Stocks continued higher amid great economic and corporate earnings news last week, while interest rates remained within a trading range. If you are an equity investor, it is hard to question the direction of earnings. They are headed higher, a lot higher. With all the stimulus from both the Fed and Congress flowing through the …
May 7, 2021 – Jobs, jobs, jobs. Another monthly update on unemployment today will lead to more discussion amongst bulls and bears. As the economy heats up, investors will place bets on when the Fed will need to pull back on the stimulus front. Higher interest rates lead to more declines in frothy areas.
Today’s most important news will be the monthly nonfarm payrolls report. With nearly half of America getting at least one vaccine shot and many others fully vaccinated, reopening efforts are ramping up. Although we are not going to repeat last June’s 4.8 million jobs added, April should show solid strength, resulting in the neighborhood of …
May 5, 2021 – Stocks sold off yesterday although they finished off their lows. The tech leaders during the pandemic suffered the most despite the fact that interest rates actually fell
This week, according to The Wall Street Journal, 41% of financial assets held by individuals were invested in equities. That is an all-time high. You can attribute it to the rise of small retail investors investing through new platforms like Robin Hood, but an increase of that scope is clearly more broad – based than …
May 3, 2021 – When stocks fail to go up on better than expected news, investors should ask themselves why. Stocks fell last week despite a surge in earnings. Perhaps most of the good news has already been discounted.
Stocks fell on Friday, capping off one of the weakest weeks for equities in a couple of months. This is earnings season. For the past two weeks, earnings reports for more than half the S&P 500 have been released. Results have been excellent. Actually, they have been more than excellent. Companies regularly have beaten expectations. …
April 30, 2021 – Another scoop of fiscal stimulus from President Biden. The Federal Reserve is keeping interest rates lower for longer. A strong quarterly earnings season so far. Price increases are coming due to raw material inflation and supply chain constraints.
Stocks started out positively yesterday, keying off of several very strong earnings reports from the likes of Facebook, Apple, Caterpillar, and Google, to name a few. As the day progressed, however, we saw a “sell the news” sentiment creep into the market. This week also heralded two key events: the end of a two-day FOMC …
April 28, 2021 – Besides another day of earnings reports, today also marks the conclusion of a two-day FOMC meeting. Tonight, President Biden will introduce yet another $1+ trillion spending package, this time wrapped in an envelope filled with requested tax increases on the wealthy. Any of these events have the potential to be market moving depending on how they unfold versus expectations.
Stocks continued to move higher, powered by strong earnings reports. There is a lot going on today. More earnings reports will continue. But the two big news events will be the conclusion of a two-day FOMC meeting this afternoon and a speech tonight that President Biden will make before Congress outlining yet another huge spending …
April 26, 2021 – Despite extraordinary earnings, stock prices paused last week amid some profit taking. Activity levels and volatility have dropped in recent weeks. A sense of sober complacency has taken over, but there are always concerns. The current earnings surge may last another couple of quarters, but it can’t continue indefinitely.
Stocks fell last week amid profit taking as earnings season got underway in earnest. But the selling was orderly. Flat bond trading didn’t give the bears any ammunition to extend the selling. This week and next will provide the bulk of the remaining earnings. So far, results have far exceeded expectations. However, that hasn’t translated …
April 23, 2021 – Economic data and first quarter earnings reports continue to improve and in impressive fashion. Although a lot of good news is already priced in after a massive rally, data is handily above estimates, creating an easy backdrop for the market to keep advancing. Bulls are firmly in charge but a correction could happen at any moment.
As many expected, earnings are coming in hot. Analysts and companies vastly underestimated the speed of this recovery which is leading to forward estimates being ramped up higher every day. We’ll have more data in the coming days, but it looks like we will have the largest number of companies beating their original guidance and …
April 21, 2021 – Stocks have retreated amid profit taking the last two days. With interest rates stable and earnings surging, any correction should be temporary. But when stocks give ground on great news, some pause and retrenchment might be happening. As long as the underlying fundamentals remain solid, the ultimate path of least resistance is higher.
After several weeks of gains, stocks took a breather the first two days of this week. While there were some notable gains on better-than-expected earnings, including IBM# yesterday, for the most part merely beating estimates by a penny or two has been setting stocks up for a pause. The old adage “buy on the rumor, …
April 19, 2021 – As earnings season gets underway in earnest this week, the economic strength is overpowering fears of rising inflation, sending equity prices higher. The expected return of the J&J vaccine to the market soon will only add to momentum.
Stocks continued to move higher last week, once again driven by good economic news. 10-year Treasury bond yields continued to trend lower, further adding to the gains. Last week started earnings season. While only a few companies reported, trends were obvious. The pace of recovery in recent weeks has escalated despite a renewed rise in …
April 16, 2021 – Economic data and earnings continue to impress, and are solidly ahead of optimistic projections. With markets already up double digits this year, even more positive news will be needed to keep the party going. It won’t be easy, or a straight line, but there is still room to run.
One of the most anticipated new listings of the year, Coinbase, brought some fireworks with it. Was the first day of trading a success? It depends on how you want to look at it. The stock closed up 31% from its indicated price, however it was also down 15% from the opening trade and 24% …
April 14, 2021 – Bulls remain in control as earnings surge and interest rates move sideways. Euphoria exists around the fringes but hasn’t overwhelmed the overall market, at least not yet. Today starts earnings season but the big event will be the IPO of Coinbase, the major trading platform for Bitcoin. How it performs will be a measure of the stock market’s current state of mind.
Markets powered ahead to new highs yesterday as earning season got underway. As I have noted often, the key to the earnings reports to be released over the next few weeks isn’t about the actual results. Rather it is a process of matching those numbers to expectations. Expectations are already priced into stocks. Changes in …
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
April 12, 2021 – Headline inflation data may look scary, but it isn’t indicative of a change in the core rate. Amid surging earnings, stock prices keep moving up. But inflationary pressures are increasing, suggesting the fairy tale ride for stocks won’t last forever.
Despite a sharp rise in producer prices for February, stocks rose on Friday while interest rates held steady. Investors have figured out that year-over-year comparisons can play tricks if one compares a booming today with a quarantined world a year ago. That will play out again tomorrow when February consumer prices are reported. As we …
April 9, 2021 – As the rise in long-term interest rates slows, leadership continues to revert back to high-quality growth stocks. FANG related companies will continue to take market share, increase profits and invest for the future. When compared to their cyclical brethren, who may have a growth shelf life, their attributes are starting to become attractive yet again.
The rotation we mentioned a few weeks ago is picking up steam again this week as FANGMAN and other growth stocks are slowly taking the leadership baton back from cyclicals and are beneficiaries of higher rates. Yesterday alone, the NASDAQ was up 1%, while the Dow Jones was basically flat. In February, interest rates were …
April 7, 2021 – Stocks are reacting to a surge in economic activity. A rising tide lifts all boats. The FANG stocks are seeing a resurgence while the Covid-19 recovery stocks continue to sail ahead. Pending Q1 earnings reports should reinforce the trend.
Stocks gave back a little ground yesterday after setting record highs on Monday. The 10-year Treasury yield also slipped a bit. The IMF raised the forecast for U.S. growth this year to 6.4%. It is likely to be significantly higher than that. A few Democrats have begun to question the wisdom of raising corporate taxes …
April 5, 2021 – A wonderful employment report on Friday will be a nice Easter present this morning. Surging employment without surging wages is the perfect combination for stock market investors.
Over the long Easter weekend, the one big piece of news was the very strong March employment report. Our economy added over 900,000 jobs as it recovers from the pandemic. The unemployment rate fell to 5.9%. There were some concerning numbers in the data. There are still over 8 million fewer Americans employed than were …
March 31, 2021 – Today we will hear from President Biden as he lays out his plan for infrastructure spending. He will also likely introduce new tax proposals. The speech should be considered a wish list, not law. The final package, assuming there is one, will likely look a lot different than today’s request.
Today ends the first quarter of 2021. For value equity investors, it was one of the best quarters in years. For tech investors, it was one of the worst. If you chose to play around the speculative fringes of the market, it started out with a bang and ended with a whimper. Meanwhile interest rates …
March 29, 2021 -Stocks rose to record highs on Friday amid economic optimism. While bond yields rose, they stayed below recent highs.
Over the weekend, there were two developments. The huge tanker stuck in the Suez Canal has been partially refloated, an encouraging sign that traffic can flow once again within a relatively short period of time. Supply chains, already stressed, can begin to recover, although they will take some time. Temporary shortages are likely. Where? It …
March 26, 2021 – A change is occurring underneath the surface this week. Rates are declining but the usual suspects are not responding. A potential return to normalcy, where current earnings and more consistency would be welcome news. That is not good news for SPAC’s or companies that rely upon super low interest rates and ten-year cash flow projections.
Volatility started to pick up a bit this week in both directions. However, volume statistics are declining due to a slowdown in retail activity. Our market may finally be changing. Value and growth stocks have been held hostage to moves in interest rates. Yields went up, tech went down and value stocks rose. This week …
March 24, 2021 – Yesterday’s decline reminds us that markets aren’t one directional. Much of the momentum that we saw several weeks ago appears to be dissipating amid no significant news. A mini-correction of sorts is possible before earnings season. But strong Q1 earnings should ultimately lift stocks higher.
Stocks fell yesterday with the declines accelerating as the afternoon wore on. Bond prices rose, sending yields down slightly. I have talked about times in the market when there isn’t much news. Right now, as the first quarter is coming to an end, is such a time. Treasury Secretary Janet Yellen and Fed Chair Jerome …
March 22, 2021 – While 10-year Treasury yields have been rising about 30 basis points per month YTD, that pace is not likely to continue. While some shortages lead to price increases, there are also excesses that will drag prices lower. The pandemic accelerated change. It takes some time for the economy to adjust completely.
Stocks fell on Friday. The decline reflected the Federal Reserve’s action to pull back an emergency program put in place a year ago to ensure bank liquidity. It isn’t needed any longer. But tell investors you are putting a lid back on the cookie jar and they react accordingly. With that said, Friday’s correction was …
March 19, 2021 – A spiking 10-Year Treasury continues to impact markets. Technology and high P/E stocks collapsed again yesterday. The rotation pushed many Industrial, Financial and Consumer Discretionary names to new highs. Dovish Federal Reserve commentary is a double-edged sword now as free money is leading investors to fear inflation.
A dovish update from the Federal Reserve did nothing to disappoint investors. Or did it? Initial reactions from Chairman Powell’s comments led to gains across the board late Wednesday afternoon, while yields fell from their highs and stocks staged a strong rebound. The committee’s median projection on the economy points towards 6.5% GDP in 2021, …
March 17, 2021 – The Fed today is likely to keep interest rates near zero and will pursue massive quantitative easing as far ahead as one can see. That is supportive of more investment. But too much investment is deflationary. If the Fed wants to instigate more inflation, oversupply, an unwanted consequence of negative real interest rates, isn’t the cure.
Happy St. Patrick’s Day in a Covid-19 world. No parade, but hopefully we will be seeing some green in the stock market. Actually, yesterday was a rather quiet session, and today, if futures are any indication, should be relatively calm as well. We are in that part of the quarter where there are few earnings …
March 15, 2021 – In the battle of rising earnings versus rising interest rates, rising earnings expectations came out a winner last week. With earnings season just a month away and stimulus checks starting to be distributed, there will be further upward pressure for both earnings and rates in the weeks ahead.
Stocks continued to rise last week. While leading NASDAQ names tried to get some footing after recent declines, the Dow names continued to surge ahead. In the race of value versus growth, value has been the steady winner since Labor Day, reversing a decade of relative underperformance. While futures point to relative calm this morning, …
March 12, 2021 – Last year at this time the world was grinding to a halt. With the pandemic a year old now, a great deal has been learned and a wide range of actions have been taken. The damage has been widespread but there are plenty of signs of hope and it shows in the economic markets. Here is a look at where we stand one year after the start of the pandemic.
The World Health Organization officially declared a pandemic one year ago. This time last year the world was beginning to grind to a halt as new temporary shutdowns were being announced each day. Many of us left our offices on Friday afternoon thinking we would quarantine for a couple of weeks before returning to the …
March 10, 2021 – The speculative end of the market staged a big rally yesterday after several down weeks. Today we will see if there is any follow-through. Although the speculative fringes have begun to correct, they can hardly be characterized as cheap.
Stocks staged a sharp rally led by NASDAQ shares early yesterday. While the Dow gave back much of its gains as the session progressed, the battered tech sector and other speculative arenas, such as the SPACs, held onto much of their gains. In market corrections, amid volatility, you often see sharp intraday or one-day swings …
March 8, 2021 – Friday’s reversal may be a temporary end to the NASDAQ selloff if there is strong follow-through today. But if rates continue to rise, the speculative end of the market will continue to face headwinds.
Stocks went for a wild ride Friday. At the start, they fell after interest rates edged higher following a stronger than expected employment report. But a good jobs number is almost never a reason to sell. More jobs is always a good economic sign. Investors soon recognized this. Stocks turned around quickly and finished higher. …
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
March 5, 2021 – Rising rates brought more selling in growth stocks yet again. Markets were hoping for some commentary out of the Fed in response to the rapid rise in yields. They were not satisfied. Overall, the rotation out of technology and into traditionally economically sensitive names is getting extended. Valuations matter on both ends.
Fed Chairman Powell’s last speaking event before the FOMC meets on March 16th certainly impacted markets yesterday. Most major averages were positive before he spoke, then began sliding with the S&P closing down 1.3%. The Nasdaq again led the negative tape, declining 2.1%, and has now dropped 10% from all-time highs set a few weeks …
March 3, 2021 – Markets gave back a little ground yesterday after Monday’s sharp rally. News this week corroborates the theme of accelerating growth and not much inflation, at least not yet.
Stocks gave back some of Monday’s big gains yesterday in orderly profit taking. While the past several sessions have been volatile with big swings in each direction, the net change has been nominal. 10-year Treasury yields spiked to over 1.6% Thursday morning, but have settled back to just over 1.4% as of yesterday’s close. We …
March 1, 2021 – Last week interest rates clashed with rising growth rates. Interest rates won as the spike took command. But the bond market began to settle down on Friday and more modest rate moves appear likely in the near term. Meanwhile, strong growth and additional stimulus will provide a tailwind. Rates and growth will clash again throughout the year, leading to more volatility.
Stocks stumbled last week as long-term interest rates spiked. While the Fed remains committed to keeping the Fed Funds rate anchored near zero, investors sold bonds as economic data suggested more rapid inflation than previously thought. The impact of the most recent round of $600 stimulus checks showed up in the January spending numbers. It …
February 26, 2021 – Markets suffered across the board yesterday as yields spiked around the globe. Inflation fears are taking hold for now. Higher rates lead to lower P/E’s. Your favorite growth stocks are finally getting cheaper. Picking winners from here isn’t as easy as it was last summer.
Stocks and bonds took one on the chin again yesterday with losses across the board. As we’re becoming accustomed to seeing, last year’s winners are leading on the downside, while recovery plays hold up on a relative basis. High P/E stocks keep taking their cue from interest rates. At one point during Thursday’s trading session, …
February 24, 2021 – Rising rates have led to market rotation. There are few signs this is ending anytime soon. In fact, as the pace of rate increases rises, the rotation is accelerating. Momentum investors got spanked yesterday morning. Relief came when Fed Chair Powell said rates will stay low for longer. But they won’t stay low forever. Valuations, in the end, always matter.
Stocks went on a roller coaster ride yesterday, first falling sharply in reaction to rising bond yields, but reversing course mid-session after Fed Chair Jerome Powell told Congress that the Fed would keep rates low and monetary policy accommodative for a very long time to come. At the start of trading in September, Amazon# and …
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 …
February 17, 2021 – The steady rise in long rates is applying some pressure to valuation. But speculative fever, in a world where monetary and fiscal policy remain highly stimulative, continues to overwhelm corners of the market. Hence, stocks take a breather while Bitcoin continues to fly.
Stocks were mixed yesterday as good economic news was overshadowed by the ongoing steady rise in long-term bond yields. As I have noted many times, 2021 is going to be a year where the tailwinds of rising earnings confront the headwinds of increasing interest rates. Yesterday, on the surface, was a stalemate with the Dow …
February 12, 2021 – Another slow day for the major averages with minimal change. However, under the surface there continues to be some wild action, this time in the cannabis area. Speculation is here but contained so far to a few select areas.
Stocks consolidated for the 3rd day in a row with fractional moves in the major averages. Ten years ago, a 300+ point Dow Jones Industrial Average daily trading range would be a 3% move. After this massive bull run, it is less than a 1% intraday move now. Long bull markets will do that! By …
December 2020 Economic Update – “2021 – Growth vs. Inflation”
Heading into 2021, the big questions to be answered are whether companies can continue to grow revenues and earnings, and if the Fed can keep inflation in check and interest rates low. In this video, Tower Bridge Advisors Chief Investment Officer Jim Meyer discusses the path ahead in 2021 and the impact of growth and …
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November 2020 Economic Update: A New President and a Vaccine
With the election behind us, there is a bit more certainty about what a new administration would mean for the economy. In this video, Tower Bridge Advisors Chief Investment Officer Jim Meyer examines the potential impact of a Biden Presidency, combined with the upswing in COVID cases that threatens to negatively impact the economy again.
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October 2020 Economic Update: COVID-19, The Election and a Look Ahead
COVID 19 continues to impact our lives, and the upcoming election has created a lot of uncertainty about what lies ahead for the economy. In this video, Jim Meyer, Chief Investment Officer of Tower Bridge Advisors, examines the ongoing economic impact of the COVID virus, and looks at the potential outcomes of the Presidential election …
October 2020 Economic Update: COVID-19, The Election and a Look AheadRead More