It’s time to look to Q4 . . . Using history as a guide, the high odds bet is that the market will be up and possibly by a large margin.

| August 21, 2011

Q4 is the seasonally best time of the year.  In the post WWII history of the U.S., the market has been up 79% of the time in Q4.  It has been up a preponderance of the time whether Q3 earnings were up or not.  Since 1980, the market has been up in 80% the time […]




The recent sharp drop in the stock market is a rare event. Drops of this type are usually followed by UP quarters.

| August 21, 2011

Setting aside all valuation factors and fears that Europe will go into a black hole and take us all with them (doubtful), we can look at prior panic attacks in the market and see what happened next.  At the moment we are experiencing an emotional event more than a rational event.  Since 1970 there have […]




We are experiencing the widest spread in the S&P 500 earnings yield and the 10 year Treasury rate in modern market history.

| August 19, 2011

 Panicked investors have bid up the price of Treasury bonds and sold down the price of equities to such a degree that the earnings yield on equities (the reciprocal of the P/E) is now 405% greater than the yield on the 10 year Treasury!  This is simply unprecedented in the lives of anyone active in […]




Banks have too much cash and too few loans. It will be hard to have a recession when there aren’t a lot of loans to charge off.

| August 18, 2011

Part of the cause and effect of a recession is the banking system has to contract its assets.  As business conditions heat up, loans grow too fast, interest rates begin to rise, the banks’ cost of funds starts to rise, their capacity to make loans becomes constrained and the growth in the money supply slows […]




There is a record $21.2 TRILLION in US retirement accounts, cash and bank accounts and retail money market funds.

| August 18, 2011

While there is a record high amount of assets in the retirement complex, there is a low percentage invested in equities.  I have used the market value of the S&P 500 as a proxy for the equity portion of the retirement assets.  US investors are underinvested in stocks.  The S&P 500 is equal to only […]




Over $52 billion was stuffed into money market funds last week – the most since the panic of 2008/2009.

| August 18, 2011

Not since the chaotic days of late 2008 and 2009 – when we had much greater uncertainty, illiquidity and systemic crisis than today – have we seen so much money flee risk and go into “money of zero maturity”, aka MZM.  MZM is now equal to 96% of the total market value of the S&P […]




Disposable Personal Income (DPI) and Personal Consumption Expenditures (PCE) are both still on the rise.

| August 18, 2011

Personal income and spending have both recovered fully from the Great Recession.  It is unlikely there will be a reversal of the trend albeit some slowing in growth.  Since the U.S. economy is centered on the US consumer vs. exports – the odds of a recession in Europe having a pronounced impact on the US […]




There is over 10 months of personal consumption expenditures (PCE) sitting in cash and money market funds – this is the most in over 20 years.

| August 18, 2011

We know that consumers and SMBs have hoarded cash but how does that relate to what is typically spent in a given month?  Since the Great Recession, U.S. consumers and businesses have put away more cash faster than any time in recent history.  There is now almost 10 ½ months of PCE parked in cash, […]




Despite the sentiment and cash hoarding there is still forward momentum in the economy as illustrated in industrial production.

| August 18, 2011

The following chart (courtesy of Yardeni.com) does a good job of showing the state of the recovery in industrial production as of July.  Hopefully the slowdown I foresee due to the recent panic attack will only be a short term negative blip in this otherwise encouraging trend. Jeb Terry, Sr. Aug 17, 2011 Aberdeen Investment […]




Retail sales show the consumer wasn’t panicking in July . . . so says Brian Wesbury at First Trust . . . While I can see the chart is pointing up, we must admit to the absolute collapse in consumer sentiment since the retail sales numbers were compiled.

| August 18, 2011

The US consumer has plenty of funds to fuel retail sales.  My concern is the collapse in sentiment in recent weeks due to the fear mongering over the debt ceiling debate and fear of undefined and un-calibrated consequences of a default of Euro sovereign debt.  Jeb Terry, Sr. Aug 17, 2011 Aberdeen Investment Management – […]