The Daily Decision - The Question: How Much is Enough?


The State of the Markets:

In pondering the macro picture over the weekend, it occurred to me that the current environment can be summed up with one simple question: How much is enough? As in, how much do stock prices need to correct from their January blow-off highs in order to create a fairly valued market where longer-term, fundamental oriented investors return to the game in a meaningful way? Or, put another way, how much time needs to go by for rising earnings to create values in the market again? A month? A quarter? A year? How much is enough?

The key problem in trying to come up with an answer is there are host of additional "how much?" questions that need to be answered first. Sure, we can do some math and project what forward P/E's might look like in a few months (and according to "the man who moves markets" - AKA JPMorgan's Marko Kolonavic - valuations are looking better and better). However, there is an awful lot of uncertainty in the markets right now. And until we get some clarity on some of these issues, the question are likely to remain unanswered and the sloppy action is likely to continue.

For example, one of the key questions right now is how much is global growth slowing? Or is it actually slowing at all? Since a fair amount of the recent bull run was based on the idea of synchronized global growth, a slowdown in growth means adjustments need to be made.

Next up is the question of how much inflation is percolating? Everybody on the planet knows that there are "some" inflationary pressures thanks to commodity prices, tariffs, the tightening labor market, etc. But how hot will inflation become in the current environment?

The next question ...

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The Daily Decision for 2.13.18 - What's Next? History Suggests...


The State of the Markets:

One of my favorite jokes about Wall Street goes something like this: The first time something happens on Wall Street, it's called it a trend. If it happens twice in a row, it's ...

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The Daily Decision for 2.12.18 - The Biggest Change Seen Last Week Was...


The State of the Markets:

I like to start each week by reviewing (a) my key market indicators and (b) the macro picture of the current market environment. As such, my Monday morning market missive is intended to cover both ...

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The Daily Decision for 2.9.18 - Is This Really About Rates?


The State of the Markets:

I usually don't write on Friday mornings. However, with the Dow experiencing its second quadruple-digit dance to the downside of the week yesterday, I figured it was probably time to make an exception.

The ...

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The Daily Decision for 2.6.18 - What is Real and What is Artificial?


The State of the Markets:

During times of market stress, one of the biggest challenges is trying to determine what is real and what is artificial.

When markets spike - in either direction - there is usually some sort of a news ...

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The Daily Decision - FOMO Has Taken Over - For Good Reason?


The State of the Markets:

As we enter the final week of what is turning out to be the best January since 1989, the macro drivers of the market remain the same. Cutting to the chase, investors continue to look ...

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The Daily Decision for 1.22.18 - No Time To Be a Hero


The State of the Markets:

To review, my first report each week is intended to take a big-picture, macro view of the overall market environment. The idea is to start the week with what we hope will be a solid ...

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The Daily Decision for 1.18.18 - The New Market Narrative: Dilly Dilly!


The State of the Markets:

Bearish reversal? What bearish reversal? It turns out that Wednesday's market narrative made a mockery of Tuesday's hand wringing relating to a potential government shut down and the end of QE as we ...

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The Daily Decision for 1.17.18 - Did Something Just Crawl Out Of The Woodwork?


The State of the Markets:

And we're back... After months of little to no volatility, the bears got back into the game yesterday, putting on a pretty decent show on the first day of the week's trade.

Stocks ...

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The Daily Decision for 1.16.18 - Bulls May Need To Slow Their Roll


The State of the Markets:

The bulls encountered a bit of a challenge early last week, but by Friday appeared to be none the worse for wear as the rip-snorting bull run of 2018 continued unabated.

However, at least on ...

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The Daily Decision for 1.11.18 - Bond Panic May Be Fake News


The State of the Markets:

After moving to within a whisker of the 2.6% level (2.595% to be exact) yesterday, the yield on the U.S. Government's 10-Year Treasury pulled back in the afternoon and closed at ...

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The Daily Decision for 1.10.18 - Are Bonds Crossing the Line in the Sand?


The State of the Markets:

When stocks enter what I like to call "melt up" mode, everything is right with the world. The economic data is strong. Earnings are fantastic. Inflation is low. Consumers are happy and shopping. Employers are ...

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