The economic outlook for 2026 is constructive, with GDP growth in the US estimated to be around 2%, and worldwide growth around 3%. Analysts expect S&P 500 earnings to grow at 15%, marking another strong year for corporate profits. Most sectors are expected to report robust earnings growth, with technology and industrials anticipated to increase by double digits, and overall corporate revenue growth at around 7%.

Stock valuations remain elevated, with the Cyclically Adjusted Price-to-Earnings Ratio (CAPE) ratio at 39, the second highest level in 150 years. As opposed to the dot-com era, current valuations are better supported in many sectors by earnings growth and business fundamentals, but t...

The U.S. Supreme Court will hear oral arguments on the legality of Trump’s sweeping global tariffs on November 5, which will prove important to markets as a test of the US Presidents use of his executive power to drive his economic agenda through the International Emergency Economic Powers Act. If the tariffs are found to be illegal, the nonpartisan Committee for a Responsible Federal Budget estimates that it will cost the US government $2.2 trillion by 2035, and push U.S. debt-to-GDP to 126 percent from their current baseline scenario of 120 percent. It should be noted that S&P, the ratings agency, recently affirmed a “stable” outlook to the U.S. credit rating because they...

,The first half was notable because the tariff chaos, due to the current administration’s trade policies, caused a 20% selloff in the stock market before Wall Street dismissed them as not to be taken seriously.

At the time of this writing, Trump tariffs continue to evolve outrageously, with diminishing impact on the stock market. The imposition of a 50% general tariff on the imports of Brazil, for example, as a punishment against the people of Brazil for their judicial treatment of former president Jair Bolsonaro, raises eyebrows considering that the U.S. has run a trade surplus with Brazil for 18 years. The sudden lack of volatility can only be explained by the fact that hard economic ...

Former Treasury Secretary Janet Yellen said this week that President Trump has taken a “wrecking ball” to the economy and could not give a “passing grade” to its handling thus far. The financial markets would agree with her. The utter chaos and uncertainty of the past two weeks make any analysis going forward difficult at best.

Because tariffs are inflationary, long term Treasury bonds have been selling off, causing long bond yields to rise worldwide. President Trump has asked the Fed to lower rates, and the Fed refuses to do so because this would fuel inflation. As consumers recoil and households feel less wealthy due to a declining stock market and higher unemploymen...

It is likely that 2025 will bring tension between the Federal Reserve and the Federal government. After last week’s strong jobs report, the possibility of further interest rate cuts has greatly diminished, and everything is pointing to higher bond yields which are rising to their highest levels since 2023. The futures market is now predicting only one interest cate cut in September. Indeed, some analysts are even beginning to consider the possibility of rate hikes in 2025, after a University of Michigan survey showed consumers’ inflation expectations jumped to 3.3% in January from 2.8% the month prior. Stocks are now back to pre-election levels.

The showdown this year will be betw...

GDP for the second quarter grew at 3%, showing no sign of a slowdown. Concurrently, there is an aggressive global monetary easing going on worldwide, as almost every central bank in the world is lowering interest rates. Money supply is expanding, financial conditions are easing, economic conditions are good, and global stocks are reaching for all-time highs. The number of advancing stocks to declining stocks, otherwise known as “breadth”, is suggesting a continuing bullish bias.

It is unusual for central banks to begin easing financial conditions when markets are at their highs, but usually a sign that expensive asset classes should continue to become more expensive. It may be arg...

Wall Street analysts are now predicting that the S&P 500 will report earnings growth of 11.33% in 2024 and 14.4% in 2025. While these are estimates, the outlook is very strong, and has even been revised up since the end of last year. We are in the midst of a “soft landing” with expectations of rate cuts ahead by the Fed, which is a bullish scenario.

Inflation has come down to 3%, and while prices are still 21% higher than when the pandemic began in early 2020, the inflation swap market is previewing 2% inflation in one year’s time. Low unemployment and real wage gains are keeping the consumer positive, and stimulative fiscal policy is still providing a tailwind to the econom...

Stocks surged in Q1 2024 across a variety of sectors, and earnings season will soon test the breadth of that rally. Last week’s CPI report on inflation is confirming that interest rates may indeed remain higher for longer as the bond markets have been suggesting. Inflation as measured by CPI, rose by 3.5% in March, higher than expectations, and signaling an acceleration of inflation. Without food and energy, inflation is now at 3.8%, while shelter was up 5.7%, and electricity was up 5%. This was the third time in as many months that the CPI was higher than expected.

It is most likely high interest rates that are causing shelter prices to spike, because so many homeowners are locked in...

A lot of bad news has been ignored by Wall Street on the assumption that the Fed will ‘pivot” and begin lowering interest rates this year. The market is annualizing three and six-month inflation, which is generating a lower inflation number than by comparing the last twelve months. For example, the Fed’s preferred inflation measure, the “core PCE” still shows annual inflation at 3.2%, while the six-month measure is now at 1.9%. This is leading many market participants to expect a significant amount of easing from the Fed. In fact, the futures market is expecting the Fed cut its short-term interest rates by 1.7% between now and the end of the year. Based on recen...

While many market participants are expecting a “soft” landing for the economy after more than a five per cent rise in interest rates, the evidence for a hard landing is mounting.

• Unemployment just rose from 3.4% to 3.8%


• The personal savings rate just rose by 3% with consumers anticipating harder times ahead.


• High yield bond defaults are up 1.6% to 3.2%


• Credit card delinquencies are up from 0.8% to 1.2%


• Auto delinquencies are up 5% to 7.3%


• Business confidence has been falling since late 2020.


• The bond yield curve is now steepening quickly; having been very inverted at -1.1%, it is now at only -45 bps.

The 10-year Treasury bond yield is now at a sixteen year high.

When bond yields go up be...