Pillars of Equity Rally Fall Away

Stock buybacks have been an important feature of the equity rally.  Companies have used low rates and easy credit to borrow money and used it to buy their own shares back.  An identity for a company’s share price is: S = (revenues * margins * P/E) / # of shares. ...

US Inflation and Wages Continue to Turn Up

The key message from our leading indicators is that US inflation and wages continue to turn up.  This was one of our core themes for 2014 we discussed in December last year and is bearing out.  Core inflation and headline inflation are positive, while wages are...

Profit Margins to Head Lower, Equities to Suffer

Profit margins in the US have hit modern-day record levels, and this has been used to help justify high equity valuations.  Consensus estimates are for profit margins to remain steady, or even increase from current levels.  We disagree for ironclad economic and...

Thinking about retirement in the US

Gone are the days when financial advisory could boast the same professional stability as a well seated doctor or lawyer. Herding people through the door and offering them a standard 60/40 portfolio  invested in the in-house equity and bond funds was a simple and...