Sentiment vs. Technicals

10 Apr

We’re not supposed to discuss politics at parties. Well, we may want to exclude politics from our investments too.

The fact is, markets have performed much better under Democratic presidents than Republican ones. That seems to defy conventional thinking because Republicans are often thought of as pro-business, while Democrats are seen as proponents of labor and taxes.

Perhaps the exception to the rule, the market returns under President Trump’s administration have been rock solid so far. But what you see isn’t always what you get.

The charts, the momentum, the flows – it’s all very positive. But beneath the surface, things are murkier. For instance, New York Stock Exchange stocks trading above their 200-day moving average are at their highest levels in four years. That’s a strong signal of overextension.

The sentiment has been wildly bullish for quite some time, as have the market returns. Both are now hitting extreme levels, while the technicals behind the returns don’t induce as much confidence.

Fueling the sentiment is talk of tax cuts, deregulation, and infrastructure projects. And believe me, they’re all moving the market. But the fundamentals don’t tell the same story. They point to gradual growth at best.

This seems to be a broken record. Talk drives returns, while the financials make you wonder. But, the market is up, so nobody is complaining. Still, the gap between sentiment and hard financial metrics should be concerning for investors.

Leaving the Stock Market Party? No Need to Rush

3 Apr

The stock market continues to rise. We’re hitting records regularly in this long-running bull market. But at some point, the party will end. And when it does, many portfolios could tumble. It begs the question – when is it time to get out? It’s similar to when you’re at a great New Year’s Eve party. [...]

A Seismic Financial Regulation Shift is on the Horizon

27 Mar

We hear quite a bit about the Supreme Court and President Trump’s potential affect on it. Beyond nominating Justice Neil Gorsuch, the president could end up nominating more, especially if he wins a second term. But there’s another venerable institution that could be hugely impacted by President Trump – the Federal Reserve Board of Governors. [...]

In Every Border Battle, There are Winners and Losers

20 Mar

One of the most controversial parts of President Trump’s proposed economic policy platform is his plan for the border adjustment tax. You’ve probably heard about it – he wants to add additional tariffs on all imports to the U.S. If nothing more, it follows his “America First” economic philosophy. After all, we want to be [...]

Is it Time to “Sell High?”

13 Mar

The stock market has been delivering outstanding returns for a number of years now, despite some evidence that gains aren’t rooted in solid business fundamentals. I think the writing is on the wall for a correction, but I’ve thought that for a long time and it isn’t happening! Still, the fact remains that stocks are [...]

Curb Your Market Enthusiasm

6 Mar

President Trump’s first 30 days in office ushered in the biggest market returns under any president in more than 100 years. During that month, the Dow Jones Industrial Average made its largest gains since President Taft’s first 30 days in 1909. Now, I realize the president doesn’t directly impact the stock market. But the current [...]

Population Growth as Economic Stimulus?

27 Feb

We’ve all heard about the troubles with the Social Security program. From it being underfunded to fears of its insolvency, it’s clear there are issues that need to be addressed. Here’s an idea to improve things – we need more babies. The Center for Disease Control indicates the American fertility rate is down to 62.3 [...]

Americans Age 60+ Carry $66.7 Billion in Student Debt

20 Feb

When you think of retirement, what’s the first thing that comes to mind? No more rush hour, sleeping in, golf during the week, travel and…I bet I know what doesn’t come to mind – student debt. But people 65-years-old and older are the fastest growing segment of federal student loan debt holders in the U.S. [...]

Dying Industries Litter Our Economic Landscape

13 Feb

It seems all the talk lately is about jobs. How do we keep them? How do we create them? Well it’s no secret that automation, technology, legislation and globalization came together to destroy middle class jobs in the U.S., with manufacturing jobs particularly hard hit. President Trump recognized it. In fact, he won precisely because [...]

Business Community Welcomes Trump Tax, Regulatory Cuts

7 Feb

President Trump met recently with CEOs from a dozen major manufacturers, including Ford, Dell, Lockheed Martin, Tesla, Johnson & Johnson and more. The Trump administration’s message was simple and two-fold: Cuts to corporate taxes and onerous regulations are coming If manufacturing moves outside the U.S., expect stiff import tariffs The president told the CEOs that [...]