Aug 6, 2020 | US Equities
Outside of technology and the FAANGs, US equity markets are pricing in a stalling of the economic recovery. The ratio of cyclical to defensive sectors has been trending sideways since the early June peak, as has the ratio of small-cap vs large-cap equities (top-left...
May 28, 2020 | China, US Equities
The collision of two powerful and opposing forces has created an uncertain outlook for equity markets. Aggressive stimulus from the Fed – which Powell says has “no limits” – has caused the monetary base to surge relative to the equity market cap (top-left...
May 21, 2020 | US Equities
“All investing is value investing” according to Charlie Munger, with today’s market continuing to offer more value from the mispricing of existing company assets relative to growth assets. Firstly it is important to point out that exceptionally cheap value stocks are...
May 14, 2020 | US Equities
The overvaluation from long-term averages for US stocks in recent years has been well known to equity investors. Unfortunately, valuations give you no information on timing – they tell you how far you’re likely to fall, but not when. The virus, specifically the...
Apr 30, 2020 | North America, US Equities
There have been five major bear markets in the S&P since the Depression, with each one experiencing rallies along the way that turned out to be false dawns. Each of these rallies felt real at the time, and there was a solid belief that the bad news that caused the...
Mar 27, 2020 | US Equities
Earlier this month, the S&P and gold both collapsed on the same trading day, which is extremely rare. The top-left chart shows that in the past 20 years, the only times gold was down more than 3% while the S&P is down more than 5% was last week and back in...
Dec 18, 2019 | US Economy, US Equities
The auto and housing sectors are two parts of the economy that are highly sensitive to interest rate changes. In light of the Fed’s dovish pivot at the start of the year, culminating in 3x25bps of interest rate cuts, we would expect activity in both sectors to surge....
Nov 13, 2019 | US Economy, US Equities
The S&P has been very resilient this year in the face of slowing growth, falling earnings and trade war uncertainty. However, underneath the surface, market rotations have been very bearish. Over the past year, high-yield credit has underperformed investment grade...
Oct 11, 2019 | US Economy, US Equities
With consumer confidence measures released a couple of weeks ago, we have observed an interesting divergence between the University of Michigan consumer sentiment index and Conference Board consumer confidence index (top-left chart). When we plot the spread and...
