Because consumers tend to vote with their wallets, this recession and associated inflation will last only until the next election. Effectively, the next election is how we will transition out of the recession. The short-run payoff to any domestic production increases in inefficient import-competing industries will limit any investment or job creation and so there will be little or no transition in that manner. Instead, we will suffer only higher prices and higher unemployment caused by the current administration’s tariff policies until the next election arrives.

For those wanting to risk investment during the insuring recession, consider the following stocks for growth: PGR, ATNI, ULCC, TCBX, CRDO, MEC, MD, and EAT. For dividends and growth, consider: CALM, BIP, BMO, CRGY, PR, and SU. The only two ETFs eking out positive growth over the previous three months were XLV and VHT. Here comes the recession, so good luck!

The post March 2025 Stock and Fund Picks first appeared on MarchéEconomics.

Buffett believes the market economy has become more and more “specialized” with “economic rewards flowing to people with specialized talents.” This, he says, has caused the wealth gap with many people barely getting by while others thrive.

“It was an agrarian economy a couple hundred years ago,” he said in an interview with CNN. “Very hard, you know, to get 20 times the wealth of the next guy because you were a little bit better farmer. But if you’re better at some skills now, you can become incredibly wealthy at a very young age … You get to capitalize [the] value of an idea. And so the wealth moves big time, even on an anticipatory basis.”

Now, he says, there’s a “mismatch” between the requirements of attractive jobs and the skills of the early American labor force, which is “simply a consequence of an economic engine that constantly requires more high-order talents while reducing the need for commodity-like tasks.”

The brutal truth, he says, is that “a great many people” will be left behind in an advanced economic system.

According to him, the solution is the right economic policies. “First, we should wish, in our rich society, for every person who is willing to work to receive income that will provide him or her a decent lifestyle. Second, any plan to do that should not distort our market system, the key element required for growth and prosperity,” he wrote.

Simply put, he thinks it’s difficult for average Americans to earn their way to significant wealth. Investing offers a simpler way of securing your financial future and growing your money in this specialized market-based economy.

Buffett’s advice to people is “just keep buying” and ignore “jabbering” about the market. In an interview with PBS, he said, “They should be willing to bet on America … They should just keep buying and buying and buying a little bit of America as they go along. And 30 or 40 years from now, they will have a lot of money.”

The post Warren Buffet explains the wealth gap first appeared on MarchéEconomics.

The Feds balance sheet projection continues to show an accelerating run off due to maturing debt. The money supply projections though have changed. Previously showing a significant decline in the broader monetary aggregate M2, projections now indicate a money supply that is holding relatively steady. This is because the Fed has recently increased its balance sheet through newly issued treasury bond purchases and actually increased the money supply. This recent and excessively accommodative Fed policy appears transitory and short-lived. This is because of the negative returns from bonds caused by weak auction demand and steadily rising long-term interest rates. In fact, yesterdays $42 billion 10 yr not auction was also characterized by weak demand. Nobody wants to by long-term bonds if they think all the debt being fiancé by the treasury will continue to push up rates.

Along with rising long-term interest rates which are contractionary, the Fed is sounding less hawkish because they know they must somehow try to keep interest rates from rising too high, too fast. Thus, the Fed must accommodated the mountain of debt by re-purchasing some of what matures on its balance sheet. Luckily, inflationary projections are in their favor as they fall to 2% and even less very soon. If this proves true, it will open the Fed to more aggressive bond purchasing, which is very expansionary. Along with that, they will probably start decreasing the discount rate.

Given such an economic backdrop, investing in stocks appears warranted. For growth consider: ALL, TSN, HIMS, HEAR, GVA, CLS, TNP, GRBK, MTX, and THC. For dividends and growth consider: BRY, HAS, WU, BEPC, EPD, MO, NEP, OUT, PAA, and UGI. Over the last three months, the fastest growing ETFs were: SMH, XLE, PSI, SOXQ, and SOXX.

The post May 2024 Stock and Fund Picks first appeared on MarchéEconomics.

Slower economic growth is partly a result of the Fed’s interest rate policy of slowing aggregate demand, but also due to our ever growing mountain of government debt. The Fed has mistakenly assumed a Phillips Curve trade-off between inflation and the unemployment rate. The idea is to decrease aggregate demand through rate hikes and thereby reduce inflation at the expense of the unemployment rate. This hasn’t happened (no unemployment rate increase) because there hasn’t been a Phillips Curve for over 25 years. Inflation has for the most part come down because aggregate supply has recovered from the Covid-19 pandemic.

Technically, rate hikes signal the direction of monetary policy which, in turn, entail the Federal Reserves Open Market Committee selling assets such as treasury bonds to soak up the money supply and bring down inflation. The Fed never did this. Instead, it simply let its shorter term bonds mature and role off its balance sheet which reduced the money supply only a very little. Now that it has weakened the economy through rate hikes, much more of its balance sheet debt will begin maturing and rolling off the Feds balance sheet and will need to be refinanced at much higher interest rates. As we face this mountain of debt rolling off the Feds balance sheet, it will continue to reduce the money supply as a kind of passive monetary policy and, at the same time, compete with private sector investment when it is refinanced. Less private investment will, in turn, lead to slower profit and economic growth.

The problem the Fed has is that if it tries to monetize (buy back) this debt to keep rising interest rates in check it will increase the money supply and inflation. The last time the Fed tried to monetize debt to hold down interest rates was in response to the G. W. Bush deficits. The increase in money supply caused the stock market and real estate subprime asset bubbles that subsequently burst and led to the Great Recession in 2008.

With this in mind, I’d try and keep my stock investments diversified and target technology and communication services on the positive side. At the same time, I’d also target defensive stocks in the consumer necessities, health care, and utilities sectors.

The growth stocks I picked for this month include: VTSI, CASY, GME, LMB, CAPL, NGL, SUN, WES, SHEN, REX, ACDVF, AMPH, EME, PLAB, and AVDX. For dividends and growth: BLX, EC, GGAL, RWAY, and SUN. Over the previous three months, the top ETFs were: SMH, SOXQ, SOXX, FTXL, and QTEC. As always, I wish you good investing, and also a Merry Christmas!

The post December 2023 Stock and Fund Picks first appeared on MarchéEconomics.

Sooner or later all good things, even overdue pull backs and corrections, must come to an end. By now those trading on the emotion of “fear” about alleged interest rate increases will have capitulated and sold near the bottom. Naturally, they will buy back in near a top. Then they will vote for Bernie Sanders. For the rest of us, its time to move on.

Stocks to consider at this point in time are: LMB, TSM, PLAB, ACMR, NDEKY, OMV, and DLHC. For dividends, take a look at: SQM, EPR, PTR, OKE, MGP, XOM, SBSW, E, CQP, MC, and PSX. Over the last 3 months, the four top ETFs are: SOXX, SMH, SPVU, and SPYD. For those looking at which CEFs to buy, consider: PDO, HYB, HIO, CCD, HNDL, BST, BMEZ, AIO, and NBXG. Keep an eye on BSTZ. Once the Nasdaq correction is over, it will likely become a good buy as well. In the meantime, Good Investing!

January 22:

I should add that if you have a stable coin account at BlockFi that you smartly contributed to prior to the correction in tech, now is a good time to cash it out and buy the heavily sold tech funds such as BST, BSTZ, BMEZ, AIO, and NBXG. That way, you will be the one buying low and getting the higher yields. The general rule I follow with these types of CEFs is to never touch the principle and add to it when there is a good opportunity such as now. Then I only take out the dividends. Over time, the principle will grow along with your dividends. You shouldn’t worry that your portfolio value will fluctuate during pull-backs and corrections because your dividends will tend to remain stable, and may even increase if you hold the better funds.

January 24:

Both the U.K. and U.S. are reducing their embassy staffs in Ukraine. Thus, I am reassessing my near term stock market outlook to be more cautionary. At some point, the market will come to grips with the Feds inflation fighting policy and once that becomes fully priced in some buying should follow. It is earnings season with most firms making more money than expected and the economy is still expanding at an above average trend. Also, the index of leading economic indicators is strongly positive. It is hard to expect the stock market to be out of step with economic fundamentals for too long. This negative short-term action, though trying, will end and create very good entry points so keep your powder dry for a bit longer. I am adding DFP, BEO, EVN, AWF, and PPT to my list of recommended CEFs as areas to employ capital in the near future. Also, Bitcoin and Ethereum are rapidly becoming good buys.

The post January Stock and Fund Picks first appeared on MarchéEconomics.

For Growth: MARUY, MATX, ARCB, USAK, VALE, PCH, RIO, ORLY, ULTA, KMX, SID, PTR, CWH, and CLF.

For Dividends and Growth: RIO, SBLK, VALE, CIG, ET, KEP, SCU, OMF, SFL, and SKM.

The closed end fund (CEF) market is also pretty much tapped out. In other words, there are only a few funds trading at discounts and all of the really solid funds are trading at significant premiums. This hasn’t been anything but good for my CEF portfolio though. Gains from simply holding them have been fairly steady for most of the days and weeks during the last few months. This is probably because I bought most of my CEFs a long time ago at steep discounts. After significant and rapid gains in portfolio value over the last year what remains are sold CEFs at premiums On average, these premiums are inclined to slowly increase during this apparent market “calm.” I’ll take that any day!

Market volatility appears insignificant and will probably remain so unless inflationary expectations increase. That will happen only if investors feel that inflation is more than a temporary supply-side phenomena. There is a clear supply-side labor shortage in the developed countries, including the U.S, and even greater labor and other supply related problems in emerging economies for which vaccination rates are still very low. These problems could drag out a temporary problem into the long-run. If so, market volatility will increase dramatically and the potential for a Fed policy mistake will increase. Let’s hope that vaccination rates increase more rapidly and that none of this happens. In the mean time, good investing!

The post July Stock and Fund Picks first appeared on MarchéEconomics.

Expect the market to have short rallies like we just had and then another bounce off of a short-term bottom. Some bottoms may be lower than previous bottoms. Eventually, things will get better and that is exactly when market sentiment will hit the bottom along with the overall market.

Already, new Covid-19 cases in Italy have leveled off to a constant rate, as opposed to an increasing rate. In other words, the first derivative is now equal to zero, if the second derivative becomes negative then we will truly have a reason for better expectations regarding the course of this once in a century pandemic.

Interestingly, the event caused recession that was at first a negative supply-side shock has manifest an extreme negative demand-side shock to the macroeconomy. The strength of the demand-side shock is so strong it has created a bit of a temporary Phillip’s curve phenomena of increasing unemployment and decreasing inflation. This justifies the strong Monetary and Fiscal stimuluses that recently went into effect. Unfortunately, it is doubtful that unemployment rates will decrease and inflation increase as a result of the economic stimulus. Medical technology will advance, and along with containment of the virus’s spread, will eventually put an end to the problem. In the meantime, Good Investing is Not investing any cash reserves at all!

April 17 Update:

The S & P probably bottomed in late March. The recovery will be like slogging through a marsh or bog and will take a very, very long time to get anywhere. The stock market will get ahead of itself at times and have to pull back and re-adjust. Only buy small amounts of funds or stocks on pull backs and be prepared to a long, long slog. Growth stocks to consider are: FRTA, TAC, PRAA, and PHI. Divided growth stocks are: PHI, BG, RGP, ACO, DIN, and TIGO and the best ETFs are QQQ, and XNTK. The best opportunity out there at the moment is O at around $50.00. Really good income funds include SPHD, PEY, O, BBN, GBAB, FLC, FFC, EXD, ETJ, BDJ, CII, BST, RNP, and RQI. Allowing the funds and stock you buy to DRIP or re-invest their dividends will pay off the most in the long-run. Good investing!

The post April Stock and Fund Picks first appeared on MarchéEconomics.

The misery index goes up when there is an outside supply-side shock to the economy such as the oil supply shortages of the mid 70s and early 80s. It goes down when things are good. Supply-side effects, either from policy or from happenstance, now dominate the business cycle. For example, during the Clinton administration there was first a large tax increase and military expenditure cuts and Republicans swept into Congress, there were also large cuts to social programs. The resulting budget surplus was contractionary on the expenditure side (tax increases and expenditure decrease) but the increased utilization of computers in offices and low oil prices created dominate supply-side effects that produced a business cycle upturn. Unemployment and inflation, that is the misery index, went down and things were good.

These days we have to worry about the mix of government policies leading to an increase in the misery index and causing a recession. Protectionist trade policies slow production in the 30 to 40 percent of our economy engaged in international trade. All tariff costs have been forward shifted into US consumer prices which is inflationary. Less investment decreases growth in labor productivity which is also inflationary. It also limits future capital expansion and associated job growth which will eventually contribute to increases in unemployment. The Feds dovish accommodation of protectionist trade policies are inflationary, and because they push interest rates down stocks look overly attractive causing the stock market to overheat. The slowdown in trade related economic activity such as in transportation, sea port activity, and trucking and transportation will also lead to increased unemployment. The misery index, which will be creeping slowly upwards, will shoot up rapidly and a recession will ensue when the stock market crashes.

In the meantime, the market is still relatively safe and one can consider (that is, research) the following stocks for growth: MX, PERI, EVRI, FRTA, KBH, OESX, ARAY, TNDM, VCEL, TRUP, and ICHR. For dividend growth, take a look at: BMA, APAM, CMRE, BHP, CVX, GLP, MBT, SNR, PDCO, RCII, SPH, and WES. AS for the best ETFs, consider IVG, XLK, VGT, FTEC, and IYW. Of course if you want CEFs for income, then look at those in my previous spread sheets and pick only those selling at a market price that is less than their net asset value. You can find current NAV and price information on the Fidelity web site. Good investing!

The post February Stock and Fund Picks first appeared on MarchéEconomics.

These examples of negative consequences are analogues to those resulting from Pres. Trump’s Trade war. The only benefit is to keep China from stealing our technology. The downside is that trade protections promote domestic monopolies such as the UAW. The UAW single handedly caused the bankruptcy of two major US automobile manufacturers during the Great Depression and caused the entire city of Detroit to collapse economically. Free trade, on the other hand, erodes the power of monopoly sellers such as the UAW. Thus, NAFTA was a better trade policy than the USMCA negotiated by Donald Trump. USMCA simply bolsters the UAWs monopoly power. Trump’s trade protections have also caused an increase in trucking bankruptcies, decreased nternational shipping, and increased the hardship among dockworkers because of the reduction of exports and imports. Industrial production, investment in building and equipment, and GDP growth are also down significantly. Moreover, the FEDs balance sheet is once again increasing. Only consumers and the labor market appear to be doing well. Unfortunately, as indicated in my previous post, this is due only to the increased inefficiency brought about by the reduction of international specialization on the basis of comparative advantage and free trade.

In spite of the negatives, Pres. Trump is now forced to propel the stock market upwards because of the election cycle. This should mean the opposite of the trade war escalation of 2018 that punished the economy and the stock market. So long as trade tensions are reduced, the economy will not slip into a recession. I don’t believe that Trump will negotiate a much better trade deal with China, however. His initial trade agreement is rather weak as it gives up specific tariffs for ambiguous and unenforceable promises. I expect that the Chinese will appear cooperative at first but there is zero basis for trusting them. Instead of tariff protections and a trade war that results in the inefficiency of protectionism, the better policy would be to place capital export restrictions and disincentives upon investment and production inside China. These could be coupled with incentives for capital export and production in friendlier countries such as Mexico. Unfortunately, the Trump administration doesn’t see the benefit of economic development in Mexico that would reduce illegal migration by capitalizing on Mexico’s comparative advantage from highly productive and cheaper labor. Instead, Pres. Trump only recognizes the apparent yet illusory gains from protectionism and greater inefficiency.

Given that the risk of recession for the foreseeable future remains low (as does the outlook for beneficial presidential policies or agreements) some highly ranked stocks that are expected to deliver growth for the next 30 – 90 days include: IMPUY, SEM, BERY, LAD, ABG. EVRI. PPC, and ATSG. Dividend growth stocks for this same period include: BMA, MBT, PHI, BBBY, DTEGY, LM, PDCO, SWM, TX, ABBV, OPI, and VGR. Currently, the best performing ETFs are XLK, XLI, and XLP. Keep in mind that the likelihood of a sudden stock correction from the current overbought level remain high. Otherwise, I wish you Good investing!

The post January 2020 Stock and Fund Picks first appeared on MarchéEconomics.

Trade is still a negative while just about everything else (eg., domestic economy and GDP growth, relatively low real interest rates, and company earnings) are positives.

On a different issue, I don’t get why the NFL allows anyone to take a knee during the national anthem.  There are a billion and one things to protest and every player can take a knee for one reason or another such that no one stands.  This disrespects the nation and that we have free speech.  In other words, protest is what our nation represents and kneeling merely protests your own right to protest.  Too many knocks to the head perhaps?

On to stocks and funds.  Buy ATEYY, CONN, and RNR for growth.  Check out OSB for dividend growth.  A great ETF to consider is JSMD.  If you want to put money into a monthly paying mutual fund that is highly ranked and that always pays its dividend then consider FLARX.  FLARX yields 3.85% and tends to hold its value.   Other monthly paying cash or near cash related funds to consider are BLW, USAIX, and ICSH.  Good investing.

Week 2 (Sept. 10 – 14):

Watching stock indexes turn red with more tariffs.  Will there be any more positive news on this front?  Probably a deal with Canada, and then maybe the EU.  Both would be a welcome relief. I don’t think it matters with China that we get a deal.  I’d like to see all our firms doing business in China reallocate entirely to anywhere else.

As for investments, consider GNRC, ATEYY, and OXINF for growth.  Recommended dividend growth stocks are BGCP, ARLP, BGSF, GES, MCY, GLNCY, and OSB.  Growth oriented ETFs are IHI, FXL, XLM, and VGT.  Dividend ETFs with payouts directly related to increasing short-term interest rates are BLW, BGT, FRA, EFT, JRO, and JFR.  Mutual funds with returns related to short-term interest rates are BLDRX and BFRKX.  Two high paying dividend growth stocks that hold up will under economic downturns are MO and PM.  That’s all for this week.  Good investing!

Week 3 (Sept. 17 – 21):

Between now and when the negative effects of trade obstruction show up in economic data there is only the midterm elections.  Election noise will lead to market volatility and opportunity.  There may also be a year-end Santa rally.  Without trade deals as promised, trade effects will manifest themselves as job losses and greater inflation.  This will happen about the time economic stimulus from de-regulation and tax cuts begin to fade and interest rates rise to higher levels.  Prepare to exit the market at that time.  Holding cash at higher interest rates will be increasingly popular and funds like MINT, ICHS, and EFT will help in that regard.

In the meantime, the market and the economy looks solid.  Consider the stocks CBD and RHHBY for growth.   For dividend growth look at MCY.  Excellent growth oriented ETFs include IHI and BBH.  For the increasing interest rate environment, start looking at the ETFs EFT, FLTR, PPR, ICHS, MINT, and VRP.  Alternatively, a good mutual fund for rising rates is EABLX.  Good Investing!

Week 4 (Sept. 24 -28):

Anybody question whether September is a typically slow month for the stock market?  Glad it’s over.  Looking ahead to October, consider ZUMZ, VRS, GES, and TITN for growth.  Dividend growth stocks to take a look at are XAN and PAGP.  Additional growth oriented ETFs you may want to consider are FXL, VONG, and SPYG. As for growth oriented mutual funds, consider AGOZX and NYSAX.  Good investing!

The post September Market Beating Stock Picks first appeared on MarchéEconomics.