Stocks continued their rebound yesterday as earnings season began to get into high gear. The next 10 days will be the peak of earnings reports. Yesterday was a bit educational. Two big Dow components, Johnson & Johnson# and Procter & Gamble# reported. J&J had really good results and raised guidance. It generally operates in business …
October 2021 Economic Update – “This time is different – or is it?”
In this video titled, “This time is different – or is it?”, Senior Portfolio Manager Chris Crooks addresses the current economic outlook by looking at the parallels between the current pandemic and its economic impact, versus the economic impact of the 1918 Spanish Flu pandemic. History doesn’t always repeat, but sometimes it rhymes.
October 2021 Economic Update – “This time is different – or is it?”Read More
October 18, 2021 – Earnings season got off to a good start. This week and next are the peak for earnings. We will learn a lot more about costs and supply chain issues, but whatever issues exist today may get resolved over the next year or so. That is last week’s message to investors. The solution will take time, but directionally, by mid-Summer 2022, Covid, supply chain issues, and inflation spikes should all be in the rear-view mirror.
Stocks rose sharply Thursday and Friday, putting the bulls back into the driver’s seat. We often see one-day rallies within downtrends, but two strong days back-to-back usually signify a change in investor emotions. What drove the change? Good initial third quarter earnings, and finally, energy from Washington to force steps to reduce supply chain logjams …
October 15, 2021 – Solid earnings, government assistance with cargo ships stacking up in the ocean, and a decline in interest rates pointed towards “risk-on” yet again. Markets had one of their best days of 2021 with rallies across the board.
Another Friday comment from us and another late week rally ensues. Stocks were in positive territory across the board yesterday, this time led by Technology, Basic Material, Financial, Industrial and Discretionary stocks. That screams optimism on the economy. Energy, which has been the leading sector in 2021, lagged along with Consumer Staples and Utility stocks. …
October 13, 2021 – Earnings season is getting underway. You will hear a lot about inflationary pressures and supply chain snarls. Right now, markets are fixated on those issues and reacting poorly. While they won’t go away near term, both will ease over time. It’s hard to see clear skies in the middle of a storm, but the underlying factors that will sustain economic growth remain in place.
Stocks continued to edge lower as concerns about inflation, supply chain issues, and Washington politics continued to weigh on investors. This morning starts earnings season with three big names reporting, JP Morgan Chase#, Blackrock#, and Delta Airlines. JP Morgan Chase should provide the best view of the economy overall, mainly through comments regarding loan demand. …
October 11, 2021 – Markets remain volatile as growth slows, interest rates rise, and Washington politics remain a mess. Until supply chain problems are resolved the picture is unlikely to change. Demand is strong but much of it is unfilled. Perhaps it is time for Washington to take notice.
Stocks gave up some ground on Friday but still finished the week with decent gains. Trading remained volatile. Leadership rotated between growth and value stocks several times depending on the economic news of the day and trends in interest rates. The week ended with 10-year Treasury yields crossing the 1.60% barrier for the first time …
October 8, 2021 – Stocks have been STIMIED (more later) over the past month with numerous headwinds popping up. One of them, the debt ceiling, looks to have a solution. Even though it is basically kicking the can down the road, markets bounced higher after McConnell’s Wednesday afternoon offering, and continued to ramp yesterday. More shoes need to drop before we get the all-clear signal for stocks to resume their march to new highs. Today’s jobs report may offer critical data for bulls or bears.
Around 1PM on Wednesday, with the markets testing 3-month lows, news broke that Senator McConnell offered Democrats two options for defusing another DC standoff related to paying our bills. Everyone knew the debt ceiling would eventually be raised, but constant bickering and political posturing caused some chaos in T-Bill rates and equities. Although thoughts of …
October 6, 2021 – Hopefully the debt ceiling issue can be solved shortly. The Democrats control the fate. If they don’t get it on the path to success soon, meaning within days, markets will scream, and the problem will get solved. Apart from that, it will take the Democrats another month or two to finalize a spending compromise. In the meantime, the Delta variant is fading, and the economy is improving. As we enter Q4, markets should take notice.
Markets rallied sharply yesterday, essentially recovering what they lost on Monday. As we keep repeating, the major characteristic of a market in transition is heightened volatility. This week’s action to date certainly puts an exclamation point on that statement. In terms of the economy, not much has changed since last Friday. As the Covid-19 Delta …
October 4, 2021 – A tough September is not a harbinger of what’s to come. The Delta variant is fading, and interest rates are not likely to rise as fast as they did in September. Inflation concerns remain. However, that should mute future upside. Higher earnings, on the other hand, will mute the downside.
Stocks rallied at the end of a dismal September. While growth in September deteriorated a bit thanks to the persistence of the Delta variant of Covid-19, stocks fell due to a combination of issues, a slowdown in growth being just one. Interest rates rose, the Fed hinted at tapering bond purchases before year end, and …
October 1, 2021 – Concerns, they are aplenty. Markets ended September on a sour note, as major averages tested last week’s spike lows. The key to the next 5% move revolves around equities holding near current support levels. Near-term headwinds are compounding, pointing to more downside risk. Rest assured, this bull market is not over yet.
Another quarter is in the books as we enter October which historically has been a favorable seasonal time to be invested. This is especially true in years where stock market returns are already generous. History says we should expect a solid finish for 2021. Even after a nearly 5% drop across the board in September, …
September 29, 2021 – Stocks stumbled yesterday as inflation fears rose. Fed Chairman Jerome Powell acknowledged that near-term inflationary pressures have been stronger than the Fed predicted and could persist for longer. Not market calming words, but with the Delta variant finally fading, economic growth could rise again. Don’t equate a one-day stumble with a serious market correction quite yet.
Stocks got routed yesterday amid multiple concerns I will detail in a moment. Despite the drop, the yield on 10-year Treasuries rose again, topping 1.5% (Spoiler alert: this is one of the concerns). But don’t forget two things: First, my two-day rule says a trend isn’t reversed based on one bad day. Just harken back …
September 27, 2021 – Congress takes center stage this week as it tries to pass close to $5 trillion in new spending. To meet divergent requests, the bills will be rejiggered countless times between now and any vote. Few Democrats are likely to know all that is within. It is all a grand experiment. We won’t know the full results for years, but whatever they are, they will be expensive and dependent on interest rates staying low for a very long time.
Stocks rose sharply last week after a brief hiccup last Monday as investors worried about a default by a major Chinese real estate company. When traders accepted the belief that any default at Evergrande could be isolated and not spread across markets, it was back to the races for investors. The Fed at its FOMC …
September 24, 2021 – Monday’s near-1,000 point drop in the Dow Jones Industrial Average is already a distant memory as major averages erase all of those losses and then some. China’s response to Evergrande’s potential default soothed some concerns, while Chairman Powell threaded the needle this week after another Fed meeting ended with no action. From here inflation remains the extreme wild card.
What a difference a few days make. As we’ve noted over the years, in bull markets corrections are fast and furious. Granted, a 3-day recovery after the first 5% correction in almost a year is faster than normal, but the point remains. So long as global GDP trends are positive, earnings are expanding and massive …
September 22, 2021 – While the economy continues to be strong, the stock market looks increasingly worried. Chinese issues this week deflected concerns from inflation, supply chain disruptions, and labor shortages. The three dominating concerns have to be resolved if equity investors are going to return to a good mood. A less aggressive Fed policy is key. We will hear the Fed’s message this afternoon. We will see the market’s reaction soon thereafter.
Stocks tried to recover from Monday’s decline, the sharpest since May, but failed in the end. Monday’s drop was precipitated by the potential collapse of Evergrande, one of the two largest Chinese real estate developers. While that collapse still remains a probability, most investors have reached the conclusion that the damage will be contained. Nonetheless, …
September 20, 2021 – News from China of a bubbling debt crisis centered on Evergrande, a huge real estate developer, brings back haunting memories of our own real estate debt crisis of more than 15 years ago. While the magnitude of the problem could be similar, China is a state-run economy. The Chinese should be able to contain the problem. While the solution may be painful to Evergrande’s owners and lenders, right now it appears the pain can be contained. Markets will be focused on China’s response over the next several days and weeks.
Stocks slid again on Friday as various concerns still haunted investors. The pending timing of the Fed’s tapering of bond purchases, ongoing supply chain disruptions, continued spikes in the prices of key commodities, and the ongoing impact of the Delta variant all weighed on stock prices. Add in worries about the possibility of cascading defaults …
September 17, 2021 – Economic data and quadruple-witching Friday brought more volatility this week. Markets fluctuated while digesting robust retail sales reports while also worrying about future Fed reactions should this data continue. Today could bring even more whipsaws with futures and options expirations.
Yesterday, the Dow Jones opened up nearly 130 points, then dropped over 400 in the next hour and a half before closing down by a mere 63 points. Two main variables are at play, namely quadruple witching and an unexpected robust August retail sales report. Overnight futures activity showed 100 point swings from positive to …
September 15, 2021 – The Delta variant and ongoing supply chain disruptions continue to create havoc. For the first time since the pandemic began, analysts are starting to reduce earnings expectations. Meanwhile, it is full speed ahead in Washington trying to push a $3.5 trillion spending package through Congress. With only a little over $2 trillion in taxes on the table, the obvious result would be a further explosion in debt.
Despite a favorable inflation report, stocks fell again yesterday. The S&P 500 is now down 6 of the last 7 sessions. The NASDAQ Composite fell for the fifth day in a row. The last time it fell 6 consecutive sessions was in August 2019. Despite the recent weakness, the Dow and S&P 500 are still …
September 13, 2021 – House tax proposals do not seem as onerous as President Biden’s earlier request. Assuming the $3.5 trillion spending target is lowered before passage, further moderation of tax requests is likely. Separately, markets are looking ahead to next week’s FOMC meeting where the roadmap for bond purchase tapering will be the prime topic.
Stocks fell once again on Friday despite a strong start. In fact, losses accelerated into the close capping the worst week for the market since February. Over the weekend, the House disclosed, in a 4-page framework, proposals to raise taxes needed to fund its planned $3.5 trillion in spending. As promised, no one earning $400,000 …
September 10, 2021 – Interest rates continue to meander at historically low levels. Once in a generation stimulus measures, global GDP expansion, and inflation spikes should force yields higher. Debt ceiling limits have slowed Treasury issuance, but what happens next could be the catalyst to get back to something closer to “normal” in bond land. Implications are far and wide.
Market averages continue to waffle around recent highs with minor movement for most of this week. If this morning’s futures hold up, major averages will end the week flat. The 10-year Treasury yield is also in a holding pattern, closing near similar levels as two months ago at 1.30%. As we have been espousing, interest …
September 8, 2021 – Disruptions of supply chains and the impact of the Delta variant may be starting to give investors jitters. Over the next two weeks, headlines will be filled with details of the President’s huge spending and tax plans. Investors are unlikely to enjoy that either. The Fed is still buying bonds and the economy is still growing, but markets look ready to take a rest. Any decline should be viewed as a correction, not an end to the bull market.
Stocks fell broadly yesterday as some economists lowered growth projections for the rest of this year, and signs that inflation might be more persistent than transient, gripped investors. The good news is that the Delta variant seems to be near a peak. It is probably past peak in the South and Midwest, which were impacted …
September 1, 2021 – There is a lot of turmoil around the world today, but most has only modest economic impact. Even Ida’s devastation has had little impact on oil markets. We enter a quiet zone after Friday’s employment report. The key events to watch in September are the FOMC meeting culminating on the 22nd, and details of the Biden tax proposals due in a couple of weeks or less.
Stocks finished marginally lower in mixed trading yesterday. Bond rates were little changed. Yesterday’s front page showed a lot of turmoil. The aftereffect of a major hurricane was creating havoc from the Gulf coast to the Northeast. Controversy about the U.S. exit from Afghanistan continued to dominate the news headlines. A huge wildfire took dead …
August 30, 2021 – Fed Chairman Jerome Powell on Friday signaled a start of tapering before the end of the year. At the same time, he indicated that any hike in the Federal Funds rate is likely a long way off. It is a message markets wanted to hear. It is also predicated on his belief that current inflationary pressures are transient.
Stocks rose Friday after a dovish speech by Federal Reserve Chairman Jerome Powell. While his forecast that the Fed would begin to slow the pace of bond purchases before the end of this year was on target with consensus, his statement that the time to think about raising short-term rates was a long way off …
August 27, 2021 – A long-awaited speech by Chairman Powell is set to dominate market activity today. Interest rates rose this week in anticipation of a dovish tone. That, and more spending plans, put Modern Monetary Theory to the test.
The Jackson Hole Economic Policy Symposium is upon us, which started yesterday in Wyoming. This annual symposium has been one of the most anticipated Federal Reserve events each year since it started in 1978, as the Federal Reserve Bank of Kansas City hosts and plans a discussion of critical issues facing world economies. In 2020, …
August 25, 2021 – Stocks rose for the third straight session as signs appear the Delta variant may be near its peak, and interest rates remain stable in front of the Federal Reserve’s Jackson Hole meeting later this week. Moderation of both growth and inflation suggest that the tapering of bond purchases likely will be deferred until later this Fall.
Stocks have rallied this week as messaging from the Fed suggests no tapering decision before the November meeting. The Jackson Hole meeting, virtual this year, will be held at the end of this week and feature comments from Fed Chairman Jerome Powell. While he may discuss conditions that he looks for to institute tapering, he …
August 23, 2021 – Transitions bring volatility. We saw that last week. With several major Federal Reserve events over the next month and little in the way of news coming for several weeks, the seeds are set for more volatility until we get to third quarter earnings season.
Stocks rallied Friday cutting the losses for the week. While there were some favorable earnings reports from retailers, most of the news last week was negative. Afghanistan turmoil, slowing retail sales affected by increases in Covid-19 infections, persistent inflation, and a falling 10-year bond yield all combined to impact financial markets. As I have noted …
August 20, 2021 – A tapering timeline gets closer and closer by the day. Although Fed Funds will remain at zero and real rates (after backing out inflation) are quite negative, tapering is a form of tightening. This, among other concerns, hits stocks that are priced for perfection. Leadership is weakening after rotating from sector to sector since the pandemic began.
Ever since markets bottomed last March, leadership has been rotational. During the shutdown, stay-at-home beneficiaries helped mark the low. Massive stimulus measures helped the likes of eBay, Wayfair, Clorox, Peloton and other Covid lockdown winners propel higher. Mega-cap technology (FANGMAN) names pulled forward years of expected growth. Online sales boomed. Mobile work forces emerged. Cloud …
August 18, 2021 – A wave of bad news sent stocks lower yesterday, but the bad news is more temporary than enduring. The Delta variant impact will pass soon, as will the Afghanistan exit, but there are long-term implications of a weak exit from Afghanistan and economic growth is clearly slowing with or without the impact of the Covid-19 variant.
Stocks fell yesterday, although they finished well off their worst levels of the day. Despite a wave of bad news, there was little emotion to the selling. Bond rates fell as investors sought temporary shelter. Sometimes bad news comes in waves. 1. Delta variant surges are affecting behavior. Schools reopening are facing escalating infections among …
August 16, 2021 – Strong hints that the Fed will release its tapering plans at its September FOMC meeting are sending stocks lower this morning. But even when tapering starts, there is still close to $9 trillion of sovereign debt trading at negative interest rates, a clear headwind to anyone expecting rates to surge once the Fed slows its pace of buying. The sorry end to the Afghanistan saga won’t have a big economic impact, but could help to realign how we spend our defense dollars in the future.
Stocks inched higher on Friday, but futures have reversed course this morning and are now solidly in the red. The issue of most importance to equity investors is word from the Fed that FOMC members are coalescing around the September meeting as the time at which it will finally announce the details of its program …
August 13, 2021 – Summer doldrums are finally upon us with muted action in markets this week. This slow grind higher keeps major averages at record levels. Inflation updates, an actual bi-partisan agreement in DC and supply chain concerns highlight the week.
Finally, we get a relatively tame week with respect to the major averages. The S&P 500 traded within a 25-point band, but is still above last week’s record close. There has been more action in bond land as our 10-year Treasury attempts to put a bottom in at the 1.10% level. Yesterday’s spike in the …
August 11, 2021 – Since last summer, there have been two major rotations within the equity market, first from growth to value last fall, and then from value to growth in late spring of this year. We may now be at the cusp of a third rotation toward cyclicals as the peak of the Delta variant surge is near, and the Fed appears ready to start tapering bond purchases this fall.
Stocks finished higher yesterday, although the NASDAQ Composite fell. There was clear rotation from the growth names toward the cyclical stocks. Banks, energy companies and industrials were notable leaders. The 10-year Treasury continued its week-long rally. It has risen over 20 basis points since ADP issued what turned out to be a weak and inaccurate …
August 9, 2021 – A strong jobs report may pull forward the start of Fed tapering. It also accelerates the growth outlook. Tapering reduces the tailwind for asset prices, but it isn’t a headwind. The path forward gets a bit rockier, any predictions of a major correction aren’t warranted if the Fed stays sensitive to market and economic forces.
Stocks rose to new highs on Friday on the heels of a second consecutive robust employment report. In July, approximately 943,000 new jobs were created. In addition, previous monthly reports were revised upward. The unemployment rate fell to a post-pandemic low of 5.4%, approximately half of what it was before the pandemic began. However, the …
August 6, 2021 – Earnings reports caused more volatility over the past few weeks, but we’re back to or already making new highs in major averages. Profits have been great. Lower interest rates keep P/E’s elevated. How long can this low-rate period last?
New highs were reached, almost across the board, as the Nasdaq continues to break all-time records with the Dow Jones and S&P only a few points away after yesterday’s session. Most large-cap companies have reported earnings over the past few weeks with retailers the last to come. Nearly 90% of them have beaten estimates and …
August 4, 2021 – Stocks are setting records just as earnings are peaking, but there are clouds that we can’t entirely ignore. Shortages persist, and so does inflation. The disruptions in the supply chain are destined to have future impact. There will be big economic packages before Congress in the Fall that could result in trillions of new spending (and taxes), or as little as nothing. As these uncertainties unfold, the future direction of markets will be impacted.
Stocks resumed their march higher yesterday with the S&P 500 setting yet another all-time high. However, the record didn’t exactly create broad based excitement. In an earnings season where the average company is reporting year-over-year earnings gains of close to 90%, managements are expressing all kinds of caution that the future won’t repeat the past. …
August 2, 2021 – Last week’s earnings reports, and stock market reaction, suggests that much of the good second quarter news was already priced in. Going forward, either the news gets better or inflation expectations fall, as the Fed believes. Rising wages and rates suggest inflation isn’t disappearing so fast.
Stocks finished lower on Friday after an earnings disappointment from Amazon#. They finished lower for the week but managed to report modest gains for July. Amazon actually had good results that were generally in line with or slightly better than expectations, but forward guidance for retail revenues was less than hoped for. Many tech stocks …
July 30, 2021 – Name That Tune! The drumbeat of strong corporate earnings continues, but a few dissonant notes around the slowing pace of growth are being sounded. Anticipation of Fed moves has kept investors on edge, but for now the song remains the same.
There used to be a popular game show called Name That Tune. The best players could recognize a song in the least number of musical notes played. Actor Jamie Foxx has resurrected a similar idea recently with a show called Beat Shazam that he hosts with his daughter. (Shazam is a song identification application for …
July 28, 2021 – This earnings season has brought an explosion of record results. Last night Apple, Microsoft, Alphabet and Visa all beat estimates substantially on both the top and bottom lines. Muted overnight reaction suggests that the results were already baked in the cake. Temporary margin gains from better than expected revenue growth may not be sustainable.
Stocks fell yesterday despite continued strong earnings. The FOMC meeting concludes today but the market will most likely be dominated by investor reaction to overnight earnings reports from giants like Apple#, Alphabet#, Microsoft#, and Visa#. Overall, these companies beat revenue and earnings estimates substantially. Aftermarket reaction yesterday afternoon was muted, which was an indication that …
July 26, 2021 – After a rocky start last week, investors figured out that the likely economic consequences of the Delta variant won’t be significant nor long lasting. Hopefully, the virus won’t prove us wrong. The big item on the calendar this week is the FOMC meeting, which isn’t likely to be very controversial.
Stocks rose to new highs Friday culminating in a four-day rally after last Monday’s sharp losses related to rising Covid-19 related fears. Earnings season has been generally on target with extraordinary year-over-year gains compared to last year’s second quarter when much of the country was in lockdown. The 10-year Treasury yield remains low at about …
July 23, 2021 – A scary start to the week is ending at possible all-time highs in major averages. Strong earnings, especially from banks, are pointing to a better Q2 than many expected. That being said, narrow leadership points to some concern in the near term.
We have been expecting market volatility to pick up as our economy shifts gears coming out of the pandemic. Stay-at-home stocks were massive winners in 2020, while reopening companies took the baton for the early part of 2021. Now that we’re getting back to some sense of normalcy, it becomes a much more difficult market …
June 2021 Economic Update – “Is this a Bubble?”
Prices for many assets, including housing, stocks and commodities, continue to rise while inflation remains in check and fixed income rates remain at historic lows. In this video Chris Gildea, a Principal and Portfolio Manager with Tower Bridge Advisors, analyzes these factors to assess the current state of the economy.
June 18, 2021-Fed announcements usually take a few days before the market figures out what they really said. This time is no different as rates initially spiked but made a 180 degree turn yesterday. Winners and losers in the stock market also flip-flopped. What to do now?
Market participants, in both stocks and bonds, waited with bated breath for the conclusion to the 2-day Federal Reserve Meeting. After two straight months of worrisome inflationary data, lower than expected employment reports and a continued rise in consumer spending, many were frightened at the prospect of the Federal Reserve changing their stance and pulling …
May 2021 Economic Update – “A Look Ahead”
Interest rates, inflation and corporate earnings are key indicators of the health of the economy and the trajectory of the investment markets. In this video, Co-Chief Investment Officer Jim Vogt discusses the current state of the economy and the outlook for the months ahead.
May 21, 2021 – After a 3-week hiatus, buyers came rushing back to the markets. Technology stocks rebounded the most, coinciding with a slight reversal in interest rates. Taper talk is coming, and we examine what that means for markets from here.
After three straight days of losses in the overall market, bargain hunters stepped up to the plate yesterday with technology stocks leading the charge higher. The Nasdaq bounced back 1.8%, pointing towards hope of at least a short-term bottom after another mini-correction. The Dow closed up 0.5% and the Russell 2000 Small Cap Index gained …
April 2021 Economic Update – “Growth vs. Inflation Part 2”
Earnings growth is accelerating, interest rates remain unnaturally low, and there is way too much money seeking a home. But too much money means valuations get stretched and pockets of euphoria erupt. In this video, Tower Bridge Advisors Chief Investment officer Jim Meyer discusses the trajectory of the market, given the unique factors currently impacting …
April 2021 Economic Update – “Growth vs. Inflation Part 2”Read More
February 2021 Economic Update – “2021 – Growth vs. Inflation”
The market is projecting continued growth in corporate profits. Coupled with low interest rates, this will continue to inflate asset values, including stocks, until interest rates rise and inflation increases. In this video, Tower Bridge Advisors Chief Investment officer Jim Meyer discusses the possibility of rising rates and inflation stalling the growth in asset values. …
February 2021 Economic Update – “2021 – Growth vs. Inflation”Read More
February 22, 2021 – The biggest factor this morning is the ongoing rise in 10-year bond yields. Higher yields mean lower P/Es for stocks. They impact growth stocks more than value names. As the economy recovers in a rising rate environment, watch for better relative performance from value sectors and a sharp headwind to excessive speculative activity.
Last week was highlighted by a continued move higher for long-term bond yields, a modest correction among high flying tech stocks, and ongoing volatility in the speculative fringes of the stock market. The short squeeze targets like GameStop continued to move back down in the direction of fair value, while SPACs continued to raise billions …