Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

central bank

About That 500% Jump in Interest Rates…

By | September 22, 2014

Economy and Stock Market Handle a Five-Fold Jump in RatesThe verdict is in…

Last week, at the end of its regularly scheduled meeting, the Federal Reserve said:

1)      It would continue to reduce the amount of money it creates each month. The Fed said it will be out of the money printing business by the end of this year. By that time, the Federal Reserve will have created more than $4.0 trillion new American dollars (out of thin air)…. Read More

Two Reasons Why Interest Rates Will Rise

By | August 18, 2014

U.S. Dollar Under BRICS PressureThe U.S. dollar is still regarded as the reserve currency of the world. The majority of international transactions are settled in U.S. dollars and most central banks around the word hold it in their foreign exchange reserves.

But since the Credit Crisis of 2008, and the multi-trillion-dollar printing program by the Federal Reserve, the supremacy of the U.S. dollar as the “world’s currency” has been challenged.

The BRICS countries (Brazil, … Read More

Why a Full-Blown Market Correction Should Be Expected

By | August 8, 2014

Investors Can't Overlook to Succeed in This MarketThe monetary environment is still highly favorable to stocks and should continue to be so well into 2015. However, while this market can handle higher interest rates, stocks can only advance in a higher interest rate environment if gross domestic product (GDP) growth is there to back it up.

Because of the capital gains over the last few years and the across-the-board record-highs in many indices, investment risk in stocks … Read More

The Era of Financial Insanity

By | July 30, 2014

What Happens Next for the Stock MarketMy colleague Robert Appel (BA, BBL, LLB) issued a research paper to the subscribers of one of his financial advisories earlier this week. I thought it important that all my readers be aware of and understand the crux of what Robert is saying about our current economic situation and where it will eventually lead.

Here it is:

“The actions of the Federal Reserve (how far they went to ‘stabilize’ the … Read More

The Only Thing I Can Find to “Buy Low” These Days

By | July 18, 2014

The Second Half of 2014 What It Looks Like for GoldThe tally as of this morning:

The stock market is up 2.4% so far in 2014 as measured by the Dow Jones Industrial Average, while gold bullion is up 8.1% for the year.

“As an investor, do I get into gold or stocks at this point in the year?”

Well, if you’ve been reading my articles for a while, you know I’m not a fan of stocks right now. I … Read More

Financial Reports

Investors Forgot Everything That Happened Just a Few Years Ago?

By | July 14, 2014

The Economy and the Stock MarketThere are two important charts I want my readers to see this morning.

The first is a chart that is an indirect measure of demand in the global economy. Right now, the Baltic Dry Index (BDI) sits at its lowest level of the year. Since the beginning of 2014, the BDI has fallen 60%.

The BDI measures the cost of moving major raw materials by sea in the global economy. … Read More

The Downside to Dow 20,0000

By | June 13, 2014

Where the Stock Market Could Head NextWith the Dow Jones hitting 17,000 being pretty likely in the not-too-distant future, from there, it’s only another 18% or so until the Dow hits 20,000, which is pretty incredible.

These numbers seemed so unrealistic just a few years ago but now, it’s not too farfetched. The most amazing thing to me is that stocks still haven’t experienced a material price correction since the financial crisis.

Stocks aren’t necessarily stretched … Read More

Negative Interest Rates: They’re Here

By | June 6, 2014

What Happens When You Toy with Nature's Boom & Bust CyclesIn 2012, I predicted that if the Federal Reserve couldn’t get the economy growing again, it would take interest rates into the negative zone.

Well, yesterday, the European Central Bank (ECB), the second-biggest central bank in the world, trumped the Fed and became the first major central bank to offer depositors negative interest rates.

What does “negative interest rates” mean?

Each night, major banks in the eurozone collectively deposit USD$1.0 … Read More

And They Say the Economy Is Getting Better?

By | May 14, 2014

Four Largest World Economies Slowdown ModeThe Chinese economy had been growing at about 10% a year, like clockwork, for years. Now, China is in the midst of an economic slowdown, with growth expected to come in this year at 30%–50% below China’s five-year average growth rate.

Why is China’s economy growing so slowly, and why does it matter to us here in North America?

Manufacturing, the key component of China’s economy, is quickly slowing. The … Read More

When the Cows Go Out for Slaughter a Second Time

By | May 12, 2014

When the Cows Go Out for Slaughter a Second TimeDid you see this story in the Wall Street Journal last Friday?

“Retirement investors are putting more money into stocks than they have since markets were slammed by the financial crisis six years ago… Stocks accounted for 67% of employees’ new contributions into retirement portfolios in March… That is the highest percentage since March 2008…” (Source: Wall Street Journal, May 2, 2014.)

You read that right. With stocks at … Read More

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