Wednesday, February 28, 2018

Nothing Surprising Here!

Day's like yesterday (Dow down 399) and today (Dow down 382) almost demand that we say something here on the blog (not that it takes much to get us saying stuff here on the blog).

Our Quick Take on Housing

One might surmise that rising interest rates would be a no-brainer reason to short (sell) housing-related stocks. And this morning's report on pending home sales -- down 4.7% month-over-month -- certainly supports that notion. 

Tuesday, February 27, 2018

Why stocks are struggling a bit this morning...

From this week's message: (be sure to read the whole thing)

This Week's Message: Rallying on the Wrong Theme!

Regular readers know that we remain constructive on global equity markets going forward. In fact, "constructive", frankly -- based on the weight of both the technical and fundamental evidence -- puts it mildly. I.e., We're -- heightened volatility notwithstanding -- downright bullish for the foreseeable future. That said, I find the otherwise impressive two-day (last Friday and yesterday) rally uninspiring. 

Monday, February 26, 2018

Stats of the Day, Plus a Heads Up

To put it bluntly, U.S. companies are doing exceptionally well at the moment. 

The following charts and commentary from Bespoke Investment Group tell the story:

Wednesday, February 21, 2018

Uncertainty Is A Certainty

Just a couple quick thoughts to help you put today's action -- the Dow first rallying 300, then declining 460 presumably in response to the release of the Fed's January meeting minutes -- into perspective.

Monday, February 19, 2018

This Week's Message: General Conditions Update -- And -- Timeless Insight

Our job, as we see it, as portfolio managers is to make sure that each client's portfolio is properly aligned with present general conditions. Our job, as we see it, as portfolio counselors is to make sure that each client's portfolio is aligned with his or her personality. 

Frankly, the latter is every bit as critical as the former, and in many ways it's the more challenging of the two!

As for us as portfolio managers: We just completed this week's technical analysis and updated our macro index. Here are the highlights:

Saturday, February 17, 2018

A Complete Sissy of a Correction So Far!

If you really think the current, or previous (if it's indeed over, which I dunno) correction is/was scary, horrific, terrifying or just plain bad, well, historically-speaking -- and to prepare yourself for the future -- you need to think again.

Friday, February 16, 2018

Today's Data Make Sense

This morning's economic releases happen to jibe with what we've been reporting herein; that is, an improving economy with an attendant pick up in inflation. 

Thursday, February 15, 2018

Chart of the Day: Home Builders Aren't Sweating Higher Mortgage Rates

The National Association of Home Builder monthly sentiment index (January's results just released) -- one of the 79 inputs to our macro model -- suggests that while housing contractors are struggling with shortages of land and labor, they aren't sweating the prospects for higher mortgage rates in the least:

How to Make "The Big Money"

Circa 1923, the otherwise media-aloof Jesse Livermore confided in journalist Edwin Lefevre and gave the world what became in my view history's greatest written work on the stock market. Livermore's observations are as pertinent, and prescient, today as they were nearly a century ago.

Wednesday, February 14, 2018

This Week's Message: Feeling At Home In The Markets

Having spent nearly my entire adult life in the investment arena, I must tell you that I feel completely at home in the stock market. That is, on behalf of myself as an investor, and on behalf of my family's financial well being, there's virtually no amount of volatility that rattles me. And it's instructive for you to know why.

Inflation Up! Duh!!

As I type Dow futures have dropped from +150 to -230. A 380 decline that began the minute the January Consumer Price Index came in at +.5% versus the +.3% consensus expectation. Yesterday virtually all of the experts were -- and clearly the "smart" money was -- betting it would come in below, at, say, .2%; thus quelling, for the moment, the market fears over higher interest rates. I sure saw it in rallying gold and bond prices yesterday, (bonds tanking [rates rising] as I type) and in equity futures this morning.

Stat of the Day: U.S. Companies Doing Pretty Okay On The Global Stage!!

If you happen to be of the mind that somehow U.S. companies are getting a raw deal on the global stage, well, we're looking at the best bottom and top-line growth we've seen in many years and, ironically, the companies whose earnings and revenues come mostly via foreign customers are the cheif difference makers. I.e., they're seeing markedly better results than those whose earnings come primarily from within (although the latter's ain't nothin to sneeze at either!). Of course the weak U.S. dollar certainly hasn't hurt:

Tuesday, February 13, 2018

Stats of the Day: Small Business Attitudes And Present Recession Risk

Small businesses employ 2/3rds of the U.S. workforce. Hence, the monthly NFIB Small Business Optimism Index is one of the 79 inputs to our macro model.

Here's this morning's release:   click to enlarge...

Monday, February 12, 2018

Uninspired to React

Those of you who'd prefer to see the present correction end sooner than later will like how the market at least opens this morning. Those of you who understand that corrections amid a strong overall setup are the healthiest of things might prefer that it last a bit longer and purge a few more excesses. Best I suppose to be oblivious to the short-term and simply take what we get.

Sunday, February 11, 2018

Volatility Is Good News For Financials!

In our year-end letter we mentioned that our expectation for market volatility in 2018 was, ironically, one of the positives for financial firms' earnings going forward:

Saturday, February 10, 2018

Charts of the Day: Earnings Results Thus Far

While you wouldn't know it by recent price action, the current earnings season -- with over a thousand U.S. companies having issued their Q4 results -- thus far ranks among the best since the early 2000s.

Thursday, February 8, 2018

Your Daily Dose of Perspective: Awfully Windy Up There!

While I suspect we've said about all there is to be said about the present state of the market and the economy (btw, economic data has only gotten better this week [hence the interest rate fear]), we're feeling we should pop in on you, nonetheless, given this morning's 600+ point decline in the Dow. 

Wednesday, February 7, 2018

Bonus Chart of the Day: One You'll Like, But Still....

We're guessing you'll like this chart and commentary from Bloomberg; operative words being "during non-recession years."

This Week's Message: The Basics of This Particular Selloff, And Sour Grapes for Flat Footed Gurus

The last few days have seen a remarkable – relative to very recent history – selloff. Based on media accounts you’d think we’re seeing a shakeup that rivals history’s “worst”. When, in fact, this is the fifth time during the current bull market where a 7-day stretch has seen at least a 7% drawdown.

The question of course is, do present conditions suggest that this could be the beginning of something far more pernicious? While it’s of course within the realm of possibilities, the answer from the data is a resounding no.

Chart of the Day: Don't Hold Your Breath

In a blog post yesterday we featured a chart of the five periods during the present bull market that saw a 7%+ decline over 7 trading days. 

Tuesday, February 6, 2018

Times Like These (video)

You gotta be thinking that all we do here is blog. Actually, you'd be surprised how quickly we can churn these things out. I guess I've been writing on markets for so long that it just flows easily.

The reason you get so much, particularly during times like these, is because unequivocally times like these bring out the worst in individual investors. Times likes these are when their emotions can get in the way of prudent long-term investment management. I.e., times like these are when investors make the biggest mistakes!

Not An Economic Phenomenon, Not At All Unprecedented Even During The Current Bull Market, And, Again, Likely Not Over Just Yet

Along with our investment in the Bloomberg Terminal (considered the most robust data source for the investment industry), we've found our relationship with premium research provider Bespoke Investment Group to be most valuable over the years.

Video Commentary: The Selloff In Perspective

Today's video commentary is brief and to the point. Please take a minute and take it in:

Monday, February 5, 2018

The Mechanics of The Seloff -- And -- Expect More Of The Same For Awhile Longer

Yes, we've been preaching herein that volatility is coming, and that, in light of the extreme lack thereof for a record period of time, it was likely going to be uncomfortable at best. And while we're very much within the % range of your garden variety correction, the speed in which we got to this point, I must confess, I find remarkable.

More on History and Volatility

Not that we're not generally active here on the blog, but it's times like these when we get to step it up several notches. 

It's tempting to pull from the archives of past market corrections and offer up the quotes, videos, stats and so on from times when the market saw every bit (more at times) of the rapid % declines we're presently experiencing; times when the Dow was multiple thousands of points lower than where it is right now. We of course may indeed resort to that, but, for this particular post, I can draw from something as recent as 2 weeks ago.

Bonus Stat of the Day: Services Sector Remarkably Strong

This morning's release of the Institute for Supply Management's Non-Manufacturing Index for January speaks to the strong reading we're getting from our macro index (illustrated for you in this morning's video commentary). Read Bloomberg's notes for the detail:

Video Commentary: The Facts (the data) As To Why We're Not Remotely Concerned 'At This Juncture'

Toward the end of the video I suggest that follow through from Friday's selloff over next few days or weeks should be something to expect. I also emphasize that it would be the norm, and that the lack of volatility we've experienced over the past year is anything but.

Stats of the Day: Global Economy

Well, the recent dip in stocks has nothing to do with the strength of the global economy. Here are the freshly released service sector Purchasing Manager Indices for 13 major economies. 50 and above denotes economic expansion:

Friday, February 2, 2018

Quote of the Day: 3% Pullbacks Since the 1920s

If you're thinking this week was at all unusual, you'll think differently after you read the following.

This Week's Second Message: My Thoughts From Last November

Don't know if you're at all rattled by today's "plunge" in stock prices, but, seriously, we haven't been kidding here on the blog when we've said that such action is long overdue, and, in fact, necessary for the ongoing health of what remains for now a bull market.

I keep a journal that I've found to be most helpful for my own keeping-things-in-perspective. Below is the 11/10/2017 entry (unedited, other than bolding). 

The Heck Is.........

So, the U.S. economy created a net 200,000 new jobs in January, employee wages rose at the fastest pace in 9 years, and 95.9% of Americans show up somewhere to work most days of the week. On top of that, half of the S&P 500's constituents have reported 4th quarter results with 77% beating analysts' earnings estimates and 67% exceeding revenue expectations.

And, as I type, the Dow's down 400 points. What the heck?