Must Read

Economic and and financial news and analysis

Global Asset Allocation Update:

There is no change to the risk budget this month. For the moderate risk investor the allocation to bonds is 50%, risk assets 45% and cash 5%. Despite the selloff of the last week I don’t believe any portfolio action is warranted. While the overbought condition has largely been corrected now, the S&P 500 is…

Big Outlier(s) For Consumer Credit

When the Federal Reserve last month updated its estimates for consumer credit, we thought it was concerning if consistent with the labor market that revolving credit jumped by $11.2 billion in November 2017. The increase continued a pattern of greater regular usage of largely credit cards in lieu of growing incomes which have pretty much…

Here’s Why This Week’s Historic Drop Is The Start of A Recession

This past weekend was bookended by two gargantuan selloffs: a 666-point drop in the Dow on Friday (spooky!), followed by 1,175 on Monday, the biggest one-day drop in the index’s history.

I won’t say “I told you so,” but if you took my advice and converted 60-70% of your assets to cash by the end of January, you should be breathing a sigh of relief right now.

As the week grinds on, we’re seeing a bit of recovery, but I should warn you – don’t be too sanguine.

Officially it takes 2 quarters in a row of falling GDP for the NBER to call a recession. By the time that second GDP report comes out a recession will have already been under way for 7-9 months. The Fed probably will not reverse its quantitative tightening program, which actually sucks money out of the financial market ecosystem, until at least then. With no economic slowdown even in sight, it is virtually certain that tightening money will be with us at least throughout virtually all of 2018.

That’s plenty of time for tight monetary policy, which the Fed euphemistically calls “normalization,” to cause considerable damage to stock prices. Apparently that damage has begun this month. The chances are that things will only get worse. Here’s why.

The post Here’s Why This Week’s Historic Drop Is The Start of A Recession appeared first on Lee Adler’s Sure Money.

Welcome Jay Powell, The Circular Hawk

Jerome “Jay” Powell was added to the Federal Reserve Board in May 2012. Quite an auspicious time to be thrown into things, Powell had avoided the “unexpected” liquidity crisis of 2011 but he did have to deal with its aftermath. By September of 2012, the Federal Reserve was once again debating yet more QE; a…

What Happened To The iPhone?

When Apple first came out with the iPhone in 2007, it was truly a revolutionary product. Even for those of us who hadn’t been impressed with Apple’s computers had to tip our caps to Steve Jobs (and team) for what they had pulled off. He knew it, of course, which is why earlier that year…