance. But such are worries for another day apparently. In the meantime, it is worthwhile to consider the sustained near-term impact on global financial markets, including both U.S. and Japanese stocks.

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

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.

U.S. Stocks: All Better Now?

After having drifted lower since the beginning of the month, the U.S. stock market as measured by the S&P 500 Index suddenly exploded higher on Tuesday. And the key index tacked on a few additional points on Wednesday. In the process, the S&P 500 not only broke decisively above its recent downward trading channel but also nearly set a new all-time intraday high. Such a decisive reversal might understandably lead one to conclude that all is once again right with the U.S. stock market. But one does not have to look far under the surface to find evidence to the contrary.

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.

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