November 2017 Newsletter

Heads up. There is a relationship between the value of stocks and interest rates.  And, this relationship is probably different than you think.  When yields on treasury bonds are extremely low, rising interest rates have a strong positive influence on stocks.  As these yields move up toward 5% this relationship weakens.  The chart below (Figure 6: Equity Sensitivity to Treasury … Read More

Be Less Anxious

Be less anxious. While global growth has been tepid, during this period corporations have remained focused on lowering expenses and thereby enhancing returns to shareholders.   Due to worldwide Quantitative Easing (QE), all G7 countries (U.S., U.K., France, Canada, Italy, Japan, and Germany) and BRIC countries (Brazil, Russia, India, and China) are experiencing economic expansions.  This synchronous expansion may support growth … Read More

Changing Investment Styles and the Economic Cycle

Changing Investment Styles and the Economic Cycle   Monitoring the rate of change in the business cycle (ups and downs) is an important part of enhancing or reducing the risk of owning stocks. It’s what we spend hours doing daily in order to advance your account balances and preserve your capital. In the mature stage of an economic cycle, growth … Read More

Advanced Optimism and the Need for a Healthy Correction

Advanced Optimism and the Need for a Healthy Correction Has the market become too optimistic?  The fact that analysts are asking this question suggests that fear of piling on has arrived.  By short-term cycle standards, the market appears overdue for a healthy correction, though the current slow and healthy decline intimates a small correction.  While past performance is no assurance … Read More

November 2016 Newsletter

In this report I discuss politics by way of economic research and tackle some of the asset class implications of a Trump or a Clinton victory. Do you hate me yet? Let’s begin with the bond market. Risk appears higher for the bond market heading into the post-election period for either candidate’s early administration as higher yields are coming. The … Read More

August 2016 Newsletter

August 2016 Newsletter Fear and Promise and the Equity Risk Premium: 2016 Relax; that is, become less taut. A recent survey by Credit Suisse has found that investors are far too fearful. While the world is awash with many reasons to be fearful, the equities market continues to sport an equity risk premium of a bit less than six percent … Read More

Late June 2016 Newsletter

Late June 2016 Newsletter Sometimes the equity research guys nail the bigger-issue: good news and bad news. At least that’s my attitude when they bring up a topic I’ve been talking about for eight years. As a precursor to what they have to say in the following paragraph, economies go through boom and bust cycles. The world’s central banks try … Read More

June 2016 Newsletter

June 2016 Newsletter Regarding the stock market: The roller coaster ride continues to be a tug-of-war between TINA, There Is No Alternative to stocks and bonds, which promise positive returns to people throughout the world used to negative interest rates (most all of Europe, and the Japanese) and American investors who remain lulled by decades of constructive returns despite the … Read More

April 2016 Newsletter

April 2016 Newsletter The Ball is in the Fed’s Court Account values are up nicely after the S&P 500 experienced two 14% corrections over the last six months; this is something never witnessed before. The S&P 500 snapped back each time and S&P 500 valuations have now been tested twice. This could produce a more bullish consensus going forward.  With … Read More

March 2016 Newsletter

March 2016 Newsletter Correlation of Oil and the S&P 500 is About to Deliver Hope Notes on the direction of oil and the equity markets: New data suggests that the demand for oil may not be rolling over, but rather, stabilizing (in the midst of normalized volatility) along with the equity markets. Could we be moving higher by May?  While … Read More