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In some ways, the bond market is more impressive than the stock market. We continue to think it may be a brand-new ball game for a while with a growing number of new players. Throw out your old rule books? Our pre-election expectation for T-Bonds is 11%-12%.

Hopefully clients read the late July Interim memos. Truthfully, the move is a tad more than expected. What now? The last calculation of the Major Trend Index produced a still negative but improved reading. A new reading will be available August 7. Just a huge rally or a new bull market? I think it’s the latter, but want confirmation from our Major Trend Index.

In many ways the bond market is more impressive than the stock market. In some ways I think it is a brand-new ball game with a growing number of new players. Throw out your old rule books. We have raised our maximum pre-election expectation for T-Bonds to 10%, up from 11%.

Using Roll Call voting record statistics provided by the National Taxpayers Union, we previously examined the Senate. This issue, trends in the House are analyzed. Overall, fiscal responsibility is on the wane, especially with Democrats.

Our weekly work comparing prices of 94 commodities with levels 12 months previous seems to function quite well as a stock market timing device and is also helpful at times with the bond market. At the end of July, it registered a “buy signal” for both. Take a look at this section and see how this has worked out 1973 to date.

At this point there is no indication inflation may be about to accelerate. Some may recall that in the early spring of 1984, this work led us to conclude that 1984 inflation might be a lot lower than most then thought at the time. This section also includes comments on the possibilities of deflation and what might be expected if it does occur. It probably would not be the disaster some seem to think.

Ruminations from “The Road” – Recent visits and client lunches in New York, Philadelphia, Baltimore and earlier in San Francisco and Seattle have played an important part in what follows… Playing Interest Rate Politics – Polls were taken at our two June luncheons in New York to see what impact our guests thought a move in interest rates, prior to the November election, might have on the stock market.

June was down in the middle and up at the end. The net was a 2.5% gain for the DJIA and 1.8% for the S&P 500. Not much, but a decided improvement over May. Actually, in the midst of the June churning, some significant undercurrents were occurring.

Jim Floyd has run new computer screens for the Consumer High Growth sector, Regional Bank Double Plays, The Undervalued & Unloved issues and the Growth Stock Bargain Basket.

T-bonds at their recent lows were down 30% from peak levels. Yes, it has been a bear market, but it may be about over. At minimum, a move to a 12% level is expected before election day.

It seems many of the financial department store builders may have lost touch with realities. Upscale financial product consumers, the most profitable market, are looking for expertise, not breadth.

Do You Know the Way to Monterey? Steve’s notes from the MTA seminar in Monterey, California…..Maybe the Best to be Said About May 1984 Is… It’s now history. It was a rotten month.

The Major Trend Index shifted to Negative status as noted in the special May 22 Interim Memo. However, downside vulnerability appears quite limited. At any rate, expect a good market in the last half of 1984. It is too late in the decline for most to build cash, although some futures hedging may be appropriate for those who can.

During May, cyclical stocks fell almost 10.5%, while our Gilt Edged Growth stock index fell 7.4%. Thus, again on a relative basis, growth was better. Momentum now clearly favors growth and we think growth stocks have regained the upper hand.

A stronger bond market does not necessarily mean a simultaneous rally in stock prices. The two markets did not move in tandem on the way down, and the stock market might well lag on the way up.

We hear what the politicians say, but how do they vote? Herein, the 1983 voting records on spending issues are tabulated and compared for every U.S. Senator. We then classify the Senators, ranging from “Tough as Nails” to “Totally Irresponsible.” See where your two Senators rank.

T-Bonds at their recent lows were down 30% from peak levels. Yes, it has been a bear market, but it may be about over. At minimum, a strong move to 11%-12% levels is expected before election day. Is the five-point move in recent days the 10 beginning of this? Maybe …

I expect Zeros will make a bigger splash in pension circles over the next twelve months than did GIC’s, Index Funds, Venture Capital or Real Estate. Dr. Harold Ehrlich does not go quite that far, but he thinks Zeros should “be recognized as being among the most important financial instruments ever invented.”

It seems that once all of Wall Street becomes aware of an indicator or historic market pattern, the damn things no longer seem to work. Is this now true of the Presidential election cycle? Well, don’t give up on this yet. According to Arthur Merrill’s research, the market so far in 1984 has been acting just like it is supposed to. The fireworks come in the last two quarters of the year.

The Major Trend Index remains in “neutral,” but it appears the correction lows may have been seen around 1120, DJIA. Our “Early Warning” work remains constructive.