Pull the trigger with confidence.

Lumber prices are going through what I call a “rogue wave” event, named for the massive oceanic waves which can swamp ships.  The physics of the oceanic rogue waves are similar to those in the financial markets.  The implication for lumber futures prices is that we should see a return to the 450-500 area, up from the current prices in the low 300s. 

In the ocean, a rogue wave forms when one wave “borrows” energy from adjacent waves, making a localized wave crest well above the surrounding... Read More

Housing sector stocks have been among the worst performers in 2018, and analysts are pointing to lots of different reasons including the newly imposed U.S. tariffs on Canadian softwood lumber.  But an easier explanation arises when we look at interest rates.

Mortgage rates are not yet empirically “high”.  I bought my first house with a 13% mortgage, so rates that start with the number 4 still seem pretty low, at least to me and my ge-ge-generation.  The key insight contained in this week’s... Read More

Investors’ appetites for risk taking can be measured with the comparison of the Consumer Discretionary sector versus Consumer Staples.  The big shift in their behavior recently shows the huge abandonment of risk appetite in October to November 2018, but it also creates a huge oversold opportunity.

The staples companies make things which consumers need all the time; our use of tooth paste and toilet paper does not vary much with the state of the economy.  But if economic prospects are... Read More

Crude oil prices reached a new multi-year high on October 3, and then started a dramatic drop.  It has just now fallen for 12 straight trading days to reach the lowest close since December 2017.  There are various theories about why this has happened, attributing it to comments from President Trump, OPEC chicanery, Iranian oil exports, falling demand, fracking overproduction, and all manner of other explanations.  But few of those explanations address the “when” question, concerning why this... Read More

I was asked recently about the upcoming “grand solar minimum”, and whether it means anything for the stock market.  This is something I have looked at, and the answer is that I wish it was more meaningful than it really is.

Solar minimum is when the sunspot count bottoms out as the sun goes quieter.  The sunspot cycle averages 11 years, but over the historical record its period has varied from 9-14 years.  This week’s chart shows that at the solar minimum, there is often a noticeable bottom... Read More