As the megacap stocks fueling the rise of the Nasdaq 100 (QQQ) continue to rocket upward, investors can easily believe the bear market beginning sometime late 2021/early 2022 is over. The fly in the ointment here is that the vast majority of stocks in the market are not participating in the uptrend. Below, the team at Schwab provides good information around this topic. (more…)
Below are excerpts from Blaine Rollins’ latest collection of market and economic observations and data. There continues to be an extraordinary lack of consensus around any market narrative. Thus, we keep chopping around mostly sideways in the broad market while the heavy-hitters of the market are perceived as the safest bet to make in the stock market. Stocks have strong competition also as short-term debt instruments offer 5%+ returns for little to no risk. At some point, this all breaks down. But that breakdown could well be a surge of money into the rest of the stock market which one of Blaine’s sources below shows is rather cheap these days. Given that such an outcome is talked about relatively little, perhaps it’s the most likely destination for stocks? (more…)
There is no shortage of commentary and hand-wringing about a coming recession. In the piece below, one Fidelity analyst posits that the recession may have already occurred. Here is Denise Chisholm’s analysis:
“Did we already have a hard landing? The National Bureau of Economic Research (NBER) hasn’t officially called a recession, but signs suggest that we may have already had a fairly bad one. One of the most consistent recession indicators has been a contraction in real wages (adjusted for inflation), which happened in every recession since 1962 except the 2020 COVID shutdown (chart hereunder). Real wages declined throughout 2022—falling more than they did during the Great Recession—as inflation outpaced wage growth. Real wage growth may have bottomed last fall; a rebound could provide a tailwind for the economy and the stock market. (more…)
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Markets continue to slog their way back and forth within a fairly tight range, bouncing between scenarios for a recession (or not), interest rate pauses from the Fed (or not), and just what is happening with the banks(!). Mixed signals abound. Despite corporate earnings coming in well above fears, the uncertainties noted keep investors from pursuing any consistent meaningful direction. (more…)
Below is Delta Research’s take on the current market conditions. Volatility has plunged from the bank crisis in March and is approaching the low end of its range for the post-pandemic cycle. Following Delta’s review, we post a more bearish, fundamental driven, outlook from Bank of America as an example of the type of bearish thinking Delta refers to. (more…)
Fidelity provided an update on where they see global economics this week. The nation’s largest administrator of 401k plans finds much of the world in late-cycle growth mode where credit gets tighter, earnings struggle, and economic growth slows. The next step is recession, which is what the vast majority of the economic watchers have been projecting for some time now. (more…)
Here at TimingCube, we begin by acknowledging that investing is a difficult endeavor emotionally; that human beings are mostly built to FLEE RISK and EMBRACE CERTAINTY. To be a successful investor, we are told, you must buy when others are fleeing and get comfortable with uncertainty – in other words, act completely opposite to what most human beings are hard-wired to do. We are told that the inherent volatility of the stock market is an OPPORTUNITY for you to buy low and sell high.
At TimingCube, we deal with this dichotomy between the design of human emotions and having to act seemingly against that emotional design by building quantitative models to REMOVE EMOTION from investing. By removing the emotion, we can use the model to give us more certainty and less exposure to risk, putting us in cash when markets are acting up and volatility is high. That pursuit of SAFE INVESTING is what we strive for. (more…)
Below, Schwab’s research group offers its quarterly outlook after a choppy first quarter that ultimately saw a strong rebound in megacap tech stocks while small-cap stocks went nowhere.
“There’s an old saying about Federal Reserve tightening cycles: The Fed “tightens until something breaks.” Cracks emerged during the first quarter of this year, as rising rates, tighter lending conditions, and shrinking liquidity weighed on economic growth. The banking system turmoil that emerged near the end of the quarter was an unsettling addition to investor concerns. (more…)
The stock market appears to have shrugged off the recent bank crisis and is ready to press upward. Does this mean the bear market is over? We have a couple of competing views below. First, Delta Research provides an overview of the market and reasons for the recent thrust higher. Second, Barron’s offers a warning. Third, we have a chart that supports both cases, depending on your perspective. (more…)