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Jul 18, 2016 | Post by: Roman Chuyan, CFA Comments Off on Where Inflation Will Come From –

Where Inflation Will Come From –

Roman Chuyan, CFA July 18, 2016 The Federal Reserve has been trying to boost inflation since the financial crisis, and inflation finally did begin to rise this year. In fact, core (excluding food and energy) consumer price index inflation was at 2.2% in June (the orange line on the chart

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Jul 02, 2016 | Post by: Roman Chuyan, CFA Comments Off on After Brexit, Back to Fundamentals

After Brexit, Back to Fundamentals

On June 23rd, the citizens on the United Kingdom voted decisively (51.9%) to leave the European Union, despite a campaign to remain in the EU led by the UK’s top politicians.  Markets reacted sharply to the news: the pound sterling lost about 10% and is trading near its lowest level in

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Jun 24, 2016 | Post by: Roman Chuyan, CFA Comments Off on Brexit: Immediate Effect and Perspective

Brexit: Immediate Effect and Perspective

Roman Chuyan, CFA June 24, 2016 Yesterday, the citizens on the United Kingdom voted decisively (51.9%) to leave the European Union, despite a campaign to remain in the EU led by the UK’s top politicians including Prime Minister David Cameron.  Markets reacted sharply to the news: the pound sterling lost about

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Jun 10, 2016 | Post by: Roman Chuyan, CFA Comments Off on The Fed: A Position of Weakness

The Fed: A Position of Weakness

Roman Chuyan, CFA June 10, 2016 After a seven-year bull run, stock market valuation reached its highest level since 2000. Then, corporate earnings began to decline in 2015 and U.S. economic fundamentals deteriorated this year. Under these conditions, we would normally expect a stock market correction, or worse. Yet, stocks continue

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Jun 01, 2016 | Post by: Roman Chuyan, CFA Comments Off on G-7 Warns About Unsustainable Debt

G-7 Warns About Unsustainable Debt

Roman Chuyan, CFA June 1, 2016 Central banks’ monetary policies – zero or negative interest rates and bond purchases – are losing their effectiveness. Earlier this year, the G-20 country leaders stated that “monetary policy alone cannot lead to balanced growth” and advocated that governments add fiscal stimulus. It was followed by similar

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May 05, 2016 | Post by: Roman Chuyan, CFA Comments Off on Central Banks Have No Cure

Central Banks Have No Cure

Roman Chuyan, CFA May 5, 2016 “If many remedies are prescribed for an illness, you may be certain that the illness has no cure.” ~ Anton Chekhov, The Cherry Orchard Most observers agree (at least, those whose experience spans a complete market cycle) that the equity market is overextended. Market

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Mar 29, 2016 | Post by: Roman Chuyan, CFA Comments Off on What The Fed Has Wrought

What The Fed Has Wrought

How The Fed’s Policies Misallocate Business Investment Roman Chuyan, CFA Model Capital Management LLC The Federal Reserve provided unprecedented monetary stimulus in response to the US financial crisis. It dropped its short-term Fed Funds target rate to zero, and provided unprecedented liquidity as part of quantitative easing (QE) programs starting in September

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Feb 04, 2016 | Post by: Roman Chuyan, CFA Comments Off on Extreme Investor Fear Is Positive For The Market

Extreme Investor Fear Is Positive For The Market

Investor sentiment reached extreme levels of fear amid the January market debacle, according to the American Association of Individual Investors (AAII). The ratio of bearish to bullish investors exceeded 200% (two bearish investors for every one bullish) in January, and still stood at 187% at month-end. This is a level of

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Jan 11, 2016 | Post by: Roman Chuyan, CFA Comments Off on Simplistic Trend-Following Will Push US Stocks Lower

Simplistic Trend-Following Will Push US Stocks Lower

Trend-following is one of most-favored methods used to time the market – after all, “a trend is your friend.” Investors who use trend-following watch for indicators such as the popular 50-day moving average crossing above (a bullish signal) or below (bearish) the 200-day MA. This indicator seems to have worked in the

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Dec 21, 2015 | Post by: Roman Chuyan, CFA Comments Off on HY Debacle: An Update

HY Debacle: An Update

The high-yield bond debacle has continued since I covered it here. To recap briefly, “the current HY prices and spreads, 6.4% for the HY index overall and 4.08% for BB, suggest considerable stress that typically occurs during a credit contraction.” The HY bond market deteriorated further since then: The HY

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