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

federal reserve

About That QE4…

By | October 20, 2014

Another Round of Money Printing Coming SoonIt’s widely expected that at the end of this month, the Federal Reserve will end its third round of quantitative easing (that began in September of 2012). This is QE3, where the Federal Reserve was printing $85.0 billion of new money every month and using it to buy U.S. Treasuries and mortgage-backed securities (MBS). In the beginning of 2014, the Fed started reducing the amount of money it was printing … Read More

Why This Company Is a Consistent Winner for Investors

By | October 20, 2014

One Company That’s Proven It Can Adapt to the MarketplaceAmid all the turmoil in capital markets, I’m reminded of all the good corporate earnings being released.

Of course, the stock market is a system of discounting future business conditions and the recent sell-off has been pronounced, but stocks have come so far over the last several years. If the catalysts were deflationary pressures among oil prices and global economic activity, a little haircut in share prices is well deserved…. Read More

What the Fear Index Is Telling Us About Stocks Now

By | October 17, 2014

Why This Stock Market Rout Is Here to StayOver the past few months, I warned my readers the stock market had become a risky place to be. While I also suggested euphoria could bring the market higher than most thought possible—to the point of irrationality—the bubble has now burst. Key stock indices are falling and fear among investors is rising quickly.

Please look at the chart below of the Chicago Board Options Exchange (CBOE) Volatility Index (VIX). This … Read More

Plunging Oil Prices Next Big Investment Opportunity?

By | October 17, 2014

Declining Oil Prices the Market’s CatalystWhile corporate earnings continue to come in solid, stocks continue to be sold.

It’s not all the time that stocks follow oil prices, but they certainly have this time around and the selling momentum has gained on deflationary pressures from producer prices to declining expectations for global economic growth.

And the selling is happening to companies that beat consensus with their earnings, like J.B. Hunt Transport Services, Inc. (JBHT), which … Read More

Why Stock Prices Will Continue to Fall

By | October 15, 2014

Stock Prices Will Continue to FallNow that the Dow Jones Industrial Average has fallen 1,035 points (six percent) from its mid-September peak, the question investors are asking is “how far will she go?” For small-cap investors, the drama is greater, as the Russell 2000 Index has fallen 12.5% from its July peak.

Since 2009, every market pullback presented investors with an opportunity to get back into stocks at discounted prices. Even some editors here at … Read More

Financial Reports

Why Stock Buybacks Will End Up Being a Terrible Investment for Companies

By | October 10, 2014

Great Stock Buyback MirageIn these pages, I have been very critical about stock buybacks by companies on the key stock indices. I see them as nothing more than a form of financial engineering used to manipulate per-share corporate earnings…and a bad investment for the companies buying their stocks back.

According to data compiled by Bloomberg and the S&P Dow Jones Indices, companies on the key stock indices are expected to spend $914 billion … Read More

Another Solid Earnings Season Ahead for Existing Winners?

By | October 10, 2014

Solid Earnings SeasonOne large-cap that always reports early is Costco Wholesale Corporation (COST). The company’s numbers came in solid.

Costco hit a wall not too long ago and was hard pressed to produce growth. But the company’s latest quarter beat the Street with considerable sales strength in the month of September.

In its most recent quarter, there was considerable growth in the company’s cash position and shareholders’ equity improved significantly.

For the … Read More

What the Smart Money Is Doing Now

By | October 3, 2014

Smart MoneyAccording to the Investment Company Institute, assets in institutional money market funds increased $17.19 billion to $1.69 trillion for the week ended on September 24, 2014. This was the biggest weekly increase in these money market funds in the last five months. (Source: Investment Company Institute web site, last accessed October 1, 2014.)

This is critical: when institutional investors sense the risk of a stock market sell-off in key stock … Read More

The Nine-Month Check-Up

By | October 1, 2014

Nine-Month Check-UpWith nine months behind us this year, today we look at how two popular forms of investment have done in 2014 and where I think they are headed for the remainder of the year.

Starting with stocks, the Dow Jones Industrial Average closed yesterday up 2.8% for the year. Given the risk of the stock market, 2.8% is no big gain. I wrote at the beginning of 2014 that the … Read More

Where the U.S. Dollar Is Headed and What It Means to You

By | September 29, 2014

U.S. Dollar Is HeadedFor the U.S. federal government’s fiscal year, which ends this Tuesday, the Congressional Budget Office (CBO) predicts a budget deficit of $506 billion. (Source: Congressional Budget Office web site, September 26, 2014.)

But just because our annual deficit is declining, that doesn’t mean our national debt is rising by an equal amount.

In fact, between September 20, 2013 and September 20, 2014, the U.S. national debt increased by $1.0 trillion. … Read More

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