Here’s your financial markets weekly report for February 2, 2018.
The Dow Jones Industrial Average lost 666 points on Friday. Warming the hearts of global conspiracy theorists. And equaling the worst one-day decline, in points, since Lehman Brothers 2008 collapse. The 2.5 percent drop was the worst since the Brexit vote in June 2016. Capping the worst week for stocks since January 2016.
Quite a send-off for Janet Yellen. Who completed her Fed Chair tenure on Friday. Made a few bleak comments as she left. And ushered in the first three-percent-plus drop of the Trump era.
Until last Thursday, it had been 448 calendar days since the S&P 500's last three percent decline. And event that typically occurs around seven times per year dating back to the late 1920s. We've been long overdue for a sizable pullback and a large spike in volatility. And despite Monday's startling 4.1 percent S&P 500 drop, it merely returned the index to its early December level. Which is to say, it has given up only nine weeks gains. So long as the index remains above the 200-day MA, the upward trendline remains intact.
Stocks are not extremely overvalued. Sitting at roughly 19.2 times forward earnings. Not too far above the 25-year average of 16.1.
It's important to keep in mind during days like these that volatility is a process by which stocks are transferred at discount prices from weak to strong hands. Last year was very unusual for its lack of volatility, but corrections like this are frequent in market history and mostly benefit those who can take advantage of lower prices.
That said, the S&P 500 breached the 50-day moving average on Monday, setting up the 200-day MA as the next major level of support. Which sits another 5 percent lower. Below that, the trap door opens.
High-volatility periods like this are the reason we own low-correlation alternative investments, in addition to a diversified array of global stocks and bonds. Such investments can lessen portfolio volatility and move independently of stock and bond indexes. So long as we are prepared for such volatility, we can withstand such periods. And will eventually benefit by a careful consideration of the bargains that will inevitably exist on the other side. Check out our recent Alternative Investments white paper here.
Last Monday, the S&P 500 found itself 7.55 percent higher than its perch on New Year's Day. The Dow was up 7.7 percent thus far -- its best start to a year since 1987. Today? The indices' year-to-date returns sit in the red.
The DJIA and the S&P 500 shave off 6.5 percent of value. And the VIX volatility index has careened 138-percent higher. No wonder they call it the Fear Index!
The losses were mostly driven by the acceleration in long-term interest rates. Which makes new investments by consumers and corporations more expensive. And emanates the scent of inflation. Toxic to stocks and bonds alike.
The market palpitations left nowhere to hide. With all 11 sectors of the U.S. market painted red.
The good news? Markets have become oversold and due for a bounce. The bad? Historical precedent suggests that the resulting bounce could be among the final exit opportunities ahead of what could be a deeper, longer decline on the wings of rising credit costs.
Of course, there remains a counter-balance in the form of these market drivers:
Trump's aggressive pro-growth, pro-business agenda. The improving Goldilocks economic conditions. Low inflation. Accommodative central banks. Solid and improving corporate earnings. Improving labor markets. Growth overseas. And a falling dollar.
And yet, the risks and warning indicators are unmistakable:
* Market breath stinks. With the market rising sharply even as a smaller percentage of stocks rise with it.
* The Volatility Index is suddenly rising in sympathy with stocks. Counter to the inverse role it typically plays. As it did throughout most of last year.
* Corporate cash flow is slowing.
* Inflation appears ready to rise, as oil returns to 2014 levels and the labor market grows ever tighter.
* The Two-Year Treasury yield now sits higher than the dividend yield on the S&P 500. Bringing asset allocation decisions that have favored equities into parity with the risk-free choice.
* The possibility of a more aggressive Fed rate hike path is distinctive. As the new Fed chairman attempts to assure that the lid is not blown off this ever-broiling economic crockpot.
* Cash levels sit at hyper-low levels as traders and investors appear to be increasingly all in.
Translation? These gains could continue. Or this could be the beginning of the bull market's terminal phase. As we come within sight of, or perhaps even sit within, the inevitable "blow-off top" that defines the end of every bull market. Where gains come quickly. And the downside risks become ferocious.
For now, this pullback appears to be garden variety. As we'd noted last week that stocks were extremely overbought and screaming for a retrenchment. Which appears to be upon us. How far will it fall? Seven, 10, 15 percent or more? Who knows. But it was long overdue, regardless. Any pullback will be positive in the bigger progression.
The S&P 500's last three percent pullback occurred in November 2016. 450 days ago. Hell, we haven't even seen a one percent pullback in 113 trading days. So, the even next two-percent drop should serve to properly freak out all market newcomers.
That said, the landscape ahead looks positive.
Astute observers say that U.S. economic data and earnings are still solid and supportive of higher prices. Of the 157 S&P 500 companies having reported, firms have beaten topline revenue estimates by 1.2 percent and bottom-line EPS estimates by 2.5 percent. Translating into year-over-year revenue growth of 7.7 percent and EPS growth of 11.1 percent.
And remember, as goes January, so goes the year?
According to the Stock Trader's Almanac, a big January is any in which the S&P 500 gains four percent or more. They're rare. We've seen just 26 over the past 90 years. But they have been very bullish for the market when they occur.
Since 1930, stocks have gone on to close the year in positive territory 95 percent of the time following such months. Gaining an average of 15.2 percent. Since 1950, the big January track record is even better. As stocks have closed the year positively 100 percent of the time -- including 1987, when stocks fell nearly 25 percent that October -- for an average gain of 22.5 percent.
The S&P 500 ended January up 5.73 percent.
In Davos, President Trump appeared at the World Economic Forum. Where he defended his "America first" policy. Explaining that this doesn't mean "America alone." Like a Salesman and Chief (a big part of any president's job) he pitched the United States as a great place to invest. Stating that the country supports free trade, but only when it is "fair and reciprocal."
Trump was warmly received. Where corporate executives and business leaders were interested in what he's been doing to make America more competitive and business friendly. Actions that will likely be emulated in various business centers around the world. As other nations begin to deregulate and lower corporate (and maybe individual) tax rates. All of Which would be very positive for global markets in the year ahead.
Upon his return, the president prepared for and delivered his first State of the Union address. One that, surprisingly, received accolades by fans and critics alike.
Short on soaring rhetoric, Trump summarized the administration's first-year accomplishments:
* Notable increase in economic growth
* Increase in household incomes and wage growth
* Deregulation - eliminated more regulations in first year than any administration ever
* Record highs in consumer and business confidence
* Biggest tax-reform bill in the nation's history
* Corporate tax rate cut from 35 to 21 percent
* Repeal of the Affordable Care Act's Individual Mandate
* Unemployment at 45-year low
* African-American Unemployment at all-time low
* Hispanic unemployment at all-time low
* Ended war against domestic energy, making U.S. a net exporter to the world
* Fed approved more new and generic drugs and medical devices in one year than ever before
* Cleaned up and economized the maligned Veteran's Administration
He then summarized near-term priorities:
* Lowering prices on pharmaceutical drugs and treatments
* Ensure that trading relationships are fair and reciprocal
* Rebuild nation's crumbling infrastructure
* Secure nation's borders and reform immigration policy, moving towards a merit-based system
Trump may be the greatest economic bull we will see for years. Following the 2017 tax cut, we expect an infrastructure bill to pass in 2018. Which will be a public-private partnership which could total more than $500 billion.
Moreover, a prediction... remember that the Reagan economy used two tax cuts (1982 and 1986) and deregulation to reach six percent economic. Following the current tax cut (big on the corporate side), followed by a massive infrastructure bill, don't be surprised to see another, smaller tax-cut bill introduced in 2019. One aimed directly at middle-class taxpayers. Designed to reduce inequality and juice the economy prior to the 2020 elections...
Love him or hate him, it's hard to argue that Trump hasn't achieved a good deal over the last year. His base loves him. Democrats will never accept him -- he's too anathema to the policies they use to consolidate power. Yet the rest of the nation may find itself going through a form of begrudging acceptance. If his accomplishments and the benefits continue apace. Something along the lines of the Kubler-Ross Model for the Seven Stages of Grief: Shock, Denial, Anger, Bargaining, Depression, Testing (seeking realistic solutions), and finally Acceptance.
We recognize faults and advantages in a Trump presidency. But, we also recognized the faults in the establishment-driven environment over which he now presides. An establishment that left the middle class for dead for 18 years. For those outside of the nation's top-earning 20 percent, D.C. had become a form of cancer. Incapable of real progress. Substantive change. Positioning Trump as a form of political chemotherapy.
Sometimes chemotherapy is required to fight cancerous tumors. Chemo is unpleasant. Has nasty side effects. But ultimately, it can kill the cancer that would, left unchecked, kill the patient. Trump is to D.C. what chemo is to cancer. Ultimately, he may change D.C. for the better. But the establishment will fight him at every turn and never forgive him for changing its beloved system.
Economically, January payrolls rose 200K, beating the consensus, 180K. Unemployment remained at 4.1 percent, in line with the consensus. Hourly earnings rose 0.3 percent, besting the consensus, 0.2 percent.
Most impressive were the Average Hourly Earnings (AHE) data.
Upward revisions of prior data, combined with a solid January gain, have lifted the year-over-year earnings rate to 2.9 percent. Marking the highest level since June 2009. The January number is made more impressive considering the adverse weather last month.
Having spent two years tracking sideways at about 2.5 percent, such earnings data could represent a significant breakthrough for the middle class. Representing a significant pickup in wages and earnings growth. The downside? Higher wage growth will greatly empower Fed hawks in their quest to more rapidly hike interest rates.
At this point in an economic cycle, unemployment drops to a level where there are not enough qualified workers to keep pace with the corporate labor demands. Accordingly, workers in the system find their time becoming ever more valuable to current and prospective employers. A benefit for American workers.
Eventually, that wage growth filters into the inflation data, and gives ammunition to Fed Governors who believe we should be raising rates more expeditiously to combat rising inflation. Which can inhibit economic growth, as higher rates make capital more difficult to come by.
Additionally, the ISM non-manufacturing index for January rose to 59.9 from 56. Well above the consensus 56.7. And a new cycle high. And the Atlanta Federal Reserve's GDPNow model projects that gross domestic product will increase at a 5.4 percent annualized rate in the first quarter. The last time the economy grew that much was in the third quarter of 2003. If correct, this would be the first period of more than 5 percent growth since Q3 2014.
Bottom line? This economy is humming.
In Asia, Vietnam is proving a ready ally in countering the increasingly aggressive projection of power from China. A direct result of China's efforts to convert a number of former independent atolls and islands in the South China Sea into Chinese military bases.
In March, a U.S. Navy aircraft carrier will stop in Vietnam. The first such visit of the post-Vietnam War era. The stopover is likely intended to irritate China as the U.S. flexes a bit of muscle in the area.
In the Middle East, Turkish leaders demanded this weekend that U.S. forces pull out of the norther Syrian town of Manbij. General Joseph Votel replied that the U.S. has no intention of withdrawing coalition forces. Nor of ceasing support for the Syrian Democratic Forces that have been battling ISIS.
Turkish leaders have threatened to move into territory protected in part by the U.S. military. Votel has attempted to maintain a semblance of balance. Saying that he understands Turkish concerns regarding the PKK, which Turkey designates as a terrorist outfit. But Votal has repeatedly said that the U.S. would stand by the SDF counterterrorism force of Syrian Kurds, Arabs and Turkmen that routed ISIS on the world's behalf.
Finally, a crypto update.
Coincheck Inc., a Tokyo-based crypto-currency exchange reported that 523 million units of a virtual currency called NEM disappeared after the system was hacked. The stolen currency was valued at $530 million. The heist ranks as the largest in digital currency's nine-year history. Topping the $450 million in bitcoin that was stolen from the Japanese exchange Mount Gox in 2014.
Yale economist Robert Schiller says bitcoin looks like a bubble. Having dropped from $19K to $9K over the last month. Schiller believes much of the pricing patterns are driven by those seeking to avoid the same remorse experienced after missing the housing and stock market booms. Bringing them to flock into crypto currency. "Driven, as they are, by the existential meaningless of life when you are not invested in anything..."
A little deep for our tastes, Professor Schiller. Believing as we do that all investment decisions are driven by two emotions: fear and greed. And so, when it comes to investing, we'll defer to Buffett, Dalio and Lynch. And leave the existential malaise to Kierkegaard, Sartre and Dostoyevsky.
The Bitcoin correction is turning into one of the more precipitous drops incurred by an asset class in years. In mid-December, Bitcoin was valued at over $19K. Today it sits at $7,105. A 63 percent drop in a month and a half. It's lost 35 percent in the last week. The good news? The research to which we're privy says that $7K may be the near-term technical shelf. The bad? Bitcoin has engendered a lot of doubt. And generated many questions as to its place in the global asset-class hierarchy.
Care to peruse our thoughts on the year ahead? Check out our 2018 Investment Market Overview webinar, here.
Finally, Nick Foles' Eagles pulled off the improbable Super Bowl victory. Marking Philadelphia's first NFL championship. And establishing Foles among the best backup quarterbacks to play the game. The Patriots were a 4.5 point favorite. Yet the Eagles prevailed, 41-33. Bettor X, the individual who took the Vegas sports books for $10 million during the World Series, was said to pocket over $6 million after placing large bets on the underdog Eagles. Sometimes it does pay to be a contrarian.
Stay tuned for your next financial markets weekly update…
Financial Markets Weekly Recap
Major indices finished down last week. The DJIA lost 4.12%. The S&P 500 fell 3.85%. The Nasdaq fell 3.53%. While small cap stocks lost 3.78%. 10-year Treasury bond yields rose 17 basis points to 2.84%. And gold closed at $1,331.51, down $18.19 per ounce, or -1.35%.
Quite a send-off for Janet Yellen. Who completed her Fed Chair tenure on Friday. Made a few bleak comments as she left. And ushered in the first three-percent-plus drop of the Trump era.
Until last Thursday, it had been 448 calendar days since the S&P 500's last three percent decline. And event that typically occurs around seven times per year dating back to the late 1920s. We've been long overdue for a sizable pullback and a large spike in volatility. And despite Monday's startling 4.1 percent S&P 500 drop, it merely returned the index to its early December level. Which is to say, it has given up only nine weeks gains. So long as the index remains above the 200-day MA, the upward trendline remains intact.
Stocks are not extremely overvalued. Sitting at roughly 19.2 times forward earnings. Not too far above the 25-year average of 16.1.
It's important to keep in mind during days like these that volatility is a process by which stocks are transferred at discount prices from weak to strong hands. Last year was very unusual for its lack of volatility, but corrections like this are frequent in market history and mostly benefit those who can take advantage of lower prices.
That said, the S&P 500 breached the 50-day moving average on Monday, setting up the 200-day MA as the next major level of support. Which sits another 5 percent lower. Below that, the trap door opens.
High-volatility periods like this are the reason we own low-correlation alternative investments, in addition to a diversified array of global stocks and bonds. Such investments can lessen portfolio volatility and move independently of stock and bond indexes. So long as we are prepared for such volatility, we can withstand such periods. And will eventually benefit by a careful consideration of the bargains that will inevitably exist on the other side. Check out our recent Alternative Investments white paper here.
Last Monday, the S&P 500 found itself 7.55 percent higher than its perch on New Year's Day. The Dow was up 7.7 percent thus far -- its best start to a year since 1987. Today? The indices' year-to-date returns sit in the red.
The DJIA and the S&P 500 shave off 6.5 percent of value. And the VIX volatility index has careened 138-percent higher. No wonder they call it the Fear Index!
The losses were mostly driven by the acceleration in long-term interest rates. Which makes new investments by consumers and corporations more expensive. And emanates the scent of inflation. Toxic to stocks and bonds alike.
The market palpitations left nowhere to hide. With all 11 sectors of the U.S. market painted red.
The good news? Markets have become oversold and due for a bounce. The bad? Historical precedent suggests that the resulting bounce could be among the final exit opportunities ahead of what could be a deeper, longer decline on the wings of rising credit costs.
Of course, there remains a counter-balance in the form of these market drivers:
Trump's aggressive pro-growth, pro-business agenda. The improving Goldilocks economic conditions. Low inflation. Accommodative central banks. Solid and improving corporate earnings. Improving labor markets. Growth overseas. And a falling dollar.
And yet, the risks and warning indicators are unmistakable:
* Market breath stinks. With the market rising sharply even as a smaller percentage of stocks rise with it.
* The Volatility Index is suddenly rising in sympathy with stocks. Counter to the inverse role it typically plays. As it did throughout most of last year.
* Corporate cash flow is slowing.
* Inflation appears ready to rise, as oil returns to 2014 levels and the labor market grows ever tighter.
* The Two-Year Treasury yield now sits higher than the dividend yield on the S&P 500. Bringing asset allocation decisions that have favored equities into parity with the risk-free choice.
* The possibility of a more aggressive Fed rate hike path is distinctive. As the new Fed chairman attempts to assure that the lid is not blown off this ever-broiling economic crockpot.
* Cash levels sit at hyper-low levels as traders and investors appear to be increasingly all in.
Translation? These gains could continue. Or this could be the beginning of the bull market's terminal phase. As we come within sight of, or perhaps even sit within, the inevitable "blow-off top" that defines the end of every bull market. Where gains come quickly. And the downside risks become ferocious.
For now, this pullback appears to be garden variety. As we'd noted last week that stocks were extremely overbought and screaming for a retrenchment. Which appears to be upon us. How far will it fall? Seven, 10, 15 percent or more? Who knows. But it was long overdue, regardless. Any pullback will be positive in the bigger progression.
The S&P 500's last three percent pullback occurred in November 2016. 450 days ago. Hell, we haven't even seen a one percent pullback in 113 trading days. So, the even next two-percent drop should serve to properly freak out all market newcomers.
That said, the landscape ahead looks positive.
Astute observers say that U.S. economic data and earnings are still solid and supportive of higher prices. Of the 157 S&P 500 companies having reported, firms have beaten topline revenue estimates by 1.2 percent and bottom-line EPS estimates by 2.5 percent. Translating into year-over-year revenue growth of 7.7 percent and EPS growth of 11.1 percent.
And remember, as goes January, so goes the year?
According to the Stock Trader's Almanac, a big January is any in which the S&P 500 gains four percent or more. They're rare. We've seen just 26 over the past 90 years. But they have been very bullish for the market when they occur.
Since 1930, stocks have gone on to close the year in positive territory 95 percent of the time following such months. Gaining an average of 15.2 percent. Since 1950, the big January track record is even better. As stocks have closed the year positively 100 percent of the time -- including 1987, when stocks fell nearly 25 percent that October -- for an average gain of 22.5 percent.
The S&P 500 ended January up 5.73 percent.
In Davos, President Trump appeared at the World Economic Forum. Where he defended his "America first" policy. Explaining that this doesn't mean "America alone." Like a Salesman and Chief (a big part of any president's job) he pitched the United States as a great place to invest. Stating that the country supports free trade, but only when it is "fair and reciprocal."
Trump was warmly received. Where corporate executives and business leaders were interested in what he's been doing to make America more competitive and business friendly. Actions that will likely be emulated in various business centers around the world. As other nations begin to deregulate and lower corporate (and maybe individual) tax rates. All of Which would be very positive for global markets in the year ahead.
Upon his return, the president prepared for and delivered his first State of the Union address. One that, surprisingly, received accolades by fans and critics alike.
Short on soaring rhetoric, Trump summarized the administration's first-year accomplishments:
* Notable increase in economic growth
* Increase in household incomes and wage growth
* Deregulation - eliminated more regulations in first year than any administration ever
* Record highs in consumer and business confidence
* Biggest tax-reform bill in the nation's history
* Corporate tax rate cut from 35 to 21 percent
* Repeal of the Affordable Care Act's Individual Mandate
* Unemployment at 45-year low
* African-American Unemployment at all-time low
* Hispanic unemployment at all-time low
* Ended war against domestic energy, making U.S. a net exporter to the world
* Fed approved more new and generic drugs and medical devices in one year than ever before
* Cleaned up and economized the maligned Veteran's Administration
He then summarized near-term priorities:
* Lowering prices on pharmaceutical drugs and treatments
* Ensure that trading relationships are fair and reciprocal
* Rebuild nation's crumbling infrastructure
* Secure nation's borders and reform immigration policy, moving towards a merit-based system
Trump may be the greatest economic bull we will see for years. Following the 2017 tax cut, we expect an infrastructure bill to pass in 2018. Which will be a public-private partnership which could total more than $500 billion.
Moreover, a prediction... remember that the Reagan economy used two tax cuts (1982 and 1986) and deregulation to reach six percent economic. Following the current tax cut (big on the corporate side), followed by a massive infrastructure bill, don't be surprised to see another, smaller tax-cut bill introduced in 2019. One aimed directly at middle-class taxpayers. Designed to reduce inequality and juice the economy prior to the 2020 elections...
Love him or hate him, it's hard to argue that Trump hasn't achieved a good deal over the last year. His base loves him. Democrats will never accept him -- he's too anathema to the policies they use to consolidate power. Yet the rest of the nation may find itself going through a form of begrudging acceptance. If his accomplishments and the benefits continue apace. Something along the lines of the Kubler-Ross Model for the Seven Stages of Grief: Shock, Denial, Anger, Bargaining, Depression, Testing (seeking realistic solutions), and finally Acceptance.
We recognize faults and advantages in a Trump presidency. But, we also recognized the faults in the establishment-driven environment over which he now presides. An establishment that left the middle class for dead for 18 years. For those outside of the nation's top-earning 20 percent, D.C. had become a form of cancer. Incapable of real progress. Substantive change. Positioning Trump as a form of political chemotherapy.
Sometimes chemotherapy is required to fight cancerous tumors. Chemo is unpleasant. Has nasty side effects. But ultimately, it can kill the cancer that would, left unchecked, kill the patient. Trump is to D.C. what chemo is to cancer. Ultimately, he may change D.C. for the better. But the establishment will fight him at every turn and never forgive him for changing its beloved system.
Economically, January payrolls rose 200K, beating the consensus, 180K. Unemployment remained at 4.1 percent, in line with the consensus. Hourly earnings rose 0.3 percent, besting the consensus, 0.2 percent.
Most impressive were the Average Hourly Earnings (AHE) data.
Upward revisions of prior data, combined with a solid January gain, have lifted the year-over-year earnings rate to 2.9 percent. Marking the highest level since June 2009. The January number is made more impressive considering the adverse weather last month.
Having spent two years tracking sideways at about 2.5 percent, such earnings data could represent a significant breakthrough for the middle class. Representing a significant pickup in wages and earnings growth. The downside? Higher wage growth will greatly empower Fed hawks in their quest to more rapidly hike interest rates.
At this point in an economic cycle, unemployment drops to a level where there are not enough qualified workers to keep pace with the corporate labor demands. Accordingly, workers in the system find their time becoming ever more valuable to current and prospective employers. A benefit for American workers.
Eventually, that wage growth filters into the inflation data, and gives ammunition to Fed Governors who believe we should be raising rates more expeditiously to combat rising inflation. Which can inhibit economic growth, as higher rates make capital more difficult to come by.
Additionally, the ISM non-manufacturing index for January rose to 59.9 from 56. Well above the consensus 56.7. And a new cycle high. And the Atlanta Federal Reserve's GDPNow model projects that gross domestic product will increase at a 5.4 percent annualized rate in the first quarter. The last time the economy grew that much was in the third quarter of 2003. If correct, this would be the first period of more than 5 percent growth since Q3 2014.
Bottom line? This economy is humming.
In Asia, Vietnam is proving a ready ally in countering the increasingly aggressive projection of power from China. A direct result of China's efforts to convert a number of former independent atolls and islands in the South China Sea into Chinese military bases.
In March, a U.S. Navy aircraft carrier will stop in Vietnam. The first such visit of the post-Vietnam War era. The stopover is likely intended to irritate China as the U.S. flexes a bit of muscle in the area.
In the Middle East, Turkish leaders demanded this weekend that U.S. forces pull out of the norther Syrian town of Manbij. General Joseph Votel replied that the U.S. has no intention of withdrawing coalition forces. Nor of ceasing support for the Syrian Democratic Forces that have been battling ISIS.
Turkish leaders have threatened to move into territory protected in part by the U.S. military. Votel has attempted to maintain a semblance of balance. Saying that he understands Turkish concerns regarding the PKK, which Turkey designates as a terrorist outfit. But Votal has repeatedly said that the U.S. would stand by the SDF counterterrorism force of Syrian Kurds, Arabs and Turkmen that routed ISIS on the world's behalf.
Finally, a crypto update.
Coincheck Inc., a Tokyo-based crypto-currency exchange reported that 523 million units of a virtual currency called NEM disappeared after the system was hacked. The stolen currency was valued at $530 million. The heist ranks as the largest in digital currency's nine-year history. Topping the $450 million in bitcoin that was stolen from the Japanese exchange Mount Gox in 2014.
Yale economist Robert Schiller says bitcoin looks like a bubble. Having dropped from $19K to $9K over the last month. Schiller believes much of the pricing patterns are driven by those seeking to avoid the same remorse experienced after missing the housing and stock market booms. Bringing them to flock into crypto currency. "Driven, as they are, by the existential meaningless of life when you are not invested in anything..."
A little deep for our tastes, Professor Schiller. Believing as we do that all investment decisions are driven by two emotions: fear and greed. And so, when it comes to investing, we'll defer to Buffett, Dalio and Lynch. And leave the existential malaise to Kierkegaard, Sartre and Dostoyevsky.
The Bitcoin correction is turning into one of the more precipitous drops incurred by an asset class in years. In mid-December, Bitcoin was valued at over $19K. Today it sits at $7,105. A 63 percent drop in a month and a half. It's lost 35 percent in the last week. The good news? The research to which we're privy says that $7K may be the near-term technical shelf. The bad? Bitcoin has engendered a lot of doubt. And generated many questions as to its place in the global asset-class hierarchy.
Care to peruse our thoughts on the year ahead? Check out our 2018 Investment Market Overview webinar, here.
Finally, Nick Foles' Eagles pulled off the improbable Super Bowl victory. Marking Philadelphia's first NFL championship. And establishing Foles among the best backup quarterbacks to play the game. The Patriots were a 4.5 point favorite. Yet the Eagles prevailed, 41-33. Bettor X, the individual who took the Vegas sports books for $10 million during the World Series, was said to pocket over $6 million after placing large bets on the underdog Eagles. Sometimes it does pay to be a contrarian.
Stay tuned...
Weekly Results
Major indices finished down last week. The DJIA lost 4.12%. The S&P 500 fell 3.85%. The Nasdaq fell 3.53%. While small cap stocks lost 3.78%. 10-year Treasury bond yields rose 17 basis points to 2.84%. And gold closed at $1,331.51, down $18.19 per ounce, or -1.35%.
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