Paul Tudor Jones Sees Year-End Rally Spoiled by Fed

In an interview last month with CNBC, famed hedge fund manager Paul Tudor Jones predicted a strong year-end market rally but argued that the Fed’s continued rate hike campaign will lead to a downturn. This according to an article in Chief Investment Officer. “I think this is going to end with a lot higher prices forcing the Fed to shut it off,” said Jones. While he doesn’t predict a stock market crash (like he did… Read More

Jeffrey Gundlach’s Market Worries

 DoubleLine Capital CEO Jeffrey Gundlach, who “sounded alarms about housing in 2006” doesn’t see any disasters in the offing, according to a recent article in Barron’s. “But that’s no reason to relax,” the article adds. The article outlines comments from an interview with the celebrated bond-fund manager. Here are some highlights: “Periodically,” says Gundlach, “the world is afflicted by mass psychosis,” alluding to the subprime mortgage crisis and the dot com bubble. He cites the cryptocurrency… Read More

Ray Dalio Says Market Surge Ahead

 At the recent World Economic Forum in Davos, Switzerland, billionaire Ray Dalio told CNBC that the coming tax cut could lead to big gains for the U.S. stock market. “We are in a Goldilocks period right now,” said the Bridgewater CEO. “Inflation isn’t a problem. Growth is good,” he said, predicting a “market blow off” rally fueled by cash from banks, corporations and investors. “There is a lot of cash on the sidelines,” he added. “If… Read More

The Effect of Quantitative Easing on Investment Cycles

By Jack Forehand (@practicalquant) —  “Hindsight gives us the illusion that the world makes sense, even when it doesn’t make sense” — Daniel Kahneman This time is different. If there is one phrase in investing that I have seen consistently lead to bad outcomes, that is it. It is what you heard over and over again in 1999, when investors felt that we were in a new world and the rules of valuation that held up… Read More

Jeffrey Gundlach Says S&P 500 Will be Down in 2018

Billionaire bond manager Jeffrey Gundlach says the S&P 500 will be down at the end of this year, and doubts the long-term value of bitcoin. This according to a recent Bloomberg article. During his annual “Just Markets” webcast earlier this month, the chief investment officer of DoubleLine Capital argued, “All recession indicators are flashing no recession, which means it’s priced in. This is why I say S&P 500 [will end] down after a pretty decent… Read More

Schwab Chief Strategist Warns of Market Headwinds in 2018

In a recent CNBC interview, Charles Schwab chief strategist Liz Ann Sonders warns investors to expect more headwinds given that the economy and the markets are in the late stages of the cycle—and cites increases in both capital spending and productivity as indicators. “That doesn’t mean we’re at an imminent end,” Sonders explains, “but it’s later-cycle-type behavior.” She adds that tighter monetary policy and the Fed’s “unprecedented” shrinking of its balance sheet as factors that… Read More

Bill Gross Likens Market to Retirement Community

In an interview with CNBC earlier this month, Janus Henderson portfolio manager Bill Gross said that the stock market’s “halcyon days are over” as central banks around the world take away the high levels of stimulus they’ve provided over the past ten years. “I’m not supporting a bear market,” Gross said in the interview, “but sort of a market where you move into an old-age retirement community where the pace of activity and prices behave… Read More

Bridgewater’s Arguments Against Fed Rate Hikes

Bridgewater Associates, the world’s largest hedge fund, told clients that the Federal Reserve is making a mistake by raising interest rates. This according to a recent article in Business Insider. In a recent client note co-written by Bridgewater founder Ray Dalio, the firm outlines five arguments against further rate hikes: “There is not nearly enough inflation and overheating risk to make concerns about inflation and overheating performance of paramount importance.” “It’s tougher to reverse an… Read More

Gross on Threats to Economy Going Forward

The quantitative easing that has occurred in the post-Lehman era has led to a situation, writes fund manager Bill Gross in a recent Barron’s article, where central bank balance sheets are replete with equities “in a desperate effort to keep global economies afloat.” Concurrently, he argues, more than $5 trillion of investment grade bonds “trade at negative interest rates in what can only be called an unsuccessful effort to renormalize real and nominal GDP growth… Read More

Inverted Yield Curve as Recession Predictor

Whether or not the yield curve on U.S. Treasuries is inverted can be a useful tool in forecasting the next recession, according to a recent Barron’s article. The inverted yield curve has predicted three of the past three recessions, the article says, which “helps lend confidence to its predictive powers.” Typically, long-term interest rates are higher than short-term rates, which results in an upward-sloping yield curve. But an inverted curve occurs when short-term rates are… Read More