Last week’s big economic event, the FOMC meeting, turned out to be fairly a non-event. The Fed kept interest rates steady as expected while raising its inflation forecast and lowering its outlook for economic growth. There was only a slight downward movement in the 10-year Treasury yield while stocks nudged up slightly. To me, however, …
March 20, 2025 – Fed Chairman Powell’s reassuring statements about “transitory” inflation and the Fed’s decision to slow balance sheet reduction triggered a significant market rally, despite downward revisions to 2025 growth and earnings forecasts. The current economic landscape is heavily influenced by political policy changes, creating heightened uncertainty and potential volatility for investors. While a lower 10-year Treasury yield is a potential silver lining, gold’s recent surge to all-time highs raises questions about its relative valuation compared to other assets and its historical correlation with U.S. debt growth.
Transitory—not again! Stocks surged yesterday, with the S&P 500 experiencing its largest gain since July, while bond yields fell sharply following the Fed’s March meeting, press release, and news conference. Jerome Powell’s measured response to the potential economic impacts of Donald Trump’s trade war, specifically citing the potential for “transitory” inflation from tariffs, calmed investor …
March 17, 2025 – Friday’s rally was a relief but, unless there is significant follow through today, it should be viewed simply as a relief rally. Since the start of the 21st century there have been three shock and awe moments that have frozen consumers and businesses in place leading to economic contractions of various lengths, 9/11, the Great Recession, and Covid-19. We may be at a fourth as both consumers and businesses face so many rapid fire events that they freeze in place. For equities to move higher, confidence needs to be restored and investors need to see a pathway to a better life promised by less government, increased productivity and reduced deficits.
The 21st century is almost a quarter old. Over that span there have been three distinct shock and awe moments for investors, 9/11, the collapse of Lehman Brothers, and the onset of Covid-19. The stock market reacted in a sharply negative fashion each time. Away from Wall Street, Americans seemed to freeze in place. After …
March 13, 2025 – The NCAA college basketball tournament known as March Madness kicks off this coming weekend. Part of the allure for fans is the unpredictability of the NCAA tournament. Cinderella stories, surprise upsets and general chaos among millions of March Madness brackets nationwide are the norm. As in the stock market, unpredictability and uncertainty are part of the investing process, and last year’s winners may not be this year’s victors.
March Madness Last year, the University of Connecticut (UConn) Huskies repeated as national men’s college basketball champions, becoming just the eighth program and the ninth team overall to achieve this feat. The first men’s college basketball tournament of what eventually became known as March Madness was held in 1939. The first NCAA women’s basketball tournament …
March 10, 2025 – At least on Wall Street, the Trump honeymoon is over. While all the shock and awe of the daily pronouncements from Washington makes some nervous, investors focus on the data. Virtually every data point of the last few weeks points to a slowing economy while inflation expectations remain elevated. That’s a bad combination. Trump’s game plan of lower taxes, higher tariffs, and a smaller government may evolve but the impact of all the steps taken or proposed will take time. Traders aren’t patient. They shoot first and ask questions later. Reality is that the impact of tariffs will be felt quickly while steps to streamline the government take longer. Until a fuller picture develops, markets are likely to stay volatile.
The Trump honeymoon appears to be over, at least on Wall Street. Over the past several weeks since inauguration, we have seen reports of mass firings, the closings of several agencies, and steps identified to reduce regulations. The honeymoon was built on a foundation of lower taxes, less regulation, and a small Federal government. The …
March 6, 2025 – Escalating trade tensions, particularly through tariffs, are injecting significant uncertainty into the market, driving stock market declines and raising concerns about stagflation. Retailers are already experiencing increased costs and potential profit reductions, while broader economic indicators, like consumer spending and GDP growth forecasts, signal potential challenges. The Federal Reserve faces a complex dilemma, attempting to balance inflation concerns with economic growth amid these trade-induced pressures.
Turbulence ahead The market is grappling with heightened uncertainty as trade tensions escalate. With the S&P 500 trading at 22x projected earnings, the stock market was priced for perfection prior to the past two-week sell-off, which sliced 5% from the all-time high reached in February. The sell-off has also reversed almost all the post-election gains, …
March 3, 2025 – Markets seemed to ignore the scene at the White House on Friday. As always, they focused on the outlook for earnings and interest rates. Zelensky’s unceremonious exit from the White House didn’t change any economic forecasts. For investors, Friday afternoon’s sharp rally was better theatre than the antics in Washington anyway. President Trump will have another opportunity to stir the pot tomorrow night when he delivers the State of the Union address. Tariffs will be on everyone’s mind this week. What actually gets implemented and what doesn’t will get market focus. What we have learned over the past six weeks is to react to actual actions, not to promises of future events. It will be an interesting week.
Stocks rose sharply Friday afternoon soon after Ukraine President Zelensky was escorted out of the White House. The two were unrelated. The dustup in the Oval Office made for great theatre and gave fodder for all the Sunday talk shows but was unlikely to alter the ultimate course for settlement of Ukraine’s conflict with Russia. …
February 27, 2025 – This week we received a window into the housing market and home improvement retailers. Existing home sales rose 2% in January from the prior year and new home sales ticked up 1%. These are not robust numbers, but reside against a backdrop of elevated mortgage rates and strained housing affordability. While prices are not through the roof, they did rise about 4% for new homes and 5% for existing homes versus the prior year, and have risen for 19 consecutive months. This may make for a challenging year for home buyers until mortgage rates begin to retreat.
Something old, something new Existing-home sales slid 4.9% in January from December to a seasonally adjusted annual rate of 4.08 million homes. However, existing home sales did rise 2% from last January, the fourth straight monthly year-over-year increase. Sales of existing homes actually fell to the lowest level in 30 years in 2024 due to …
February 24, 2025 – Weaker economic data and ongoing tumult in Washington sent stocks reeling on Friday. But the data suggests modest slowing within the economy. While Trump’s actions dominate media focus, the actual impact to date on the economy is relatively moderate. Still, looking forward, the chaos suggests a lot of variability to future outcomes. Hopefully, it will moderate in the months ahead. Expect rising volatility until outcomes become more predictable.
While Friday was a nasty ending to the week, we have seen lots of one-day moves, up and down, that failed to extend into a trend. With that said, however, there are increasing causes for concern. Existing home sales are on track for their worst year in two decades. Other economic sectors impacted by high …
February 20, 2025 – S&P 500 earnings are showing strong growth, with a notable 15% Y/Y average increase, driving market gains, though the performance of major tech stocks is diverging. Conversely, the housing sector is facing significant headwinds due to rising interest rates and costs, indicating potential broader economic vulnerabilities. Future market direction hinges heavily on interest rate trends and the impact of evolving economic policies, which will determine the sustainability of current market valuations.
Earnings season Approximately 85% of S&P 500 companies have reported their quarterly earnings. On average, earnings are up 15% while revenue has increased roughly 4% Y/Y. Net profit margins have averaged 13%, up from 12% in the year-ago period. In aggregate, investors have reacted favorably to the published results, driving the S&P 500 index higher …
February 17, 2025 – Tidal waves of technological, political and economic change are all taking place simultaneously. Yet markets are remarkably calm. Little data is yet available that can measure the impact of steps taken to invoke political and economic change. Business leaders are more uncertain than apprehensive, in part because the messaging has been so inconsistent. We will learn a lot more in the months ahead. So far, markets are willing to give some slack. As data rolls in over the next few months, we will see how that changes.
The one constant in our world is change. Successful investing means being able to understand and correctly interpret the changes happening around us. Fortunately for equity investors, change driven by rising population and productivity improvement driven by advancing technologies provides a persistent tailwind. Change doesn’t happen at a constant rate. Nor does it occur in …
February 13, 2025 – The January CPI report showed a surprising acceleration of inflation to 3%, exceeding forecasts and raising concerns about the Fed’s ability to control rising prices, particularly in core inflation and food costs. This inflationary pressure, combined with the potential impact of proposed tariffs, challenges the Fed’s current stance and increases the likelihood of continued rate holds or even rate hikes. Furthermore, the unusual rise in 10-year Treasury yields despite recent Fed rate cuts signals investor concerns about long-term inflation and fiscal responsibility, posing risks to economic growth and asset valuations.
CPI report The January Consumer Price Index (CPI) report delivered a surprise jolt, accelerating to 3% year-over-year, exceeding economists’ forecasts and raising concerns about the Federal Reserve’s fight against inflation. This uptick, from 2.9% in December, was driven by a surge in food costs, particularly eggs, which saw a dramatic price increase. While seasonal adjustments …
February 10, 2025 – You may not be a fan of the tactics Trump and Musk are using but it is imperative that steps be taken to reduce our deficit from 7% of GDP toward a more sustainable 3%. In less chaotic fashion, Truman and FDR did similar in the 1940s and Clinton/Gore turned deficit to surplus in the 1990s. The bond market will be the arbiter of DOGE’s success. So far, it is hopeful.
The shock and awe of the first few Trump weeks continues. Market volatility has increased a bit without much direction. Long-term bond yields have dipped slightly as investors are hopeful that DOGE efforts to reduced Federal spending will help to narrow deficits and relieve upward pressure on rates. As for actual data, what we have …
February 6, 2025 – Six more weeks of winter are apparently in store as Groundhog Punxsutawney Phil saw his shadow this past week. While the stock market was volatile in January, the S&P500 actually ended up 2.7% for the month. All sectors except Technology posted gains. That is not a bad start to the year, and would be welcome if repeated. As in the movie Groundhog Day, however, rarely does performance repeat in exactly the same manner month to month or year to year.
Groundhog Day Groundhog Punxsutawney Phil saw his shadow this past week, which means six more weeks of winter are in store. Phil’s track record is less than a coin-flip longer term, although cold weather and snow are indeed forecast in the Northeastern U.S. over the next week, so we will defer to Phil’s prognostications. In …
February 3, 2025 – Two weeks into Trump’s second term, events are evolving at rapid speed with the usual sprinkling of chaos. From an economic point of view, efforts to rein in government spending are helpful. The same might not be the case for tariffs. Aside from the happenings in Washington, Wall Street focused on a new Chinese company’s ability to develop AI models with less than the most sophisticated chips. While Wall Street was jolted by the initial news last Monday, the panic seemed to ease as more details emerged.
Warning: Last week was an unusually chaotic one, first related to a flurry of pronouncements from the White House and, second, from news that DeepSeek, a Chinese firm appeared to build AI models that rivaled the performance of the American leaders at a fraction of the cost. There’s a lot to cover. Thus, this note …
January 30, 2025 – Did ChatGPT just lose its job to AI? This week, a little-know Chinese artificial intelligence company, DeepSeek, sent ripples through technology and energy related stocks. DeepSeek stated that it has created a ChatGPT-like app at a fraction of the cost and energy consumption of current offerings. It quickly became the most downloaded free app in the U.S. The Nasdaq fell more than 3% on the news and Nvidia# promptly shed 17% on Monday wiping out nearly $600 billion in value. However, consumer-related stocks, along with healthcare and financials stocks, notched solid gains. The Fed also concluded its two-day policy making meeting yesterday and noted no changes to interest rates.
Seeking Deeper Meaning in AI DeepSeek was the big story in markets this week with its low-cost, open-source AI model, sparking discussion about the extent of U.S. technology spending. It also raised broader questions about the U.S. lead in the global AI race. Microsoft# and OpenAI are apparently investigating whether DeepSeek improperly obtained OpenAI data …
January 27, 2025 – A flurry of Executive Orders punctuated Donald Trump’s first week in office. From an economic standpoint, the barrage did little to moderate expectations. The bond market barely budged and equity markets reacted more to earnings reports than pronouncements from Washington.
It was quite a first week for the Trump Administration. Close to 200 Executive Orders were signed impacting everything from immigration, deportation, and diversity to birthright and Federal employment. Missing so far are any specifics regarding tariffs. Those should be expected over the next two weeks. In general, Wall Street was happy as were the …
January 23, 2025 – The S&P 500 is hitting all-time highs, driven by investor optimism and a business-friendly political climate. However, uncertainties remain, including high asset valuations, potential economic slowdown, and the long-term ROI of massive AI investments. While AI is driving significant innovation and market growth, a balanced approach to investing is recommended, considering macroeconomic factors like budget deficits and rising interest rates, and potential shifts in sector leadership.
Animal spirits are driving asset prices to record levels The S&P 500 hit an intraday all-time high yesterday of just over 6,100. It appears that investors and business owners are enthusiastic about the economic prospects despite all the unknowns. The rally in stocks and bonds, which lowered the 10-year U.S. Treasury yield to 4.6%, may …
January 21, 2025 – It was an eventful day yesterday but nothing likely to change investor perceptions, at least not immediately. Perhaps as the details from dozens of Executive Orders over the coming days become evident, that might change. But for now, steady as it goes.
Today is the first full day of the second Trump administration. Judging from early futures pricing overnight, investors either liked what they saw or were relieved that Executive Orders weren’t about to disrupt a growing economy. That, however, was later compromised by threats of tariffs against Mexico and Canada. Rather than get too precise on …
January 16, 2025 – Alexander Hamilton, the first Treasury Secretary of the United States, was born this week in 1755 in Nevis, British West Indies. Lin-Manuel Miranda, who wrote the musical “Hamilton,” also celebrates his birthday this week. While Hamilton was a proponent of a strong Federal Government, the U.S. Government now accounts for a large and growing share of GDP, well above historical levels. On the economic front, the December CPI inflation report was slightly better than expected, and bank earnings this week have been coming in above expectations. Markets reacted favorably yesterday with the 10-year yield dropping sharply and the S&P500 gaining 1.8%, the small company Russell 2000 gaining 2% and the Nasdaq jumping 2.5%.
What’d I Miss? This week we heard from several major banks which posted decent fourth quarter earnings and favorable, though cautious, outlooks for 2025. JP Morgan#, Citigroup#, Goldman Sachs#, and Wells Fargo# all reported Q4 2024 earnings above expectations. This was led mostly by higher trading volume and investment banking fees. In fact, investment banking …
January 13, 2025 – The message of the market’s reaction to Friday’s solid employment report is that a strong economy has little slack to absorb further inflationary pressures. It’s a prelude to actions expected from the Trump administration which takes office next week. The market is finally saying that debt service costs and deficits matter. Trump has long viewed the financial markets as the arbiter of the success of his economic agenda. Hopefully, that will temper some of the early hype and lead to a more sober reality that can keep markets moving ahead.
Friday’s solid employment report, a bit above Street expectations, sent stocks and bonds into a tailspin. Stock prices fell about 1.5% while 10-year Treasury yields spiked to over 4.75%. While an ongoing robust increase in employment could be inflationary, there are no convincing signs that is happening yet. Maybe we will learn more when CPI …
January 9, 2025 – Rising bond yields indicate growing concerns over reflation, despite recent Fed rate cuts, as persistent inflation and potential policy changes fuel uncertainty. The bond market’s reaction underscores the need for investors to temper expectations for future stock market gains in the face of already high valuations.
What are rising bond yields telling us? The bond market is sending a clear signal: despite the Federal Reserve’s recent rate cuts, the risk of reflation is rising. This means that inflation, which had been cooling, may be heating up again. This is reflected in the yields on US Treasury bonds, which have been climbing …
January 6, 2025 – Wall Street enters 2025 with continued optimism. Keys to watch are the size of pending deficits, the ability of the Trump administration in getting a significant part of his legislative agenda passed early, and the path of 10-year Treasury yields. With that said, earnings will continue to grow, the impact of AI investment can only get bigger, and fears of political chaos may be overstated. Markets aren’t cheap but without a recession in sight, investor fears should be mitigated.
A belated Happy New Year to all! Wall Street often talks about a January barometer. What happens in January is a prelude to what happens over the next twelve months. While there is a statistical bias that supports that idea, and a certain logic as well, its validity depends on how accurate January 1 predictions …
January 2, 2025 – According to the Chinese Lunar Calendar, 2025 ushers in the “Year of the Wood Snake.” About 2 billion people around the world celebrate Chinese New Year, which focuses on renewal and the coming Spring season. While 2024 was the dynamic Year of the Dragon, and equity markets cooperated with strong gains, the Year of the Snake may be scaled back in terms of market returns. While worldwide economic growth is expected to continue and interest rates should maintain a downward bias driven by central bank actions, market valuations remain above historic norms. As the New Year begins, futures are indicated higher this morning.
The Year of the Wood Snake The Chinese Lunar Calendar features a 12-year cycle of animals. Each year also incorporates one of five elements: wood, fire, Earth, metal, or water, creating a 60-year cycle. So, while the animal repeats every 12 years, the animal and the element together repeat only every 60 years. For example, …
December 30, 2024 – As the new year begins, all eyes will be on the evolution of Trump’s economic agenda. How different will reality be from the hyperbole of the campaign? While early Executive Order proclamations will give some hint, longer term consequences will depend on factors outside of White House direct control. Can productivity gains be sustained? What will the 2025 tax package look like? Can inflation continue to decline toward the Fed’s 2% target? Ultimately, the 10-year yield a year from now will be the arbiter of Trump’s first year performance.
Despite a down day Friday, on light volume, 2024 was a very solid year for equities. But it hasn’t been quite as solid as the performance of the S&P 500 might suggest. The leading average is up over 25% with two trading days remaining, the second 20%+ year in a row. But the equal weighted …
December 27, 2024 – The S&P 500 defied expectations with a 27% gain in 2024, driven by earnings growth, AI optimism, and abundant capital in the market. Despite this strong performance, investors should maintain balance in their portfolios as valuations are near historical peaks, raising concerns about a potential market correction and the impact of rising long-term interest rates.
A remarkable year for stocks It looks like we are going to close out 2024 with another double-digit gain for stocks. This makes two consecutive years. Out of curiosity, I reviewed the early 2024 predictions of the 20 biggest research publishers on Wall Street. The results were surprising. This year’s 27% YTD gain for the …
December 19, 2024 – The Federal Reserve lowered its key interest rate by a quarter percentage point yesterday, but signaled that only two more rate cuts may be coming in 2025 instead of the four cuts widely expected. Fed Chairman Powell said it is like “driving on a foggy night or walking into a dark room full of furniture: you slow down, you go less quickly.” That hawkish and more uncertain tone was not well received by markets. While the stock market is typically volatile on Fed decision days, the 10-year yield backed up to 4.5% and stocks dropped about 3% following the Fed’s remarks. Markets have been strongly positive this year, but a pause on this news provides a chance to focus on better valuations. Stock market futures are indicated positively this morning.
Fed Meeting – Driving on a Foggy Night The Federal Reserve lowered its key interest rate by a quarter percentage point yesterday, the third consecutive reduction. This brings the total reduction to 1% since the Fed began cutting rates in September. The rate cut to a target range of 4.25%-4.5% is back to the level …
August 12, 2024 – Last week’s volatility exposes the heightened level of uncertainty in today’s financial markets. This week, the largest retailers report earnings and may offer some clarity into consumer spending trends. But uncertainty is likely to remain elevated until we get closer to the November elections.
Roughly 75% of the time, stocks go up. They go up because earnings rise. They don’t go up in a straight line for obvious reasons. Interest rates fluctuate. Central bank actions are impactful. With that said there are periodic bear markets. While occasionally they represent a correction of a severely overvalued market, most bear markets …
December 8, 2023 – Markets rallied yesterday but remained in tepid anticipation of today’s employment report and next week’s CPI report. The November employment report came in close to expectations with gains of 199,000. Not sure from the early read how much those numbers were enhanced by the end of the auto and Hollywood strikes. Markets reacted negatively to the report as month-over-month wages increased slightly more than anticipated. The unemployment rate fell to 3.7% as the labor participation rate rose to a pre-pandemic high.
Stocks rallied yesterday while bonds stayed mostly level in front of next week’s Federal Reserve meeting. For a change, the leaders were the big tech stocks, noticeable laggards over the last four weeks during a period where investors moved toward equities perceived as being cheaper than the high multiple Magnificent Seven. The pop in the …
September 18, 2023 – Markets are directionless, torn between better economic activity and an increase in storm clouds from labor unrest to China. What is crucial is the future trend for interest rates. Investors will parse this week’s FOMC meeting for clues, but probably won’t get a much clearer picture for their efforts.
Stocks have been trading sideways in a directionless pattern for the past month. On the plus side, earnings have exceeded forecasts and the economy continues to grow at a rate faster than economists had predicted. But that has been countered by a series of concerns: 1. Interest rates, particularly at the long end of the …
June 12, 2023- : The S&P 500 traded into Bull market territory last week on the back of a broad market rally. The broadening of the rally is key to continued optimism in the market. However, the possibility of a recession still looms, despite the rally.
Are we in a new Bull market? Last week the S&P 500 rallied to its highest level this year which put the index 20% above its October lows. On a year-to-date basis the index is up 12% led by mega-cap technology stocks. However, as we mentioned many times before, not all stocks and sectors have …
May 12, 2023 – While mega caps keep gaining steam, the average stock is now down for the year. Eight of the last nine trading sessions have been negative for the Dow Jones Industrial Average. The Fed may be done raising rates, but an all-clear signal is far off in the distance. Transitions are hard!
April’s consumer inflation report was well received, with a continuation of a gradual slowing for inflation. Ditto for the Producer Price Index yesterday morning. Our infamous “Fed whisperer”, Nick Timiraos, helped fuel a minor rally in growth stocks when his latest Wall Street Journal missive noted “Federal Reserve officials were already leaning toward taking a …
April 26, 2023 – Markets are being buffeted by crosscurrents. The banking crisis has come back into focus amid turmoil at First Republic. Earnings reports move individual stocks both ways. Bond market strength portends a weakening economy and slower inflation. Yet pockets of economic strength endure, mostly in the travel and leisure sectors. The net for equity investors is a standoff, one likely to endure for some time amid persistent rotation of leadership.
It was a wild day yesterday with several strong moves relative to earnings, a wild ride for First Republic Bank, the regional bank most people see as the stress point within the banking system, and a sharp rally in bonds. The major averages were all lower. After the close, solid earnings from Microsoft# reduced some …
October 26, 2022- Stocks have now risen sharply for three straight sessions as both the value of the dollar and the yield on 10-year Treasuries retreated. But disappointing earnings last night from a trio of tech names may spoil the party this morning. Or at least give it some reason to pause. The poor numbers from tech land remind us to look forward, not back. The great opportunities that technology created over the last quarter century are now maturing. The good news is that new opportunities will appear. They always do in a capitalistic entrepreneurial society.
Stocks rose sharply for the third straight session. It’s earnings season. Through yesterday, the results were basically in line with lowered expectations, but perhaps the biggest driver of higher stock prices was the reversals over the past several days in the value of the dollar and the yield on 10-year Treasuries. Within a bear market …
October 12, 2022- As we enter earnings season, attention will shift from interest rate fears to corporate performance. Pepsi kicked it off this morning with good results, hopefully an encouraging sign. As always, the story for the season will revolve around expectations versus reality. In July, reality beat expectations sparking the best rally of the year. The key will be the relative performance of the large tech names, notable laggards coming into earning season.
Stocks ended mixed yesterday in a very volatile session where the Dow Industrial Average moved back and forth by more than 1000 points. News was rather sparse. A brief afternoon plunge occurred after the Bank of England signaled it would halt its planned intervention to support the pound Friday as originally planned. Stock, bond, and …
October 5, 2022 – Two huge up days in a row put bulls back in charge. Is this the market bottom? Only time will tell. It will largely depend on the severity of the pending economic downturn. But retreating interest rates, and weaking labor market statistics suggest the end to the Fed’s cycle of higher interest rates is nearing an end. That is at least one key ingredient to the end of a market downturn.
For those of you who have read my letters over the years, you should know about my 2-day rule. It states that two consecutive days of outsized moves in the opposite direction of recent market trends marks a reversal. Certainly, the gains Monday and yesterday qualify as strong up sessions in sharp contrast to the …
August 26, 2022 – Markets continued to consolidate the ~20% spike off June’s low with minor rebounds the past few days. In anticipation of Chairman Powell’s long-awaited speech at Jackson Hole today, stocks are priced for a somewhat hawkish update. Anything that deviates from that position could release energy in either direction. Other news items require some attention as well that could affect GDP going forward.
Stocks staged a late day rally to help bring all 11 S&P sectors to a positive close yesterday. Gains were led by Basic Materials, Technology, and Communication stocks. The risk-on tone had defensive sectors lag the overall market with Utilities, Consumer Staples and Health Care stocks fractionally higher. Rallies continue to follow the Treasury market. …
June 13, 2022 – Friday’s report on Consumer Prices told us all that the fight against inflation will be harder than previously anticipated. This week, the Fed will increase interest rates again. It may suggest the ultimate Fed Funds rate this cycle will need to be higher than previously thought. None of this is good news for equity investors.
Friday’s CPI report didn’t make investors happy. Led by sharply higher energy expenses, and the fastest growing shelter costs in decades, the message loud and clear was that inflation shows no signs yet of abating. Recognizing that government steps to curb inflation only began in March, the numbers we are seeing now weren’t impacted one …
May 25, 2022 – While the Dow tries to find its footing, the NASDAQ continues in steep decline as one former darling after another faces reality. It’s an ugly picture and it isn’t over for the speculative end of the market. for those looking for safer havens, more dependent on predictable cash flow growth, the picture is far better. The contrast between the two worlds was most evident yesterday.
Stocks fell once again although a sharp afternoon rally reduced the damage. Still, the NASDAQ fell another 2.4% after a prominent social media company lowered earnings guidance just a month after it previously offered a somber outlook. As a group, social media and related companies depend on advertising for revenue. With the economy slowing and …
May 2, 2022- When leadership gets taken out to the woodshed, the whole market dies. That is what happened last week. While some escaped (e.g., Microsoft) the loud and clear message is that the big boys of the S&P 500 are now at or near economic maturity. That isn’t a message a market already worried about interest rates and recession wanted to hear.
Stocks sank on Friday to close out one of the most miserable months for equities in many years. The NASDAQ took it on the chin the worst after Amazon# reported a weaker than expected outlook for its retail business when it reported results Thursday night. On Friday, Amazon# suffered its worst percentage loss since the …
March 25, 2022 – Investors continue to grapple with inflation, war news, Fed tightening and valuations. Historians will point to stocks not topping until earnings peak, inversion occurs and/or better alternatives. We got some answers over the past few weeks but cloudiness prevails, for now.
A few weeks ago, there were almost no positives to think of. Most investment advisors were bearish. Cash was sitting on the sidelines earning nothing. Short sellers were pressed. Russian invasion continued to look worse by the hour. Oil, wheat, natural gas and many other commodities spiked higher even after doubling since Covid. The most …
March 21, 2022- The Fed did what it said it would do, economic growth remains intact, and the war isn’t getting worse by leaps and bounds. That set the table for a strong rally in stocks. Is the bottom in? Or is this just a bounce? The answer may be a little yes and a little no. For some stocks, the bounce might be over, but if the economy stays solid, there remain plenty of opportunities.
Stocks rose sharply all week as the NASDAQ rebounded out of bear market territory and both the Dow and S&P 500 cut their 2022 losses roughly in half. Oil prices remained volatile closing at over $100 per barrel. Pain at the pump continues but it isn’t getting worse, at least for now. Interest rates rose …
March 7, 2022 – While the war outcome continues down a path leading to a Russian occupation of Ukraine, the economic costs are becoming both starker and more apparent. Gasoline prices are rising close to $0.50 per week. If anything, the pace is accelerating. Wheat, aluminum, copper and palladium are spiking as well. These root commodity price increases will flow into a massive array of products. Inflation is quickly becoming more supply constrained than demand driven. The Fed’s weaponry can’t increase supply.
Stocks fell last week for the fourth week in a row, a combination of inflation fears and the war in Ukraine. Bond yields fell amid a flight to safety. The news from Ukraine is discouraging, to say the least, but it isn’t unexpected. Russia has overwhelming military advantages and continues to make progress in its …
January 10, 2022 – If there was a message last week, it was that speculative fever is dissipating as the Fed winds down its pace of bond purchases. No one knows when the purging of speculation will end but it probably will be with a thud, not a whimper. Market rotation to financials, industrials and energy names suggests the economy continues to thrive despite Omicron. The rotation can go a bit farther. The high growth sector got very overpriced, outpacing cyclical and value stocks for years, and it could take several more months for the rotation to run its course, allowing for some intermittent bounces and reversals. The overall market is down only modestly as the speculative fringes blow apart.
It was a tough week for stocks particularly on the NASDAQ. The speculative end of the market took the biggest hit as bond yields rose in line with continued economic growth. I noted last week the relevance of the January barometer. While not always valid, there is a trend that says, “as goes January, so …
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 …