Archive | Consumer ETFs

Why You May Want To Sell Into The Post-Brexit Rally

For the better part of six years, between December of 2008 and December of 2014, the Federal Reserve created hundreds of billions of electronic dollar credits to pump up asset prices (e.g., stocks, bonds, real estate. etc.). Theoretically, the subsequent wealth effect would encourage businesses to invest in their growth, consumers to spend on discretionary items [...] Continue Reading...


Why Stocks Have Gone Nowhere For 18 Months (And Counting)

Some charts are more interesting than others. For example, Rob Isbitts at Sungarden Investment Research pointed out that the three-year return for the S&P 500 has dipped below 30%. Why might that matter? When the three-year return disappointed investors with single-digit annualized gains (< 10% per year) in 2001 and again in 2008, bearish stock sell-offs came [...] Continue Reading...


Treasury Bond Yield Curve Is Telling Stock Investors To ‘Wake Up’

How dependent is the U.S. economy on stimulus by the central bank of the United States? Take a look at what has happened in the bond market since the Federal Reserve began to reduce asset purchases as part of its quantitative easing program (“QE3″) in 2014. The spread between longer-term maturity treasuries and shorter-term maturity [...] Continue Reading...


Why Low Interest Rates Do Not Imply Perpetual Increases In Stock Prices

Some investors have come to believe that ultra-low interest rates alone have made traditional valuations obsolete. The irony of the error in judgment? Experts and analysts made similar claims prior to the NASDAQ collapse in 2000. (Only then, it was the dot-com “New Economy” that made old school valuations irrelevant.) The benchmark still trades below [...] Continue Reading...


When You Exit The Stock Market, Don’t Let The Door Hit You On Your Way Out

You cannot make this stuff up. The median stock in the S&P 500 has never been more overvalued on price-to-earnings growth (PEG) and price-to-sales (P/S). On a forward price-to-earnings (P/E) basis – where profitability expectations already reflect pie-in-the-sky speculation – the median company’s shares trade in the 96th percentile. That’s pretty darn pricey! Credit Goldman [...] Continue Reading...


Do You Have Rally Envy Or Bear Market Anxiety?

For those who have paid attention, the last actual bond purchase by the Federal Reserve occurred on December 18, 2014. Why does the date matter? For one thing, research demonstrated that the expansion and manipulation of the Fed’s balance sheet (i.e., QE1, QE2, Operation Twist, QE3) corresponded to 93% of the current bull market’s gains. [...] Continue Reading...


Should Investors Take Notice When Reward Prospects Diminish?

The world’s central banks devise conventional and unconventional ways to depress interest rates. The impact? Consumers purchase goods and services on credit with favorable financing terms. Corporations issue low-yielding debt in order to buy back shares of their own stock. And governments issue low-yielding treasuries to continue spending far more than they generate in tax [...] Continue Reading...


No Bull. Economic Weakness Continues To Pressure Corporate Profitability

Is the U.S. economy really in great shape? The U.S. Federal Reserve does not seem to think so. They started the year with an intention of raising the overnight lending rate four times – from 0.25% to 1.25%. In March, they announced that it would more likely be a mere two. And today, the Atlanta [...] Continue Reading...


No Sales, No Profits, No Bull: What Happens When Valuations And Central Banks Collide

Total business sales Рsales by wholesalers, manufacturers and retailers Рhave fallen 5% from their July 2014 peak of $1.365 trillion. At $1.296 trillion for January 2016, total business sales have dropped back to where they were in January of 2013 ($1.293 trillion). In fact, the erosion of total sales by American businesses are even uglier [...] Continue Reading...


Are U.S. Stocks Really The Only Game In Town?

The S&P 500 notched an all-time record high of 2130 on May 21, 2015. That was 10 months ago. Since that date, the popular gauge has suffered two faith-rattling corrections Рa 12% decline in August of 2015 and a 14% pullback in February of 2016. Granted, U.S. stocks rallied back to respectable levels after each [...] Continue Reading...


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