A Reversal of Fortunes

As alluded to back in March, we continue to observe the markets carving out a recovery which saw it make new highs after entering a bear market in a traditional reversal pattern. This was done in record time, condensing 6 years into 6 months; helped mostly by the joint effort of the Fed and record setting stimulus from the Government. What now is ahead will be the topic for many as we enter into one of the most divided elections in recent times.

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I "spy" an opportunity…

After a historic bull market, it wasn’t liquidity crisis from Fed actions but an outlier from a virus which has brought uncertainty to the markets and ultimately opportunity for those with resolve to execute.

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Trump's Timeout

Whether to support or oppose Trump, there is no doubt his actions at least in the short term are inflationary but as Health Care, Tax Reform, and Trade face increased scrutiny in the political sphere the risk associated to these events may not be fully priced into the markets putting the President in a time out as far as markets are concerned.

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Tidal Shifts and Inflation Valves

It is not hard to look back and see that when central banks push money into the system, stocks rise and when they pull money out – they fall. In simple terms, the markets are an inflation valve overlaying a system of innovation. What has changed since December? The Federal Reserve has begun the process of raising rates and now the markets must re-balance based on current sources of innovation and monitor for new injections of currency.

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A Japanese Fortune

Positioning for a summer dip, look to acquire some good fortune as Japan pulls back with the markets into the long upward channel in preparation as the Fed continues to wind down the asset purchases. Prime Minister Shinzo Abe will find himself, along with Europe, increasing quantitative easing to accelerate growth spurring the initial spark of inflation.

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