Stocks: The Correction Is Underway

The stock market correction is underway. It is neither long nor deep. Nor is it anything that should cause stock investors alarm, at least at this point. But it is now taking place. Thus, it is worthwhile to consider how low stocks might go before the seemingly inevitable bounce that follows.

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About A Bullish Bond Outlook

I remain bullish on bonds. And now may be an opportune time to add to bond allocations for those that may be interested in an added layer of diversification against a stock market that may have gotten way ahead of itself over the past few months.

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Field Of Stock Market Dreams

The stock market rally has been lacking something over the last several years. Rising stock prices are typically accompanied by rising capital expenditures. But over the past several years, this has not been the case, as capital expenditures have effectively stalled as stock prices have soared to new all-time highs. Looking forward, a long overdue pick up in capital spending will be required to keep the stock market going to the upside. Conversely, if business investment ends up contracting, it would effectively take wrecking ball to the post crisis stock market rally along with it.

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Mr. Creosote Vs. Mr. Market

The stock market is looking full. After nearly a decade of gorging itself at the trough of freely flowing liquidity from the U.S. Federal Reserve, stock prices are surging toward unprecedented levels relative to consumption in the underlying economy. Given the implied excesses in stock prices, one is left to wonder when Mr. Market will take down that last marginal wafer-thin mint before it explodes back to normal.

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The Fed Weathervane

Another day, another parade of speakers from the U.S. Federal Reserve headed to the podium. While their commentary is increasingly falling on deaf ears for the market, thanks to their seemingly boundless propensity to over-hint and under-deliver during the post-crisis period, not to mention the news competing for the headlines out of Washington, it is arguably more worthwhile than ever to pay close attention to what they are saying now that they are finally backing up their words with actual action on interest rates. With this in mind, it is also important to establish a baseline against which the path of future rate increases may be compared going forward.

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