Posts Tagged ‘short-term cash alternative’

The End of Slow

July 6th, 2018 by Kurt L. Smith

Halfway through the year and still no Bond Crash of 2018. Despite the double-digit losses in the longer US Treasury market discussed last month, the sell-off is orderly. With a recent temporary pause (treasury bond prices have bounced the past six weeks), the set up remains quite ripe for the Bond Crash of 2018.

Stocks are doing their part as well. Take a look at the Dow over the first six months of the year. A sharp rise into January’s record highs only to swoon into February’s dive. Given ample opportunity for investors to buy this year’s dip, the Dow has instead delivered how a bear market behaves. Gapping down, filling gaps, falling further and partial retracements of late…these are bearish descriptions of the Dow over the past weeks.

We are left with a bond market bear that began in 2012 and the beginning of one for stocks. This, despite record profits, surging growth, tax cuts and off the chart optimism in just about every metric out there. The market doesn’t care; the market is a market.

The importance of these paragraphs are not because they portend change, a change we can all ride out together. No. These paragraphs and my years of harping on this subject is because the changes will be generational, unfathomable changes. (more…)

Remember Credit Quality?

April 2nd, 2018 by Kurt L. Smith

Since November’s letter, Top of Tops, I’ve discussed the unfolding progress of the new bear markets in both stocks and bonds. While recognizing the risks of an impending bond market crash, we instead were treated to the beginning of a stock market crash.

On March 23^rd the Dow closed at 23,533, essentially even with the November 1^st close. But what a wild five months it has been for stocks. Almost straight up to the all-time high of 26,617 January 26th, to a 12% sell off in a mere ten days to a new closing low as of this writing.

I don’t just see possible horrific losses for stocks unfolding, I see probable horrific losses for stocks unfolding. This is why I have referenced the 1987 stock market crash (down 22% in one day, down 40% over eight weeks). The seemingly impossible has happened before. Who knows, this time it may be worse.

Conventional wisdom may direct investor’s funds towards bonds if such a stock market panic unfolds. That would be a mistake in my opinion. While stocks attempted to bounce since their 12% sell-off and have failed, bonds did rally. But this rally happened in the midst of a larger bond market sell-off. With an overall downtrend for both stocks and bonds, if both do get aligned and move strongly lower together the resultant fear could heighten concerns of a crash in financial asset values. (more…)

The Trend Is Not Your Friend

November 11th, 2015 by Kurt L. Smith

Investors look to the Federal Reserve for economic leadership. Looking backward, one might say the Fed helped get the economy back on track with lower interest rates, higher asset prices and lower unemployment. Looking forward, the Fed continues to feed us the line that next month or next quarter will be better. (more…)

Markets Move; Fed Does Not

October 5th, 2015 by Kurt L. Smith

We have witnessed a reversal from the slow and steady rise of the stock market to greater volatility including a twelve percent decline in the Dow in a mere four days back in August. Stocks recovered going into the Federal Reserve’s interest rate announcement September 17^th, yet the Fed chose not to move on interest rates. (more…)

We Live In Interesting Times

September 1st, 2015 by Kurt L. Smith

While waiting for the next move higher in long-term interest rates, the Dow decided to shed 1000+ points. And that was only in the first eight trading days following the publication of the August Letter. (more…)

Rates Rise, Prices Fall

August 12th, 2015 by Kurt L. Smith

Interest rates are moving higher. While markets do not move in a straight line, they do move consistent with the trend. The trend for interest rates is up and the ramifications for investors worldwide will probably be huge. (more…)

Buy The Euro; Enjoy Your Trip

February 6th, 2015 by Kurt L. Smith

Hot on the heels of a plunge in oil prices, the Euro has quickly reached a twelve year low. From 140 in May 2014 to 111 last month, like the price plunge in oil from $107 in June 2014 to $44 last month, we have no idea of the economic disruptions that are now under way. (more…)

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