Dalton — We’re entering the third quarter, which has historically been the worst quarter of the year for the stock market. We’re also entering the final four months of an election season, which tends to experience some stock market weakness somewhere in the middle of that stretch. As an investor, I’m not excited about the
The stock market is always going to have corrections. For me to say that we’re going to get a correction isn’t me pretending to say I am Nostradamus. Corrections happen all the time.
Stop. Stop it. For the love of all that is holy, stop saying that there will be a V-shaped recovery coming out of this recession.
However, keep in mind the stock market does best when it goes from “bad” to “less bad.” We are certainly not out of the woods yet.
The coronavirus aside, the stock market typically does its best when the economy is moving from “very bad” to “less bad.”
Don’t get me wrong: I’ve become more bullish over the last few weeks. But I am not going to lose sight of the risks.
Dalton — The stock market should pull back. It always does, by some magnitude. However, on the morning of Thursday, April 9, the Federal Reserve prescribed some good medicine, and the wounded stock market should heal even faster than we thought prior to this “whatever it takes” approach to propping up the economy. In response
At the heart of this, it’s a medical issue, not an economic issue. The virus will determine the pace and the path of economic recovery.
We humans like a narrative, a story we can relate to, because it helps us make sense of things, and that makes us feel more comfortable. The fact that the stock market was up about 19% over the previous four months, based on very little improving fundamentals, set us up for a tumble.
As big as the physical impact is, the psychological problem of the coronavirus may have an even larger impact.
My concern is that the Fed will begin to gain comfort in the functioning of short-term interest rates, then decide to reduce the balance sheet just before a shock coincides with less liquidity and super-high stock valuations.
The U.S. produces about 13 million barrels per day and consumes 21 million, so higher oil prices could depress economic growth. But I’m not worried about that yet.
Not that we can ever rely on one indicator, but those historical instances of outperformance suggest that we haven’t yet seen too much of a good thing.
Without changes, the Social Security Administration projects that its trust fund will be insolvent by 2035.
Where the economy might go from here is another conversation, but we do know that defaults on existing debt are relatively tame, meaning that consumers are not yet feeling overwhelmed.
If they do cut rates this afternoon, I’m growing convinced that the Fed will be one-and-done, and there will be an extended pause before we see any new action.
Dalton — Last Thursday, July 18, the yield curve (the spread between yields on 10-year and three-month U.S. Treasuries) turned un-inverted for the first time since May 23 and ended a 40-day streak at inverted levels. As a refresher, an inverted yield curve is an interest rate environment in which long-term debt has a lower
The next six months may finally give you the returns you were hoping for. But depending on your level of expectations, I doubt it.
The Bank of Mom and Dad, I bet, is not a new concept to you. But what might be less familiar to you is the Bank of Junior, which has an obligation to pay the cost of elder care for aging parents.
According to my colleagues, 44 percent see a recession hitting in 2020, and 32 percent in 2021. That’s two-thirds who think the U.S. will see a recession within the next two years. You can count me among them.
The bad news is that when everyone is bullish, it’s often a bad time to be invested because, often times, that means all of the potential good news has already been expected and priced into the market.
Negative effects will intensify and compound the longer the shutdown continues. If the government were to reopen today, the affect for this quarter would be nearly tripled due to the impact from workers not receiving paychecks.
Dalton — On Dec. 19, I wrote Berkshire Money Management’s “2019 Outlook,” detailing why we are positioned the way we are now for the future. Our outlooks are not intended to be set in stone; they’re living documents. As information changes, we change our minds. In only 12 days, it seems as if it’s already time
Rising home prices and mortgage rates are slowing down homebuyers. And the higher costs of land, labor and materials are making it more difficult for builders to deliver houses at the prices which are most in demand.
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