Mid Term
December 27, 2017 | Daily JAM, Mid Term, Volatility, You Might Have Missed |
Black swan events in the financial markets are terrifying. By definition they’re extremely rare and extremely difficult to predict. Which wouldn’t be so scary if their effects weren’t so catastrophic. A 10% drop in the Standard & Poor’s 500 would certainly be painful–but it doesn’t rise to the category of a black swan. Neither does a 15% drop in the price of Bitcoins. Or a 20% drop in the price of Apple (AAPL). All these are relatively normal negative events. They’ve happened before. They happen relatively frequently. And in some cases–that of Bitcoin or the S&P 500, for example–they’re absolutely statistically normal for the market or a part of the market or a specific asset. No, the label “black swan’ is reserved for things like the 2008 global financial crisis that almost brought the world’s financial markets and its real economies to their knees. Or the Dot.com crash of 2000, which saw corporate giants such as Nortel Networks disappear from the economic landscape. Or the oil price crash of 2008 that saw oil soar to a high of $147 a barrel in July and then plunge to $32 by December. Given how devastating to a portfolio a black swan event can be, it seems, at first, surprising that most lists of “bad things that could happen in the year ahead” pretty much ignore this type of financial event.
December 13, 2017 | Daily JAM, Mid Term, Morning Briefing |
No surprise: The Federal Reserve raised its short-term benchmark Fed Funds rate by 25 basis points to a range of 1.25% to 1.50% at today’s meeting. No surprise: The Fed and its outgoing chair Janet Yellen didn’t say anything new. The labor market continues to strengthen and economic growth has been solid. Overall inflation and core inflation have declined this year and are running below the Fed’s target of 2%. But there were surprises in the “dot plot.”
December 11, 2017 | Daily JAM, Mid Term |
Both Citigroup and JPMorgan Chase are now predicting that average interest rates across the world’s advanced economies will climb to at least 1% in 2018. That might not seem like much, but remember that major economies such as Japan and the European Union now have negative interest rates. Overall the two Wall Street megabanks are telling investors to get ready for the biggest tightening of monetary policy since 2006, before the global financial crisis.
December 11, 2017 | Daily JAM, Mid Term, Morning Briefing |
I don’t expect the Federal Reserve to say anything especially revealing abut future interest rates after the Wednesday, December 13, meeting of the Federal Open Market Committee in the last scheduled post-meeting press event of the Janet Yellen Federal Reserve, resolutely stay the rhetorical course. But that likely reticence isn’t stopping economists from moving toward projecting more and faster interest rate increases in 2018.
December 8, 2017 | Daily JAM, Mid Term, Morning Briefing |
The U.S. economy added a net 228,000 jobs in November, the Labor Department reported this morning. Economists surveyed by Bloomberg were looking for a gain of 195,000. That kept the unemployment rate at 4.1%, the lowest since 2000. Disappointingly, however, average hourly earnings increased by just 0.2%, less than the 0.3% gain expected by economists surveyed by Briefing.com That took the year over year gain in average hourly earnings to 2.5%
November 7, 2017 | Daily JAM, Mid Term |
In a momentum market, which is what we have, you put money into the stocks that are riding the momentum upward. An equally weighted index of Alphabet, Amazon, Apple, Facebook and Microsoft is up 42% in 2017. That holds true on the downside too. This market has taking the losers and crushing them some more. Bed Bath and Beyond is down 53% for the year.
November 7, 2017 | Daily JAM, Mid Term, Morning Briefing |
Good news for oil prices: OPEC raised its forecast for global oil demand in 2021 by 2.3 million barrels a day above last year’s projection. It also raised its oil demand forecast in 2040 by 1.7 million barrels a day to about 111 million barrels. Bad news for oil prices: OPEC also forecast that oil output from North American shale producers will hit 7.5 million barrels a day in 2021.
October 27, 2017 | Daily JAM, Mid Term |
Before the recently concluded 19th Congress of the Chinese Communist Party, President Xi Jinping had repeatedly stressed his goal of doubling China’s real GDP from its 2010 level by 2020. The goal was absent from Xi’s three-hour speech at the opening of the meeting.
October 24, 2017 | Daily JAM, Mid Term, Morning Briefing |
Bond traders are convinced that the Federal Reserve is going to raise interest rates at its December 13 meeting–according to the CME Fed Watch calculator, the odds of a December 13 interest rate increase are 96.7%. But bond traders are also convinced that the Fed won’t raise rates four times in 2018 as it has signaled. Two rate increases and that’s it, the market is saying
October 19, 2017 | Daily JAM, Mid Term, Morning Briefing |
Apparently it’s one thing for foreigners, such as Fitch Ratings or Moody’s Investors Service, to warn of an impending debt crisis in China. Chinese financial markets have by and large shrugged off such warnings. But it’s another thing entirely when the Governor of the People’s Bank of China, Zhou Xiaochuan, issues a very similar warning.
September 26, 2017 | Daily JAM, Mid Term |
Will OPEC really keep pumping less oil than it could in an effort to clear the global surplus in crude and to support prices above $50 a barrel and maybe push oil back to $60 a barrel? The annual confab of oil traders this week in Singapore is likely to tell.
August 13, 2017 | Daily JAM, Mid Term |
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