@theMarket: First-Quarter Gains Were Led by TechnologyBy Bill Schmick,
04:16PM / Friday, March 31, 2023 | |
The NASDAQ 100 index jumped more than 20 percent from its December 2022 lows. The textbook definition indicates that when a market does that, it officially leaves a bear market and enters the bull market territory.
A handful of stocks can be credited with not only pushing the tech sector higher but also dragging the rest of the market up with it. I'm sure you can guess the names — Meta, Apple, Netflix, Google, and Microsoft — they all did yeoman's work in the first quarter.
In my opinion, the motivation for crowding into these stocks can be explained with a single word — fear. Fear of financial contagion. Fear of a gathering 0 Comments
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The Retired Investor: Game Has Changed in Bank RescuesBy Bill Schmick,
04:33PM / Thursday, March 30, 2023 | |
The present banking crisis has brought back memories of the 2008-2009 global financial crisis. So far, the financial contagion has been corralled, thanks to swift government action. The winners and losers, however, have changed.
Most readers are familiar with the term "too big to fail." It refers to the financial theory that asserts that certain corporations, particularly banks, and some other financial institutions, are so large and so interconnected that their failure would be disastrous to the greater economic system. As such, these entities must be supported by governments when they face potential failure.
Back in the day, when Britain ruled 0 Comments
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@theMarket: The Fed Walks a Tightrope.By Bill Schmick,
04:15PM / Friday, March 24, 2023 | |
In the face of uncertainty over the fate of regional banks, the U.S. central bank hiked interest rates and said they would continue with their program of quantitative tightening.
Stocks fell and bonds rose after the FOMC meeting on Wednesday, however, the real drama was elsewhere. U.S. Treasury Secretary Janet Yellen was testifying before a Senate Appropriations subcommittee at the same time as the Fed meeting. She told lawmakers that she has not considered or discussed "blanket insurance" for U.S. banking deposits without approval by Congress.
Many traders in the markets had just assumed that since the government had made all depositors whole in 0 Comments
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The Retired Investor: Gold as a Safe HavenBy Bill Schmick,
05:55PM / Thursday, March 23, 2023 | |
This week, gold briefly climbed above $2,000 per ounce. The precious metal is commonly thought of as an inflation hedge, but also serves a different function in times of financial stress. Gold can be a safety trade.
Gold is a highly speculative asset in the best of times. But, unlike bonds and stocks, it has one redeeming factor in times of economic slowdown, financial instability, and geopolitical tension. It does not carry the risk of an issuing entity collapsing, such as a bank or a government. There have been many examples of this throughout history.
The latest example was back in February 2022, during Russia's invasion of Ukraine. Gold spiked to 0 Comments
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@theMarket: Financial Contagion Spooks MarketsBy Bill Schmick,
04:04PM / Friday, March 17, 2023 | |
The global banking sector took center stage as three U.S. banks bit the dust and a fourth large bank in Europe floundered. This puts the Fed between a rock and a hard place.
The Federal Open Market Committee meets this coming Wednesday and, before the collapse of the Silicon Valley Bank, was expected to raise interest rates by 25 to 50 basis points. Today, expectations are split between no rate hikes at all, and maybe one more hike of 25 basis points and then a pause.
Investors large and small held their breath last weekend in the wake of three bank failures. Fears of financial contagion swept the country throughout the week. Regulators acted on several 0 Comments
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