April 25, 2024

By Robert Wiedemer

Gold is on a tear – up 13% year to date! Silver is doing even better – up 15% year to date. Compared to the S&P 500 which is only up 4% year to date and the NASDAQ 100 which is only up 5.75% year to date, it’s a complete blow out.

Sounds like the Aftershock is near? Not a chance. Why? Lots of reasons. First the Fed isn’t printing any money now. In fact, it has vacuumed almost $2 trillion out of the economy since March 2022. Wonder why the 10 year rate is so much higher than 2021?

April 22, 2024

By Robert Wiedemer

Earlier I had reported that the Fed was planning to start reducing its sales of bonds after their March meeting based on information from the Wall Street Journal. Reducing sales of bonds is absolutely essential to keeping the 10 year interest rate from going higher quickly. Well, the Wall Street Journal’s information wasn’t correct. The Fed kept selling bonds right through April and the 10 year interest rate jumped a half percent to 4.6%, which the stock market didn’t like at all.

The good news is that the Economist reports that the Fed will likely announce at its May 1 meeting that it will reduce bond sales in June. In fact, it will reduce them by 50%. Hopefully that will be confirmed at their May 1 meeting. But, for now, it’s a good reason to expect the reduction in bond sales is coming soon, even if it didn’t happen in April.

April 18, 2024

By Robert Wiedemer

All the talk about rate cuts is kind of silly. The economy is doing fine due to massive Congressional borrowing. Inflation is not going lower. It’s very unlikely to go back to 2% as the Fed would like to see. More likely it will bottom out at around 3.5%.

So, why would the Fed want to lower rates significantly? They won’t.

March 30, 2024

By Robert Wiedemer

The market is up a lot and Bull Bear clients have benefited mightily as we’ve called this rally since the beginning of last year. But has it run out of steam?

Well, going forward there’s little doubt that the market won’t be able to maintain the almost 1% a week gains it had in January and February. That’s just too fast a pace for any market.

But will it continue to go up? To answer that question, let’s first look at why it went up.

March 18, 2024

By Robert Wiedemer

Electric vehicles face a fundamental problem: Why buy them?

Nobody really seems to ask that question. Stock pundits and most of the auto industry just assume it is an inevitable transition that will have to occur in the next five to ten years.

By Robert Wiedemer

February 27, 2024

I have often said that China has a bigger bubble economy than we do. And like the US in 2008, when it pops the financial repercussions will reverberate around the world.

Well, it’s popping now, but the worldwide repercussions have been small so far.

By Robert Wiedemer

February 24, 2024

Not to worry. Even if US and foreign investors are running out of money to fund the deficit we can always turn to our friend, the Fed. They have plenty of money and will be forced to use it to fund the deficit.

But let’s take a step back. Why do I think the US is running out of money to fund the deficit? It’s actually quite simple, but the technicalities are complex and opaque. Let me shed some light on it.

By Robert Wiedemer

February 22, 2024

Yesterday, we got just about the best news the stock market could get. I’m not referring to NVIDIA’s spectacular earnings announcement, although that was pretty amazing. NVIDIA’s GAAP earnings were up 765% from a year ago. That’s fairly unbelievable for a company that is 30 years old and not coming out of a big economic downturn.

January 30, 2024

My outlook for 2024 is based on the two most important drivers of the economy and the stock market: Government stimulus and interest rates.

December 13, 2023

As we have told our clients, after the November rally, the next big market move will be a run for the record. That was set in January of 2022 when the S&P 500 hit 4819. We are at 4707 now (as of the close on December 13) – not that far away from the all-time high.

November 29, 2023

Looking for Volckerization

When the Fed started raising rates last year, many investors thought it would be a repeat of the rate raising efforts of Fed Chair Paul Volcker in the early 1980s. People are always more comfortable with a repeating pattern since it is easier to understand.

However, nothing could be farther from the truth.

November 17, 2023

The decline in the 10-year rate has been fueled in part by the Fed meeting on November 1 where Fed Chairman Jerome Powell announced he was not raising the overnight interest rate. He further cheered the market by indicating he did not expect much in the way of rate increases in the future.

By Dr. David Wiedemer

September 30, 2023

Economic Growth

As for the economy, according to Blue Chip Economic Indicators, a survey of business economists, the US is heading for 3% growth this year. Even if it is less, economic growth is fine. The US typically sees about 2.5% growth. We basically agree with the Blue Chip forecast.

The Stock Market

As for stocks, FactSet, a company that surveys stock analysts, says its most recent survey on September 21, shows analysts are expecting a 19% increase in the S&P 500 over the next 12 months. We agree with the FactSet survey and think it might even be a little low.

By Robert Wiedemer

September 11, 2023

Only a few months ago I wrote that part of the reason our economy was staying out of recession is that the amount of money the government is borrowing this year is up 50% from last year. Well, only a few months later, it looks like the deficit is going to be up ONE HUNDRED PERCENT from last year. Going from $1 trillion last year to almost $2 trillion this year.

Again, no wonder the economy is doing just fine. All this borrowing is just one big stimulus to the economy.

August 24, 2023

The market has seen a pullback in August. That’s not unexpected given that the market has been on a tear since June after the Fed paused its rate increases and the debt ceiling was raised.

However, another problem has been added to what is a normal market pullback – rising interest rates for the 10-year bond. The rate hit a high of 4.3% last week before falling back slightly.

July 11, 2023

There’s been a sharp increase in interest rates in June from 3.5% to 4% on the 10-year government bond.

That’s a big increase, especially in a month where the Fed paused its overnight lending rate increases for the first time in over a year.

Why the big increase?

June 13, 2023

This year marks a half century since the bestselling book, A Random Walk Down Wall Street, by economist Burton Malkiel, first warned investors in 1973 that the stock market is, by nature, unpredictable and that trying to beat the market with “smart” stock picks is futile. In fact, compared to simply investing in a variety of randomly chosen stocks, most highly analyzed portfolios of carefully chosen stocks, on average, fail to match the growth of the overall market over time.

In other words, almost every amateur and professional investor would be better off just buying a low-cost S&P 500 index fund than trying to pick winners.

May 10, 2023

As I discussed in “A Look Ahead at 2023 – Part II” in February, the debt ceiling crisis will be solved and will be a buying opportunity. That’s because not raising the debt ceiling means we default on our debt. Of course, defaulting on our debt would cause a massive decrease in spending because the government couldn’t borrow anymore. But it also means the total collapse of our stock, bond and real estate markets and a pretty quick 25% to 50% contraction in our economy.

May 5, 2023

After jumping over 4% in November of last year, the rate on the 10-year Treasury bond has not seen 4% again, except for a brief pop over 4% in March. More recently it has been bouncing around the 3.5% range.

March 23, 2023

As I mentioned in my earlier newsletter on the Banking Crisis, this crisis may turn out to be a positive turning point for the stock market. It may cause the Fed to reverse its recent policy of selling bonds to increase interest rates and, instead, forces them to buy bonds which will lower rates. And guess what? It has!