Bob Hoye Blog | Signs of the Times - Bob Hoye | Talkmarkets

After completing a degree in Geophysics, Bob worked in mining exploration. Inspired by the mistake of making money on his first trade, he joined an investment dealer. Historical research led to metals forecasting for large mining companies. This segued into providing independent research to ... more

Signs of the Times - Bob Hoye

Date: Friday, October 27, 2017 6:37 PM EST


PUBLISHED BY INSTITUTIONAL ADVISORS The following is an excerpt from Pivotal Events published for our subscribers October 19, 2017.


The headline about the cost of not being fully invested was from the manager at JP
Morgan Asset Management who added “I’ve never been so optimistic about the global

We are still disturbed by last week’s observation from a very big money manager that the
main risk is “policy error” by the Fed. This could be based upon 2007, when there was
adamant conviction that the Fed, in making the perfectly-timed “cut” in the administered
rate, could keep the mania going. One conclusion could be that the Fed’s timing was not
perfect and was an “error”. The more practical observation is that the T-bill rate always
plunges during a post-bubble collapse and the Fed rate follows the market rate of interest.

T-bill rates, or equivalent increase in a boom and decrease in the consequent contraction.
And then there is the comment about creating new kinds of financial instruments. Which
is a sign of speculation, but we do not know of any “alarm bells” at the Fed. Wild, but
ephemeral financial instruments have been created with every great bubble since the first
one in 1720.

Stock Markets

A year ago, going into the US election financial markets were unsettled. Part of the
decline was political and the other was seasonal. Pressures in the stock market were
sufficient to prompt a ChartWorks “Springboard Buy” on November 3rd. The market was
poised for a rebound and the prospect of a pro-business administration launched the rally
on November 7th.

In December, we began calling it “Rational Exuberance”. With the momentum readings
in June we called it just “Exuberance”. As outlined below, this could get into “Irrational

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