Week Stocks Beneath The Surface

If you look at some of the sectors that continue to get beat up making new 52 week lows so even though the headlines are probably gonna be about the Dow Jones Industrials Average (DJIA) making another all-time record high, beneath the surface are a lot of stocks that are having a lot of problems.

Italy Is Putting Pressure On The Euro Currency

The Italian market is under a lot of pressure because the Italian government is running deficits that exceed the two percent guidelines imposed by the Eurozone. I think they're proposed new budget deficit is 2.4 percent of Italian GDP and so this is putting pressure on Italy which is all so putting pressure on the euro currency.

We've Had Some Substantial Stock Market Declines In October

We have had some substantial stock market declines in October. Obviously, not every October has a big drop, in fact, most of the October's don't but some of the most notable declines have incurred in the month of October including the crash of 1987 and the crash of 1929. But given that our valuations are probably higher now than they were at those prior peaks you would think that there'd be more concern right now about the possibility of another October surprise in the way of a major decline in the stock market.

U.S. Economy: Soft Landing or Crash Landing?

It's not like the Fed is gonna finally see a small reaction to one rate hike that will enable them to quickly reverse course and engineer this soft landing that everybody likes to talk about. The minute there is a problem from the rate hikes it's gonna be a crash landing. There's going to be no opportunity to try to soft land this thing because as soon as it goes down it's going to come crashing down even if the Fed immediately goes from whatever they've raised rates to, to zero and launches another round of quantitative easing it's not going to be in time to stop the damage.

Federal Reserve: The Removal of the Word "Accommodative"

The only thing that was significant or potentially significant about this interest rate hike was the removal of the word accommodative by the Federal Reserve in their official statement to describe the current state of monetary conditions or monetary policy.

Now, I initially thought that was a significant removal of a word obviously the Federal Reserve thinks very carefully about the written statements and so if they chose to remove a word that was there and they know that people parsed through these words with a microscope and so the fact that the word was missing and obviously it's missing by intention it wasn't just an accident that they're trying to send a message and what I first thought the message was and I still believe that was the Federal Reserve views a two percent interest rate as neither accommodative or restrictive but maybe neutral. The Federal Reserve now believes that interest rates are high enough that they would no longer be described as accommodative.

Treasury Yields: The Chart Looks Ominous

Look at the bond market, yields on the 10-year and on the 30-year were up again today. We haven't completely broken down yet but to me the chart looks ominous I mean there is the potential for a big break in the bond market: drop in price, up in yield above 3.50% in the 10-year maybe above 4.00% in the 30-year in the short run.