Is a recession inevitable? In our August webinar, Tower Bridge Advisors Chief Investment Officer, Jim Meyer follows up on the themes he discussed in our June Webinar – oversupply across the economy, U.S. unemployment still at historic lows, inflation expectations are low, and consumer spending is strong. Jim goes on to see what has changed …
August 21, 2019 – Wouldn’t it be nice if we got the same message from the White House two days in a row? Tax cuts may be good for elections but not what the economy needs. What the economy needs is patience to let rising demand chew up excess supply in an orderly way. In the meantime, a calmer bond market improves the backdrop for stocks.
Stocks gave back a bit of the gains achieved late last week as interest rates began to slip again. There was no significant economic news. Dow component Home Depot# reported solid results and the stock rose smartly. Without Home Depot, the market’s losses would have looked quite a bit worse. This morning, however, continued good …
August 19, 2019 – With yield spreads starting to widen once again, stocks are in rally mode. However, with earnings growth miniscule, and the decline in rates over, at least for the moment, there isn’t any overwhelmingly strong tailwind for stocks. All eyes this week will be on Friday’s speech by Jerome Powell hinting at the future direction of Fed policy.
Stocks posted solid gains on Friday for the second day in a row as the brief 2-10-year Treasury yield inversion that lasted only a couple of hours faded and yields posted tentative gains along the curve. Over the weekend, China preannounced a new lending structure that is a de facto cut in rates. That has …
August 16, 2019 – Bonds are in a bubble. There is no rational explanation for rates this far below the rate of inflation or for negative yields in Europe. But when the bubble bursts is an open question. Until then, as bond prices rise, stocks are likely to fall further.
Stocks staged a rather tentative rally yesterday after a 3% decline Wednesday when the 2-10-year Treasury yield curve briefly inverted raising fears of a recession within the next two years. The bond market has staged a huge rally this year with 10-year Treasury yields falling from 3.25% to just over 1.5%. Just this month, yields …
August 14, 2019 – The yield curve has inverted raising fears of a pending recession. Clearly, current momentum is to the downside. Inflation is also fading leading to fear of deflation. All this calls for strong monetary and fiscal policy actions around the world. One ray of sunshine is the spike in mortgage refinancing applications this week.
Volatility continues. The market fell about 1.5% on Monday amid heightened trade fears and concerns about the growing demonstrations in Hong Kong. Then yesterday morning, President Trump said he would defer some tariffs on consumer goods imported from China to December 1 to avoid price increases before Christmas. Stocks regained Monday’s losses. This morning the …
August 12, 2019 – Tensions in Hong Kong add risk to world economic growth should they lead to violent confrontation. They aren’t at that level yet, but today’s sit-in at Hong Kong’s airport leads to a situation that the government won’t tolerate forever. Heightened fears are causing stocks to open lower today. Hong Kong is likely to remain a market focus in the days ahead.
Stocks sold off in the last half hour on Friday bringing a very volatile week to a close. For the week, the major averages were all down, but gains mid-week muted the overall impact with losses generally totaling less than 1%. This morning, demonstrators in Hong Kong have massed inside the airport effectively shutting it …
August 9, 2019 – Growth continues but downside risks are heightened by trade rhetoric and by the events unfolding in Hong Kong.
For the second straight day, stocks advanced by more than 1% more than wiping out the losses from Monday’s sharp decline. With no new news regarding tariffs, trade, currency wars or the Fed, investors calmed down and resumed buying stocks. With bonds, even long term bonds, generally yielding 2% or less, even income investors were …
August 7, 2019 – Tariff and currency wars are causing investors to lower growth forecasts. But the fall in interest rates will raise P/E ratios. As markets adjust, volatility will remain elevated.
It has been a roller coaster week so far in the market with the Dow falling over 700 points on Monday before rallying 300 points yesterday. The catalysts for this week’s volatility have been strong moves in currency markets set off by President Trump’s threat to impose 10% tariffs on $300 billion of Chinese goods …
August 5, 2019 – The yuan has fallen overnight to its lowest level against the dollar in over a decade. While that will lessen the impact to U.S. consumers from promised tariffs, it’s consequences on other financial markets is hurtful. Currency markets, left alone, balance out the strengths and weaknesses of trading partners. Tariffs and currency interventions create havoc. Markets are reacting negatively this morning for the right reasons.
Stocks finished lower on Friday as traders continue to fret over President Trump’s threat to increase tariffs on an additional $300 billion of Chinese imports by 10%. Overnight, the value of the Chinese yuan fell to a ratio of over 7 to the dollar for the first time in over a decade. As a result, …
August 2, 2019 – The Fed lowered rates, chasing bad central bank policy in Europe and Japan. Lower rates may help the stock market over the near term, but it won’t solve the key economic issue of overcapacity. The consumer was robust before the rate cut and inflation is creeping up toward 2%. Trump’s tariff threat is simply throwing a fly into the ointment.
The Fed lowered interest rates 25-basis points on Wednesday as advertised. In the subsequent press conference, Jerome Powell confused everyone about the FOMC’s future course and stocks fell by over 1%. Then yesterday, as the yield on 10-year Treasuries fell to 1.95%, stocks started to take off once again until President Trump threatened more tariffs …
July 31, 2019 – The consumer is alive and well. Whatever might be ailing the economy, it isn’t a lack of consumer demand. In the stock market, look at the success of consumer staples and restaurant stocks for example. There are few signs that momentum is about to switch.
Stocks were mixed yesterday, in line with a mixed set of earnings reports. After the close, Apple# reported slightly better than expected results, and the stock moved about 4% higher. That alone will lift major averages this morning. Without the Apple impact, stocks look to trade fairly flat going into today’s conclusion of a two-day …
July 29, 2019 – About 150 S&P 500 companies will report earnings this week but the most important event will be the 2-day FOMC meeting concluding Wednesday afternoon. A 25-basis point cut is expected with post-meeting commentary likely to suggest a Fed receptive to the possible need for further cuts to raise inflation. Any deviation from market expectations could give markets a lift or a jolt.
Stocks rose slightly Friday in very light mid-summer trading. The bond market was quiet as well. Going into this week’s FOMC meeting, the yield curve is very flat with a slight inversion dip in the early years and a slight rising trend amid long-term maturities. This week, approximately 150 S&P 500 component companies will report …
Tower Bridge Advisors Announces the Addition of a Senior Portfolio Manager
Conshohocken PA (July 18, 2019) – Tower Bridge Advisors is pleased to announce that Stephen Saunders has joined the firm as a Senior Portfolio Manager. Mr. Saunders will have responsibility for managing client portfolios and contributing to the firm’s equity research efforts. Mr. Saunders brings more than 15 years of experience in equity research, portfolio …
Tower Bridge Advisors Announces the Addition of a Senior Portfolio ManagerRead More
July 26, 2019 – Earnings season is winding down and the focus will move to next week’s FOMC meeting. Will a 25-basis point cut in rates be enough? Stay tuned. The bond market will tell us rather quickly.
Stocks fell amid a few rather weak earnings reports and commentary from the ECB that was very dovish and suggested that steps taken by the central bank could push rates further into negative territory. One could assume the ECB move would push the Fed to be even more aggressive with monetary policy although there are …
July 24, 2019 – Justice is going to investigate possible antitrust violations by Facebook, Alphabet and Amazon. The investigation is just beginning but it is unlikely to end with a governmental smile. Elsewhere, economic doldrums are caused by ongoing world oversupply of everything but labor. The solution is time. Central bank easing will help but central banks don’t, by themselves, increase demand.
Stocks rose yesterday amid a few good earnings reports. However, after the close, the Justice Department announced that it would begin an investigation into antitrust activity at the big social media, search and Internet retailing companies. Put Facebook#, Alphabet# and Amazon at the top of that list. At the moment, this is an announcement of …
July 22, 2019 – A big week lies ahead. 133 S&P 500 companies will report earnings. Congress goes down to the wire (once again) trying to cobble together a 2-year spending authorization bill and an increase to the debt ceiling before going on a six-week hiatus.
Stocks finished lower both on Friday and for all of last week. Early strength, tied to hopes that the Fed would cut the Fed Funds rate by 50 basis points next week, were squashed when the Fed officials who hinted at the possibility, said such a discussion was only theoretical, and didn’t apply to possible …
July 19, 2019 – Earnings season has gotten off to a good start. Early cycle stocks, unlikely winners this late in a bull market, will get a new life if the Fed begins to cut rates in two weeks.
Stocks managed to eke out a small gain after trading lower for much of the session. With the next FOMC meeting less than two weeks away, the yield curve has flattened a bit reflecting investor optimism that lower rates could spur economic growth and a slight increase in the rate of inflation. This week has …
July 17, 1019 – As we await the flood of earnings reports to come over the next few weeks, it may be a good time to stand back and reflect on some of the major trends that have come to dominate our world today. Populism is one. The way politicians react as they hear the cries of their electorate will shape tomorrow’s world.
Stocks gave ground yesterday amid some profit taking. A sharp drop in energy prices nicked the oil sector. Late in the day, President Trump once again spoke of the possible need for further tariffs against the Chinese should trade talks fail to make progress. The markets reacted much less harshly than they have in the …
July 15, 2019 – The 3-month to 10-year yield curve is very close to uninverting. Fears of recession are waning and stocks march to record highs. Valuation remains a concern. A lot will depend on the moods managements display during earnings season which starts today as Citigroup reports.
Stocks continued to rally on Friday and most leading indices again closed at record high levels. With long Treasury bond yields continuing to press higher, the 3-month to 10-year yield curve, which has been inverted for a few months, is very close to uninverting, perhaps even before the Federal Reserve lowers the Fed Funds rate …
July 12, 2019 – Inflation remains missing in action. The world suffers from oversupply, and millennial debt levels are starting to strain spending. The Fed will cut rates at the end of July. The only open question is how much.
Stocks finished mixed yesterday. The Dow Industrials set a new record high crossing the 27000 barrier for the first time led by UnitedHealth Group which jumped sharply after President Trump stepped back from his proposal to ban rebates within the distribution channel for pharmaceuticals within government drug plans. On the flip side, the pharmaceutical stocks …
July 10, 2019 – The big event this week will be Fed Chair Jerome Powell’s testimony to Congress beginning today. Those wanting multiple interest rate cuts this year may be disappointed by Mr. Powell’s approach of being data dependent meeting to meeting. But, based on market action this week, investors appear to have adapted to Mr. Powell’s approach to monetary policy.
Stocks finished mixed yesterday recovering from a weak open. The big economic event this week is Fed Chair Jerome Powell’s testimony before Congress today. While it continues tomorrow all the reaction will happen today. Here’s the conflict. Markets love higher earnings and lower interest rates. That may sound like an oversimplification but it really isn’t. …
July 8, 2019 – Interest rates have been the driver for rising stock prices this year. Fed Chair Jerome Powell’s comments to Congress this week could give clues to the path forward.
After Friday’s strong employment report stocks fell as the likelihood of significant rate cuts later this year were diminished. But the losses were cut by half or more at the end of a very slow trading day. This morning, however, the downward response continues if futures are any indicator. As we have noted numerous times, …
July 5, 2019 – A strong employment report is good for the economy. A July rate cut is still an almost 100% likelihood, but future rate cuts will depend on the course of inflation and markets overseas.
Stocks rose on Wednesday as rates remained weak. But the big story today is the June employment report just released. Let me start by restating one truism that we shouldn’t ignore. The higher the net employment gain, the better it is for our economy. Period. In June, 224,000 net new jobs were created. After a …
July 3, 2019 – Lower rates mean higher P/Es. That continues to propel stock prices higher. While lower rates and a partially inverted yield curve could portend a recession, more likely they reflect a reaction to easier monetary policy worldwide and an effort to stimulate growth.
Stocks staged a mild gain once again yesterday, and the S&P 500 set another all-time high. 10-year Treasury yields fell below 2.0%. This morning they are trading at about 1.96% as yields throughout Europe tumble further into negative territory. Economic data this week continues to show some slowing in the pace of economic growth in …
June 2019 Video – What’s wrong?
The economy is in the late innings of the economic cycle. There is a tug of war between the positive and negative factors facing the economy. In this video, “What’s Wrong?”, Tower Bridge Advisors’ Chief Investment Officer Jim Meyer discusses the balance between what’s right and wrong with the economy, and whether an imbalance can …
July 1, 2019 – The good news coming from the Trump/Xi meeting may be less substantive than appears on the surface. While the removal of tariff threats is a relief, starting talks is a lot easier than reaching an agreement. In the meantime, nothing emanating from the summit is likely to change the GDP or earnings outlook.
Stocks rose again on Friday amid optimism that the G-20 meeting wouldn’t produce any unwanted surprises. The bond market was quiet with the 10-year Treasury yield settling around 2.0%. While there were a lot of headlines over the weekend related to the G-20 meeting and President’s Trump brief foray into North Korea, the news was …
June 26, 2019 – Stocks fell and investors accepted the likelihood of no trade deal this weekend. However, this morning, Mnuchin’s comments that we are 90% of the way there was taken encouragingly. The consensus of the moment is that no deal is achieved this weekend but new tariffs are deferred. Any deviation will cause immediate market action next week.
Stocks suffered their biggest decline in months yesterday. While profit taking would have been a good enough explanation, heightened rhetoric between the U.S. and Iran, a statement from a White House spokesperson to the press toning down expectations for the Trump-Xi summit this weekend, poor economic data out of Europe and weak housing data here …
June 24, 2019 – With stocks back to recent highs, risks start to increase and reward potential starts to decrease. Overcapacity worldwide is keeping inflation low. For equity investors, the attendant rise in P/Es is a plus. But central banks are pumping money to try and boost inflation. Cheap available funds often lead to bad decisions and economic bubbles as evidenced by the current frothy IPO market.
Stocks continued to chug along and now the Dow is within shouting distance of setting a new all-time high just as the S&P 500 did last week. But all isn’t perfect. German ten-year bund yields fell below -30 basis points overnight, and 10-year Treasury yields in the U.S. are down to 2.0% after reaching over …
June 21, 2019 – Markets set new highs yesterday as the Fed indicated a rate cut was likely in July. The IPO market continues to boom. This is clearly a risk-on market that is starting to flirt with euphoria. While it is nice to celebrate new highs, creeping euphoria sets off danger signals.
Stocks moved to new record high ground after the Federal Reserve strongly hinted that a rate cut would come at its July FOMC meeting. Markets are pricing in at least one more rate cut before the end of 2019. Normally, the Fed cuts rates to stimulate the economy. That is a likely outcome of a …
June 19, 2019 – Today’s Fed meeting and the outcome of Chinese trade negotiations will dominate markets for the next two weeks. After yesterday’s rally, optimism prevails. But there is plenty of room for disappointment. This is a hard market to chase.
Stocks staged a sharp rally yesterday after President Trump tweeted that he would have an extended meeting with Chinese President Xi at the upcoming G-20 summit and that trade talks with China are resuming. The move came in front of today’s conclusion of a two-day FOMC meeting. Results will be released early afternoon with a …
June 17, 2019 – A quiet market offers you time to upgrade your portfolio. Just as in sports, putting a team with superior skills on the field is likely to get you superior results, owning the best managed companies, over time, should be a winning strategy.
Stocks fell modestly on Friday ending a rather tranquil week following sharp gains the week before and a prior 6-week stretch of losses. Once again, there was little economic news. Most of the economic data last week highlighted the slow pace of inflation. For the next couple of weeks we are likely to get much …
June 14, 2019 – Against a relatively quiet backdrop today, three issues seem paramount: Fed policy, tariffs, and the 2020 election. How these play out will dictate the course of the market over the next several months.
Yesterday, stocks halted a two-day losing streak. A late afternoon rally helped shares finish near their best levels of the session. Attacks against tankers in the Persian Gulf helped to lift the price of oil stocks which have been in steep decline lately. The bond market was fairly quiet, and both the economic and corporate …
June 12, 2019 – Markets will be volatile in front of next week’s FOMC meeting. They clearly want to see a rate cut. A more likely expectation might be for a cut at the end of July. What is important for investors is that this Fed, led by Jerome Powell, wants to work with markets, not against them. If the need for lower rates is clear, it will act, if not now, then soon.
The Dow’s six session winning streak ended yesterday as a solid early morning rally faded. Continued dissatisfaction with the recently announced United Technologies/Raytheon merger drove the price of United# lower for the second straight session. That alone was enough to move the Dow Industrials into negative territory as United Technologies is a Dow component. With …
June 10, 2019 – A robust market last week brought stocks back within shouting distance of their April highs. To move higher, equity investors need to expect either earnings greater than consensus forecasts or a continued downward move in interest rates. More likely, we believe stocks have recovered to the top end of an 18-month trading range, and some caution right now appears warranted.
Before starting this morning, I want to thank my colleagues for pitching in so admirably during my vacation. Before switching back to the markets, I want to make one comment on infrastructure. Anyone who has traveled overseas knows that the gap between our roads, airports and rail systems compared with those of other nations, both …
June 7, 2019 – Although near term volatility seems to be creeping up, the major averages remain range-bound. There hasn’t been much in the way of equity gains in nearly 18 months. Digestion phases are appropriate times to refresh your portfolio while keeping an eye out for new opportunities.
While Jim is away on vacation, other members of the TBA Investment Committee will write the market comment. Today’s comment is from Jim Vogt. Recent news events are leading the market to price in at least two Fed Rate cuts by the end of this year. It seems like the Federal Reserve made a mistake …
June 5, 2019 – Market rebounds on dovish Fed comments but fears of a global economic slowdown continue and news that U.S. government regulators are now targeting Google, Amazon, and Facebook shakes FAANG stocks.
While Jim is away on vacation, other members of the TBA Investment Committee will write the market comment. Today’s comment is from Chris Gildea. The latest bout of volatility was ignited by news that U.S. government regulators are now targeting some of the largest tech companies on antitrust concerns. Whether or not any concrete actions …
June 3, 2019 – Increased market volatility is an opportunity to review risk tolerance, asset allocation and existing equity holdings, while resisting the temptation to time the market.
While Jim is away on vacation, other members of the TBA Investment Committee will write the market comment. Today’s comment is from Ray Reed. As analysts and investors, we seek to understand what drives markets and individual stocks on a long-term basis in an effort to produce competitive investment returns for our clients and help …
May 31, 2019 – Markets are rattled with growing global trade tensions. Equities continue their decline for May. Trade tensions, slowing growth and tepid inflation are all causing investors to look towards the bond market for safety, driving yields down.
While Jim is away on vacation, other members of the TBA Investment Committee will write the market comment. Today’s comment is from Dan Rodan. Trade tensions take center stage again as China hints at increased retaliations, and the White House signals 5% tariffs against Mexico if Mexico does not increase its efforts to slow the …
May 29, 2019 – Today’s market worries are likely to provide a buying opportunity in the fall.
While Jim is away on vacation, other members of the TBA Investment Committee will write the market comment. Today’s comment is from Maris Ogg. Not much in the stock market has been clear lately. We saw the irrational decline in December of 2018 corrected quickly in 2019, which seemed to suggest that the domestic slowdown …
January 2019 Video – Investing at the Crossroads
After the volatility in recent months, stocks now appear to be fairly valued. The economy is in the late cycle with a number of issues on the horizon – Brexit, the government shutdown, Fed movement on rates and Tariffs to name a few. In this video, “Investing at the Crossroads,” Tower Bridge Advisors Chief Investment …
November 2018 Video – Investing in a Decelerating Economy
Stocks were a bit overpriced prior to the recent correction, and it would seem that they are now fairly valued. But there are a number of factors including the Fed’s decision on interest rates, the value of the dollar, and the impact of tariffs that could change the valuation picture. In this video, Tower Bridge …
November 2018 Video – Investing in a Decelerating EconomyRead More
September 2018 Video – Great Economy! Great Market?
Economic indicators all point to a strong economy, but there are always storm clouds on the horizon. In this video, Tower Bridge Advisors’ Chief Investment Officer, Jim Meyer, talks about the headwinds facing the economy and what to expect as we head into 2019.
September 2018 Video – Great Economy! Great Market?Read More