Followup: “Quick Thoughts on Markets: May 24”

Reflection on how my predictions panned out from my May 24th article: 1. Multiple expansion thru 2019; bull market to continue or trade sideways with lower earnings estimates, lower guidance. P/E forward and trailing, P/S, P/CapEx, all rising thru 2019. Over the last two months, we've seen multiple expansion in the S&P 500 (SPX) and … Continue reading Followup: “Quick Thoughts on Markets: May 24”

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Quick Thoughts on Markets: May 24

Quick thoughts on where markets will be/are: Multiple expansion thru 2019; bull market to continue or trade sideways with lower earnings estimates, lower guidance. P/E forward and trailing, P/S, P/CapEx, all rising thru 2019 Small cap debt expansion as small business owners feel more wealthy when tax season comes around in 2019, combined with rising … Continue reading Quick Thoughts on Markets: May 24

FX Dynamics

Two competing forces in FX markets: Interest Rate Parity and Hot Money Interest Rate Parity states that a lower yielding currency should appreciate relative to a higher yielding currency. According to the International Fischer Relationship, higher yielding currencies have higher inflation domestically. This inflation difference causes the high yielding currency to depreciate relative to a … Continue reading FX Dynamics

Gotta Pay the Debt Collector

This entire rally is being fueled by credit, not real gains in productivity. A tweet: Let's investigate. See: Three body problem.┬áTl;dr Good companies make good stocks, and high quality, trustworthy governments issue to low yielding, safe bonds. There is correlation, but as an investment strategy the relationship seems to be working less and less. Ben … Continue reading Gotta Pay the Debt Collector

So let me get this straight…

US Government Treasury bonds are the safest asset in the world today. They are implicitly guaranteed to get you your principal back at the maturity of your bond. Economists and investors commonly consider yields on Treasuries to be the 'risk-free' rate; meaning rates on Treasuries are the smallest amount of return an investment should provide. … Continue reading So let me get this straight…

Discretionary Recessionary Signals

Do you feel more optimistic than a year ago? Despite more negative headlines and political turmoil, bond markets are signaling more optimism surrounding future growth than a year ago.   Nominal yields around the world are much much lower than their historical averages. We actually see negative rates in some European nations. That being said, … Continue reading Discretionary Recessionary Signals

Why are Markets so Calm?

Valuations are stretched and economic data is cooling, yet markets are complacent. Why? The following are rationalizations of current market values. 1.) Massive movement from active management into passive strategies. Why pay someone to under-perform the S&P 500? Passive investing implies no trading, which means less volatility. 2.) Increased regulation has permanently caused a decline … Continue reading Why are Markets so Calm?