By Gary Kaltbaum- August 28, 2018
As we leave the office this afternoon for another great golf trip, we figured we would bore you a bit.-
First off, major indices are indeed breaking out of range. Do not forget what we said about the “potential” for a real strong move into the end of the year. Ridiculous easy money, combined with very strong earnings and a strong economy doing the trick. Europe and Japan are still both negative and both printing money. China has just gone on another easy money program. On top of that, we keep being told that our central bank is hawkish. May we remind you the last time we had this unemployment rate, the fed funds rate was in the 6% range. Hawkish our a–!-
But on another note:-
US 10-Year minus 2-Year Yield…
Aug ’09: 2.43%
Aug ’10: 2.10%
Aug ’11: 2.08%
Aug ’12: 1.37%
Aug ’13: 2.34%
Aug ’14: 1.86%
Aug ’15: 1.50%
Aug ’16: 0.78%
Aug’ 17: 0.83%
Today: 0.18% (flattest since Aug 2007)-
Bears are out in droves stating that we are headed to a recession because of this tightening yield curve. We disagree. We think yields are so distorted by central bank intervention that this does not come into play. We think the best forecaster of a recession is the stock market itself. We have news for the bears. There is no way a recession is coming when the transports are breaking into all-time highs. There is no way a recession is coming when we are seeing new highs in a bunch of major indices. Markets are a great forecaster of the future…and right now, they are saying the opposite.-
We continue to be longer term worried about the gargantuan debt and deficits. We continue to be worried about the longevity of humongous government programs like social security, medicare and medicaid. We continue to be worried about the imbeciles in both parties that are doing nothing about any of this. But right now, things are in good shape. When, not if, things change, we will let you know as price means everything. Right now, price continues to act well.-
2 replies
  1. Avatar
    Jeff Chesner says:

    I understand that part of the deal with Mexico is they will leave our “intellectual property” alone.

Comments are closed.