Mike Lipper’s Monday Morning Musings
Three Rs + Beginnings of a New Cycle
Editors: Frank Harrison 1997-2018, Hylton Phillips-Page 2018
Three Rs Describe the Week
The first part of the week in terms of transaction volume on
the NYSE + NASDAQ looked somewhat normal, but by midafternoon the world
changed. We got the expected ¼ percent cut in Fed interest rates. However, during
the press conference Jerome Powell stipulated his lack of confidence in the intermediate
future outlook for Fed actions. As the conference went on, selling accelerated.
By the closing bell many stocks had fallen, then some fell between 3-5% or more
in the after-market. Interestingly, Thursday saw little movement. Trading volume
for the first four days of the week was 4.72 million shares. On Friday there
was news of one indicator showing inflation likely to decline, which was
greeted with 8.13 million shares traded mostly on rising prices.
This was the first R, demonstrating the trader’s recalibration
of inflation estimates, showing particular strength in techs and high-quality
bond prices crunching.
The second R saw a further breakdown in the reversal chart pattern
of the DJIA and DJTA. (Chart reading is an artform and is not accurate all the
time.)
The third R, the need to deal with reconciliation of the
budget, was perhaps the most significant and became known on Saturday. The
final votes in favor were impressive. The House voted 366 to 34 in favor and the
Senate 85 to 11. This proved my earlier view that there was no real landslide
for President Trump. The American people don’t want much legislation or many executive
orders.
What Does This Mean?
We live in a world where:
- Most governments are tolerated or downright unpopular.
- Technology appears to create more problems.
- People are afraid of both political and corporate leadership.
- The education sector can’t even run its own campuses safely. They are producing unemployable and over-privileged people only ready for “C-suites”.
- Hard science is not providing much help for the soft science needs of the population.
Several examples of not understanding labels hit me this
week, emerging markets and large global companies dominated by the five largest
firms. The largest firms are attractive because they are exporters to large
markets. Thus, to be successful one must be global.
Another example is the published list of the 15 best and
worst mutual funds. If you are a large investor, the list is misleading. Of the
best performing funds, 13 funds were from large fund families, whereas only 6 funds
were from large fund families on the worst funds list.
Even with AI people need to think more thoroughly.
Please suggest what you think the next cycle will look like.
Did you miss my blog last week? Click here to read.
Mike
Lipper's Blog: Confessions & Confusion of a “Numbers Nerd” - Weekly Blog #
867
Mike
Lipper's Blog: It Doesn’t Feel Like a Bull Market - Weekly Blog # 866
Mike
Lipper's Blog: Professional Worry Time vs Amateurs’ - Weekly Blog # 865
Did someone forward you this blog?
To receive Mike Lipper’s Blog each Monday morning, please
subscribe by emailing me directly at AML@Lipperadvising.com
Copyright © 2008 – 2024
A. Michael Lipper, CFA
All rights reserved.
Contact author for limited redistribution permission.
Posts
No comments:
Post a Comment