Gold, Oil, and the US Treasuries provide different diversification benefits when combined with the S&P500 Index. Correlation of Gold prices to the stock market remains low in Bull and Bear markets. Gold provides consistent diversification benefit to the stock portfolio…. Read More ›
The US economy has a structural wage stagnation. For the last 34 years, wages have been growing at the effective real annual rate of 0.51%. Consumers who rely on salary alone, cannot increase discretionary spending too much. As discretionary spending declines, economic growth will slow down. This creates a risk for the next economic recession.
This is my sixth annual forecast of the S&P 500 Index return for the year. It is based on the simple linear regression model. The model uses Gross Domestic Product (GDP) as explanatory variable to the performance of the S&P… Read More ›
On one side, the Fed pushes short-term yields higher. On the other side, strong demand from investors pushes long-term yields lower. Investors may demand more long-term US government bonds in the coming years causing the yield curve to turn negative or to invert
The yield curve is likely to continue to flatten. The Fed has a strong control over the short term rates through its FOMC policies: setting the federal funds rate and by purchasing US treasuries. The long-term yields are out of the Fed’s control
Based on the statistical analysis and the forecast using GDP and S&P 500 data, I expect the S&P 500 Index to close at 2,375 on December 29, 2017. That is a potential annual upside of 6.1% from the closing price of 2,238 on December 30, 2016.
As a holiday tradition at ECNFIN.com, I forecast the S&P500 Index closing price one year from now. Based on the statistical analysis and forecast described in detail further in this article, I expect the S&P 500 Index to close between… Read More ›