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  • Navigating Debt, Politics, and Economic Challenges Plus May Market Review

    John Gorlow | Jun 14, 2024

    As November elections draw near, the threat of election interference from Russia and China looms large. Both countries aim to undermine the stability of American democracy by creating confusion among U.S. voters and pushing them toward extreme viewpoints. Such interference could unsettle markets and have far-reaching consequences for high-stakes issues including U.S. fiscal policy, immigration, and foreign policy.

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  • Cause Vs. Correlation: Parsing the Inverted Yield CurvePlus April Market Report

    John Gorlow | May 17, 2024

    In weather, an inversion layer is an odd phenomenon in which warm air pushes cold air to the ground, resulting in trapped smog and unsettled conditions. In finance, an inverted yield curve is a similarly odd disturbance. When investors demand higher yields (or interest) for holding short-term U.S. debt than they do for holding long-term debt, something is decidedly off-kilter. Common wisdom says that an inverted yield curve signals a recession. But so far, the pattern is not unfolding as predicted..

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  • Global Equities Post Best Q1 in Five Years
    Plus Quarterly Market Review

    John Gorlow | Apr 09, 2024

    Investors had a terrific Q1. But a third of the way through April, the mood may be changing. While investors remain generally optimistic, they are also watchful as high-flying tech stocks show some signs of deflating. A headline that caught my eye today: “Nvidia has entered correction territory. Apple was already there” (MarketWatch, 9-April). For some months, there has been speculation that we are in a tech Bubble, defined as a period in which stock prices are driven wildly high, completely unmoored from economic fundamentals. And yet we are not witnessing the rabid frenzy we saw back in 2000, when day-trading seemed to be a sideline for everyone with a brokerage account.

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  • The Subtle Stress of a Surging Market
    Plus February Market Report

    John Gorlow | Mar 19, 2024

    Shrugging off uncertainty over inflation and Fed policy, Wall Street celebrated its fourth consecutive winning month in February. The Nasdaq closed at a record high, and both the Dow and S&P 500 turned in the best two months at the beginning of a new year since the pre-Covid days of 2019. Perhaps all this good news makes you feel anxious about what comes next. Will markets continue their climb, or are they primed for a fall? As an alternative to predictions and Fed watching, I encourage you to consider verifiable historical data about market peaks, valleys and recovery times over the past 100 years.

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  • Cautious Optimism
    Plus January 2024 Market Report

    John Gorlow | Feb 15, 2024

    Following the broad-based Q4 stock rally, investors entered 2024 with both hope and caution. Trading was choppy, but by the end of January, the S&P 500 Index notched several new highs and a third consecutive monthly gain. For the first month of the year, at least, confidence in the strength of the U.S. economy outweighed concerns about monetary policy. Whether that confidence will remain intact is uncertain.

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  • 2023 Wasn’t What We Expected. 2024 Won’t Be Either. Plus Q4 Market Report

    John Gorlow | Jan 17, 2024

    Perhaps the most predictable thing about 2023 was that most market predictions would be wrong. Many pundits foresaw a recession, a stalled economy, stubbornly high inflation, job layoffs and more. Instead, the U.S. economy proved to be remarkably resilient, rewarding investors with a stunning stock rally in the final two months of the year. Markets were lifted by a raft of good news, including inflation falling faster than expected, strong U.S. economic output, and a healthy labor market. Driving the year-end surge was the belief that central banks are done with interest rate hikes and will soon begin rate cuts. How that story unfolds remains to be seen.

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  • Soaring Markets Challenge the Fed
    Plus November Market Report

    John Gorlow | Dec 08, 2023

    Investors celebrated a blockbuster November as markets posted their biggest monthly gains in more than a year. The news was superb, as bonds posted their best monthly performance in nearly 40 years and the S&P 500 index returned a whopping 9.13%. For many, it felt like the stars aligned and their dream-scenario was coming true as robust growth, diminishing inflation, and slowing job growth pointed to a gentle landing and an end to rate hikes. But like the morning after a blow-out party, there may be a price to pay for all that enthusiasm.

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  • Hope Blooms on Inflation News
    Plus October Market Review

    John Gorlow | Nov 20, 2023

    Holiday jubilation came early to Wall Street last week as positive news about inflation led to a third straight winning week. The overall Consumer Price Index for October dropped to 3.2% annually from 3.7% the previous month—and from a peak, in this business cycle, of 9.1% in June 2022.

    At the same time, core inflation, which excludes fuel and food prices, fell to 4% in October, the smallest increase since September 2021. Bond prices rallied sharply, as the yield on the 10-year Treasury dipped to 4.43%. A few weeks ago, it was above 5%, its highest since 2007.

    Investors’ hopes for a Fed pivot towards lower short-term interest rates fueled the benchmark S&P 500 to rise sharply, climbing nearly 10% from its October lows, and propelled year-to-date returns on the bellwether index to more than 19%.

    Time to pop open the champagne? Depends on what data you’re digesting. On the one hand, soft jobs data, slowing inflation, and a resilient economy are rekindling hopes for an economic soft-landing, which seemed nearly impossible a year ago. On the other hand, a more troubling downturn could be on the way. Some analysts predict large ripple effects from rising commercial property market foreclosures and a coming wave of corporate bankruptcies. Mounting debt-refinancing issues face even the most powerful private equity firms, and could lead to deeper problems for investors.

    What we’re seeing now is great news, to be sure, but it doesn’t mean we’re out of the woods yet. Even Fed Chair Jerome Powell acknowledges this. All of which is to say, hope is warranted, but maybe not too much. Keep that champagne on ice.

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  • The Crux Of The Matter
    Plus Third-Quarter Market Review

    John Gorlow | Oct 20, 2023

    Mixed messages rattled the U.S. bond market last week. First came hints from some Fed officials that further rate hikes may not be needed. Investors cheered the news and bonds rallied. But by mid-week, hot inflation data threw cold water on investors’ hopes and the bond rally turned into a sell-off as bond yields rose. By the end of the week, global concerns about the expanding Middle East conflict caused bond prices to rebound as investors searched for a safe haven. But the ping-pong game wasn’t over yet.

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  • An Antidote to Gloom
    Plus August Market Report

    John Gorlow | Sep 19, 2023

    Here we are, nearly three-quarters of the way through 2023, and the markets continue to defy the pessimists and pundits who predicted a recession, a tanking economy, and big job losses as a result of the Fed’s aggressive series of rate hikes. None of that has happened as of mid-September. Of course, it still could.

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