Coordinated Policy Action

Today brought news that five central banks – the Federal Reserve, European Central Bank, Bank of England, Bank of Japan, and Swiss National Bank – have teamed up to provide unlimited short-term U.S. dollar funding to troubled European banks. It was a coordinated policy response designed to calm increasing market concerns about another credit freeze,…

Where Could We Be Wrong?

As Pinnacle investors know, we are investing defensively right now due to our feeling that the business cycle is under severe pressure and that technical conditions have broken down. Taking a negative view of the current situation is not a bad thing — it is actually what we are paid to do when we feel…

Dollar Starting to Pay Off

For months we have been wondering when the dollar will finally start to move higher versus the euro. The problems in Europe are massive and they will not go away. And yet the Euro seemed to be hanging around — the damn thing has alligator blood. Well, the dollar is finally having its day. The…

Fear the Ostrich

Yesterday, we received an email that basically said that market emotions were running wild, and that those who just held during this period would be rewarded. It sounded pretty ‘Buy and Hold’ to me, and one of our wealth managers suggested we write a refutation.

Asking the Wrong Question

In academic terms, or in terms of the Capital Asset Pricing Model, known as CAPM, the risk of owning the market is called systematic risk. Nowadays, as one financial institution after the other seems in danger of collapsing, we hear much about systematic risk. Nevertheless, for professionals who try to manage risk in portfolio construction,…

Time for a New Economic Model?

Economic data took another hit today as the payroll numbers came in showing no growth. Yep, I’ll say it again, zero growth in non-farm payrolls! Those encouraged by a few data points the last few days are rethinking whether or not there could be a business cycle change occurring right now. At the moment, we’ll…

Time to Change the Models?

Economic data took another hit today as the payroll numbers came in showing no growth. Yep, I’ll say it again, zero growth in non-farm payrolls! Those encouraged by a few data points the last few days are rethinking whether or not there could be a business cycle change occurring right now. At the moment, we’ll…

Q’s Signal End to Rally?

We continue to believe that the stock market has likely entered a new bear market and have positioned our portfolios to outperform if further market declines are in store. However, with short-term technical indicators signaling oversold conditions when the S&P 500 dropped to 1100 in early August, we decided to wait for a bounce to…

Defensives Leading, Again

Since we’ve moved to a much more defensive investment position over the past few weeks, we are watching very closely and trying to keep an open mind that we could in fact be wrong with our change in call. The stock market is now bouncing, with the S&P 500 up about +8.5% from the August…

Spending Confounds, Confidence Plummets

Yesterday brought the latest income and spending report from the Bureau of Economic Analysis. With spending still driving the U.S. economy, and arguably world growth, we watch these numbers closely. I’ve been increasingly bearish on the economy recently, but I have to admit that the print was surprisingly good, even when stripping out the effects…