Mid Term
April 7, 2021 | Daily JAM, Mid Term, Morning Briefing |
Nothing to see here. Move along. In the minutes from its March 16-17 meeting, released today April 7, Federal Reserve officials told the financial markets “that it would likely be some time until substantial further progress toward the [Open Market] Committee’s maximum-employment and price-stability goals would be realized.” And, the minutes went on, “a number of participants highlighted the importance of the Committee clearly communicating its assessment of progress toward its longer-run goals well in advance of the time when it could be judged substantial enough to warrant a change in the pace of asset purchases.”
March 25, 2021 | Daily JAM, Mid Term |
Today’s auction of $62 billion in seven-year Treasury notes was a big improvement on the dismal February auction. But the 5- and 7-year heart of the yield curve is still showing stress as it tried to absorb huge amounts of issuance.
March 12, 2021 | Daily JAM, Friday Trick or Trend, Mid Term |
The iShares 20+ Year Treasury Bond ETF (TLT) fell 2.12% at the close today to drop into a Bear Market having lost more than 20% from its August high. That’s just in case you needed a reminder of how relentless the selling in the Treasury market has been. At the close at $136.06, the ETF is below the both the 50-day and 200-day moving average. And the Treasury bond ETF is down 13.74% year to date as of the close on March 12. Treasury bonds, even long-dated Treasury bonds aren’t supposed to produce that kind of volatility. Which leads me to the important question: How long does this rout go on and what are the odds of a short-term bounce?
February 17, 2021 | Daily JAM, Mid Term, Special Reports, You Might Have Missed |
2021 is shaping up as an especially challenging year for investors. Much, much more challenging than 2020. I don’t think we can count on this rally running uninterrupted through the year. That would be simple, wouldn’t it? We’d all know how to profit from that scenario. And I don’t think the market is about to drop off a cliff from its current record highs. That would be traumatic. But, still, we do know how to protect a portfolio in that scenario. And even how to profit from a prolonged plunge–if we can bring ourselves to place those short and Put Options bets. Instead 2021 is likely to be one of those years with a Rally Stage and then a correction (or “something”) to be followed by a last quarter of 2021 that is, at this moment, close to completely unpredictable. That would make 2021 one of those years that gives investors a chance to be wrong several times over, to botch timing on the upside and the downside, and to let emotions power some really bad investment moves. I don’t pretend that I’ve got this year’s market stages down perfectly–although I think the outlines for the first two stages for 2021 are pretty clear. I don’t imagine that I’ve got the timing for navigating these stages clocked perfectly–although I do think I understand “generally” when the market is likely to switch gears. And that lets me lay out for you a likely pattern for 2021 and to suggest stocks and ETFs to use to navigate this year. Part of the point in getting as specific as I can at this point isn’t that I expect that I’ve got everything right, but to lay out concrete markers that will let you and me adjust portfolios as the year progresses. I’m dividing this Special Report into three parts.
February 11, 2021 | Daily JAM, Mid Term, Morning Briefing |
In a speech on Wednesday, Federal Reserve chair Jerome H. Powell said that the unemployment rate in January was close to 10%, not the 6.3% rate reported by the Labor Department last week.
February 8, 2021 | Daily JAM, Mid Term, You Might Have Missed |
Stocks climbed for a sixth straight day–the longest string of gains for the Standard & Poor’s 500 since August and with the Dow Jones Industrial Average turning in its best start for a February since 1931. The S&P 500 finished the day ahead 0.34% and the Dow gained 0.76% on the session. The NASDAQ Composite was up 0.95% and the NASDAQ 100 added 0.67%. The biggest winner for the day was the small cap Russell 2000, which gained 2.53% on strength in bank stocks and hope for more growth in the general economy. Oh, and the hope for $1,400 checks to individual Americans, hundreds of billions of dollars in state and local aid and enhanced federal unemployment benefits. And continued progress on the Covid-19 vaccination program. All this means, in my opinion, that the currently stretched valuations in this stock market are likely to get even more stretched in the coming days and weeks.
February 1, 2021 | Daily JAM, Mid Term |
Granted this is just a projection, and that nobody really knows what the economy will look like over the next three years, but it’s still depressing news. The nonpartisan–although frequently reviled by the Trump administration–Congressional Budget Office projects that the U.S. unemployment rate won’t fall to pre-pandemic levels until 2024. The office says that the unemployment rate will fall to a still elevated 5.7% in 2021, to 5$ in 2022, and to 4.7% in 2023. From 2026 to 2031 the unemployment rate will average 4.1%, well above the 3.7% it average in 2019, the last pre-pandemic year. The unemployment rate was a historically low 3.5% in February 2020
January 7, 2021 | Daily JAM, Mid Term |
The stock market is in the midst of euphoria at the prospect that unified Democratic control of the White House and Congress will mean more fiscal stimulus–those $2,000 checks for a start–increased aid to cities, and increased spending (maybe) on infrastructure and to combat global warming. The bond market not so much.
December 20, 2020 | Daily JAM, Mid Term |
On Sunday Congressional leaders reached agreement on a $900 billion coronavirus stimulus/relief. It is expected to be merged with a sweeping $1.4 trillion spending bill that includes 12 annual appropriation bills that would keep the government funded for the remainder of the fiscal year that ends on September 30, 2021 (and that began on October 1, 2020), creating a $2.3 trillion legislative monster that almost no one in Congress has read in its entirety.
December 16, 2020 | Daily JAM, Mid Term |
Today’s (Wednesday, December 16) meeting of the Federal Reserve, the last of the year for the central bank, ended with the promise to maintain the current massive monthly bond purchases of at least $120 billion until the Fed sees “substantial further progress” in employment and inflation. This replaces the earlier promise to keep buying “over coming months.” In other words the Fed’s bond buying policy now fits into the Fed’s interest rate framework of extraordinarily low for an extraordinary long time.
December 15, 2020 | Daily JAM, Mid Term |
In most years companies buy back more shares then they sell. That creates a steady upward bias to stock prices simply because there are fewer shares to buy. On average over the last decade companies bought back $3 in stock for every dollar they raised. Not in 2020. For th first time since the global financial crisis year of 2009, companies will issue as much stock as they sell
December 10, 2020 | Daily JAM, Mid Term |
Denmark has decided to stop offering new oil and gas leases in the North Sea and to phase out all production there by 2050. That lines up with the European Union’s goal of being carbon neutral by 2050. And it will leave around 150 million barrels of oil and oil equivalents in the ground.
