Stock Markets and the Economy
Found 217 Articles.
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The Risk of Stagflation Increases
Are we about to face another period of stagflation like the one in the 1970s? Before Russia invaded Ukraine, the economy already was facing a series of supply and demand shocks that pushed inflation to its highest levels in 40 years. The invasion has caused new supply shocks, reducing global supplies of oil, natural gas, […]
The Fed Continues to Deflate the Bubbles
Will we experience another 2018? Markets are betting that we will, but they ignore important differences between then and now. The Federal Reserve gradually began reversing its extraordinary monetary policies from the financial crisis in 2015. In 2018, the Fed raised interest rates and withdrew liquidity from the economy. The effects were sudden and significant. […]
Fed Policy Changes Cause Markets and the Economy to React
Will the Federal Reserve and most investors be very wrong two years in a row? Market prices, especially futures prices, indicate most investors join Fed officials in believing the Fed won’t have to do much to dampen inflation and return economic growth to pre-pandemic levels. They also expect high profit margins to continue. They were […]
Inflation and Economic Growth Aren’t Transitory
Central banks are curtailing their pandemic stimulus measures, and investors need to assess how that will affect different investments. As expected, the Federal Reserve announced that in November it would begin reducing its monthly asset purchases of $120 billion with the goal of eliminating those extra asset purchases by June 2022. That doesn’t mean the […]
The Economy and Stocks Start to Diverge
The tight relationship between the economy and markets might be ending. For some time, economic growth has been accompanied by higher stock prices, and stock indexes faltered when growth slowed or declined. Going forward, it is likely economic growth will continue while the stock indexes remain in a trading range or decline. Growth should continue […]
The Fed Plays Chicken with Inflation
Investors seem to agree with the Federal Reserve that the surges in economic growth and inflation are temporary. I am skeptical. Market pricing indicates most investors expect the growth rate to decline, and that slower growth will reduce inflation. I believe the markets are underestimating the prospects for continued growth and inflation. Recent economic growth […]
What’s Happening in China and What it Means to Investors
China’s government has been busy over the last few months, and its actions have led to a steep sell-off in China’s stocks. The decline accelerated in August. The iShares MSCI China ETF (MCHI) declined 14.39% from its Feb. 17 peak through June 28. By Aug. 25, the fund was down 32.21% from its February high. […]
Riding the Wave of Growth and Inflation
The strong economic growth and inflation experienced recently are sustainable, and they’re being underestimated by investors and the Federal Reserve. Market prices indicate investors expect a quick return to the pre-pandemic combination of modest growth and low inflation. Fed officials repeatedly say that’s what they believe will happen. Forces supporting growth and inflation are in […]
