Recent Commentary
Massive Stimulus Thrown At The Economy And Markets
In markets like this we look for clues in sentiment that tell us just how oversold a market may be. Sentiment indicators are contrarian indicators; that is, when they are at peak bearishness, the market is likely to rally. Currently, sentiment indicators are very...
Markets Driven By Fear
Equities are trying to find a floor even though the news flow on the spread of the coronavirus outside of China hasn’t shown any signs of improvement. A number of market indicators would suggest forward returns from current oversold levels should be pretty...
Will The Coronavirus Derail This Year’s Earnings Recovery?
Can investors look back at SARS in 2003 and use that market behavior to analyze how today’s markets might be impacted by the coronavirus? Probably not. Both the economic and market conditions were much different in 2003 than they are now. In 2003 we were coming out...
Our 2020 Playbook
Last week investors were reminded of risk – geopolitical risk to be specific. Stocks quickly sold off after tension between the U.S. and Iran escalated. But we don’t remember when there wasn’t ‘tension’ in the Mideast. Individual risks such as this tend not...
A Higher P/E Ratio Results In A Great Year For Stocks
A Higher P/E Ratio Results In A Great Year For Stocks This year’s 25%+ YTD advance in the S&P 500 stock index is a very pleasant surprise to most investors. What accounts for the great year in stocks? About 20% appreciation came from multiple expansion (a...
The Bond Market Takes Center Stage
Barron’s recent fall 2019 Big Money Poll reported that only 27% of money managers are bullish on the stock market for the next 12 months, down from 46% in the spring survey and 56% a year ago. The latest reading is the lowest percentage of bulls in over 20 years. A...
Our Annual Q And A
Q. Will the impeachment inquiry (and possible impeachment) of President Trump put a lid on stock prices, or cause share prices to fall? A. The impact of impeachment on the markets is not clear. From the beginning of Richard Nixon's impeachment inquiry to his...
The Bond Market Takes Center Stage
Is the growing “consensus” that’s calling for recession correct? Not in our view. The leading/coincident indicator ratio tends to plunge consistently for long periods of time in the lead-up to recessions, unlike the three instances of sideways movement we...
Why Investors Should Care About Rate Cuts
To date, about one-half of companies in the S&P 500 have reported Q2 earnings. Seventy-seven percent of companies have reported a positive EPS surprise, a very strong showing. The overall earnings decline is expected to be 2.6% for the quarter. For CY 2019,...
P/E Ratios and Bull Markets
The current economic expansion is celebrating its 10th birthday this month — the longest on record. What accounts for its longevity? In our view, the lack of an economic boom. No boom, no bust. The next recession may be the most widely anticipated of all time. ...