LIVE MARKETS-The telling signs in the sounds of cannons and trumpets

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THE TELLING SIGNS IN THE SOUNDS OF CANNONS AND TRUMPETS

Retired strategist Jim Paulsen believes economic indicators have turned more contractionary during the last year including a significant rise in bond yields, a much stronger U.S. dollar, a declining factory utilization rate, rising unemployment, and sluggish if not insufficient money supply growth.

Paulsen, an economist and seasoned Wall Street watcher who most recently worked as chief investment strategist at The Leuthold Group, thinks these forces are likely to slow the pace of overall economic activity. With this, he thinks profit performance will also likely become less impressive, particularly vs current expectations.

That said, Paulsen believes a recession still looks unlikely and consequently profits should not collapse, but they may begin disappointing investors as the year progresses.

"There is an old adage which lately has been ringing in my ears – 'Buy on the Cannons and Sell on the Trumpets'!" writes Paulsen in his latest "Paulsen Perspectives."

He adds that "Last year we had war in Europe, war in the Middle East, and a war for the White House. That is, the Cannons were firing."

Early in 2025, he says a peace treaty has recently been reached in the Middle East, peace-keeping forces are being discussed for Ukraine, and "the White House battle has ended (for now)."

This leads him to say, "As 'peace' breaks out overseas and as a new beginning brings hope to Washington, while I still don’t expect a bear market this year, the recent silencing of the Cannons and those Trumpets I hear could bring a few bumps along the way."

(Terence Gabriel)

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