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December 2023 Stock and Fund Picks

December 21: We appear to be near the bottom of the current business cycle. It's a very shallow bottom with no clear signal as to when corporate profits might also bottom out. The upside will be characterized by slow growth and stock prices that become overvalued quickly during rally's and lead to frequent bouts of profit taking and stock repricing. In fact, this scenario has just occurred. Slower economic growth is partly a result of the Fed's interest rate policy…

September Stock and Fund Picks

Sept. 29, 2023: Let's say I am the Fed and I want to protect the markets, consumers, and citizens from reality. So, I hide a T-Rex debt monster behind a curtain called the Fed's balance sheet. I monetize or "feed" the T-Rex over-time by buying up newly issued IRS debt, and thereby increasing my balance sheet while injecting money into the economy during the Pandemic. This lowers interest rates and increases spending -- indirectly through lower rates and directly through…

August Stock and Fund Picks

August 14: In business cycle parlance, we are coming down from a peak towards a recessionary trough and appear to be nearly there. This trough is not likely to be an actual recession though as the economy is generally still too strong for that. Thus, a "soft landing" has become a common expectation. The more relevant question question is when earnings or profits will stop continuing to fall and bottom out. As it is, the approach towards a trough tends…

June Stock and Fund Picks

June 28, 2023: Because the Fed intends to carefully proceed by looking at downside (recession) risks versus inflationary risks, we can expect them to try to avoid causing a recession. But, recent strong economic activity in areas such as capital goods manufacturing, housing construction, strong service sector and a still fairly resilient labor market mean that a recession would be relatively more difficult to accomplish. This gives the Fed ample room to pursue it's anti-inflation goal. Inflation is still too…

May 2023 Stock and Fund Picks

May 30, 2023: Assuming the debt ceiling FUBAR fades into the rearview mirror, the Treasury will have to rebuild the cash reserves it exhausted during the long period of "special measures." This cash rebuilding process involves bond sales which will also be good for inflation because it will compete for excess money in the economy. Unfortunately, it will also and create an alternative to buying stocks for a time. During the second half of this year the stock market should…