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October 7, 2018 | Is the Economy Looking Just a Little Too Rosy?

Rick Ackerman

Rick Ackerman is the editor of Rick’s Picks, an online service geared to traders of stocks, options, index futures and commodities. His detailed trading strategies have appeared since the early 1990s in Black Box Forecasts, a newsletter he founded that originally was geared to professional option traders. Barron’s once labeled him an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case. He received a $200,000 reward when a conviction resulted, and the story was retold on TV’s FBI: The Untold Story. His professional background includes 12 years as a market maker in the pits of the Pacific Coast Exchange, three as an investigator with renowned San Francisco private eye Hal Lipset, seven as a reporter and newspaper editor, three as a columnist for the Sunday San Francisco Examiner, and two decades as a contributor to publications ranging from Barron’s to The Antiquarian Bookman to Fleet Street Letter and Utne Reader.

Before Saturday’s confirmation vote, I’d raised concerns here that a rejection of Kavanaugh might unsettle the nation politically and economically, ultimately reversing Trump’s undeniably positive effect on the economy and the stock market. With Kavanaugh confirmed, perhaps it’s time to flip the argument around with the observation that things looks just a little too rosy to last. Unemployment is at its lowest levels since the 1960s, wages are finally starting to rise, and the new Nafta agreement could help ease global trade tensions while jump-starting tired appendages of the U.S. economy. It’s even possible that the Democrats’ embarrassing failure to stop Kavanaugh will result in significant Republican gains in November, helping to solidify Trump’s aggressively pro-business agenda.

What Could Possibly Go Wrong?

What could possibly go wrong? Pundits could be pardoned for seeming not to care. It is in their nature to validate the popular wisdom and to tell us what they think we want to hear. This implies not only that they will always be wrong at important turning points, but that the sunnier their disposition, and therefore the more optimistic their predictions, the closer we are to the bear market that will end these good times practically overnight.

For what it’s worth, when I tuned briefly to some TV business shows Sunday morning, one commentator wondered aloud “How high can this economy go”? The response from a co-panelist was predictable, but also unsettling to those of us who have been students of bull and bear cycles for decades: “It’s not going to be over any time soon.” We can only hope that this will prove to be the case. Regardless, it behooves us to take with a grain of salt the giddy pronouncements we are certain to hear from economic pundits as long as stocks continue to rise.

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October 7th, 2018

Posted In: Rick's Picks

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