@theMarket: Fed Backs Away from More Interest Rate CutsBy Bill Schmick,
10:45AM / Saturday, December 21, 2024 | |
The Federal Open Market Committee cut interest rates again on Wednesday and reduced the number of interest rate cuts next year. That decision dismayed investors and triggered a run for the exits in the stock market. Will this government Grinch decision ruin the chances of a Santa Claus rally?
Wall Street labeled the central bank move a "hawkish cut." Prior to the meeting, most investors were expecting that the Fed would pause after this month's rate cut of 25 basis points. Given that events unfolded as expected, why did the Dow lose over 1,000 points in two hours?
Inflation is the short answer. You may recall in last week's column I 0 Comments
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The Retired Investor: Trump's 21st Century MercantilismBy Bill Schmick,
03:32PM / Friday, December 20, 2024 | |
Jan. 20 is just around the corner. It is Day One in the tariff wars that our next president is intent on launching. The corporate world is trying to dissuade him from that course of action, with no success.
It is an economic fact that the cost of tariffs is passed on to the consumer. If tariffs are high enough, some imported products simply cease to be available, which can cause supply chain interruptions. At some point, buyers balk at paying higher prices. When that happens, tariff costs hit business profit margins directly. Everyone loses.
In the last column, I explained why Donald Trump is adamant that tariffs are the only way to turn 0 Comments
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@theMarket: Stocks Shrug Off Rising InflationBy Bill Schmick,
11:40AM / Saturday, December 14, 2024 | |
New highs continue as equities ignore the inflation data and focus instead on the prospects of the next administration. Wall Street consensus is that the upside in stocks should continue at least until the new year.
As a contrarian investor, I often disagree with the consensus view but not this time. Last week I explained how global money flows usually support the markets and create the Santa Claus rally. This period of good cheer and higher prices should extend into mid-January.
This week, the most recent data on inflation confirmed my fears that we have not seen a bottom in inflation. Back in September, I predicted that inflation would begin to rise again, 0 Comments
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The Retired Investor: Is Mercantilism the Answer to Our Trade Imbalance?By Bill Schmick,
04:33PM / Thursday, December 12, 2024 | |
Mercantilism is often associated with Donald Trump's economic policies. Can reaching back into the past truly make America great again? That is up for debate.
For those few of us familiar with the term, mercantilism was the dominant economic system in Europe from the 16th to the 18th centuries. It was a world where it was believed that global wealth was fixed and finite. To become powerful, a nation needed to acquire as much wealth as possible. Back then, a nation's wealth was measured by how much gold and silver it accumulated.
If this period evokes visions of tall ships, the Spanish Main, and epic exchanges of cannon fire between Spanish galleys 0 Comments
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@theMarket: The Santa Claus Rally and Money FlowsBy Bill Schmick,
03:49PM / Friday, December 06, 2024 | |
Each year from roughly the end of the second week of December through the second week in January the stock market rises most of the time. This year, expect a similar occurrence.
There are plenty of explanations for why this occurs. Many believe it is simply the good cheer the holidays bring to the markets. Others point to the additional spending triggered by holiday shopping, while some argue it is because institutional investors buy stocks before going on their Christmas break.
For me, it comes down to the flow of funds in and out of financial markets. Every year, for many reasons the flow of funds into the financial markets increases at the end and 0 Comments
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