Up is Down, Until It’s Just Up

It’s been one week since Barataria made the prediction that if good news came in on jobs the stock market would tank. The good news came in, with the headline unemployment number slipping below 6% for the first time since 2008. Immediately, the market proved Barataria to be wrong. Then right. Then wrong. Then right, again.

It’s been a roller-coaster of a week. How does that stack up with any prediction at all?

It’s probably time to make another prediction. Let’s stick with the first one, that the stock market is due for a decent but not horrific “correction” that re-affirms that we’re really still in a secular bear market. But with the focus on Fed action we are also entering a time when the logic of the market finally turns rightside up – and good news will once again become unalloyed good news.

We just have to get through the ride before we know what’s up – literally up.

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Yellen’s Dashboard – Update

Another quarter has come, and it arrived with good news on jobs. The stock market didn’t tank right away, but most investors agree that the daze of puffed-up valuations for everyone are over. The consensus seems to be that rather than a general fall, investors will have to be more selective and careful. This is consistent with an economy that is changing and gradually turning over, ahead of the next Big Thing that will propel a real bull market in coming years.

But where do we stand with respect to Yellen’s Dashboard – those key economic indicators that Fed Chair Yellen said she’d be watching for movement where there has been so little over the past few years? We don’t have all the data to fill in where 3Q14 stands, but we have most of it. And it all looks good. Which is to say bad, if you’re so minded, because it really does look like the Fed is going to raise rates.

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Stocks Lower Because … They Just Are, Dammit!

The Dow Jones Industrial Average (DJIA) is down for the third straight day. News outlets that have to attribute it to something attribute it to “global tension,” which does appear to be running a bit higher than usual. But the entire exercise of watching an index from one day to the next is a bit silly from the start.

A more interesting question asked by some commentators is, “Does this mean that the bull market is over?” The short answer is no, it doesn’t, but not for the reasons that most people think. The reality is that we have been in a secular (or long term) bear market since 2000, roughly the start of what we call a “Managed Depression,” and this small correction is nothing but a regression to the mean that proves it.

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Greed Beats Fear – For Now

The the sun beats out beads of sweat and the kids laze at home without school to worry about. It’s summer, the season of loafing. Typically this is the time of year when there’s work to be done and jobs are plentiful but the stock market takes a gentle pause.

Not last year, and not this year. The stock market is hitting new highs as investors find US securities the safest and most promising investment on the planet. But just like last year, the pace of job growth is still not accelerating beyond the roughly 190k jobs created every month. It’s a decent pace, but not what we need to claw out way out of the six year hole and bring back the boom. Barataria called that one completely wrong.

It’s past time to get serious about income inequality – or really the lack of opportunity for those who don’t have money to invest.

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Whither, Twitter?

The question always comes up in about the same way whenever I have a new client seeking social media advice.

Client: “I don’t get Twitter. Can you explain it to me?”
Me: “It’s like a personalized news ticker and public chatroom.”
Client: “That’s it? That’s all there is to it? Why is there all the hype?”

At this point, we have less dialogue and more handwaving. People who aren’t on twitter already don’t “get it” and will probably never become users. That’s reflected in their falling growth rate, down to 4% each quarter. And it’s starting to show up in their stock price now that the six month lockup period is over, allowing insiders a chance to sell. It’s below $33 a share, down 25% from the first day of the IPO last November. It’s worth about $19B total, about the same as Facebook’s tab to buy WhatsApp.

Is Twitter dead? No, MySpace and AOL are still around – but that’s where it’s headed at this rate.

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Summertime Party! (For Now)

The US government ran a surplus in June!  Stocks are at all-time highs!  The party is starting in a big way in the normally lazy daze of summer.  Are you ready to join it?

Not so fast.  Barataria has been a source for positive economic news for at least a year now, but it’s always been tempered with caution.  Things are turning around, yes, but the headlines hide the work that still needs to be done to make this into something much bigger.   It’s up to all of us, really, to find a way to make it happen.

But we do have a party, at least as long as Ben Bernanke is buying.  He’s a fun guy, really.

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Buy in May, Let it Play?

It’s May Day, and it’s more than the traditional first day of (real) Spring and the worker’s holiday.  It’s also the day that the old stock market adage “Sell in May and go away” kicks in.  Why is that?  It’s hard to say exactly why, but Wall Street traditionally takes a long summer break.  The S&P 500 since 1928 has risen on average 1.83% from May to October, but 4.98% from November through April.  The summer is also a period of high volatility and danger, so smart investors often skip the warm seasons.

Not this year.  The huge rise of 9.3% in the S&P 500 so far in 2013 might be enough to scare some people into profit-taking, getting out while the getting is good, but many advisers say you should stay in this year.  That includes Nouriel Roubini, better known as Dr. Doom, the New York University Econ prof who famously predicted the housing crash.  The faith in the stock market is impressive, but is it realistic?

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