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

quantitative easing

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

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

If the Economy Is Improving, Why Are Investors Pricing in a Slowdown?

By | August 11, 2014

U.S. Economy Slowing Down Here in 2014The Bureau of Economic Analysis (BEA) surprised even the most optimistic of economists when it reported the U.S. economy grew at an annual rate of four percent in the second quarter of 2014.

On the surface, the number—four percent growth—sounds great. But how serious should we take that gross domestic product (GDP) figure?

Firstly, I’d like to start by pointing out that the BEA often revises its GDP numbers downward. … Read More

Why We Are Closer to a Recession in 2014 Than You Think

By | June 13, 2014

U.S. Economy to Fall into a Recession This QuarterDon’t buy into the notion that there’s economic growth in America!

We’ve already seen U.S. gross domestic product (GDP) “unexpectedly” decline in the first quarter of 2014, and now there are signs of another contraction in the current quarter. (The technical definition of a recession is two negative quarters of GDP—we’re halfway there!)

As you know, consumer spending is the biggest part of our U.S. economy, accounting for about two-thirds … 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

Financial Reports

The New Land of Oz

By | May 28, 2014

When Gold Will Finally BottomYesterday was an amazing day for the markets.

Gold bullion hit a three-month low despite: 1) inflation rising rapidly in North America; and 2) the Chinese buying half of this year’s world gold production.

The stock market was up to a new high despite: 1) corporate insiders selling like mad; 2) corporate earnings growth collapsing; 3) the amount of money investors have borrowed to buy stocks standing at a record … Read More

2014: Year the Frail U.S. Housing Market Recovery Reverses?

By | May 22, 2014

What the Collapse in Homeownership Is Telling Us About the Housing MarketLooking at the current state of the U.S. housing market, one could say, “It’s the perfect time to buy a home.” Mortgage rates are historically low. Home prices are still down significantly from their peaks in 2006. But unfortunately, potential homeowners are not coming into the housing market.

The reality of the U.S. housing market is that it never recovered. It’s still sick at heart. Low mortgage rates and low … Read More

The Economy: What Will Break the Camel’s Back This Year

By | April 22, 2014

Baltic Dry Index Collapses Again; Not a Good Sign for EconomyThe International Monetary Fund (IMF) has lowered its growth forecast for the global economy. It says the world economy will now grow by 3.6% in 2014 and 3.9% in 2015; it grew at three percent in 2013. (Source: International Monetary Fund, April 8, 2014.)

I see the IMF forecast on global growth as being far too optimistic. In fact, I think we’d be lucky to get three percent growth in … Read More

Why the Fed Will Have to Get Back into the Paper Money Printing Business Soon

By | April 4, 2014

U.S. Economic GrowthIn the early days of the 2008 financial crisis, the Federal Reserve said, “Job losses, declining equity and housing wealth and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment.” (Source: Federal Reserve, March 18, 2008.) As a result of this, the central bank came up with the idea of … Read More

Why Is the U.S. Dollar Collapsing in Value All of a Sudden?

By | March 27, 2014

Whey the Fed May Need to Reverse its Decision to Cut Back on Money PrintingWhen news first broke from the Federal Reserve that it would slow down the pace of its quantitative easing program, the consensus was that the U.S. dollar would start to rise in value as the Fed would be printing fewer new dollars and actually eliminating all new paper money printing by the end of 2014.

But the opposite has happened.

Below, I present the chart of the U.S. Dollar Index, … Read More

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