Three Negatives and One Ginormous Positive
The State of the Market: Executive Summary Three negatives and one ginormous positive. From my seat, this defines the current stock market environment. The negatives can more accurately be described as uncertainties and all are well worn: (1) The breathtaking surge in coronavirus cases, (2) the election, and (3) the state of/outlook for economic recovery. […]
The State of the Market Models | 10.24.20
Indicators Updated | 10.24.20 Each week we do a disciplined, deep dive into our key market indicators and models. The overall goal of this exercise is to (a) remove emotion from the investment process, (b) stay “in tune” with the primary market cycles, and (c) remain cognizant of the risk/reward environment. The Major Market Models […]
US Elections, Once More unto the Breach
Global asset classes continued their stimulus-fueled recovery throughout the summer, incredibly posting all-time highs among major US stock indices by early September. Economic readings also ended the quarter on firmer footing, although in less convincing fashion than the strong market action may have otherwise suggested. While the historic market rebound off the mid-March lows was […]
Grand Reopening or Bear-Market Rally?
After staggering pandemic-induced volatility and the most severe bear-market retreat since the “Great Recession” of 2008, global equities reversed the tide to post their strongest serial advance ever on hopes tied to a rapid economic reopening, multiple vaccine trials, and historic levels of fiscal stimulus and monetary support not seen since WWII (CNBC, “This is […]
From In-Person to By-Zoom Economy
Although the year began with stocks arguably “priced to perfection,” there were high expectations for equities to follow-through on solid 2019 performances and the strength of the US consumer. Tempering that outlook was the possibility of heightened volatility surrounding lingering trade issues, slowing global growth and the national election cycle. However, after a strong start […]
Uncharted Territory Ahead
Stocks worldwide finished 2019 by recording gains typically expected over the course of a year in just a single quarter. Indeed, the S&P 500 index rose just under +9% (‘SPY’ ETF*), while the MSCI Emerging Markets index gained some +12.2% (‘EEM’). Following the pattern seen throughout the year, nearly all asset classes joined in the […]
Manufacturing Slowdown Amid Trade Uncertainty
Each new quarter, we take a close look at market performances and economic conditions to understand what is driving markets and to inform our portfolio decision-making. Although rare, this is one of the few quarters where conditions remained virtually unchanged. However, several themes that began to express themselves earlier this year certainly became increasingly entrenched. […]
Federal Reserve Preempts Slowing Growth
As markets transitioned into spring off their historic winter bounce, evidence of global slowing began to accumulate. Factory gauges flagged, jobs reports became erratic, trade disputes flared, the US treasury yield curve inverted, and the World Bank cut its forecast for global growth by -0.3% to +2.6% (World Bank, “Global Growth to Weaken to 2.6% […]
Strongest Start for Markets since 1987
This winter, US stocks recovered nearly all their cascading losses from the prior quarter that had left the major indices in or near bear market territory, defined as a 20% decline from previous highs. Reasons for the late-year volatility were several-fold, including concerns about an overly aggressive US Federal Reserve, stalling US-China trade negotiations, a […]
Market Disconnects from Economy
Twenty-eighteen began supported by the same strong fiscal and monetary policy tailwinds that had propelled the prior year to twelve consecutive monthly gains. Stocks arguably got ahead of themselves out of the gates, however, destabilizing a foundation increasingly built upon historically high valuations. The ensuing correction defined the wide range that the S&P 500 US […]