Wall Street’s Yo-Yo Ride Surprised Investors

Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

“The market can do ANYTHING.” — Jesse Livermore

“It was the worst of times…and the best of times.” — Charles Dickens

In my entire 40-year career on Wall Street, I’ve never seen anything like it.

On Monday’s shortened Christmas Eve session, we witnessed the worst down market in history. The Dow fell more than 600 points to make for a pretty bleak Christmas.

Then the day after Christmas, we enjoyed the best Boxing Day ever on Wall Street, when the Dow climbed more than 1,000 points.

Jesse Livermore said it best, “The market can do ANYTHING.” And it did!

I’m sure President Trump will take full credit, as he encouraged his followers to be bargain hunters.

I surveyed several veteran investors who are friends of mine, and they all said the same thing — this is one crazy market, and it’s far from over.

The question is, will the turnaround last? Fed Chairman Jerome Powell and President Donald Trump have proven to be Scrooges who stole our Christmas joy and maybe even a prosperous New Year.

When the Fed was cutting rates and President Trump was cutting taxes, the market moved to new highs and extended the bull market beyond 10 years. I called it “The Mother of All Bull Markets.”

Now it looks like the longest bull market in history is in jeopardy; the tailwinds now have become the headwinds in the face of higher interest rates, gridlock in Washington and Treasury Secretary Steve Mnuchin’s call to convene a “Plunge Protection Team” of bankers, the Fed and the Securities and Exchange Commission to calm panicky investors. Talk about a PR blunder.

Exclusive  RUSSIA: A TALE OF TWO MARKETS

The Fed announced last week that it was raising short-term rates to 2.5%, and the money supply (M2) is now growing at 4%, its lowest rate in six years. The central bankers’ attitude is, “damn the torpedoes, full speed ahead”, even if it means a negative yield curve and a potential recession down the road.

Their mandate is to “foster maximum employment and price stability.” We are enjoying low unemployment, but that ignores a downward trend in the labor employment rate. And I hardly call 2%-3% consumer price inflation “stable.”

Former Fed Chairman Paul Volcker rightly rejects the current Fed’s inflation targeting goal and the “puzzling” Keynesian rationale that “a little inflation is a good thing.” In his latest book, “Keeping at It: The Question for Sound Money and Good Government,” he recounts that “In the United States, we have had decades of good growth without inflation,” such as the 1950s and early 1960s and again in the 1990s and early 2000s.

Certainly, the prices on the stock exchanges are anything but stable!

President Trump’s “America First” policies also are having a negative effect on the economy and the markets. The trade war with China and the rest of the world is costing us billions.

And I can think of a lot of reasons to shut down the federal government, but building an expensive wall isn’t one of them (illegal immigration has been down 82% since 2000).

Defense Secretary James Mattis resigned after Trump’s sudden decision to withdraw all troops from Syria. The merry-go-round of personnel changes continues at the White House and does not inspire confidence on Wall Street.

Like This Article?
Now Get Mark's FREE Special Report:
3 Dividend Plays with Sky-High Returns

This newly-released report by a top-20 living economist details three investments that are your best bets for income and appreciation for the rest of the year and beyond.

Get Access to the Report, 100% FREE


img
previous article

Jim Woods discusses an ETF that focuses on emerging markets.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE