The Northern Star 2/26/18
|Message from Jon|
Inflation and Interest Rates
If anyone wants to know what the market thinks about inflation and the rise of interest rates' effect on bonds and stocks, all they need do is observe the market conditions of late.
As of Tuesday, I am watching 68.5% of all stocks decline, and the chart has the precision lines of a chainsaw! Interesting enough, our StormGuard Indicator has declined from a +1.39% (high point in the markets in January) to a current level of +0.61%, even after the "recovery" of the most recent market correction.
We are seeing the VIX spike from about 10.25 at the start of 2018 to a high of about 33.5 a month later at the beginning of February, and then retreat to just over 17 as I am writing this newsletter. A 226.83% increase in the volatility index in under 30 days can't be good - and voila' - it wasn't.
Some say the markets are a six-month predictor of the US economy, and if that is the case, we should be preparing for a cloudy and unpleasant forecast later this year. What does this all mean?
Nothing at this point, other than the fact that anytime monetary policy is in flux, you can bet it will send the jitters through the markets like a winter flu. Sometimes, having the flu can be life-threatening. In the majority of the cases, however, it turns out to simply not feel good, but something that we all just live through.
Till we speak again, enjoy the warm(er) weather.
Interest Rates, Treasuries,
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* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
Tip courtesy of IRS.gov