Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

NOLTE NOTES A Volatile Period As Stock Markets Nosedive in the face of Stagflation

Stock-Markets / Inflation Nov 13, 2007 - 12:25 AM GMT

By: Paul_J_Nolte

Stock-Markets Ok, so the stock slump we have been looking for was more along the lines of a cliff dive. Worries over the dollar, oil, sub-prime write-offs and the housing markets all conspired last week to push markets down over 4% for the week. Global warming hurt the retail industry, as consumers stayed away from buying their winter garb just yet. We're still confused as to what constitutes “good” weather for shopping. The government's official stats will be released this week and should show retail sales slowed significantly from September's pace.


Also on the docket will be the inflation reports that continue to provide Fed Chairman Bernanke fits. According to his testimony to Congress last week, he is worried about an overall economic slowing, but that the spike in oil prices and a lower dollar could fuel higher inflation rates (which could short circuit the rate cuts). Not to be outdone, Congress managed to pass some “tax reform” that is supposed to cut the bit of the alternative minimum tax, but once the hood gets lifted, many will find that their taxes will be going up – thankfully the weekend came just in time.

While the week was bad, it wasn't as bad as back in July/August on many counts, from number of declining stocks to new lows and even volume. Either the market is setting up for a successful retest of the August lows – or it will be a dismal failure and we begin a journey into a new bear market. At least over the next week or two, we could get a bounce, as the market internals are quickly getting to levels that usually begins a short-term rally. However, unlike past instances of buying the dips, we are getting to the point of selling rallies as many of our longer-term models point to generally lower stock prices ahead.

For example, over the past year, stocks have returned just as much as bonds and the conditions that existed a year ago have not changed – investors generally bullish and valuations high. The volume figures continue to deteriorate, as has the net number of advancing stocks. Historically, September and October have been poor months, with November beginning the best part of the year. When both September and October are positive, the rest of the year has been good. However, as of today, this November ranks among the top three worst since 1950 – with the following year not too promising.

While our bond model remains in positive territory, investors are beginning to bet heavily FOR a continued decline in yields that may actually allow for prices to decline and yields to rise over the next couple of weeks. This may also dovetail well with a temporarily resurgent stock market (as investors switch back to stocks from bonds). This week will have inflation data that as the potential to be worst that expected – forcing yields up. Based upon the comments from Chairman Bernanke, the Fed is stuck between a cooling economy and persistently higher interest rates – a stagflation environment that could be bad for both stock and bond investors. It is too early yet to tell, but this week's data could help.

By Paul J. Nolte CFA
http://www.hinsdaleassociates.com
mailto:pnolte@hinsdaleassociates.com

Copyright © 2007 Paul J. Nolte - All Rights Reserved.
Paul J Nolte is Director of Investments at Hinsdale Associates of Hinsdale. His qualifications include : Chartered Financial Analyst (CFA) , and a Member Investment Analyst Society of Chicago.

Disclaimer - The opinions expressed in the Investment Newsletter are those of the author and are based upon information that is believed to be accurate and reliable, but are opinions and do not constitute a guarantee of present or future financial market conditions.

Paul J. Nolte Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in