Ben Bernanke, in a speech on November 19th, made it very clear that the Fed is likely to hold interest rates low for an extended period of time. This comes on the heels of similar comments by his likely successor at the Fed, Janet Yellen, during her confirmation hearings. On top of this, inflation numbers released on the morning of the 20th show almost no increases in consumer prices over the past year and existing home sales have just registered a drop. In related events, Larry Summers just gave a widely-noted presentation to the IMF in which he warned that the U.S. may be settling into a long-term economic malaise. Larry Summers, who was previously a contender to be the next Fed chairman, surely considered his comments to the IMF very carefully. Continue reading
The S&P500 is up by 26% for the year-to-date, despite the fact that employment growth is anemic, the labor participation rate is at its lowest point in thirty five years, and inflation-adjusted GDP growth is experiencing a long-term slowing (see chart below). GDP turns negative in recessions—this is the definition of a recession—but has historically recovered much faster than we have seen in the post 2008 years. Continue reading
Guest Post by Contributing Editor, David Kotok, Chairman and Chief Investment Officer, Cumberland Advisors.
The old adage “Sell in May and go away” was good guidance for stock markets last year. The market peaked on April 29 and bottomed out on October 3. For a detailed discussion of this period and the subsequent bull-market recovery, see our new book From Bear to Bull with ETFs. The eBook (ten bucks) is now available on Amazon.com. Paperback by month end and other channels of distribution like iBook and Nook are coming. Please note that profits from this book will be donated to the Global Interdependence Center, www.interdependence.org.
History shows that ‘Sell in May and go away’ has applied when the Federal Reserve was in a tightening mode during the six-month span from May to November. Continue reading