Sunday, May 19, 2019

What The Past Two Weeks Told

Two weeks ago yesterday I posted "A Telling Two Weeks to Come!". In it I stated that the following pending events would help us gauge stock price-action going forward.

Friday, May 17, 2019

Headline of the Day: Could Be a Game Changer (If a Harbinger of Things To Come)

The Dow just staged a 300-pt turn around on the following headline:

Yesterday's Log Entries and This Week's Message: We Should Be Skeptical

Yesterday's log entries pretty much cover my view of immediate-term conditions. Bottom line; we should be skeptical of the staying power of the three-day rally. Beyond the immediate-term, overall general conditions, while reflecting what I'll call trade-war strain, are not at this point rolling over and signaling eminent recession/bear market.

Thursday, May 16, 2019

Brief Commentary on The Latest Action (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:

Wednesday, May 15, 2019

Chart of the Day: Loud and Clear on the Economics of Tariffs!

Take a look at the market (S&P 500) reaction immediately upon news that the President is delaying (for 6 months) his decision on whether to impose tariffs on European cars:

This Morning's Log Entry; A Most Timely Selloff!


In yesterday’s log entry I suggested that if this week’s data reflects what we’re seeing in our PWA index (a weakening [but not yet recessionary] economic backdrop), it’ll add incentive for the Administration to abandon protectionism as a strategy for combating protectionism.

Well, we’ll soon find out, as U.S. retail sales and industrial production both missed expectations this morning – following week overnight data out of China – and stocks are trading lower in the premarket as a result.

Tuesday, May 14, 2019

Education on International Trade (really should say "required reading", but it's entirely up to you)

I'm thinking that all of the present hullabaloo around trade makes -- for those interested -- for a wonderful (and extremely important) learning opportunity!

For my part, here are four quick and easy videos I produced before the present administration came to be (so you know, none of my recent carping is the least bit politically-inspired), and a blog post I penned last year.

Quote of the Day: Markets Scratching Their Heads

I agree with the following from Bloomberg macro strategist Cameron Crise's commentary this morning:

This Morning's Log Entry

Trump was clearly rattled by yesterday’s market action; during a speech last evening he suggested that we’ll know if we have a [China trade] deal in 3 to 4 weeks: he said “we’ll see, but I think we’ll get a very good deal”. On that, U.S. equity futures went from red to modestly green; trading notably higher in the cash session this morning. 

Monday, May 13, 2019

Brief Commentary on Today's Selloff (video)

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This Morning's Log Entry: This Week's European Tariff Deadline

5/13/19 Monday


Equity futures are selling off markedly this morning on Trump’s weekend China-trade tweets and China’s stated resolve.

Yesterday's Log Entry: Not Yet Buying This Decline, Or Jumping Ship

5/12/19 Sunday

While I certainly wouldn’t advocate panic at this juncture, I am nonetheless amazed at the sanguinity (if not complacency) I’m witnessing among much of the investment community, amid what is clearly an escalation of trade tensions. I read where one well-known technician deems last week’s late-week bullish action as a signal that we’re near the end of this brief, and modest, selloff, and that new all time highs will soon be at hand. Bespoke Investment Group, whose research I hold in high regard, sees the present as an attractive buying opportunity for equity ETFs, particularly many non-US offerings. I continue to see references to “a very strong and resilient U.S. economy” and how it’ll hold up against the trade war headwind well into the future.

Well, while I like the sound of all of that, I presently do not share the near-term optimism, for the following reasons:

Friday, May 10, 2019

This Week's Message: Surreal! (required reading)

Per many of my latest blog posts, I've been guarded in my assessment of the market's near-term probabilities. And while this week's 2+% declines in the S&P and the Dow, and 3+% decline in the Nasdaq, support my assessment, if you had told me that come Friday's close we'd be looking at a scenario that had tariffs ramped up on Chinese imports, and trade talks concluding with no followup on the calendar (although both sides dubbed this week "constructive" and vowed to continue negotiating), I'd have told you to look for a selloff easily doubling what actually occurred.

This Morning's Log Entry

5/10/19 Friday


As I type the Dow future contract is pointing to a 90–pt decline at the open. Given the hike in tariffs overnight, Trump’s tweet this morning that essentially said there’s no rush and that tariffs are good, the potential for him to announce tariffs on European cars next week, the pending details on how China will retaliate, and the odds that the EU will respond aggressively to any hike in U.S. protectionism make the shallow depth of this morning’s futures selloff – not to mention the modest rally occurring in European equities (and the overnight rally in China [although I suspect state-backed buyers stepped in big time) – frankly, surreal!

Thursday, May 9, 2019

Complacency Update

I've been noting of late what I view to be a dangerous degree of complacency among market players in certain circles.

Now you'd think that with this week's wake-up call we'd be seeing those snoozers on the bullish (short-term sentiment) side of the boat begin to, well, wake up.

The Only Question Remaining

Given all of the news, commentary and rhetoric around the China trade deal over the past 48 hours, I am now more convinced that my following narrative captures the current state of affairs than I was when I penned it Monday evening. The only question remaining; how much of a hit will the market need to take to permanently pound home the economic reality of tariffs and, thus, inspire a complete change of tactic going forward?

Wednesday, May 8, 2019

Brief Commentary On The Latest Action (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:

This Morning's Log Entry


U.S. equity futures are bouncing around a bit this morning; going from notably negative to flat, now moving lower once again.

Tuesday, May 7, 2019

Bonus Chart of the Day: Our Three Top Weightings Look Relatively Cheap

Yesterday afternoon the Fed released its latest "Financial Stability Report"; its findings suggest that the Fed has some concerns over asset valuations and debt levels (related to businesses) in the U.S. economy. On the plus side the report states that household borrowing remains modest relative to incomes, and sub-prime (credit score) borrowers' debt levels remain "flat". Banks remain in very good shape, as do insurance companies, and hedge fund leverage "appears to have declined over the past six months".

This Afternoon's Log Entry

After suffering a 600-pt decline the Dow rallied back to close down 470 points in today’s session. The late-day buying has carried through a bit into the after-hours session.

Chart of the Day

While it's good sport to profess that the U.S. jobs market suffers at the hands of outsourcing to technology and offshoring to cheaper foreign labor markets, by some apparent miracle the U.S. jobs market remains remarkably robust.

Last Evening's Log Entry (The Sooner the Selloff the Better!)

5/6/19 Monday


Today saw a stellar rebound from a 470-point Dow plunge at the open. The plunge was entirely warranted based on Trump’s Sunday Tweet, the rebound occurred on news that China’s negotiators are nonetheless coming to Washington this week for the next round (was originally billed as the last round) of talks; a scenario that was in question at the market open this morning.

After hours, however, Lighthizer stated that indeed tariffs will be raised this Friday, per the President’s tweet, despite the scheduled talks. Apparently this is in response to China’s reneging on previously agreed-upon provisions in the draft deal. U.S. equity futures immediately tanked on Lighthizer’s announcement; with the Dow dropping by 200+-points, SPX down 20+.

Monday, May 6, 2019

Back to Where We Started

In reviewing my market log entry from Saturday (logged after completing my weekly macro analysis), it occurred to me that after the President's Sunday surprise tweet, the market's strong initial response, and the subsequent rally nearly all the way back on news that China's negotiating team looks to be nevertheless descending upon Washington this week, we're virtually right back to where we left off last Friday.

This Morning's Underwhelming Response to Overwhelmingly Negative News

Overnight, Dow futures traded as much as 600 points lower; as I type the Dow's down merely 170. The depth of last night's lows came on news that China may all-out cancel the trade talks, in response to Trump's Sunday tweet threatening to severely exacerbate the "trade war" (in response to China reneging on previously agreed-to terms). 

High Stakes Poker

Clearly, a record-level stock market, a strong jobs number last Friday and a positive Q1 GDP read has the President feeling like he’s holding the chips, and the winning hand, in the current game of trade poker with China; as he just doubled-down in response to what he apparently views as his opponent's bluff.

Sunday, May 5, 2019

Currencies' Reaction to Today's News

I know, more than you need on a quiet Sunday afternoon, but I also know that a fair number of readers look to me to keep them abreast of what I'm seeing/thinking.

Quotes of the Day

Bloomberg's economists pretty much echo my earlier comment regarding what's behind the President's risky move this morning, and that it will "focus the market's attention" on trade; specifically on China's top negotiator's Washington visit this week. 

This I Did Not Expect!

While I've expressed serious concern over the extent to which tariffs will continue to play a roll in U.S./rest-of-the-world trade relations going forward, this I did not expect:

Saturday, May 4, 2019

Friday, May 3, 2019

This Week's Message: Concerned (Near-Term) About Complacency (video)

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This Morning's Log Entry

The April jobs number was just released and it was definitely good: 263k new jobs (vs 190k expected), 3.6% unemployment rate (down .2% from March) and 3.2% average hourly earnings growth (same as March). However, average hours worked and the labor force participation both legged just a bit lower.

Thursday, May 2, 2019

This Morning's Log Entry

The Fed, per yesterday’s post-meeting commentary, shares our view on the state of general conditions. Powell’s comments regarding the present lack of inflation (transient), despite doing a bit of a number on stock prices (as I hinted it might in yesterday’s entry), were, all things considered, right on the money. That said, this morning’s strong productivity report suggests that there’s possibly room for certain pressures to run (notably) before we see above-Fed target (2%) inflation.

Wednesday, May 1, 2019

Quick Comment on Today's Action

The Fed left rates unchanged and, in their official statement, along with Powell at the presser, gave an overall upbeat assessment of general conditions. Powell stated that, in the committee’s view, the lower than expected inflation of late is transient and will likely not persist for too long going forward. I entirely agree.

Data of the Day: ISM Survey Speaks To What Most Concerns Me At The Moment

In this morning's log entry I noted that data this week has been "net positive". Well, the exceedingly important ISM (Institute for Supply Management) Manufacturing Survey results were released this morning, and they lower that net (relative to expectations) number just a bit.

This Morning's Log Entry: The Fed Announcement Today Will Be Telling

The week so far has seen no letup in this earnings season’s high percentage of bottom-line beats (relative to lowered expectations). Even top-line numbers, which have been relatively disappointing in terms of % beats, have shown a notable pickup in that category over the past few days.

Tuesday, April 30, 2019

Bonus Headline of the Day

In theory, the market should rally on this one. It'll test our currently cautious near-term assessment:
"President Donald Trump and leading Democratic lawmakers agreed that $2 trillion were needed for a plan to overhaul U.S. infrastructure..."

Headline of the Day

In case you're wondering what's ailing the market this morning (Dow down 130), here you go:

This Morning's Log Entry: In No Mood to Rally -- And, Alas!, THE Existential Economic/Market Risk

The Dow future contract was up 100 points in the premarket on McDonald’s earnings beat, however, since the open it’s been vacillating around the flat line. GE also just posted an earnings beat, and while MCD has already come back down to earth, GE is still up 7% as I type.

Google missed its number after the close yesterday, which is weighing heavy on the stock this morning, Apple reports after the close tonight.

Monday, April 29, 2019

Sunday, April 28, 2019

Earnings Season Signals

While Q1 earnings season has a ways yet to run, enough companies have reported at this point for us to begin gleaning general market signals from the results.

Saturday, April 27, 2019

Hoping We Avoid "A World of Pain"

Believe me, it is my sincere hope that we'll soon be able to dispense with our intense focus herein on the present state of international trade relations. 

Otherwise, as Asia Society Policy Institute president Kevin Rudd states at the end of the 2-minute video clip below:

This Week's Message: Still A Mixed Picture

I think the best way to describe my current read on the vast array of economic and market-related data that we track week in and week out is (as it was a month ago) simply "mixed".

Friday, April 26, 2019

Chart of the Day: Digging Into This Morning's GDP Number

Again, the GDP number was fine and speaks to our present macro assessment: Conditions aren't what they were a year ago, but they're certainly okay.

Now, that said, as we dig into the report, we look to assess its quality to determine if the headline number reflects the kind of growth that says we should expect more good things going forward.

This Morning's Log Entry

U.S. equity futures turned green this morning, after trading in the red overnight and early morning, on the better than expected GDP print. However, beyond the initial reaction, futures have vacillated around the flat line.

Thursday, April 25, 2019

Somewhat Doubting These Levels, In The Very Near-Term (video)

Warning! This one is ideal for those of you who like digging deeper into the weeds. That said, for those who perhaps don't, you may still want to take this one is, as it offers a bit more insight into my somewhat guarded-sounding commentary of late...

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:

How To Legitimately Deal With China

On the topic of tariffs, I've been asked during client review meetings, and via email from blog subscribers, what other solutions might there be to the legitimate issues surrounding global trade.

Here's essentially my response (taken from an email conversation yesterday morning):

This Morning's Log Entry


Yesterday saw selling into the close, confirming my view that sentiment among traders is presently waning.

After the close Facebook and Microsoft beat earnings estimates handsomely, and, therefore, their shares are trading up 8% and 4% respectively in the premarket this morning. 3M (MMM) on the other hand lowered guidance, citing (like CAT yesterday) dynamics around China sales as a concern going forward.

Wednesday, April 24, 2019

Chart of the Day: CAT and The Economy

Caterpillar (CAT) is of particular interest to us for two reasons: One, it sits prominently in our industrial sector allocation (7th largest position in XLI), two, its global sales results are one of the 86 data points that make up our PWA [Macro] Index.

Brief Commentary on the Latest Action (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:

Tuesday, April 23, 2019

Quote of the Day -- And -- Via A Letter to the President, An Excellent Primer on The Tariff Issue

Here's Thomas Fang (UBS Head of China Equities), from a Bloomberg interview this evening, on UBS's base case for U.S./China trade negotiations:

This Morning's Log Entry

4/23/19 Tuesday

Equities are rallying nicely this morning on very good corporate earnings results. Interestingly, the bond market ain’t buying it (TLT [long-term treasury bond ETF] is also trading higher this morning).

It’ll be interesting to see if traders don’t fade this morning’s strength, if not today, as the week progresses.

Monday, April 22, 2019

Latest Log Entries

4/22/19 Monday

Last Thursday’s positive momentum died overnight as reports that Chinese authorities are concerned with the bubbly nature (in terms of the speed of the advance) of this year’s huge rally in Chinese equities and, thus, are inclined to ease back on the stimulus.

Per this weekend’s log entry, despite generally strong internals (and seasonality), in my view the very near-term setup is showing a few cracks.

Friday, April 19, 2019

This Week's Message: Just Ain't Feeling It

With a consistent slew of decent enough data releases (not too hot [to embolden the Fed] and not too cold [to worry about recession]), with a start to the earnings season that has thus far seen 72% of S&P 500 members beat bottom line expectations, with relatively (or perhaps ostensibly) positive headlines around ongoing U.S./China trade negotiations, with Brexit now on hold till the fall, and with a presidential impeachment seemingly off the table, one might think that the U.S. stock market would be barreling through last September's all-time highs. 

Thursday, April 18, 2019

Goldilockish Data

My overall assessment of today's U.S. data releases is that -- from an equity market perspective -- one almost couldn't ask for more. I.e., the numbers are good enough to imply that recession risk remains notably low, but not so good as to suggest that the Fed needs to cool things off by raising interest rates anytime soon. Call it Goldilockish...

Here's my rundown:

#1 Corporate America Worry

Indeed -- as some friends and colleagues have stressed to me in response to my persistent whining over the perniciousness of protectionism -- tariffs may very well be simply the negotiating tool of choice by the Trump Administration. Nevertheless, per the 54-second clip below, JP Morgan's chief quantitative strategist agrees that they pose a "headwind" (in my view THE headwind) and finds them to be literally the number one "discussed topic" (read worry) among corporate America. He also stresses, as our analysis suggests, that good things are likely to happen if/when that headwind abates (provided general conditions hold up in the meantime):

Wednesday, April 17, 2019

This Morning's 2nd Log Entry

Forgot to touch on the health care sector earlier...

Clearly, health care stocks are doing a number on the major averages of late.

This Morning's Log Entry

This morning's log entry only reflects my view of the short-term setup. For a deeper dive, and insight into what guides our allocation decisions, be sure to watch my latest video commentary (if you haven't already):

4/17/19 Wednesday

Tuesday, April 16, 2019

This Morning's Log Entry


Futures are pointing to a strong U.S. open this morning after an impressive overnight rally in China and positive earnings reports in the U.S. premarket; 9 of the 10 companies reporting exceeded earnings estimates, with the 10th meeting expectations.

Monday, April 15, 2019

Weekend Log Entry

Once again, I offer up my very short-term (inexhaustive, and always subject to abrupt change) assessment with some reservation. I.e., there's no trading advice herein, and you have to consider the following within the context of our exhaustive longer-term assessment. With the latter in mind, in case you missed it, be sure and watch last weekend's video commentary. 

I think the most you can glean from the following is that we're in for a pickup in near-term volatility:

4/13/19 Saturday

Near-term positives:

Sunday, April 14, 2019

Optimism Picking Up! Uh-Oh!

Sentiment is definitely picking up.

The widely watched American Association of Individual Investors (AAII) weekly sentiment survey presently shows bullishness rising/bearishness falling:

It's Not Just Me

In our year-end 2017 letter I reported the following:
"...our macro score presently sits at a very bullish +60, with 85% of the data reading positive, 3% negative and 12% neutral."

Saturday, April 13, 2019

This Week's Message: Highlights From Our Current Assessment of General Conditions (video)

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Friday, April 12, 2019

Quote of the Day

JP Morgan CEO Jamie Dimon, in this morning's earnings conference call, sang the same tune we've been singing herein for months.

This Morning's Log Entry


U.S. equity futures are set to open sharply higher this morning on positive bank earnings reports (JPM in particular), on strong loan growth out of China, on a huge rally in Disney shares (per yesterday’s announcement that its streaming service [that’ll be unprofitable for years btw] is about to come on line), and on news that Chevron has agreed to pony up $33 billion to purchase Anadarko.

Thursday, April 11, 2019

This Morning's Log Entry

Jobless claims took another incredible turn lower this week, other now-non-confirming related data (Challenger’s job-cut report, and JOLTs), however, suggest that this record trend of record low jobless claims may be nearing its end. This morning’s PPI report showed producer prices rising above consensus expectations. Futures sold off, but only momentarily, on the inflation data, as traders are sensitive to any data that might have the Fed rethinking their uber-dovish stance.

Wednesday, April 10, 2019

Post Fed Minutes Log Entry

11:15am Fed minutes (from the March meeting) released this morning pretty much confirmed the message of “patience” delivered by Powell's post-meeting commentary. However, the media made strong note of the fact that some members of the committee stressed their concern with that characterization, in that should things heat up and they feel the need to hike rates, it potentially conflicts with their would-be actions in a way that could hamper the committee’s ability to affect conditions with their verbiage in the future.

This Morning's Log Entry

Equity futures are pointing to a slightly higher open this morning. Yesterday's selloff was all about uncertainty over the present state of global general conditions, exacerbated by the U.S. proposing tariffs on $11 billion worth of European goods.

Tuesday, April 9, 2019

Brief Market Update (video)

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Monday, April 8, 2019

Piling Into Financials

A couple weeks ago I shared our current narrative on the financial sector. Here's a snippet:

Sunday, April 7, 2019

This Evening's Log Entry

My entire log entry this evening is too wonky for public consumption, but I do think it's worth offering up the highlights. 

I'm essentially skipping the minutia on the pricing signals of the various markets I track during the evening session.

Friday, April 5, 2019

This Week's Message: Why the Blah Reaction to the Impressive Jobs Report?

In light of legitimate fears among the punditry over the state of the economy, today's employment report was virtually perfect: 196,000 jobs created, 3.8% unemployment, and decent wage growth.

Log Entry

4/4/19 Thursday


The world is waiting with bated breath for news out of this week’s trade talks. Trump met with China’s lead negotiator today and afterward said that they’re close but not there just yet.

Thursday, April 4, 2019

Update On The Latest Action and Current Conditions (video)

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This Morning's Log Entry

German factory orders just released for March were abysmal; confirming other data of late that suggests the German economy is in anything but good shape presently.

Wednesday, April 3, 2019

This Morning's Log Entry

News that the U.S. and China are in “90%” agreement on the terms of a draft trade deal has futures rallying notably this morning. Global services PMIs coming in virtually across the board good is no doubt helping along what has been a broad overnight global rally.

Tuesday, April 2, 2019

Newsflash of the Day!

The following from The Financial Times just crossed my screen:
Top US and Chinese officials have resolved most of the issues standing in the way of a deal to end their long-running trade dispute...
Of course U.S. equity futures immediately went from red to green on the above newsflash. Thing is, the Dow future contract, for example went from down 50 to up 40, not from down 50 to up 400 (and some [a bunch]), as you might expect on such news.

THE Uncertainties in the Market

If you think I've been overemphasizing the monster economic and equity market risks inherent in a global trade war (I've been accused of such during President Trump's tenure), take 1 minute 43 seconds and listen to why the World Trade Organization just downgraded its global trade estimate to a 3-year low.

To regular readers this will sound very familiar:

This Morning's Log Entry

U.S. futures are flat this morning after trading lower most of last night. Treasuries were notably higher (yields lower) overnight, but they’re coming back a bit this morning.

Monday, April 1, 2019

Today's Log Entries


Per yesterday's entry, futures are pointing to a sharp spike higher at the open this morning (spx +20). Given ample liquidity and ho-hum sentiment readings, there’s the potential for sustainable upside from here. Although there are definitely risks looming that could limit the gains, if not see stocks lower: The biggest being trade talks, next being Brexit and U.S. data.

Sunday, March 31, 2019

This Morning's Log Entry

As you've noticed, I've gotten into the habit of often sharing my internal log entries herein. Feedback from clients suggests that there's a demand for these high-frequency daily musings. While, given that demand, I'll continue to offer up commentary that I believe will help readers keep the short-term in perspective, a word of caution: My sharing, as I do this morning, of a short-term hypothesis is absolutely not to be considered a prediction nor trading advice to our readers! Make no mistake, the secret to long-term success for 99% of investors, is, in our view, to understand the macro and to catch the major, long-term market moves, while not attempting to time the short-term fluctuations. 

Think of these log entries, as well as the videos, as simply my attempts to help you understand what's going on in the markets and, most importantly, to help you keep your heads about you amid the constant media onslaught. 

3/31/19 Sunday Morning

China’s manufacturing PMI came in well above expectations yesterday (services beat as well, but the world is focused primarily on manuf), which offers evidence that the global slowdown may be bottoming. Other global data, while very mixed, has me leaning toward that hypothesis as well.

Saturday, March 30, 2019

Chart of the Day

To help you appreciate our focus herein of late on trade negotiations, and Brexit -- and to set your expectations for lots of volatility over the next few weeks (in both directions) -- here's a look at Thursday's (White House econ adviser L. Kudlow's comment) and Friday's (Teresa May's Brexit plan voted down, again) action in the U.S. equity market:

Green arrows highlight strong gaps higher at the opens (btw, tough to write with a mouse).... click to enlarge...

Quotes of the Day

While I've disagreed plenty with Mark Zandi, Moody's chief economist, over the years, I strongly believe (as I've preached herein and in client meetings an nauseam) that he's spot on when it comes to the economic and political consequences of not soon settling the trade war with China.

Friday, March 29, 2019

Positive Headline and Quote of the Day

While the market gave back some on the news highlighted below this morning, make no mistake, if Mr. Qaurles is correct in his assessment, this is unequivocally good news:

This Morning's Log Entry -- And -- This Week’s Message: Mixed Picture

Chinese stocks screamed higher last night on news that trade talks with the U.S. were constructive, as China pledged greater than previously-proposed measures related to IP theft and forced technology transfer.

Thursday, March 28, 2019

This Morning's Log Entry

The market is basically directionless at the moment, with the S&P trading within a range from 2780 to 2820.

Wednesday, March 27, 2019

Brief Commentary on General Conditions, Present Risks, and the Current Market Setup (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:

Tuesday, March 26, 2019

Quote of the Day

Bloomberg's Andrew Mayeda shares my view of the extreme political risk in not coming to workable terms with China, and speaks to the market risk inherent in a deal that does not include a rollback of existing tariffs:   emphasis mine...

This Morning's Log Entry

Equity futures are pointing to a strong open this morning. To the extent that the yield curve inversion drove stocks lower on Friday, it would make sense that traders would either, 1, rotate back into stocks as they get their heads around the historical average length of time between inversion and recession (18 months) -- when, that is, an inversion presages a recession, or, 2, chalk it up to the yc inversion exacerbating already palpable global angst over the prospects for a protracted trade war (drawing in Europe) amid slowing, but not on balance recessionary, global economic conditions, and, thus, take the buying opportunity Friday offered up – as the consensus base case is that trade tensions will abate markedly over the next few weeks. Plus, and this is a huge plus!, central banks en masse are currently efforting mightily to maintain easy monetary conditions.

Monday, March 25, 2019

A Further Selloff Is Not To Be Bemoaned

Last Friday's blog post was subtitled "We Need A Selloff Right Here". My premise was that a strong stock market at this juncture was counterproductive to ultimately positive results around what I view as the market's greatest current headwind, the U.S./China trade war.

Sunday, March 24, 2019

Saturday, March 23, 2019

This Week's Message: Scary Yield Curve, Scared German Manufacturers, and What's Really Troubling the Market...

The consensus among financial pundits is that yesterday's global stock market drubbing was catalyzed by the inversion of the Fed's favored yield curve signal; the 3-mo/10-yr treasury yield curve.

Friday, March 22, 2019

Perspective On Today's Selloff (video)

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This Morning's Log Entry: We need a selloff right here!

Wednesday’s rally on the Fed decision, then the plummet immediately following Powell’s press conference made perfect sense to me – after hearing Trump proclaim that he has no interest in rolling back tariffs as part of a China deal. Therefore, Thursday’s big rally surprised me – I was absolutely expecting follow through selling.

Thursday, March 21, 2019

Still -- for the moment -- Skeptical

This morning's very strong rally is simply that, thus far, very strong. Volume is above average and breadth (advancers vs decliners) is outstanding!

Last Night's Log Entry

Here's an excerpt from last night's log entry. And, per paragraph two, stocks are set to open lower (although could be, or get, worse) this morning:

This evening China is surprisingly (although the Fed announcement was extremely bullish for EM [bearish the dollar]) trading higher, as are SPX futures, although the latter are losing steam at the moment.

Wednesday, March 20, 2019

Brief Commentary on the Latest Action (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:

Unfortunate Headline of the Day!

Not the headline the market was looking for!

Tuesday, March 19, 2019

This Evening's Log Entry

Stocks completely gave up what was an impressive move further above what had been stiff resistance. The selloff was in response to news that Chinese trade negotiators were backing away from what had been pre-commitments on issues around intellectual property. Followup articles reported that China’s threatened reversal is inspired by the U.S. not committing to the rolling back of tariffs introduced by the Trump administration.

Headline of the Day

Stocks, in a virtual instance, gave up the majority of their gains this morning on the following headline:

This Morning's Log Entry

The market is rallying this morning on the latest EU/UK developments virtually assuring a Brexit delay, and on expectations for an un-eventful wrap up tomorrow of this week’s Fed meeting. A rebound in Boeing, as well, is helping the Dow. 

Saturday, March 16, 2019

This Morning's Log Entry

My short-term chart character analysis to end last week speaks bullishly about global equities’ prospects in the near-term, but somewhat discriminatorily:

Friday, March 15, 2019

Quote of the Day

The snippet below from Econoday's highlights of today's U.S. Industrial Production report speaks to what we've been preaching herein ad nauseam for the past couple of years: Protectionist policies (read tariffs) -- as I attribute no small measure of the present global slowdown to such -- are unequivocally no way to promote a nation's economy at large, let alone even the sector(s) such acts are ostensibly designed to protect:  emphasis mine...

This Week's Message: Encouraging Breadth (video)

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Thursday, March 14, 2019

This Morning's Log Entry

Clearly, Trump is bothered by pundits in the media suggesting that he’s desperate for a China trade deal. Thus, he’s pushing back with statements that he’s “in no hurry”, that he “could walk away”, and so on. Additionally, the latest stock market strength, he believes, gives him that prerogative.

Wednesday, March 13, 2019

Today's Log Entry

I need to preface this one with a huge caveat: While it might appear that I am making a prediction in today's entry to our internal market log, that's not how I view it. Instead, my current (always subject to change) "6-month thesis" (abbreviated version below) is simply the laying out of my current (always subject to change) base case.

Brief Commentary on the Latest Action (video)

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Friday, March 8, 2019

This Morning's Log Entry

China’s trade activity has plummeted, relative to expectations, European growth has been subdued and the U.S. is clearly showing cracks; virtually all of it related to slowing global trade, and the uncertainty/fear that it engenders.

Thursday, March 7, 2019

Brief Commentary on the Latest Action (video)

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Wednesday, March 6, 2019

This Morning's Log Entry/This Week's Message: It's All About U.S.-Messaging On Trade!

China continued its strong rally overnight while U.S. equities remain in apparent consolidation mode below 2800 on the S&P 500 and above its 200-day moving average.

Tuesday, March 5, 2019

Long-term Signal Encouraging (video)

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This Morning's Log Entry

Chinese equities bucked the trend last night by not following Wall Street’s lead lower; the Shanghai and Shenzhen indexes closed up .9% and 2.2% respectively. New fiscal and monetary stimulus, along with the promise of a trade truce, is inspiring a risk-on mood in China.

Monday, March 4, 2019

Are We Staring Into a Sell-the-News Scenario?

A growing theme among market pundits is that the ending of the U.S./China trade spat is already baked into the stock market; i.e., it's a "sell the news" event. Hence today's selloff.

Waiting for Detail

The S&P's down 32 points as I type, the Dow's off roughly 360; volume's a little below average for this time of day (suggesting there's no panic in this morning's action). Early on we saw both indices nicely higher on news that a trade deal is near. 

This Morning's Log Entry

This week’s important data releases (construction spending, ISM Services, new home sales, Beige Book, jobs, etc.), barring any huge surprise in the jobs number, will be overshadowed by trade headlines. Domestic politics will continue its steady stream of sound bites that have, thus far, been ignored by markets. Asian markets closed higher, although well off of their overnight highs, U.S. equity futures are set to open higher.

Sunday, March 3, 2019

Politician Do What Politicians Do, The Unfortunate Headline of the Day, And You're Likely Missing the Point...

Updated Tuesday 3/5/19

Indian Prime Minister Narendra Modi rode to office on the promise of massive economic reform, job creation, and so on. And, yes, a number of measures have indeed moved the needle and inspired a great amount of foreign capital interest in India's huge potential.

Generation Z May Surprise You -- OR -- Is Millennial Socialism a Byproduct of a Strong Economy?

So, do the macroeconomic conditions prevailing during one's upbringing impact one's idea(s) of how things should be?

Recently I offered my two-cents on "millennial socialism", as, apparently, per the polls, a large swath of millennials share "socialist" values. The following, from Visual Capitalist, introduces us to the next generation to enter the fold; Generation Z, those born between 1997 and the early 2010s, who make up 25.9% of the population.

Saturday, March 2, 2019

Brief Commentary on the Latest Action (video)

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Friday, March 1, 2019

This Morning's Log Entry

2/29/19 (7:18am)

A 200+ point Dow move on positive trade news and decent overnight data has faded on a weaker than expected ISM Manufacturing survey and a consumer sentiment reading dropping 2 points for February.

This Week's Message: The Fed 'Ultimately' Back In Play Would Be A Good Thing!!

The Caixin Manufacturing PMI for China came in just a shade below 50 last evening, which was a marked improvement over the previous month. Asian equities moved from red to green on the news, rallying hard into the close on that and on positive trade news.

No Worries Over the Housing Market

If you've been worrying about the current state of the housing market, well, you can stop now.

Here's Bespoke Investment Group's summary of yesterday's data release:

Thursday, February 28, 2019

This Morning's Log Entry

This morning's Q4 GDP estimate was net positive; above expectations growth with tame inflation. The Fed is safe to sit back and watch as 2019 unfolds, which bodes well for stocks.This week's dip in equities has been notably tame thus far considering the resistance zone the market presently sits in. 

Wednesday, February 27, 2019

Just Because It's Interesting OR Intermarket Relationships Are Key!

"So why was Caterpillar up today if it just got seriously downgraded?"  asked our crazy-smart, inquisitive, CCO (Chief Compliance Officer) Jeannette this afternoon. I said "well, could be because there's evidence out there that maybe global construction isn't about to go rolling off into the abyss after all. In fact, copper, (that ubiquitous construction input) is painting an altogether different picture."

The Trade War's Doing A Number On Business Investment!

When questioned before Congress this morning on the impact of the "trade war" with China, Fed Chair Powell confirmed that respondents to the many surveys the Fed performs have major concerns, and that in some cases it is indeed influencing their expansion plans.

This Morning's Log Entry

Domestic politics, geopolitics and the Fed are providing some push/pull for the market this week; while the S&P bumps up against what has been very strong technical resistance during the current correction:


Tuesday, February 26, 2019

This Morning's Log Entry


The strong near-term setup is getting tested by Trump’s “maybe there’ll be no deal” (on China) statement yesterday, as well as on China’s followup comments which expressed a somewhat muted optimism. Neither commentary, however, suggests that there’s any credible growing threat to an ultimate deal, at this point. 

Despite the strong near-term underpinnings,  given the speed of the move off of the 12/24 low, traders might very well take any excuse to take some profit right here.

Monday, February 25, 2019

Brief Market Update (video)

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Sunday, February 24, 2019

This Morning's Log Entry

This coming week will be interesting, if not telling. Trump appears to be at odds with Lighthizer; this has been a long time coming. Lighthizer’s history, and utter lack of economic tutoring (by his own admission) always made him a strange, and dangerous, pick for the top trade post. Up to him, the negotiations would drag on and tariffs would likely rise in the meantime. I.e., if it were up to him we’d be staring down stronger odds of a near-term global recession; although he – as his words and actions dictate -- would be oblivious to the risk.

Friday, February 22, 2019

This Morning's Log Entry and This Week's Message: Europe's Trade Negotiation Strategy, If....

A consensus seems to be growing that since a trade deal with China is a virtual certainty, it’s already in the market. If that’s the case, we should anticipate a sell-on-the-news scenario.

Thursday, February 21, 2019

Quote of the Day

This, from the President this morning (on 5g), should be music to every investor's, and consumer's, ear:  emphasis mine...

This Morning's Log Entry

U.S. equity futures and Asian stocks rallied notably last night on news that the U.S. and China are drafting a multi-point plan to end the trade war. That rally, however, completely reversed on followup news suggesting there remains a marked lack of detail. News that China is banning Australian coal imports seemed to shake global markets a bit as well.

Wednesday, February 20, 2019

Market Update (video)

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Sunday, February 17, 2019

My two cents on "millennial socialism"

The following from this week's issue of The Economist speaks to what my study and observations of the past 30+ years has me concluding:

Saturday, February 16, 2019

This Morning's Log Entry

Stocks maintained strong gains throughout the day yesterday, then rallied hard into the close; traders were more than comfortable being long into the weekend. This pattern of late day buying during the current rally is hugely bullish.

Friday, February 15, 2019

This Morning's Log Entry

Optimism from U.S./China talks and positive earnings news out of Europe have stocks rallying hard this morning.

This Week's Message: All You Need To Know About the Latest Market Action

While the following is no doubt our shortest weekly message ever, it tells you all you need to know about the latest market action.

From Steven Drobney's extremely instructive Inside the House of Money:   emphasis mine...
"Sometimes speculators add to volatility, other times they dampen it. The important point is, they don't influence the trend; underlying pressures along with policy decisions drive market events."

Thursday, February 14, 2019

Quotes of the Day: Too Much Emphasis on Trade??

If it seems like we're beating the global trade issue to death here on the blog, well, I just read the transcript from today's Coca-Cola (that great American brand) earnings conference call.

Headline of the Day

Confirming what we've been preaching herein ad nauseam, just when the major averages were on the verge of green this morning, this headline hit:

This Morning's Log Entry

Dow and S&P futures this morning went from nicely positive to flat on higher than expected weekly jobless claims and lower than expected m/m PPI, then completely rolled over on hugely worse than expected December retail sales.

Wednesday, February 13, 2019

My Two Cents on the Share Buyback Debate

A hot topic, among many others, today is the push to regulate share buybacks by our iconic U.S. brands. Surprisingly, even some on the right (Marco Rubio anyway) find it to be (please pardon my cynicism) politically expedient to join the chorus.

Market update, and what we're looking out for going forward (video)

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Tuesday, February 12, 2019

This Evening's Log Entry


The latest BofA/ML mutual fund manager survey shows a presently high level of bearishness among respondents and cash positions at their highest since 1/09.

No Need To "Bring Back the Jobs" -- And Quote of the Day

This morning's Job Opening and Labor Turnover Survey (JOLTS) for December (1 million+ more job openings than there are folks looking for work), once again tells us that, contrary to popular political opinion, the U.S. labor market is in no way hurting from the strategic movement of some production to the world's lower-cost labor markets.

Chart of the Day: Foreclosure & Delinquency Data Say Something

In a weekend blog post I illustrated the market's view of the present state of U.S. housing (bullish). Keeping with that theme -- by way of foreclosure and mortgage delinquency rates -- here's more evidence from this telling sector that the U.S. consumer-driven economy, not to mention the financial condition of the U.S. consumer him/herself, remains in pretty decent shape:

Monday, February 11, 2019

Today's Log Entry


Big overnight gains in Asia and Europe didn’t translate to gains in the U.S..

Quote of the Day

As I stated on Saturday (and a zillion times previously), trade is THE global issue of the day -- and is utterly huge in terms of the direction of the economy and the markets going forward.

Sunday, February 10, 2019

Charts of the Day: Housing Stocks Say Something

Each week I perform a detailed technical analysis of the equities that make up the key sectors of the economy. While these analyses help me gauge to what extent, if at all, we should be exposed to a given sector, I'm also looking for any and all signals pointing to the state of the overall economy.

Saturday, February 9, 2019

This Week's Message: Strong Internals, Worrisome Externals (video)

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Friday, February 8, 2019

Chart of the Day: Nothing Panicky At This Point

While 500ish points of Dow downside (yesterday and so far this morning) is an attention getter, at this point, it's been pretty blah.

Last Night's Log Entry

The market fell apart today when Larry Kudlow suggested that the U.S. and China are essentially nowhere near a trade deal. This is yet another instance where Trump and another adviser or two (in this case Mnuchin), literally hours before Kudlow’s comment, touted great progress and a deal in the near-term offing – only to see the resulting rally quashed by conflicting signals coming literally from someone on the same team.

Thursday, February 7, 2019

Trade Wars: The Pain and the "Gain" (video)

If you're interested in understanding the cold realities of protectionism, this short clip touches on the long-term commonsense of the issues of the day, as well as where all of the short-term thinking comes from.

Headline of the Day

This headline speaks directly to the closing message of this morning's  video commentary:
"Dow drops 250 points after Larry Kudlow says US and China still far away on trade deal"

Brief Look At This Week's Action (video)

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Quotes of the Day: No Surprises Here

Reuters this morning speaks to the point I made in yesterday's log entry, as well as to the roiling markets have taken due to the trade war. None of this should be of any surprise to anyone who remotely understands modern-day economies and markets.

Wednesday, February 6, 2019

This Morning's Log Entry

Clearly, as the Australian central bank joined the flock of doves this week, the world’s central bankers are, on balance, in anything but a tightening mood these days. While, global growth has definitely slowed, Q4’s near bear market in global equities is what truly captured the world’s monetary policy makers' attention.

Tuesday, February 5, 2019

Brief Look At The Latest Action (video)

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Monday, February 4, 2019

Tracking our dollar thesis...

In our latest annual message I made the case for a weaker-trending dollar this year partly based on the prospects for a rotation away from U.S. equities into non-U.S. equities; those found in the Eurozone in particular:

Sunday, February 3, 2019

My Two Cents On The Tax Debate

While, like most folks who pay taxes, I'm never one to turn down a tax cut, I often find myself explaining to clients how a recession in the near-term would be unusually tough to combat using conventional fiscal and monetary means. 

Friday, February 1, 2019

This Week's Message: Still Ample Fear Out There (video)

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So, Is The Fed Suddenly Back In Play?

In a log entry this week I predicted that the jobs number would be good this morning "but not a repeat of last month's 300+k." Boy was I wrong! The January number was +304k!

Thursday, January 31, 2019

Quote of the Day: "A Conjunction of Positive Factors"

Here, Benjamin Robinot, a credit specialist and adviser to a high-yield fund in Asia, is speaking to the prospects for Asian junk bonds going forward. However, he speaks to the prospects for the global economy this year as well. 

This Morning's Log Entry

Foreign data came in mixed overnight, with China’s PMIs suggesting that its slowdown may be finding a bottom, and Eurozone GDP numbers looking okay, save for Italy, which remains ugly.

Wednesday, January 30, 2019

Video Commentary: Technically Constructive

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This Morning's Log Entry

Private payrolls came in at +213k, vs +174k consensus estimate, while pending home sales came in at -2.2%, vs +0.3% estimate. Mortgage purchase apps fell 2.0%, however the reading (along with the previous two) remains above the post-crisis low in 2010.

Tuesday, January 29, 2019

Chart of the Day: Concerned Consumer!

If you've figured that the Q4 stock market plunge and the government shutdown has/had weighed on the consumer's psyche, you've figured correctly. Today's Conference Board's consumer confidence survey release is concerning!

Chart of the Day: European Stocks Painting a Decent Picture

While global growth continues to wane, with Europe being no exception, European cyclical stocks are outperforming defensives (less economically sensitive) markedly.

Monday, January 28, 2019

Today's Log Entry


Fed meeting this week: No change in rates, “patient” and “data dependent” will be the message; a statement that they’ll use all tools when needed (including balance sheet) will be given in the Q&A. Anything less dovish will likely spark a selloff in equities.

Brief Commentary On This Morning's Action (video)

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Saturday, January 26, 2019

Abating Headwinds Could Create That Rare "V" (video)

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Friday, January 25, 2019

This Week's Message: "Mixed", At This Juncture, Is Good

As long-time readers know, in addition to the data we track within our proprietary index, I maintain a "monthly trends" file where I simply copy and paste data and news articles that speak to the present state of global general conditions. 

Thursday, January 24, 2019

Quote of the Day: Wisdom to live by!!

If I had a nickel for every time, over the past 34 years, a client asked me what I think about the prognostications of, say, Ron Paul, Peter Schiff, David Stockman, Harry Dent, Jimmy Rogers -- or any of the folks who find themselves in front of the national media prognosticating on the decisions, emotions, desires and whims of 7+ billion Earthlings -- man I'd have me some serious nickels!

This from Bloomberg's Cameron Crise is wisdom to live by:

Why The Market Hates The Trade War

For readers who perhaps don't sympathize with my repetitiously-stated concerns over protectionism, perhaps they'll take the latest from Fortune's CEO survey to heart.

Wednesday, January 23, 2019

This Morning's Log Entry


Selloff yesterday turned out to be on either erroneous or reversed news regarding the cancelling of upcoming trade talks. The market bounced back strongly this morning, however the gains are waning. Headlines suggest the market struggling here is about weakening economic growth prospects.

Tuesday, January 22, 2019

Headline of the Day

In this morning's video commentary I pointed to the high likelihood that 2630 on the S&P 500 would be tested (on the way down) this week. Well, that was quick, as I type the index trades at 2626.

Not Nearly Out of the "W"oods Just Yet (video)

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Sunday, January 20, 2019


As the presently hot topic of trade rears its head during virtually all of our client revue meetings of late, it becomes abundantly clear to me that many, if not most, folks sympathize with the narrative that the U.S. has been taken advantage of for years by its trading partners, the focus of late being on China.

Saturday, January 19, 2019

This Week's Message: Enjoy Your Coffee, But Don't Let It Sway You!

The reality that markets are mere reflections of human action has been a growing theme herein of late. And while that's easy to get, and should go without saying, it is the most important distinction that I hold firmly in mind as I go through my daily and weekly exercises in pursuit of the knowledge of the state of general conditions.

Thursday, January 17, 2019

Charts of the Day: Unequivocally Bullish Action

In a Tuesday blog post I offered up the following:
While the trading off of the December 24th low has indeed been bullish (late intraday buying, rallying amid bad news, strong breadth, etc.), I want our clients to understand (if not expect) that a testing of that Christmas Eve low remains a distinct possibility. Although, again, the action of late has been encouraging...
Should the bulls succeed 2600, 2630 (where the next resistance line meets the 50-day moving average [green line]) will be the next big test.

2018 Year-End Letter, Conclusion

Link to Part 1  (What Makes Us Tick)
Link to Part 2  (General Conditions)
Link to Part 3, Sectors  (Steep Corrections During Expansions)
Link to Part 3, Sectors  (Financials and Industrials)
Link to Part 3, Sectors  (Technology)
Link to Part 3, Sectors  (Materials and Energy)
Link to Part 3, Sectors  (Cons. Discretionary & Comm. Svrcs.)
Link to Part 3, Sectors  (Healthcare and Cons. Staples)
Link to Part 3, Sectors  (Utilities and REITs)
Link to Part  (Bonds and Gold)
Link to Part 5  (The Dollar)
Link to Part  (Global Investing)

In our 2018 year-end message 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 our present sector and regional weightings. We shared our views on the importance of maintaining a global investment mindset and we expounded on why we think that many currency traders once again may be on the wrong side of the dollar going into 2019.

Wednesday, January 16, 2019

U.S. Housing Not So Bad

Whether we're talking the stock market or economic indicators, we are forever looking at how prices/activity responds to the overall character of the news related to a given market or to a given segment of the economy.

Quote of the Day: The ECB "has the [Eurozone] market's back"

In our 2018 year-end letter's section on the dollar I pointed to low expectations for the Eurozone economy leading to a softer European Central Bank, and how that, along with low relative valuations for Eurozone equities and our view that recession risk for now remains low, makes for a bullish setup for the region's stocks, as well a bearish one for the U.S. dollar (a bullish scenario for equities the world over).

Tuesday, January 15, 2019

Chart of the Day: Don't Break Out Your Rally Hat Just Yet!

As I illustrated for you over the weekend, 2600 on the S&P 500 stands to be a tough technical level to beat in the near-term.

2018 Year-End Letter, Part 6: Global Investing

Other than updating the accompanying charts, and my closing comments, there's really no improving on our 2017 letter's section on global investing. Ironically, as I type here today, Brexit remains an issue (mentioned in the 2016 must watch video), and while Italian banks aren't as forefront as they were then, the new populist Italian regime definitely is (although they did finally come to terms with the EU recently on what initially was an utterly ridiculous budget proposal).

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.

Headline of the Day

If you're wondering what happened to this morning's strong rally in the Dow (up triple-digits to down single-digits), here's your answer:

Monday, January 14, 2019

Quote of the Day: Hard Brexit Bad For The Economy, And, Thus, The Politicians...

In "The Dollar" section of our 2018 year-end letter, one of the bullet points on why I anticipate a downward bias for the greenback was the economic, and, thus, the political risk inherent in a hard Brexit. The following from Bloomberg's Markets Live Blog this evening speaks to that point:

Sunday, January 13, 2019

2018 Year-End Letter, Part 5: The Dollar

In the dollar section of our 2017 year-end letter we made our contrarian (currency traders were betting the dollar would fall) case that the dollar was likely to trend higher throughout 2018. Here's our final paragraph where we acknowledge the difficulty in predicting and the would-be benefit if we happened to have been wrong:

Saturday, January 12, 2019

A Tough Test for the Recent Rally is Imminent (video)

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Friday, January 11, 2019

Quote of the Day: Morgan Stanley Sees A 'W' Coming...

Last Thursday I pointed to strong historical evidence that the deep correction low reached on Christmas Eve will ultimately be tested, creating your typical W pattern, as opposed the V pattern that's developed thus far. Morgan Stanley's chief strategist Mike Wilson, per below, thinks it's virtually assured. 

This Week's Message: Realistically Optimistic, For Now...

Your preconceptions, if not your predisposition, could have you judging the graph below in either a positive or a negative light.

Here's our money market fund assets chart since the last recession:

Thursday, January 10, 2019

2018 Year-End Letter, Part 4: Bonds and Gold


We'll limit our narrative on bonds to the investment grade space (high quality corporates and treasuries) and keep it short and sweet.

Wednesday, January 9, 2019

It's Very Windy Out There!

Apple just cut its iPhone production by another 10% and the World Bank just lowered its global growth forecast for 2019, and the stock market just posted its 8th up day out of the last 10.

Charts of the Day: It's All About Trade, At the Moment

Traders came into the morning expecting a strongly positive statement from the U.S. team after concluding 3 days of talks with China's trade negotiators.

Tuesday, January 8, 2019

The Shorts Are Back, In Force...

On occasion herein I'll make reference to "short interest" or to the "shorts" when referring to traders who are betting that the market (or a given stock, commodity, etc.) is about to fall. Shorting is the act of selling borrowed shares with the expectation that they'll be returned to the lender after the borrower repurchases them at a much lower price; the difference being pocketed by the borrower.


To give you a feel for how sensitive the stock market is to the trade negotiations with China, here's the Dow this morning:

Monday, January 7, 2019

2018 Year-End Letter, Part 3: Sectors: Utilities and REITs


We stuck with our zero target to utilities throughout 2018, despite the end of year economic uncertainty that saw the sector slip into the green with a 1.4% gain on the year. While a 1.4% gain sounds like nothing to write home about, it did land the sector in 2nd place on the year, behind healthcare (+3.4%).

Data of the Day: The Economy's Doing Okay

The Institute for Supply Management's December services sector survey says the economy is still expanding, although at a slower pace of late. December's score of 57.6 represents a sharp decline off of November's 60.7.

Sunday, January 6, 2019

2018 Year-End Letter, Part 3: Sectors: Healthcare and Consumer Staples


In last year's letter we expressed our view that, given our assessment of general conditions at the time, the healthcare sector -- with its defensive nature -- was likely to under-perform the more cyclical sectors in 2018. Although we nonetheless felt that the sector held sufficient prospects to justify a high single-digit weighting.

Saturday, January 5, 2019

This Week's Message: The Intraday And The Big Picture (video)

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Friday, January 4, 2019

2018 Year-End Letter, Part 3: Sectors: Consumer Discretionary and Communication Services

Consumer Discretionary:

Take a look at the top 10 names in our core consumer discretionary sector ETF:

Home Depot
Booking Holdings
General Motors

2018 Year-End Letter, Part 3: Sectors: Materials and Energy


I could essentially copy and paste our outlook for the industrials sector and insert materials. Recall that I cited materials as vying for the top spot with industrials as 2018's most frustrating sector.

In a nutshell: Materials still warrant a 15% target weighting in our view; based on generally decent (still) macro conditions, the prospects for a sizable infrastructure spending bill in the U.S. sometime in 2019 (yes, this one has bipartisan support), and, contrary to our view coming into last year, the prospects for an on balance weakening U.S. dollar during the course of 2019.