Welcome to the Don S. Peters Blog

The current week's commentary is posted below. I invite you to visit the site for my past writings and contact me with any questions.

I also encourage you to visit Freestate Advisors' website, which can be found here:

Freestate Advisors LLC

Steady As She Goes

Weekly Writing 2018.04.16

The economy continues to plug along at approximately 2% real and financial markets are overvalued but stuck in a trading range. Nothing seems to change. Many—including yours truly—keep looking for that Minsky moment which will send the markets into a downward spiral, creating a valuation level which makes historical sense. I was thinking the retail sales print today (Monday, April 16, 2018) would provide the catalyst that finally signaled a recession. Retail sales had been down for three months in a row and March’s numbers would have been—if negative—four. But alas car sales popped up nicely and halted the decline. Ex-car sales, the numbers were a disappointment but still positive. Debt continues to pile up in all areas. The major banks continue to do well as smaller banks are where defaults are beginning to rise. It appears that goldilocks continues to prevail and will so, until it doesn’t. Buy and hold comes out to zero and maybe a trading stance can make some money here and there.


As you can see from chart #1 below, U.S. bank loan growth has been rather weak. Those that expect an economic acceleration this spring and summer are quite likely to be disappointed, just as we who expect weakness have and continue to be. It is bank loan growth that creates money supply growth (note chart #2), which is necessary for expansion. It is just not there. Money supply in fact has been declining since 2012. If history is any guide, this will take its toll on economic activity. One needs to keep in mind, money trends have long lead times—sometimes very long.


I thought the following Crestmont Research chart (chart #3 below) might give one a reasonable ten-year total return outlook for the S&P 500 index. Dividend growth, earnings growth, and price earnings change are the three components of total return pure and simple—and that’s it. If any of you want a copy of the Crestmont Research Paper one needs to visit their website at www.crestmontresearch.com. Their most recent paper can be found by clicking on this link. I have made reference to them before. Ed Easterling is a friend and one of the really good people in this business.



Chart 1


Chart 2

Adapted from zerohedge.com

Chart 3



The Best,

Don S. Peters

Information contained in these commentaries is based upon information obtained from sources both external and internal which we consider to be reliable, but the accuracy of the information and the recommendations contained herein cannot be guaranteed, nor do they constitute a solicitation for the purchase or sale of any securities mentioned herein. Information contained in this commentary may not be reproduced in any form without written permission from Donald S. Peters.