By Bryan Rich 

August 31, 2016, 4:00pm EST

We watched oil closely earlier this year.  The oil price bust ultimately pulled down stocks.  And when oil aggressively bounced off of the bottom, stocks recovered alongside, returning to new record highs.

Today it was oil again.

Stocks oscillated near record highs and following an anticipated Fed event last week had continued to tread water.  That gives the bears a low risk trade to sell the S&P 500 against the top (as a take profit, hedge or just a trade), holding out hope that gravity would take hold.

It hasn’t happened.  But we did get a catalyst to get it moving lower today, with a bigger than expected oil inventory build.  That sent oil down nearly 4% on the day.


Oil stocks took a hit.  But the broader stock market held up well, losing just 1/2 percent and recovering most of it by the day’s end.

The market still sits at critical levels going into the jobs number on Friday.  Yields continue to chop in this ever tightening wedge (below) — a break looks certain on the jobs number.  This is a very important chart.


And stocks are positioned close enough to the highs to encourage some profit taking (if the highs get taken out, you put the position back on … if the highs hold, you may have an opportunity to buy it back cheaper).


It remains a macro story – a central bank story.  And that’s the mindset of the market as we head into the end of what has been a rather sleepy August.

In our Billionaire’s Portfolio, we’re positioned in deep value stocks that have the potential to do multiples of the broader market—all stocks that are owned and influenced by the world’s smartest and most powerful billionaire investors. Join us today and get yourself in line with our portfolio. You can join here.  

By Bryan Rich 

August 30, 2016, 5:00pm EST

Last Thursday, everyone was awaiting the Friday Jackson Hole speech from Yellen.  I suggested that, while all eyes were on Yellen, maybe Kuroda (the head of the BOJ) would steal the show:  “he could conjure up some Bernanke style QE3. Not a bad bet to be long USD/JPY and dollar-denominated Nikkei through the weekend (ETF, DBJP or DXJ).”

Indeed, Yellen was short on clarity as we’ve discussed in recent days.  As of this afternoon, stocks are now unchanged from Thursday afternoon (just prior to her speech).  And the 10-year yield is right where it was before she spoke — and looking like a coin flip on which direction it may break. The pain is lower, so it will probably go lower.

aug 10s

As for Kuroda, he did indeed steal the show, at least in terms of market impact.  On Saturday, Kuroda hit the wires saying its negative rate policy was far from reaching the limit and said they would act with more QE or deeper negative rates “without hesitation.”  That’s a greenlight for buying Japanese stocks and selling the yen (buying USD/JPY).

The Nikkei is up 1.5% from Friday’s close, and USD/JPY is up 2.7% (yen down).

Was Kuroda telegraphing another big round of fresh QE (as Bernanke did in 2012)?  Maybe.  He said inflation remains vulnerable in Japan and is responding “differently” (i.e. worse) to shocks like falling oil prices.

Inflation in Japan, even after rounds of unprecedented QE, is back in negative territory and has been for five consecutive months of year-over-year deflation.   The U.S. economy looks like its running hot compared to Japan.  It’s not a bad bet to expect Japan to act first, with more QE, to pump asset prices, and then the Fed would have a little more breathing room to make another hike (either December) or early next year.

In our Billionaire’s Portfolio, we’re positioned in deep value stocks that have the potential to do multiples of the broader market—all stocks that are owned and influenced by the world’s smartest and most powerful billionaire investors. Join us today and get yourself in line with our portfolio. You can join here.  

By Bryan Rich 

August 27, 2016, 12:00pm EST

The Fed’s Janet Yellen was the focal point for markets for the week. She had a scheduled speech at the annual Fed conference at Jackson Hole.

When her speech was finally made public Friday morning, the response in markets was uncertainty (the most used word for the past nine years).

Stocks went up, then down. Yields went down, then up.

So what do we make of it? Let’s start with the headlines that hit the wire Friday morning.

The world was wondering if Yellen would support the messaging from some of her fellow Fed members–that a September rate hike is on the table. Or would she continue the backstepping (dovish speak) the Fed has done for the past five months. The answer was ‘yes.’ She did both.

Yellen said the case for rate hikes has strengthened (yellow marker) because the data is nearing their goals (employment and inflation–the white marker). Ah, rate hike. But then she said the Fed expects inflation to hit the target 2% in the next few years (circled)! And then talked about the strategy for more QE. Huh? And then to top it off, she said they might move the goalposts. They might move the inflation target higher, and start targeting GDP. That means they would be happy to leave conditions ultra accommodative until those higher targets are met. Clearly dovish.

As I said Thursday, they want to raise rates to get the financial system closer to proper functioning, but they don’t want to cause a recession. The Fed wants to raise short-term rates, but promote a flatter yield curve (i.e. promote expectations that the economy will continue to be soft) to keep the market interest rates low, which keeps the housing market on the rails and the economic activity on the rails.

Remember, we talked about the piece Bernanke wrote a couple of weeks ago, where he suggested exactly this type of perception manipulation from the Fed, to balance the need to raise rates, without killing the economy.

That looks like the game plan.

Have a great weekend!

In our Billionaire’s Portfolio, we’re positioned in deep value stocks that have the potential to do multiples of the broader market—all stocks that are owned and influenced by the world’s smartest and most powerful billionaire investors. Join us today and get yourself in line with our portfolio. You can join here.  

By Bryan Rich 

August 25, 2016, 4:00pm EST

Tomorrow is the big annual Fed conference in Wyoming.  It typically draws the world’s most powerful central bankers.  This is where, in 2012, Bernanke telegraphed a round three of its quantitative easing program.

The economy was still shaky following the escalating sovereign debt crisis in Europe, which had taken Spain and Italy to the brink of default.  Draghi and the ECB stepped in first, in late July and made the big “whatever it takes” promise.  This is where he threatened to crush the bond market speculators that had run yields up in the government bond markets of Spain and Italy to economic failure levels.  He threatened to take the other side of that trade, to whatever extent necessary, in effort to save the future of the euro.  It worked.  He didn’t have to buy a single bond.  The bond vigilantes fled. Yields ultimately fell sharply.

But just a month after Draghi’s threat, it was uncertain at best, that it would work.  With that, and given the economies globally were still flailing, Bernanke hinted that more QE was coming at the August Jackson Hole conference.

The combination of those to intervention events ignited global stocks, led by U.S. stocks.  The S&P 500 is up 55% from the date of Bernanke’s speech and the climb has been a 45 degree angle.

This time, this Jackson Hole, things are a bit more confusing, if that’s possible.  The BOJ, ECB and BOE are QE’ing.  The Fed has been going the other way.  But in the past six months, they’ve backstepped big time.

The hawk talk went quite for a while earlier this year.  Even Bernanke has written that the Fed has shot itself in the foot by publishing an optimistic trajectory and timeline for normalizing rate. It has resulted in an effect that has felt like a rate tightening, without them having to act.  That’s the exact opposite of they want.  They want to hike to restore some more traditional functioning of the financial system, but they don’t want to slow down economic activity.  It doesn’t normally work that way, and it hasn’t worked that way.

So now we have Yellen speaking tomorrow, and people are looking for answers.  We have some Fed members now wanting to dial back on public projections, as to not continue to negatively influence economic activity (Bernanke’s advice) and others getting in front of camera’s and telling us that a September hike might be in the cards.

But while everyone is looking to Yellen for clarity (don’t expect it), the show might be stolen by another central banker.  Haruhiko Kuroda, head of the Bank of Japan, will be in Jackson Hole too.  The agenda is not yet out so we don’t know if he’s speaking.  But he could conjure up some Bernanke style QE3.  Not a bad bet to be long USD/JPY and dollar-denominated Nikkei through the weekend (ETFs, DBJP or DXJ).  Full disclosure: We’re long DBJP in our Billionaire’s Portfolio.

In our Billionaire’s Portfolio, we’re positioned in deep value stocks that have the potential to do multiples of the broader market—all stocks that are owned and influenced by the world’s smartest and most powerful billionaire investors. Join us today and get yourself in line with our portfolio. You can join here.  

By Bryan Rich 

August 22, 2016, 4:30pm EST

As we head into the end of August, people continue to parse every word and move the Fed makes.  Yellen gives a speech later this week at Jackson Hole (at an economic conference hosted by the Kansas City Fed), where her predecessor Bernanke once lit a fire under asset prices by telegraphing another round of QE.

Still, a quarter point hike (or not) from a level that remains near zero, shouldn’t be top on everyone’s mind.  Keep in mind a huge chunk of the developed world’s sovereign bond market is in negative yield territory.  And just two weeks ago Bernanke himself, intimated, not only should the Fed not raise rates soon, but could do everyone a favor — including the economy — by dialing down market expectations of such.

But the point we’ve been focused on is U.S. market and economic performance.  Is the landscape favorable or unfavorable?

The narrative in the media (and for much of Wall Street) would have you think unfavorable.   And given that largely pessimistic view of what lies ahead, expectations are low.  When expectations are low (or skewed either direction) you get the opportunity to surprise.  And positive surprises, with respect to the economy, can be a self-reinforcing events.

The reality is, we have a fundamental backdrop that provides fertile ground for good economic activity.

For perspective, let’s take a look at a few charts.

We have unemployment under 5%.  Relative to history, it’s clearly in territory to fuel solid growth, but still far from a tight labor market.

unem rate

What about the “real” unemployment rate all of the bears often refer to.  When you add in “marginally attached” or discouraged job seekers and those working part-time for economic reasons (working part time but would like full time jobs) the rate is higher. But as you can see in the chart below that rate (the blue line) is returning to pre-crisis levels.

u6

In the next chart, as we know, mortgage rates are at record lows – a 30 year fixed mortgage for about 3.5%.

30 yr mtg

Car loans are near record lows.  This Fed chart shows near record lows.  Take a look at your local credit union or car dealer and you’ll find used car loans going for 2%-3% and new car loans going for 0%-1%.

autos

What about gas?  In the chart below, you can see that gas is cheap relative to the past fifteen years, and after adjusted for inflation it’s near the cheapest levels ever.

gas prices

Add to that, household balance sheets are in the best shape in a very long time.  This chart goes back more than three decades and shows household debt service payments as a percent of disposable personal income.

household

As we’ve discussed before, the central banks have have pinned down interest rates that have warded off a deflationary spiral – and they’ve created the framework of incentives to hire, spend and invest.  You can see a lot of that work reflected in the charts above.

In our Billionaire’s Portfolio, we’re positioned in deep value stocks that have the potential to do multiples of the broader market—all stocks that are owned and influenced by the world’s smartest and most powerful billionaire investors. Join us today and get yourself in line with our portfolio. You can join here.  

By Bryan Rich 

August 17, 2016, 3:45pm EST

We’ve talked about the recent public portfolio disclosures that have made in recent days by the world’s biggest investors.

And as we’ve discussed, the 13F filings only offer value to the extent that there is some skilled analysis applied.  Loads of managers file 13Fs every quarter.  And the difference in manager talent, strategies, portfolio sizes … run the gamut.

Through our research of over 15 years, among the most predictive factors in these filings is the presence of high conviction positions.  To put it simply, the bigger the position relative to the size of their portfolio, the better. Concentrated positions show conviction. Conviction tends to result in a higher probability of success, especially when the investor has a controlling stake and is influencing (or seeking to influence) management.  At that stage, these positions will show up first, before the quarterly 13F filing, in more timely filings called a 13D (or 13G) filings.

Here’s a look at a specific case that fits that profile, with some detail on why it matters.

If we look across high conviction positions among the recent 13F filings, among the highest, we find Carmike Cinemas (symbol CKEC).  Mittleman Brothers, a $410 million hedge fund and value investment advisor, runs a concentrated portfolio, and owns 9.6% of the CKEC.

The stake represents (as of the most recent 13F filing) more than 31% of its long U.S. equity portfolio (more than 18% of its overall portfolio).  That’s a huge stake.

After fees the Mittleman Brothers have returned 17% annualized since inception (2003).  So we have a manager that has doubled the S&P 500 over the 14 years, runs a concentrated portfolio, and has an ultra-high conviction stock in CKEC.  And in this particular case, they have the ability to influence the outcome in CKEC.

The fund filed a 13D on Carmike back in March, which means they intended to influence management. Mittleman has since been trying to block a sale of Carmike to AMC Entertainment Holdings for a value they deem “unacceptably low.”

At the time of the first takeover offer, the stock traded at just around $25 (so a $30 takeout would be a 20% premium).  The stock now trades at $31.  But based on industry multiples, Mittleman argues the company should be sold for no less than $40, and as much as $47.  The bid has since been raised, but remains at levels Mittleman has deemed unacceptable.

The moral of the story:  As we know, management’s mandate in public companies is to maximize shareholder value, but unfortunately it doesn’t always happen (most of the time, only after their interests are maximized).  That’s why siding with influential shareholders that are fighting to maximize your return on investment is critical.  In the case of Carmike, you have management that is willing to give away the company for as little as 70 cents on the dollar (according to view of one of its biggest shareholders).

In our Billionaire’s Portfolio, we’re positioned in deep value stocks that have the potential to do multiples of the broader market—all stocks that are owned and influenced by the world’s smartest and most powerful billionaire investors. Join us today and get yourself in line with our portfolio. You can join here.  

By Bryan Rich 

August 16, 2016, 3:45pm EST

Yesterday was the deadline for all big investors to submit, to the SEC, a public snapshot of their portfolios for the quarter ended June 30th.

On that note, as we’ve discussed, this information is covered hot and heavy by the media.  You often see headlines like these (these are actual headlines from yesterday): “Activist hedge fund ValueAct takes about 2 percent stake in Morgan Stanley” or “George Soros sells off Apple stake during the second quarter.”

On the above stories, if you own Morgan Stanley should you feel good about it?  Conversely, if you own Apple, should you be worried?  The heavy coverage of the topic both online and on television implies “yes” to both, which likely gets the average investor stirring.  But there’s never context given as to whether or not the information is meaningful, and there’s never evidence given as to what the results tend to be for those that follow.  The reason is, it requires a lot of hard work, experience, ingenuity and proprietary research to draw any conclusions from the information.

For perspective, these Q2 filings show positioning just five days after the UK voted to leave the European Union.  And this event was broadly speculated to be a crushing blow the global markets and the global economy.  As you recall, we made the case that it was over-exaggerated and could actually be good for markets and the economy by invoking some much needed fiscal stimulus.

Still, it’s safe to assume the UK event had considerable influence on the holdings of the world’s biggest investors. Global markets swung violently on the news back in June.  Remember, between June 23rd and June 27th, the S&P 500 fell as much as 5.7%.  It made it all back the subsequent four days.
So given the timing of the portfolio snapshot with the Brexit fears, let’s talk about Apple, the most widely held stock in the world and the largest constituent in the market cap weighted S&P 500.  The headlines were scrolling fast and furious on Apple yesterday, following the filings from billionaire investors David Einhorn, George Soros and Chase Coleman – all of which sold Apple shares in the quarter.  Now, it’s important to understand that these funds can trade Apple with virtual anonymity between quarters.  The stock is too large for anyone one investor to take a 5% “activist” stake, which would trigger the requirement of a 13D filing with the SEC, which would require updated filings (or amendments) within 10 days of any change in the position size (sell one share, you have to report it).

On that note, let’s start some perspective on Einhorn’s Apple stake:  Going into the second quarter Einhorn’s biggest position, by far, was Apple.  He had 15% of his fund in the stock (a huge position).  It would only make since that he would trim the position and neutralize some risk into an uncertain macro event.  In fact, in his second quarter letter, Einhorn brags that they have done a good job of “trading” Apple (i.e. managing the downside). Still, as of the end of Q2, Apple was a very large position, at 12% of his fund.
What about the tech investing genius billionaire Chase Coleman?  Coleman had 9% of his $7 billion fund (long public equities) in Apple going into the second quarter.  By the end, he had cut it by 75%.  Again, playing defense into Brexit. Apple stock is 16% higher than it traded on June 30.  Coleman may very well have put the full position back on since the June 30 snapshot (likely).

George Soros?  First, we should note that Soros is the world’s best global macro investor. He’s an agile investor that will load up on a theme and just as quickly reverse course and position for another probable outcome.  For a career, Soros’ bread has been buttered betting on the unexpected outcome.  That’s where the big wins come.  Brexit was unexpected, thus his trimming of Apple, the stock with the biggest contribution to his view on a slide in the S&P 500.

And then we have arguably the greatest investor of all-time, Warren Buffett.  While others ran from Apple, Buffett increased his stake by more than 55%.  Why?  Buffett has made his living for more than 50 years buying good companies when everyone else is selling.  As he says, “be greedy when others are fearful.”

That’s a sliver of perspective on the popular 13F filings of the past few days.  As I said yesterday, the presence of a big investor in a stock is rarely valuable information.  Only a small percentage of those reporting investors have the powerful combination of size, influence and portfolio concentration to make their presence alone a potential catalyst for change in a company/and a repricing of the stock.

Follow The Lead Of Great Investors Like Warren Buffett In Our Billionaire’s Portfolio

In our Billionaire’s Portfolio, we’re positioned in deep value stocks that have the potential to do multiples of the broader market—all stocks that are owned and influenced by the world’s smartest and most powerful billionaire investors. Join us today and get yourself in line with our portfolio. You can join here.  

By Bryan Rich
August 15, 2016, 4:00pm EST

Following a quiet week on the news and economic data front, this week will have plenty of events and catalysts for markets, as we sit at record highs in U.S. stocks.

We talked last week about the sharp bounce back in oil. That bounce continues today (+2.5%), and is being driven by comments from Saudi Arabia that an oil production freeze may finally come to put a floor under oil.
Why does it matter? OPEC, led by its biggest oil producer, Saudi Arabia, has rigged oil prices for the better part of two years in an attempt to ward off new shale industry competition. That brought the U.S. energy industry to its knees earlier this year, before central banks stepped in with “stimulus” measures that happened to bottom out oil and double the price in just weeks. Still, low prices are finally reaching the breaking point for all oil producers (including the Saudis and fellow OPEC countries).

So higher oil (above $40) takes shock risk off of the table for global markets. As such, global stocks continue to climb. It started in China this morning, with a 3% plus rise (as we said in early July, It May Be Time To Buy Chinese Stocks).

Among the events this week, the biggest investors in the world are filing required quarterly public portfolio disclosures with the SEC (13F filings). This is where we get a glimpse into their portfolios.

Of course, it’s a widely covered event these days by the media. And there’s interesting information to be gleaned. But of 400 or so top funds/investors, only 20-30 have the combination of size/influence and hold a concentrated portfolio of high conviction investments to make the prospect of following their lead, productive. Most of the lot allocate across so many stocks their portfolio performance mirrors the broader indices.

Of this small group of investors, what’s most valuable are the timely public disclosures (13D filings) they make when they’ve taken a controlling interest in a company with the intent to create change — their conviction level, and their clear and articulated game plan for unlocking value.

With filings continuing throughout the day today, we’ll talk more this week about the value of following the lead of some of the best investors in the world.

Follow The Lead Of Great Investors Like Warren Buffett In Our Billionaire’s Portfolio

In our Billionaire’s Portfolio, we’re positioned in deep value stocks that have the potential to do multiples of the broader market—all stocks that are owned and influenced by the world’s smartest and most powerful billionaire investors. Join us today and get yourself in line with our portfolio. You can join here.  

By Bryan Rich 

August 10, 2016, 4:00pm EST

After the past two weeks, that included a Fed decision, more BOJ action, the approval of Japanese fiscal stimulus, a rate cut and the return to QE for the Bank of England, and a strong jobs report, this week is a relative snoozer.

With that, every headline this week seems to contain the word Trump. Clearly the media thought a post by the former Fed Chairman, the architect of the global economic recovery and interventionist strategies that continue to dictate the stability of the global economy (and world, in general) today, wasn’t quite as important as Trump watching.

On Monday, Ben Bernanke wrote a blog post that laid out what appears to be his interpretation of a shift in gears for the Fed – an important message.  Don’t forget, this is also the guy that may have the most intimate knowledge of where the world has been over the past decade, what it’s vulnerable to, and what the probable outcomes look like for the global economy.  And he’s advising one of the biggest hedge funds in the world, the biggest bond fund in the world and one of the most important central banks in the world (at the moment), the Bank of Japan. And it’s safe to assume he still has influence plenty of influence at the Fed.

My takeaway from his post:  The Fed’s forward guidance of the past two years has led to a tightening in financial conditions, which has led to weaker growth, lower market interest rates and lower inflation.

Why?  Because people have responded to the Fed’s many, many promises of a higher interest rate environment, by pulling in the reins somewhat.

To step back a bit, while still in the midst of its third round of QE, the Fed determined in 2012, under Bernanke’s watch, that words (i.e. perception manipulation) had been as effective, if not more, than actual QE.  In Europe, the ECB had proven that idea by warding off a bond market attack and looming defaults in Spain and Italy, and a collapse of the euro, by simply making promises and threats.  With that in mind, and with the successful record of Bernanke’s verbal intervention along the way, the Fed ultimately abandoned QE in favor of “forward guidance.”  That was the overtly stated gameplan by the Fed.  Underpin confidence by telling people we are here, ready to act to ensure the recovery won’t run off of the rails — no more shock events.

The “forward guidance” game was working well until the Fed, under Yellen, started moving the goal posts.  They gave a target on unemployment as a signal that the Fed would keep rates ultra low for quite some time.  But the unemployment rate hit a lot sooner than they expected.  They didn’t hike and they removed the target.  Then they telegraphed their first rate hike for September of last year.  Global markets then stirred on fears about China’s currency moves, and the Fed balked on its first rate move.

By the time they finally moved in December of last year, the market was already questioning the Fed’s confidence in the robustness of the U.S. economy, and with the first rate hike, the yield curve was flattening.  The flattening of the yield curve (money moving out of short term Treasuries and into longer term Treasuries, instead of riskier assets) is a predictor of recession and an indicator that the market is betting the Fed made/is making a mistake.

And then consider the Fed’s economic projections that include the committee’s forecasts on interest rates.  By showing the market/the world an expectation that rates will be dramatically higher in the coming months, quarters and years, Bernanke argued in his post that this “guidance” has had the opposite of the desired effect — it’s softened the economy.

So in recent months, starting back in March, the Fed began dramatically dialing back on the levels and speed they had been projecting for rates.  It’s all beginning to look like the Fed should show the world they are positioned to well underestimate the outlook, rather than overestimate it, as it’s implied by Bernanke.  The thought?  Perhaps that can lead to the desired effect of better growth, hotter inflation.

This post by Bernanke is reversing some of the expectations that had been set in the market for a September or December rate hike by the Fed.  And the U.S. 10-year yield has, again, fallen back — from 1.62% on Monday to a low of 1.50% today.  Still, the Fed showed us in June they expect one to two hikes this year.  Given where market rates are, they may still be overly hawkish.

This is the perfect time to join us in our Billionaire’s Portfolio, where we  follow the lead of the best billionaire investors in the world.  You can join us here

By Bryan Rich 

August 9, 2016, 4:15pm EST

Yesterday we walked through some charts from key global stock markets.  As we know, the S&P 500 has been leading the way, printing new highs this week.

U.S. stocks serve as a proxy on global economic stability confidence, so when stocks go up in the U.S., in this environment, there becomes a feedback loop of stability and confidence (higher stocks = better perception on stability and confidence = higher stocks …)

That said, as they begin to capitulate on the bear stories for stocks, the media is turning attention to opportunities in emerging markets.  But as we observed yesterday in the charts, you don’t have to depart from the developed world to find very interesting investment opportunities.  The broad stock market indicies in Germany and Japan look like a bullish technical breakout is coming (if not upon us) and should outpace gains in U.S. stocks in second half of the year.

Now, over the past few weeks, we’ve talked about the slide in oil and the potential risks that could re-emerge for the global economy and markets.

On Wednesday of last week, we said this divergence (in the chart below) between oil and stocks has hit an extreme — and said, “the oil ‘sharp bounce’ scenario is the safer bet to close the gap.”

oil v stocks aug 1 2
Sources: Billionaire’s Portfolio, Reuters

Given this divergence, a continued slide in oil would unquestionably destabilize the fundamentals again for the nascent recovery in energy companies.

With that, and given the rescue measures that global central banks extended in response to the oil bust earlier this year, it was good bet that the divergence in the chart above would be closed by a bounce back in oil.
That’s been the case as you can see in the updated chart below (the purple line rising).

aug9 oil v stocks
Sources: Billionaire’s Portfolio, Reuters

At the peak today, oil had bounced 11% in just five trading days.  Oil sustaining above the $40 is key for the stability of the energy industry (and thus the quelling the potential knock-on effects through banks and oil producing sovereigns).  Below $40 is the danger zone.

In a fairly quiet week for markets (relative to last week), there was a very interesting piece written by former Fed Chairman Ben Bernanke yesterday.

Tomorrow we’ll dig a little deeper into his message, but it appears that the Fed’s recent downgrade on what they have been projecting for the U.S. economy (and the path of policy moves) is an attempt to stimulate economic activity, switching for optimistic forward guidance (which he argues stifled activity) to more pessimistic/dovish guidance (which might produce to opposite).

Remember, we’ve talked in recent months about the effect of positive surprises on markets and the economy.  We’ve said that, given the ratcheting down of earnings expectations and expectations on economic data, that we were/are set up for positive surprises.  Like it or not, that’s good for sentiment.  And it’s good for markets.  And it can translate into good things for the economy (more hiring, more investment, more spending).

The positive surprises have been clear in earnings.  It’s happening in economic data.  It looks like the Fed is consciously playing the game too.

This is the perfect time to join us in our Billionaire’s Portfolio, where we  follow the lead of the best billionaire investors in the world.  You can join us here