Sunday, December 31, 2017

2017 Year-End Client Letter, Part 6: Conclusion

Link to Part 4
Link to Part 5

At last, it's time to close our year-end message for 2017: 

Herein we've presented what we believe to be the characteristics of good portfolio managers. We've expressed the sense of security we gain in the understanding that while not all good investments make money, if we strive to make only good investments the odds are strongly in our clients' favor over the long-term. We highlighted the whys and wherefores of the sectors we presently like and those we don't. We shared our views on the importance of maintaining a global investment mindset. We expounded on why we think that (despite valuation) many currency traders once again may be on the wrong side of the dollar going into 2018 -- and how it's perfectly okay for our portfolios if they're right this time. And we discussed the not-so-safe nature of today's bond market as well as our presently not so bullish view of precious metals.

Friday, December 29, 2017

2017 Year-End Client Letter, Part 5: The Dollar, Bonds, Gold and Silver

Link to Part 4

The Dollar:

Several times in this year's lengthy final message we've cited the potential for a rising U.S. dollar to be a headwind for a number of sectors, as well as foreign equities, in the year to come. 

Our view is that a relatively strong U.S. economy, aided by the potential near-term positives of corporate tax reform, not to mention an infrastructure spending package (should it happen), along with a higher interest rate regime, and a Fed that is no longer reinvesting all of the income from its massive balance sheet, are factors that stand to support the dollar -- if not see it rising -- going forward.

Thursday, December 28, 2017

Don't get used to it!

Yes, 2017 has been a very good year for equity investors. Honestly, given the overall setup going in, a good 2017 should have been no big surprise to anyone. What has been surprising to us, however, is the remarkably low level of volatility! Make no mistake folks, in that regard, 2017 was highly unusual.

2017 Year-End Client Letter, Part 4: Global Investing

Link to Part 1
Link to Part 2

Link to Part 3, Section 1

Link to Part 3, Section 2

Link to Part 3, Section 3

If there's been a common theme over all the years we've been blogging, and, for that matter, managing money, it's that the world is a very big place, and the U.S., in terms of its share of the world's human capital, is a very small place. While we can debate the causes of the miracle that makes the home of a mere 4% of the world's population the far and away world's largest economy, we can't deny the fact that the human race is becoming more connected by the minute and, thus, the nations and institutions that embrace the interdependence that this global connectivity breeds -- while successfully navigating the at times turbulent geopolitical waters -- will prosper the most in the decades to come.

Wednesday, December 27, 2017

2017 Year-End Client Letter, Part 3: Sectors, Section 3: Healthcare, Utilities, Telecom, Consumer Staples and REITs

Link to Part 1
Link to Part 2
Link to Part 3, Section 1
Link to Part 3, Section 2

Here's a brief synopsis of what we view as today's fundamental aspects of the healthcare, utilities, telecom, consumer staples and reit sectors. We want to emphasize "brief", as we could easily offer up a lengthy research paper for each. 

Note, the following relates primarily to the prospects for sectors within the U.S. economy. Our targets are also influenced by our assessment of each sector within other countries -- as we maintain target allocations to foreign markets as well. A topic we'll tackle in Part 4.

Tuesday, December 26, 2017

2017 Year-End Client Letter, Part 3: Sectors, Section 2: Industrials, Materials, Energy and Consumer Discretionary

Link to Part 1
Link to Part 2

Link to Part 3, Section 1

Here's a brief synopsis of what we view as today's fundamental aspects of the industrial, materials, energy and consumer discretionary sectors. We want to emphasize "brief", as we could easily offer up a lengthy research paper for each. 

Sunday, December 24, 2017

2017 Year-End Client Letter, Part 3: Sectors, Section 1: Financials and Technology

Link to Part 1
Link to Part 2

Along with our perspective on general conditions, in our year-end letters we like to offer up some detail in terms of what inspires our sector weightings going into the new year. After bullet-pointing financials and tech below, I realized that if I carry this year's narrative through each major sector in one post I'd be asking our readers to devote far too much of their precious time herein, especially during the holiday season. So we'll stop this one at technology, and dribble out the rest between now and the end of the year.

Thursday, December 21, 2017

Pay no mind to Soandso!

Every now and again a client will quote a Wall Street guru's market prediction. Goes something like "Hey Marty, Soandso says the S&P's going up 12% next year." Or, "Soandso says the next bear market (that would be a 20+% decline) is just around the corner."

Wednesday, December 20, 2017

It's Clearly A Sellers' Housing Market

Econ 101 says that when you have an excess supply of a thing relative to the demand for it, the thing's price will decline.

Of course the 2008 housing crisis was a multifaceted phenomenon, yet this 2001 to mid-2008 simple chart showing the supply of existing homes for sale relative to the monthly sales pace (months supply in inventory), by itself, speaks volumes:

Sunday, December 17, 2017

2017 Year-End Client Letter, Part 2: General Conditions

Link to Part 1

Long-time clients and readers know that while we pay very close attention to market technicals (price trend, momentum, volume, breadth, sentiment, etc.) when positioning client portfolios, it's our view of general conditions that holds the greatest sway. The overriding question being, are present conditions conducive to growth in corporate earnings? And, if so, which sectors of the economy are best (and least) positioned given those conditions. Or, if not, which asset classes are best positioned to weather, if not exploit, a less than bullish, or outright bearish, macro scenario. 

Friday, December 15, 2017

This Week's Message: December Trends

Keeping it short and sweet this week (as we prepare Part 2 of our year-end letter [link to part 1]), below are the titles to what we've stuffed into our December '17 trends file thus far.

Bottom line: The global economy presently looks good, U.S. inflation -- while the Fed doesn't (per the December meeting commentary this week) seem to entirely agree -- is clearly brewing, China's debt picture is at the margin improving slightly, the Federal government is collecting a lot of tax money, however, it's spending much more than it's receiving (what else is new?), the Dow's recent results are heavily skewed by Boeing, and the recent rally in transportation stocks suggests good things about the go-forward probabilities for U.S. equities. 

Sunday, December 10, 2017

2017 Year-End Client Letter, Part 1: What Makes Us Tick

2017 has been quite the year for the stock market! Predictions annihilated, records smashed, and headwinds bucked like they were never there. My, where to begin?

Of course we'll do the obligatory roundup of returns, show off our economic indicators, tell you what sectors we like and don't like going forward, and see how our opinions of a year ago played out. But how do we get it all started in a way that'll inspire you to remain engaged throughout this year's yarn?

Well, if we were on your end of this letter, and you managed our money, we'd want to know what makes you tick. We'd want to know how you view the world, the markets, and how you approach the business of investing our money. Therefore, we'll devote Part 1 to a brief synopsis of how we do/see things here at PWA.

Friday, December 8, 2017

Goldilocks Consumer

The University of Michigan just released its preliminary December read on U.S. consumer sentiment (an input to the consumer sentiment component of our macro model). The headline number, while plenty high (96.8), came in at the lower end of economists' estimates. 
  • Forecast range 96.5 to 102.0 from 57 estimates...

Wednesday, December 6, 2017

Aha! Well, maybe... maybe not..

While, for three+ decades, I've been preaching to investors that financial markets are the definition of uncertain, that they should never take anything for granted, and that they are to shun all gurus like the plague, there are still moments where I find myself scratching my head when the market doesn't move like I might've guessed.

The past few days would be an example.

Tuesday, December 5, 2017

This Week's Message: Does It Really Matter How Companies "Spend" Their Tax Savings?

The following is me thinking via my keyboard about an article I just read.

A senator from New York is leveraging Bank of America's plan to add another $5 billion on top of a previously announced $12 billion share buyback campaign to argue that 
"big corporations can smell the huge tax cut they have coming, and rather than raising workers' pay or hiring new workers, they're buying back stock and prepping huge dividend payments," 

Chart of the Day: Piling Into Financials

As we've been reporting for some time herein, we like the setup for financial stocks (presently tied with industrials for our highest target weighting). Therefore, XLF (the largest, and most liquid, financial sector ETF) is a prominent holding in most of our client portfolios.

Apparently, the market is beginning to warm up to our thesis:

Saturday, December 2, 2017

Bonus Chart of the Day: Global Economy Better Than Expected

We've been expressing herein often of late (here and here for example) our view that the global economic setup looks quite good. The below (again from Bespoke) suggests that it's even better than economists expected:    click to enlarge

Chart Of the Day: New Home Sales

If you're thinking that the housing market, by way of rising prices, is revisiting its bubbly condition of the mid-2000s, well, you're fretting over our last economic battle. I don't suspect that the housing/mortgage market/s will be the catalyst for the next.

Friday, December 1, 2017

Tax Reform and Its Economic Implications

Posted this early this morning, before the revelation regarding Michael Flynn's pending testimony regarding the President and Russia -- which has the market selling off notably (relative to the lack of volatility the market's experienced this year). Of course there'll be commentary coming your way as dusts settle. 

In the meantime, a little something to ponder: While, clearly, traders are reacting to the potential for political uncertainty to come, we have to acknowledge that the world has been rife with political uncertainty throughout 2017. Of course this feels different/dramatic, but, in the end, will it actually culminate in political certainty? Well, it ultimately has to, one way or another. And, in the end, the market likes certainty. We'll keep you posted....


We've been reluctant, here on the blog, to weigh in much on tax reform and its market implications. Mainly because, up until very recently, the likelihood of either plan passing -- in the forms presented -- was nil, as neither would wash given the "Byrd Bath" rule (has to be revenue neutral in 10 years to allow for a simple majority vote). Now, apparently, it looks as though the ultimate plan will somehow wash, and, thus, we're on the cusp of tax reform becoming reality.

Wednesday, November 29, 2017

This Week's Message: November Highlights

No doubt, there'll be plenty to cover here on the blog over the next few weeks. However, it's likely to come to you in small bites as it's time to begin formulating our more robust year-end commentary. 

Hey! The Market's Up Nicely This Morning! Well, not really....

Hey, the market's up 90 as I type! Uh, well, actually, it's not; the Dow (with its 30 constituents) is up 90.. 

Tuesday, November 28, 2017

Again, It's 'Presently' Hard Not To Feel Good About the Global Economy

Yesterday we noted that the economy of that huge trading (block) partner of ours who resides across the Atlantic -- along with our own assessment of the U.S. economy -- has us feeling pretty good about the state of the global economy these days. 

Monday, November 27, 2017

Stats of the Day: Hard Not To Be Bullish on the Global Economy

As Bespoke states below, with the Eurozone looking so good -- on top of our own assessment of the U.S. economy -- it's hard to be anything but presently bullish on the global economy:

Saturday, November 25, 2017

Christmas Shopping Season: So Far So Good

In Monday's weekly message, and again in Wednesday's follow up, we mentioned that our macro study just hit its highest score among 20 years of back tests. The message there being that the U.S. economy is presently in very good shape. We should, therefore, expect a very good Christmas shopping season. 

Wednesday, November 22, 2017

Time To Cash In Your Chips?

Rarely during a client review meeting these days is there no mention of the stock market's all time highness, along with queries as to how long it can last. At times we'll get inquiries via email from colleagues or clients who in that moment intimate their sense of bewilderment as to the market's current state of affairs.

Monday, November 20, 2017

This Week's Message: The State of the Economy Heading Into the Holiday Season

Heading into a shortened workweek, it seems only fitting to offer up a shortened weekly message. Here goes:

While getting a jump on this week's macro analysis over the weekend, I guessed that the forthcoming reading of the Index of Leading Economic Indicators would jump nicely given the positive look of many of the other 72 data points we track. 

Sure enough:     click any insert to enlarge...

Saturday, November 18, 2017

Small Businesses on Taxes and Labor -- AND -- The State of the U.S. Labor Market

Three of the seventy-three inputs to our macro analysis have to do with the results of the monthly NFIB Small Business Survey. We track the headline number, hiring plans and capex (expansion) plans. While we don't score the stated concerns of the employers of 2/3rds of all Americans, we find them to be interesting and instructive. 

Friday, November 17, 2017

Stat of the Day: Housing starts and permits...

Following up on our housing theme from this morning, today's release of new home sales and permits speaks to the sustainability of the single-family housing market. Oh, and by the way, such data does not support the doom and gloom you've been hearing from the media of late:

Charts of the Day: No Housing Bubble Here

We've expressed herein a few times of late (here's one) our view that -- rising/record home prices notwithstanding -- today's housing market does not nearly possess bubble characteristics.

To further support that notion, take a look at the latest quarterly Fed assessment of U.S. consumer credit, courtesy of Bespoke Investment Group. I.e., it takes a lot more (a lot more!!) than the ability to fog a mirror (the mid-2000s litmus test) to qualify for a mortgage these days:    

Wednesday, November 15, 2017

This Week's Message: The Quintessential

The stock market is a fascinating phenomenon! It is the quintessential independent, and unpredictable, entity. Yet there are those who would have us believe that they have its number; that they have indeed figured out what makes it tick and what its next move is going to be. 

Saturday, November 11, 2017

There's Inflation in Them There Surveys! -- AND -- Gold's action made sense to us yesterday...

Once again, the Institute for Supply Management Survey respondents are telling us there is indeed some inflation out there. Thing is, we, as of yet, haven't seen much in the headline indicators; which, by the way, (PPI and CPI) are set to report next week. 

Friday, November 10, 2017

Follow Up To "Headline of the Day"

China's move to free up its financial sector for foreign investment also potentially bodes well for our emerging markets exposure; as China's looming bad debt issues have been a source of concern for global investors.

Headline of the Day: China's starting to get it...

Contrary to what so many hold to be true (completely baffles me!), history -- the history of the U.S.A -- has proven that the countries with the markets most open to trade and investment (not to mention labor) have the most robust economies and the richest citizens!

Thursday, November 9, 2017

This Week's Message: A Wall of Confusion

We think there's something to be said for the old Wall Street adage, "bull markets climb a wall of worry"; if only for the fact that while there's worry in the system, there's uninvested cash in the system. It also jibes with John Templeton's oft-quoted and forever prescient line:
"Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria."

Sunday, November 5, 2017

Chart of the Day: Jobs are Presently Plentiful!

One more today to go with the jobless claims chart I posted earlier. Here, courtesy of Bespoke Investment Group, is a look at the "Jobs Plentiful" component of the most recent Consumer Confidence report:   click to enlarge...   

Worried About the U.S. Jobs Market? Don't Be!

As I get a jump on our weekly research this morning, I am yet again baffled by the disconnect between rhetoric and reality. This morning, my baffledness has to do with jobs.

Wednesday, November 1, 2017

This Week's Message: Mispricing, Ms. Yellen, and a Certain Something

Interesting day yesterday. The U.S. stock market began with a nice broad-based rally which ultimately fizzled into a, broadly-speaking, mediocre session that saw the Nasdaq give up all of its morning gains, and some, while energy stocks advanced an impressive 1.13%, followed by our global natural resources (read commodity producers) ETF, up .87% and materials +.49%. Utilities and telecom came in last with .56% and .79% declines respectively.

Quotes of the Day: Gut Instinct Does Not Generally Serve Us Well (when it comes to investing)

Ned Davis's excellent book Being Right or Making Money is a treasure trove of potential Quotes of the Day.

Sunday, October 29, 2017

Quote of the Day: The Defining Reason Why Some Succeed and Others Fail at Investing

In Jack Schwager's Hedge Fund Market Wizards, Columbia Business School professor (and author, and successful investor) Joel Greenblatt describes how he begins his Value and Special Situations Investing course:

Saturday, October 28, 2017

Quote of the Day: THE Mistake Investors Make

In his highly instructive book of interviews, Hedge Fund Market Wizards, Jack Schwager asks the successful investor, author, and Columbia Graduate School of Business professor Joel Greenblatt what mistakes investors make. His immediate response was:

Friday, October 27, 2017

Chart of the Day: Market Reacts to Trump's Affection for Powell

In our October 5th blog post we suggested that Jerome Powell best fit the mold of a Fed chair any sitting politician would love. I.e., he has a reputation for going easy on monetary policy (for our purposes here, read interest rates).

Wednesday, October 25, 2017

Chart of the Day: Very Welcome News!

In our September 27th post we discussed the importance of capex (investing on the part of companies in business-expanding capital); an essential ingredient in a healthy, growing economy. The post serves as a nice, and very short, primer on capex.

This Week's Message: Breaking Records and Broken Records

Sorry folks, but as the stock market continues to break records we have become the proverbial broken record here on the blog. The long and the short of it is simply that for the moment this market remains a long (a buy), and anyone who dares to go short (sell), gets it handed to him/her.

Tuesday, October 24, 2017

Charts of the Day: Worried About the Global Economy? Well, CAT Isn't!

Once in a while we feature our tracking of Caterpillar's global sales. Here's the latest:    click each insert to enlarge...

Sunday, October 22, 2017

Headline of the Day: Communists Acting Like Capitalists

What reducing trade restrictions can do for a stock market:
Shanghai Plan to Lift Trade Barriers Sends City Shares Soaring(Bloomberg) -- Traders are snapping up stocks with Shanghai in their name after the city’s Communist Party chief confirmed plans to set up a free trade port that would aim to ease restrictions for incoming cargo. Eleven of the top 20 gainers on the city’s equity gauge were companies whose names begin with the word Shanghai and all 11 surged by the daily limit. 
The empirical evidence is overwhelming that the countries most open to trade sport the healthiest markets, and, ultimately, the healthiest economies.

Wednesday, October 18, 2017

Chart of the Day: Not So Fast Folks

I take the opportunity at each client review meeting to bemoan the public emphasis on the Dow Jones Industrial Average. We're talking a market benchmark that consists of merely 30 U.S. stocks and, to make matters stranger, the index is price weighted -- the stocks with the highest share prices have the largest impact on the Dow's performance. 

Consequently, the largest company on the planet, Apple -- in terms of its impact on the index -- plays 7th fiddle (virtually tied with IBM)  to, in order of impact, Goldman Sachs, Boeing, 3m, United Health, McDonalds and Home Depot. 

Tuesday, October 17, 2017

This Week's Message: North Korea, The Fed, and The Markets in a Nutshell

Our schedule this week requires that we spend less time here on the blog. While we'll certainly step in and offer some perspective should markets demand, for now we expect that the following will be it for the week (save for perhaps the irresistible quick quote or chart here and there).

Monday, October 16, 2017

Chart of the Day: Scrapping NAFTA?... Hmm...

Here's the postscript to a little something I wrote last week:

P.s. As you may know, the North American Free Trade Agreement  (NAFTA) may be on the chopping block. The President has suggested of late that termination of the agreement, at the hands of the U.S., is likely. 

Friday, October 13, 2017

How We'll Remain Globally Relevant -- And a postscript on NAFTA

I know many of our readers sympathize with the notion that it's time to play trade hardball with the rest of the world. Regular readers and clients know that in my view this is a most dangerous notion.

Thursday, October 12, 2017

Chart of the Day: Worried About the State of Clean Energy Investment? Don't be!

Investors pumped $66.9 billion into clean energy around the world in 3Q, up 40% from the same period a year earlier, according to Bloomberg New Energy Finance. Wind investment reached $34.3 billion, the highest since 2Q 2016, and surpassed solar investment of $30.5 billion. A $4.5 billion Oklahoma panhandle wind project was the biggest deal in the quarter.

This Week's Message: Again, How on Earth??

Regular readers now know this Jesse Livermore quote all too well:
"Not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish. And all a man needs to know to make money is to appraise conditions."
This is the one I've heard myself repeating most often during client review meetings of late -- given the relentlessness of the geopolitical risk-related headlines. The process involved in "appraising conditions" is how we here at PWA spend a great deal of our time. 

Friday, October 6, 2017

Tillerson, Gold and The Dollar

The strong setup for stocks -- that we've been illustrating herein since last summer -- remains, and appears to be allowing for a surprising sanguineness among the major averages when it comes to the, let's call it, angst, in Washington. Although it does appear to be playing havoc with a couple of other markets: Specifically currency and gold.

Data Favor the Fed Hawks...

In this week's weekly message we noted that our economic assessment isn't screaming inflation, but it's indeed suggesting that the Fed would be well advised to continue to ease up on the gas pedal (nudge rates higher while reducing its balance sheet) going forward.

Thursday, October 5, 2017

This Week's Message: The Fed's Timing is Critical and Let's Pray Not Political!

As we've been reporting herein, the economic backdrop suggests a looming recession is simply not presently... well... looming. Quite the opposite in fact.

Tuesday, October 3, 2017

Quote of the Day: Maintain a critical eye...

Highly respected trader and author Alexander Elder speaks to why investors should view media-spawned prognostications with a most critical eye:

Saturday, September 30, 2017

Quick update to yesterday's post on gold...

In yesterday morning's blurb on gold we began with:
While the price action in gold has confirmed (as we've hinted) our near-term (bearish) sentiment on its prospects, others (the majority I suspect) clearly see it differently.
And ended with: 
Again, if we're right on the present economic setup, we may see a reversal in sentiment, and a continued slide in the price, in the coming weeks.
Here's a newsflash from yesterday afternoon:

Friday, September 29, 2017

Despite recent price action, folks remain bullish on gold...

While the price action in gold has confirmed (as we've hinted) our near-term (bearish) sentiment on its prospects, others (the majority I suspect) clearly see it differently.

Financial sector bullishness...

Back on September 7th we briefly explained why we remain stubbornly bullish on financials. Here's a chart of the moves in major sectors since then: 

Crazy Strong U.S. Job Market

Any "authority" who'd have you believe that the U.S. job market is anything but strong has been politically captured in the worst way.

Charts of the Day: October, the good and the "bad"

Well, if we live through today, September didn't deliver September. I mean, September is notorious for its abysmal historical stock market performance, and this year it turned out okay.

Careful with that populism folks!

Not being from Great Britain, I can't really say whether I would have voted for Brexit. I will say this, I love freedom, and I, therefore, respect the British people's right to... umm... limit freedom. Or, more palatable perhaps, I love freedom, and I, therefore, applaud the British people in their exercising the freedom to break from the EU and chart their own course going forward (sincerely).

Wednesday, September 27, 2017

Quote of the Day: The Key to Successful Investing

While we forever remind you that we (here at PWA) -- on behalf of our clients -- are investors, as opposed to traders, in our perpetual endeavor to understand what motivates market players we've found that studying the methodology of short-term traders helps us put short-term volatility into perspective.

This Week's Message: Businesses Are Looking to Invest/Expand

One of our chief complaints/concerns over the past couple of years has been an historic lack of capex  spending (investing on the part of companies in business-expanding capital), relative to past expansions.

Recessions in red:             click each insert below to enlarge...

Tuesday, September 26, 2017

Gold/Dollar Update

Back on September 7th we pondered herein the positive year-to-date correlation between gold and stocks:
"So what gives? Why is gold rising while stocks appear locked in a strong bull market? Are they indeed presently inspired by the same developments?"

Friday, September 22, 2017

A win for U.S. solar manufacturers, a loss for U.S. consumers!!

One step closer to a win for U.S. solar manufacturers, one step closer to a loss for U.S. consumers, and, ironically, the industry itself:   emphasis mine...

Cat shows global growth accelerating...

One of our favorite under-the-radar global economic indicators is Caterpillar's global sales. Cat's global sway, and the cyclical nature of its business, makes its sales results a true harbinger of global economic activity.

Chart of the Day: No worries about sentiment...

As we've been reporting herein, the macro economic setup supports the notion that the present bull market has more to run.

Thursday, September 21, 2017

This Week's Message: The Fed, the Military, and the Housing Market

In this week's message we're going to jump around a bit.

For starters, I received inquiries pre and post yesterday's Fed announcement. Here was my response to a client who asked about how I saw the Fed meeting playing out and how it would impact gold and stocks specifically:

Wednesday, September 20, 2017

Tech Volatility to Ignore, and Some to Respect...

The following essentially serves as a good example of market myopia. I.e., how short-term trading can shake up stock prices and, alas, have an unsuspecting long-term investor wondering or, worse yet, acting.

Tuesday, September 19, 2017

Things Don't Always Work Out the Way They Ought To!

Remember back when the Fed started creating money like mad and sending it by the billions to the banks, in return for their holdings in treasury bonds and mortgage backed securities? For many legitimate analysts and too many illegitimate fear-mongers/gold purveyors this was a phenomenon that was certain to bring on rampant inflation and mass financial destruction. After all, the production of "paper money" at a pace far exceeding the production of goods and services had to push the prices of goods and services to the moon, right?

Monday, September 18, 2017

Sector Positioning

It's our intent here at PWA, and the primary purpose of this blog, to (between portfolio review meetings) keep our clients abreast of the thinking behind their portfolio allocations. With that in mind, here's a snip from an internal record which shows year-to-date returns by sector, our present target exposures, adjustments we've made within the past year or so, and our view of some of the prevailing and potential key themes that are most likely to either support or diminish the prospects for each going forward.

Saturday, September 16, 2017

The Customers Live Elsewhere!

While we strive to maintain our focus herein on all things market and economic, every now and again we'll risk touching subscribers'/clients' nerves on topics that we believe impact/relate to markets and economics, but nonetheless spark ideologically-inspired rebuttals, if not rebukes (we're talking politics of course).

Thursday, September 14, 2017

The Global Answer

I'd say that the most commonly uttered client question in review meetings of late has been, words to the effect, "How can the market be doing so well with all of the uncertainty in the world?"

Analysts are Loving Financials Right Now. Bummer!

As we've hinted a number of times herein, we presently like financials. The one thing that bothers me, however, is that Wall Street does too. 

Chart of the Day: Producer Price Inflation deserves attention...

Not to beat a dead horse, but, to add to our Monday message on input costs, here's the latest look at the Producer Price Index:

Wednesday, September 13, 2017

This Week's Message: You gotta give me data!

Hedge fund legend Julian Robertson fears a forming bubble in the stock market:
"The market as a whole is quite high on a historical basis," he said. "I think that's due to the fact that interest rates are so low. But there's no real competition for the money other than art and real estate."
 "I think we need interest rates to appreciate, to go up, because I think we are creating a bubble," he added.

Why Europe remains prominent in our portfolios. With a word of caution going forward...

Bespoke Investment Group's morning message spoke to why we remain bullish on European equities.

Worried about U.S. small businesses? Well, they're not.

We think the monthly NFIB small business survey is important to pay attention to.

Here's why (optimism reading and past recessions [red shaded areas]):  

Tuesday, September 12, 2017

Worried about the U.S. labor market?

Worried about the state of the U.S. labor market? Don't be.

Here's Bloomberg's comments on this morning's release of the Job Openings and Labor Turnover (JOLTS) Report (the last line speaks to our position on inflation going forward):

Monday, September 11, 2017

Input Costs are Rising

Yeah, inflation has remained stubbornly low, creating a bit of a conundrum for the Fed. Our view is that, on balance (in terms of the voting members), they'd like to continue nudging rates higher. 

Saturday, September 9, 2017

Charts of the Day: Exceedingly Subpar Long-term Results...

While much ado is being made over the stock market's impressive results of late, when we look back a bit and consider its 10 and 20-year performance, the market's got some serious catching up to do.

Quick Followup to Yesterday's Hurricane/Economy Blog Post

Yesterday, I blurted out a quick post after reading a headline suggesting that hurricanes help economies. I prefaced it with a warning that the topic deserves more, and better, than I had time to present. After my little dinner story below, I'll offer up a bit more reasoning...

I asked our youngest over dinner last night if he thought hurricanes hitting communities ultimately help the economy. He answered "yes" almost instantly. "Why?" I asked. He went on to describe with unwaveringly confidence what many respected personalities -- one Fed president no less -- have been suggesting of late; that the aftermath activity will be legitimate economic stimulus.

Friday, September 8, 2017

Really? A Hurricane Can Be Good for the Economy??

The below is just a quick scribble after catching a headline this morning. The topic deserves more, and better, than you'll get here, but you'll get the point.

One of my many pet peeves is the faulty notion that somehow destruction at the hands of Mother Nature is a good thing for an economy. As New York Fed President William Dudley apparently stated in an interview this morning. I only read the headline:

Thursday, September 7, 2017

This Week's Message: Believe it or not, we -- for now -- are living in a low-stress market environment. Although gold says otherwise...

At the beginning of each week we update a variety of technical and fundamental indicators/data as our way of monitoring market and economic conditions. We often share our interpretations herein.

Quote of the Day: Again, be careful what you ask for!

Scott Grannis points out how important trade is to your portfolio's bottom line (NIPA is "a measure of profits based on information supplied to the IRS"):

Why We Remain Bullish on Financials

Yesterday, the Canadian central bank raised its policy rate (by .25%) for the second time in 2 months. If you're wondering why we remain bullish on U.S. financials, the comments below from Canada's banking sector answer that question. The U.S. economic backdrop/trend ultimately screams (well, let's say yells, or speaks, certainly more than whispers) for higher U.S. policy rates -- plus, trading at 12.8 times this year's earnings makes them really cheap compared to every other sector, save for telecom (which we're currently avoiding):

Wednesday, September 6, 2017

Worried About the U.S. Services Sector? Don't be!

Here are Bloomberg's summaries for today's releases of the Institute for Supply Management's August Non-Manufacturing Survey and Markit's Services Sector Purchasing Managers Index:

Tuesday, September 5, 2017

Brief Market Commentary (video)

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Monday, September 4, 2017

Chart of the Day: Futures traders see volatility picking up...

The VIX Index (aka the Volatility Index, and/or the Fear Index), which tracks the volatility component in S&P 500 options pricing, presently sits at a remarkably low 10.13. However, futures trades on levels 1, 2, 3 and 4 months out (yellow, red, purple and blue respectively) are suggesting that's about to change: 

Trump has smart, experienced folks around him. Question is, will he listen to them?

If any of you happen to be cheering the latest rhetoric regarding foreign trade; specifically the notion that the U.S. will cut off trade with any country doing business with North Korea, and last week's head-scratching (given the timing) threat to abandon an existing trade agreement with South Korea, well, since we're here to talk about your portfolio, you might want to curb your enthusiasm.  

Sunday, September 3, 2017

Fasten your seat belts! Maybe...

Have you heard the claim that September is the worst month for the stock market? Well, actually, that's correct -- historically speaking of course.

Worried about U.S. manufacturing? Don't be!

As we finished up our discussion on the economy -- during a client review meeting last week -- I said "if we could only track one indicator it would probably be the treasury yield curve. A close second would be the Institute for Supply Management (ISM) Surveys."

Saturday, September 2, 2017

The U.S. market this year (as in all other years) offers nothing for either side of the political aisle to hang its hat on... And that's a really good thing!!

Yes, it's been a nice year for the stock market, the world stock market that is. The majority of our readers live in the U.S., thus, we're generally U.S.-centric in our discussions herein (plus, we are talking the world's largest economy). And, yes, the U.S. stock market has been nothing to sneeze at lately. However, as you'll see below, it's been anything but a world leader.

Friday, September 1, 2017

Quote of the Day: Jobs clarity "may prove elusive" for the next few months...

Economist Carl Riccadonna called today's jobs number perfectly. Yesterday I read his preliminary analysis where he pointed out August's strong tendency to miss consensus expectations. He also pointed out the tendency for the number to be revised upward in subsequent months.

Man! Capitalism and the Freedom to Trade Across Borders are Beautiful Things! Pg2

Here's Bloomberg adding fuel to the free trade argument!       emphasis mine...
The shutdown of almost a quarter of U.S. crude refining capacity in the wake of Hurricane Harvey is presenting a rare opportunity for fuel traders in Asia.

Man! Capitalism and the Freedom to Trade Across Borders are Beautiful Things!

From Bespoke Investment Group's morning message:     emphasis mine...
....gas prices in New York (where the NYMEX future is benchmarked) currently trade $15.48/bbl over where they trade in Rotterdam (Europe’s busiest port) net of quoted shipping costs. In Galveston, Texas (currently under partial operations) gasoline is $9.62/bbl over Rotterdam prices net of quoted shipping costs. In other words, if traders can buy Rotterdam spot gasoline, book passage on a refined product tanker, and sell it forward in New York, they could be looking at $9mm gross margins, including the $3.52 in shipping price. For this reason, we expect PADD 1 product imports to surge, and local gasoline price spikes in the US to be temporary amidst a loose global products market.

Thursday, August 31, 2017

This Week's Message: Please, Quit With the Ifs! It's "When" -- And -- More on Trade...

"So, Marty, what'll you do in our portfolio if the market suffers a correction?" How does an adviser answer a question (a common question, in fact) like that? It's like asking someone, "what'll you do if it starts raining while you're driving your car?"

Wednesday, August 30, 2017

Chart of the Day: Financials poised to do well...

Citi's chief strategist speaks to our view of interest rate probabilities going forward, and why financials maintain a significant target weighting in our portfolios:

Quote of the Day: The setup suggests the bull has more to run...

Urban Carmel, popular investment and economic blogger and his team, like us, use macro economic as well as market fundamental and technical data to form their view of present conditions. They, therefore, see the setup precisely the way we've been presenting it herein of late.

Tuesday, August 29, 2017

Quote of the Day

As we've discussed many times herein, investors (looking to exploit infrastructure makeovers) need not wait for the U.S. to get its act together:

Not Yet Begging For A Bear Market -- And -- Not the first N. Korean projectile over Japan

We can't -- while recognizing that, in markets, anything can happen at any time -- overemphasize how derailing (something more than a ~20% correction) a bull market is really tough when it's not in the mood for, well, derailing.

A la the late great Jesse Livermore:
"Not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish. And all a man needs to know to make money is to appraise conditions."
For example, in the fall of 1998, a then storied (and monster of a) hedge fund called "Long-Term Capital Management" (LTCM), run by the two Nobel laureate economists who, ironically, wrote the options pricing model we all use today, and who were, ironically!, huge proponents of modern portfolio theory (i.e., what happened to them -- they theorized -- had one in a bazillion odds), blew to pieces (as Russia, for example, defaulted on its debt). And, yep, among other things, North Korea flew a rocket over Japan (talk about icing on the cake!) -- although, clearly, it was LTCM and an emerging market debt crisis that did the number on global markets. A number that, to the surprise of many, didn't derail the then bull market.

Monday, August 28, 2017

Bonus Chart of the Day: Thinking About Bitcoin?

Thinking about Bitcoin? Well.....

Chart of the Day: High Dividend Stocks and Bonds Going Their Own Separate Ways

We've been making a big deal for some time about what we see as a heightened degree of interest rate risk in today's market. 

Ironically, per the chart below, that's been validated (lately) by the performance of high dividend paying stocks, but, clearly, bond investors -- at least in the near-term -- see things differently. Time, and the economy, will tell who's right:

Sunday, August 27, 2017

Charts of the Day: Well, actually, more of a free trade rant!

As the rhetoric heats up over trade, please remember, a "trade deficit", actually a "current account deficit" is only meaningful in accounting and politics. In the real world, we absolutely know that no country would ever allow the trading of its resources and the fruits of its labor for goods and services of lesser value. Meaning, for example, the Chinese would not be willing to enter into a deal wherein they send us $500 billion worth of stuff during the year in return for a mere $150 billion worth of stuff, plus a bunch of green pieces of paper. Not unless they were certain that those green pieces of paper could be used to acquire stuff of sufficient value to make the entire deal work for them. Oh, and by the way, those green pieces of paper I'm referring to -- those U.S. dollars -- would be claims against U.S. stuff.

Saturday, August 26, 2017

Charts of the Day

In his weekend presentation Chris Ciovacco uses weekly moving averages to compare the present market setup to past turning points. This nicely complements the presentation we posted yesterday:

Friday, August 25, 2017

This Week's Message: A Technical and Economic Look at Past Trouble Spots (video)

This week's message is coming to you via video, as the content was simply too visually rich to cram into a written commentary.

Our aim this week is to give you a sample of the historical testing we do of what we believe to be the most telling data/indicators:

Thursday, August 24, 2017

Quotes of the Day: Be VERY Careful What You Ask For!

In a world where certain players are pushing protectionism, it is incumbent upon us to study its real world effects. Brexit offers us a present day analysis. 

From Bespoke's morning message:

Wednesday, August 23, 2017

Jittery, on balance...

As we've addressed herein ad nauseam, the media forever angles for an explanation -- often a single event or development -- as to why the market does this or that on any given day. Well, as for today's 90-point hit to the Dow (no huge deal of course), the President's threat to shut down the government is as good as any -- actually, probably better than most.

Tuesday, August 22, 2017

Quotes and Bonus Chart of the Day: Careful What you ask for!

Brexit was a surprise, to say the least! Many folks, many whom I know, celebrated the Brit's desire to chart their own course going forward. I can certainly sympathize. However, if they thought the breaking from a hard-fought trade union wouldn't come home to roost on their economy... well....

Chart of the Day: Global corporate earnings prospects look good!

Schwab's Jeff Kleintop points out the extremely positive breadth (my highlight below) in global corporate earnings, which speaks to the general health of the global economy as well as the generally bullish equity setup (we've been illustrating herein) going forward:

Monday, August 21, 2017

Quote of the Day

Take Steve Reitmeister's (Zacks Research) simple, yet critical, point into account the next time a market headline has you rattled:

Sunday, August 20, 2017

Chart of the Day: Buckle up! -- Or -- The Two-Tone Market

It's easy for, and presumably incumbent upon, the media to tie some event to every market blip. But what we've come to realize over many years of market watching is that for the market to at all blip, it first has to be in the mood for blipping. 

Saturday, August 19, 2017

This Week's Message: So what do we do now?

So what are we, as investors, to do amid all of the present turmoil? Let alone the stuff to come; like the looming debt ceiling debate, the ongoing Russia investigation, the U.S./South Korea military drills slated to begin next week, the German election, etc.??

Quote of the Day: Good Investing

From Gregory Morris's insightful book Investing With the Trend:
The Greek philosopher Aristotle wrote, "We are what we repeatedly do. Excellence, then, is not an act but a habit." 

Friday, August 18, 2017

Quote of the Day: Some perspective

While much of the news of late is indeed troubling, recent market action -- at this juncture -- in an historical context shouldn't be:

Thursday, August 17, 2017

Quick commentary on today's action...

Told you not to hold your breath.

Took a moment and added the following to my market diary this morning:


Well, so much for the VIX staying calm. As I type, the S&P 500 Volatility Index is up 25% on the morning. The Dow and the S&P themselves are flirting with 1% declines. Clearly, although 1% index declines are nothing to get excited about, there’s fear in the market today – if, that is, the VIX is any indication. Surprisingly, however, gold and bonds are only up roughly .5% each. That wouldn’t be your definition of panicky risk-off action…

Wednesday, August 16, 2017

Quick Comment on Today's Action

I know, I'm out of the office, but, good or bad, I presently have a connection :)!

I just scribbled (so to speak) the following into my market diary. Thought you might find it interesting, because -- only for this very moment -- it might help put the noise of the week into its proper market perspective.

After this, I should be leaving you alone for the next couple of days. But don't hold your breath :)

Tuesday, August 15, 2017

Chart of the Day

If you're wondering why we've stepped up the volatility reminders of late, it's not because we're feeling bearish these days (in fact our data says stocks remain solidly in an uptrend), it's because we've been doing this a very long time. And, thus, we've learned that even the best of bull runs are replete with multi-point pullbacks. And, per the chart below, it's been awhile since the market's experienced even your garden variety 5% hit.

Quote of the Day: Our trade deficit says we are a very rich country. I.e., be careful what you ask for!!

I can't recall the last time I quoted a sitting politician, other than in pejorative fashion, that is. Well, to my very pleasant surprise, Senator James Lankford basically understands international trade.

Sunday, August 13, 2017

Chart of the Day: North Korea -- and the market -- in the '90s

As stated in yesterday's lead-in to our quote of the day, we should be careful diminishing such things as the present conflict with North Korea. Yet we must also acknowledge that the more the media outlets can -- for any reason whatsoever -- grab our attention, the more they can show paying advertisers how adept they are at grabbing our attention.

Saturday, August 12, 2017

Where's the Inflation??? Well, just wait...

Yes, the economy is for the moment on solid footing. Hence the Fed's recent rate hikes and signaling that they're ready to reduce the monster of a balance sheet (treasuries and mortgage backed securities) they grew as they saved the free world (a little sarcasm there).

Quote of the Day: Hyperbole is profitable...

No doubt, the news has been troubling this week. And while we should be careful diminishing such things, we should also be cognizant of the fact that the media (whose duty, I acknowledge, is to report) benefits markedly when its product spawns trouble in the minds of its customers. Per the last line in the opening paragraph to Bespoke Investment Group's weekly message:

Friday, August 11, 2017

Quote of the Day

The ultimate quote for the patient long-term investor:

This Week's Message: Why Didn't Brexit, Trump's Victory, or North Korea(???) Derail the Market?

Our May 11th blog post was well received (we assume so because of its unusually high number of clicks). That essay came to mind this evening as I pondered what I'd offer up for this week's message. We subtitled it "Why Didn't Brexit, or Trump's Victory, Derail the Market?".

Thursday, August 10, 2017

Video Commentary: A walk through a few charts...

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Bonus Quote of the Day: (So far) just a blip...

I read very few investment blogs these days; I've found the majority to be little more than echoes of the prevailing media noise. 

Scott Grannis's is a rare exception. Below is a snippet from his post this morning. I encourage you to read the whole thing -- it's brief:

Quote of the Day: Half the battle...

Richard D. Wyckoff was one of history’s great investment minds. His teachings/methods are as pertinent today for savvy traders and deep-thinking investors as they were in the early 20th Century.

Wednesday, August 9, 2017

Charts of the Day: What does the intraday action say?

As we've been illustrating herein, the technical setup for the stock market remains bullish for the time being. And while a single day never does a trend make, we do pay particular attention to how the market behaves in the final hour of the trading session.

Is it yet "Fire and Fury" for the markets?

Here's how markets are trading this morning, as I type -- it's 6:46 am PDT:

Tuesday, August 8, 2017

Quote of the Day: JP Morgan CEO won't call it a bubble, but is wary on bonds...

While JP Morgan CEO Jamie Dimon is wisely humble in an interview this morning --

Chart of the Day: Bonds are unusually risky these days...

This morning, Bloomberg featured one of the indicators that we closely monitor; colloquially known as the Modified Duration Index. We call it our "Interest Rate Sensitivity Index".

As you can see in the graph (and commentary) below, it's registering quite the high, which suggests that if, as we suspect, things do ultimately get rough for bond investors, it can get really rough:

Monday, August 7, 2017

Chart of the Day: Losing world market share

While the headlines boast of the U.S. market's record-setting run, in a global context, we're just doing okay; as illustrated in the graph below showing a notable decline in the U.S.'s share of the world's market capitalization.

Saturday, August 5, 2017

Charts of the Day

Per our brief video this week, periods of unusually low volatility inspire some advisers to ready their clients for the norm.

Friday, August 4, 2017

Thursday, August 3, 2017

Video Commentary: Volatility vs 2013

We've illustrated herein the similarities between 2017 and 2013 coming into this year. Here's a quick look at year-to-date volatility by comparison.

This Week's Message: From our July Trends File...

Here's a chronological look at our titles (which include our summary assessments) of the various data points that found their way into our July 2017 "Current Trends" file. I'll add long-term implication color-coding (where clearly applicable).

Wednesday, August 2, 2017

Quote of the Day

Two things to note in today's quote: 1. The U.S. manufacturing industry feels quite good about its present lot. 2. Much of the sector's strength is coming from exports. Please keep number 2 in mind if/when someone cites pejoratively the high level of goods we import from other nations.

Tuesday, August 1, 2017

Quote of the Day: Greenspan sees a bubble!

In an interview yesterday, former fed chair Alan Greenspan spoke to why we've -- for quite some time -- been so stubbornly bearish on bonds:

Charts of the Day: On average, how we doing?

While our clients of course like what they've seen over the past year, many have expressed concern over the 8+-year chasm separating today with the end of the last bear market. I mean, stocks just can't go up forever, right? Absolutely, they cannot! However, as we've expressed herein, bull markets don't die of old age, they die of obesity -- of, let's say, excessive living.

Saturday, July 29, 2017

Quote of the Day: Markets are Never Easy!

I absolutely know that folks are paying unusual attention to their portfolio balances these days. It feels good when stuff's going up! If you can relate, be careful with that. Studies show that individual investors who watch their stuff daily underform those who don't. I.e., market fluctuations tend to spark emotion, and emotion-inspired investment decisions can be killers.

Thursday, July 27, 2017

Stat of the Day: Still Like Europe's Stocks

Bloomberg's graph and commentary below (citing the 6x more inflows to European equity funds vs the U.S. this year, and the yet lowest relative valuation in 5 years) speaks to why -- as we've discussed/illustrated herein (here's a recent example) -- we continue to favor European equities:

This Week's Message: A Few Tidbits From Our Diary

Our job here at PWA is a fascinating one. World markets are an ever-changing menagerie of the decisions humans make. Over time, patterns develop -- inspiring strategies aimed at exploiting them -- only in so many instances to see those patterns disintegrate and make fools out of "strategists" bold (and foolish) enough to brandish their opinions to the financial media.

Tuesday, July 25, 2017

Quote of the Day: Policymakers getting in the way of an indicator...

I was recently asked about the disconnect between the economic signaling of the bond market and that of the stock market. That is, interest rates remaining so low (bond prices so high) suggests that the bond market is signaling anything but robust economic growth going forward -- while stocks at record highs may be interpreted as a signal of blue skies to come. The questioner added that in his view "those bond guys are smart" and wondered if perhaps they have it right when all is said and done.

Saturday, July 22, 2017

Stat of the Day: How Trump's start stacks up...

It's a popular notion in some circles that this year's positive stock market start has a lot to do with our new president. Well, we gotta be careful with that, for, as I pointed out in a recent post, if Trump had taken office in January 2008 he'd be unfairly catching the blame for the worst bear market/recession since the Great Depression.

Friday, July 21, 2017

This Week's Message: One area that warrants caution...

Here's an unlabeled 64-year graph that I'd like you to take a look at:   
click any insert to enlarge

Wednesday, July 19, 2017

This Week's Video: A Quick Technical Indicator Update

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Tuesday, July 18, 2017

Quote of the Day

Edwin LeFevre, in his timeless 1923 classic Reminiscences of a Stock Operator (the reputed story of Jesse Livermore, and perhaps the greatest book on trading of all time), spoke facetiously to why we so consistently question herein the motives of the tipsters and prognosticators the financial media trots out to steal your attention (if not your money):

Sunday, July 16, 2017

Charts of the Day: Small businesses are getting a little impatient with Washington...

While the factors that underpin the continuing bullish setup for stocks can be debated, the one area where I have found last year's election to have been unambiguously positive is the NFIB's monthly small business survey (aka Small Business Optimism Index).

Quote of the Day

The siren song of populism can be very hard to resist (btw, I'm not entirely unsympathetic to the independence the folks in Great Britain were after). When, however, and alas, it wins what it plays for, it can be costly for the populace:

Friday, July 14, 2017

This Week's Message: On the ground, things look good...

Fed Chair Janet Yellen gave her 2-day semiannual report to Congress this week and offered up what you might say was a moderately optimistic view of the economy going forward. Like us, the Fed tracks an array of published economic data to gauge its view of general conditions.

The Fed's overall assessment is what guides its monetary policy moves. Our overall assessment influences (technical data plays prominently into our view as well) the sector and regional weightings within our portfolios' equity exposures, and -- along with our technical market assessment -- guides our approach to the fixed income allocation.

Wednesday, July 12, 2017

Quote of the Day: Stealing the benefits of a steel glut...

Driving by Clovis Community Hospital yesterday evening I noticed a large construction project on the south-end of the complex. The setting sun reflected brilliantly off of the building-to-be's dense steel skeleton. I suddenly found myself pondering the current threat of what I consider to be the most destructive government act of cronyism imaginable -- the tariffing of foreign imports.

Monday, July 10, 2017

Chart of the Day: China Risk

To the dismay of those who've been betting big that China's gotten too far out over its skis, its economy remains unwilling to buckle under the weight of a rapidly expanding credit system.

Friday, July 7, 2017

Charts of the Day: Who Buys U.S. Exports?

As we all know (right?), political narratives (influenced dictated by political incentives) often stray far from reality.

Amazingly, two countries that combined account for less than 4% of the world's economy (ex the US) buy an astounding 1/3rd of U.S. exported goods!

Thursday, July 6, 2017

This Week's Message: Trade Data Says Global Economy Growing -- which has to have (some) short-term traders wary...

Thursday morning we added two charts (U.S. and Australian trade data) to our current trends file. Both speak positively about the current state of the global economy.

While we believe the U.S. trade deficit receives far too much, and ill-conceived, attention, we do look into the data to help gauge our view of the global economy. We agree with Bloomberg's note below that American export growth speaks positively:   click charts to enlarge...

Wednesday, July 5, 2017

This Week's Video: The U.S./Foreign Equity Setup Vs A Year Ago

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Sunday, July 2, 2017

Quote of the Day: Know the risk before you go chasing the return!

Highly respected money manager Colm O'shea, in his interview for the Market Wizards series, explains why he bought beaten down Berkshire Hathaway amid the late '90s dotcom mania:   (emphasis mine)

Friday, June 30, 2017

Quote of the Day: Know the difference between the wind and the tide!

In an interview for Jack Schwager's Market Wizards series, uber-successful money manager Colm O'shea offers the perfect analogy for why -- as we continue to illustrate herein -- we focus on prevailing long-term trends and the fundamental backdrop:

Thursday, June 29, 2017

This Week's Message: How's the present look compared to what we presented in our 2016 year-end letter?

Well, we're halfway through 2017, and so far so good. In this week's message we're going to take a look back at our 2016 year-end commentary and compare the signals we illustrated then against the progress 6 months hence.

Wednesday, June 28, 2017

Quote of the Day: The Key to U.S. Business, and Investor, Success in the Years to Come!

Sticking with this morning's theme (globalization), here are a few excerpts from yesterday's Bloomberg Economics Asia brief:     emphasis mine...
China's transformation from rags to riches isn't over quite yet.
... the China miracle is set to continue with its per capita GDP seen rising to 64th out of 166 countries by 2022, up from being the 133rd-poorest in 1992 — on par with Haiti and with over half its population living on less than $2 a day. The current $16,676 per capita GDP level is already higher than Brazil's when adjusted for purchasing power, according to a Bloomberg analysis of International Monetary Fund data.

This Week's Video: Investing Globally

One point we've made consistently herein over the past year+ is our view that the rest of the world, particularly Europe, lags the U.S. in terms of the economic cycle. We've also noted via video(s) that global equities (again, particularly Europe's) have underperformed the U.S. for an unusually long stretch. Hence, our persistent optimism over European equities.

Tuesday, June 27, 2017

Friday, June 23, 2017

Is The Eurozone's 'Recent' Underperformance Something to Sweat?

While our core Eurozone ETF (FEZ) has produced a substantially higher year-to-date return versus the U.S. market (5.9% better as of this morning), the past few weeks have been an altogether different story (FEZ was better by a whopping 11.4% on 5/19).

Click to enlarge...

Thursday, June 22, 2017

Stat of the Day: Abnormal Volatility

While the headlines have indeed been volatile thus far in 2017, the U.S. stock market has been anything but. The S&P 500's largest drawdown year-to-date has been a measly 2.8%! While applying that percentage to the Dow would be -600+ points, in the historic scheme of things, make no mistake, that's measly!

Wednesday, June 21, 2017

This Week's Message: Eeyore Would Be a Star!

In two recent blog posts I touched on the seemingly popular notion that a market at all-time highs is doomed to collapse under the weight of its all-time-highness, and on the dire prognostications of a gentleman who -- despite his dismal track record -- receives a visionary's welcome by the mainstream financial media.

As regular readers/viewers know, we prefer to let the somewhat slow-moving, generally boring and often redundant data do the talking. No wonder CNBC never calls us for an interview!

Tuesday, June 20, 2017

Charts of the Day: Embracing (as an investor) Globalization!

In my June 3rd blog post I suggested that Western investors would be ill-advised to ignore China's Belt and Road Initiative.

Monday, June 19, 2017

Quotes of the Day: Stockman Strikes Again -- Or, Perhaps -- Stockman Strikes Out Again (time will tell)

David Stockman -- a man who has leveraged his tenure with the Reagan administration to the absolute hilt -- has a warning for all investors:
"This is one of the most dangerous market environments we've ever been in. It's the calm before a gigantic, horrendous storm that I don't think is too far down the road."

Friday, June 16, 2017

Chart of the Day: Financial Sector Breadth

The financial sector -- our presently highest target weighting -- seems to be finding its legs.

Thursday, June 15, 2017

This Week's Message: The Fed's Green Light -- And Its Implications

In last week's message I shared an email conversation where I suggested that despite present yield spreads denoting a low financial risk environment (essentially paving the road to higher interest rates), folks were nonetheless willing to buy bonds. Here's that part:

Wednesday, June 14, 2017

How to Sleep Well Amid Uncertainty

As the market traverses present-day domestic politics, geopolitics, central bankers, corporate earnings and economics, it's incumbent upon you (the investor) and us (the investment counselors) to keep our thinking above the fray.

Tuesday, June 13, 2017

That the-market's-gotta-come-down-because-it's-at-an-all-time-high attitude...

Last year, when the S&P 500 moved into all-time high territory with momentum, a trader friend or two asked for my view on what to short. It wasn't "if" to short, it was literally "what" to short. The sentiment there was that the market surely couldn't sustain that level and, therefore, virtually had to come crashing down. Since the data we track suggested otherwise, I had nothing to offer in response.

Monday, June 12, 2017

This Week's Video: Putting Recent Volatility Into Context

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Saturday, June 10, 2017

What the &$#! Happened Yesterday?

Really rough day for tech stocks yesterday:    click charts to enlarge...

Quote of the Day

The great challenge as a market participant is of essentially the same mental character that has us interpreting the world around us in a manner that fits what we desire, and/or supports our personal biases.

Friday, June 9, 2017

This Week's Message: The Age of the Machine Has NOT Risen -- OR -- The Effects of Little League Games and Piano Recitals

I need to preface the following with the acknowledgement that, as with virtually everything else in life, future market prices are undeniably uncertain. Stocks can fall out of bed at anytime for any reason -- whether they've enjoyed an uptrend lasting 8 years, 8 months, 8 weeks, 8 days or 8 minutes. They can fall from what some construe as great heights, they can fall from any number above zero... 5,000 was considered a great height when the Dow reached that milestone back in November 1995:

Wednesday, June 7, 2017

This Week's Video: Sectors Sending Mixed Signals

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Saturday, June 3, 2017

While Western Leadership May (or may not) Resist Belt and Road, Western Investors Absolutely Should Not!

From Bloomberg's May 12, 2017 Economic Brief:
China is one of the few countries in the world today with money to spend, and Xi Jinping is ready to write some checks.
Those checks would be written to fund China's "Belt and Road Initiative".

Friday, June 2, 2017

Quote of the Day: Really? Tax reform in the face of such perverse incentives??

All in favor of tax simplification say "aye". AYE!!! All opposed say "nay". ..................

I know that all of you, umm, well....., we do have a client/subscriber or three in the tax-planning business (each of whom I respect and admire [sincerely!])..... so let's say most of you sympathize with my AYE!!

Thursday, June 1, 2017

This Week's Message: Are Stocks Dangerously Expensive? -- AND -- Highlights of our in-house study on the financial sector

Here's a look at our tracking of current-year price to earnings ratios for the S&P 500 (spx), major U.S. sectors, and much of the rest of the world -- along with our target allocation percentages:   click charts to enlarge

Sunday, May 28, 2017

Quote of the Day

As you've gathered, our chief aim herein is to help our readers/clients keep the day-to-day world of markets in proper perspective, and to keep their eyes on the long-term ball.

Saturday, May 27, 2017

Quote of the Day

I can virtually assure you, any ad for a sure fire investing/trading system isn't worth the cost of whatever medium utilized to bring it to you (in the olden days we said "the paper it's printed on").

Thursday, May 25, 2017

This Week's Message: What Motivates the Seers

RBC's guy feels very good about the market these days:              emphasis mine...
(Bloomberg) -- Risk assets should continue higher amid an economy that’s in good shape, barring “some exogenous event,” and “bearish arguments appear to be increasingly contrived,” RBC strategists led by Jonathan Golub write in a note. * Drivers of market upside include: synchronized global pickup, easier lending conditions, improving consumer situation, renormalization of rates and corporate profits.....
And, clearly, he's in no mood for dissenting opinions.