I. US FINANCIAL MARKETS The bull/bear ratios have dropped sharply over the past couple of weeks (chart). From a contrarian perspective that’s a bullish development for the US stock market. The US bond yield has been increasing while the

The backup in bond yields since mid-September did not surprise us. But it has surprised lots of other financial pundits, who are warning that this could be bad news for stocks. It could be, especially if the 10-year US

The US economy continues to roar. December’s ISM purchasing managers survey showed that services activity remains strong. The JOLTS data, albeit a bit stale from November, showed job openings jumped. That aligned with the recent rise in measures of

Today was another good day for technology stocks, semiconductor stocks, and the Magnificent-7. In the S&P 500, they were up 1.44%, 3.28%, and 2.01%. We continue to recommend overweighting the LargeCap S&P 500 Information Technology and Communication Services sectors.

The economic week ahead is chockful of labor market indicators for November and December. We’re expecting them to beat expectations. As long as corporate earnings continue to reach new record highs, companies are likely to hire more workers and

The Q4-2024 earnings reporting season is about to start, led by the big banks. We expect that during their conference calls, company managements will discuss how AI may be starting to boost their productivity. In effect, they’ll be trying to

Today’s Wall Street Journal reports: “Now, as Trump prepares for his second administration, American companies have largely gone silent about the importance of the U.S.-China relationship. That is because American businesses no longer see China as the land of opportunity. The

This is the time of year when we all wish one another a healthy, happy, and prosperous new year. The past two years were certainly prosperous ones for equities investors, as the S&P 500 rose 23.3% following a 24.2% gain in 2023. Those gains more

The post-election rally has been losing steam since early December (chart). The S&P 500 peaked at a record high on December 6. From a sentiment perspective, there have been too many bulls. From a technical perspective, breadth has been

The 10-year Treasury bond yield is up 100bps since the Fed started lowering the federal funds rate (FFR), by a total of 100bps, on September 18 (chart). Even the 2-year Treasury yield is up about 75bps. We warned about

January could start the year off with some volatility in the bond and stock markets. There are lots of fundamental and technical crosscurrents and a few possible riptides. The Q4 earnings reporting season during January should show a solid

We’ve been bullish on the stock market since October 2022. We remain bullish, targeting 7000 on the S&P 500 by the end of next year. That puts us near the head of the pack (chart). Here’s more on earnings

There may soon be fewer jobs for economists in both the US and China. On Monday, December 23, Elon Musk (one of the “DOGE Boys”) tweeted that the “Fed is absurdly overstaffed.” The Fed seems to wear that fact

I. The Light Side In a November 19 post titled “Yardeni And The Long History of Stock Market Prediction Problems,” Lance Roberts, the Chief Investment Strategist for RIA Advisors, wrote that I am a permabull. The slant of his article was

Wednesday was a bad day for stocks after the release of the FOMC’s Summary of Economic Projections (SEP), which showed two cuts in the federal funds rate in 2025 rather than the four cuts shown in September’s SEP. Friday was

Despite yesterday’s 25bps cut in the federal funds rate (FFR), we’re not raising our subjective odds of a stock-market meltup. While we’re cautious in the short run through January, we’re sticking with our odds of the Roaring 2020s (55%),

Since the December 5 QuickTakes titled “Contrarian Indicators Showing Too Many Bulls,” we’ve been warning that bullish sentiment is too high and setting the stage for a pullback. In Sunday’s QT titled “Game of Drones,“ we reiterated: “Is it time to panic in the

The Federal Open Market Committee (FOMC) cut the federal funds rate (FFR) by 25bps today, as widely expected. That takes the target range for the overnight rate down from 5.25%-5.50% to 4.25%-4.50%, a full percentage point lower since the

Consumer spending rose again in November, with real retail sales rising more than 3.0% y/y (chart). Rising real labor and nonlabor incomes, plus a strong wealth effect from record highs in stock and home prices, have boosted spending for

Last Thursday, we wrote, “After today’s PPI, we won’t be surprised if Fed officials plant a story in The Wall Street Journal over the weekend titled something like “Fed Officials Might Vote To Pause Rate Cutting Following Hot Inflation Data.” We were

The main focus of the economic week ahead is the FOMC’s interest-rate decision on Wednesday. The most likely outcome will be a 25bps cut of the federal funds rate (FFR) to a target range of 4.25%–4.50%. After a full

Look up in the sky. It’s a bird. It’s a plane. It’s Superman! Nope, it’s lots of drones flying over New Jersey, New York, and Maryland typically between 6 p.m. and 11 p.m. They are reportedly the size of

After today’s PPI release, we won’t be surprised if Fed officials plant a story in The Wall Street Journal over the weekend titled something like “Fed Officials Might Vote To Pause Rate Cutting Following Hot Inflation Data.” The current consensus seems to

Today’s CPI report for November matched expectations. The CME FedWatch tool shows 95% odds that the FOMC will cut the federal funds rate (FFR) by 25bps next week, and the Fed doesn’t like to surprise market expectations. The Nasdaq front-ran our

The stock market appeared calm ahead of tomorrow’s November CPI report, which is likely to show that supercore inflation (i.e., CPI services less shelter) remains stuck around 4.5% (chart). However, there was plenty of action just below the surface

Chocolate and chips were on today’s stock market menu. Hershey’s stock price soared on a report of another Mondelez takeover attempt. However, the market was weighed down by Nvidia shares, which fell after China opened an investigation over possible

The economic week ahead is chockful of inflation updates. We’re expecting stickier inflation readings that should ruffle the feathers of the Fed’s doves. The FOMC is in a blackout period ahead of its December 17–18 meeting, meaning FOMC members won’t

In recent conversations with our accounts, many of them said that the financial markets may be more volatile under Trump 2.0 over the next six months than they were over the past 12-18 months. In Thursday’s QT, we observed that

We were very bullish at the start of this year, with a Street-high year-end price target of 5400 for the S&P 500. That level was surpassed on June 12. We weren’t bullish enough, as the stampeding bulls left hoof

Salesforce beat Q3 earnings expectations today, but that’s not what drove the company’s shares 11% higher. CEO Marc Benioff did that by touting the company’s AI-powered chatbots on today’s quarterly earnings call. He sparked renewed AI optimism that lifted