interest rates

Weekly Update

The Bond Market Beckons?

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Published September 15, 2023

 

With our focus on the Nasdaq 100 (QQQ), we do not actively invest in bonds in our models. However, we know that many of our subscribers do. Below we offer the latest output from Delta Research. We hope you find it of interest.

“The iShares Core US Aggregate Bond ETF (AGG) representing investment grade, U.S. corporate debt was down -1.77% in 2021 and -13.02% in 2022. 2022 was by far its worst performance year ever. Never before has the AGG suffered from two sequential down years. The rolling 5, 3 and 1-year average annual returns of the AGG are 0.39%, -4.69% and -0.36%, respectively. An investor might expect bonds to bounce back after such negative performance. The index is up only 0.9% year-to-date, a significant disappointment. (more…)

Weekly Update

Summer Doldrums for the Market

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Published August 25, 2023

 

As summer winds down, we have seen August play out in its usual way so far – weak. Here with more comment on recent market moves is Delta Research:

“In the past three months, the 10-year US treasury rate climbed by more than 15%. The sharp move higher during the month of August took the 10-year rate to the highest level its been since November 2007. As treasuries moved higher in August, stocks traded lower. The S&P 500 declined from August 1 to the Friday low of last week by 5.5% and the NASDAQ 100 was down 6.7%. (more…)

Weekly Update

The Market Finds Something to Worry About

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Published August 18, 2023

 

Stocks rise on a ‘wall of worry’. As the worries turn out not to be true, buying accelerates. The market’s euphoric rally in June signaled that investors collectively had overcome virtually all the worries of recession and interest rates leading to the bear market. In true bull market fashion, investors have rotated from the initial leaders to other sectors of the market, lifting all boats as it were. Eventually, a new worry surfaces sending prices back down a bit in a market correction. We are there now. (more…)

Weekly Update

Late Cycle Economics and a Stagnant Market

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Published April 21, 2023

 

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…)

Weekly Update

Who Backstops Cryptocurrencies?

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Published November 11, 2022

 

For the first time in awhile the usual market suspects of inflation and the Fed’s assault on the stock and bond markets took a backseat for a couple of days. When interest rates rise sharply as they have this year, investors find out who was overly leveraged and caught without a seat in the market’s cakewalk. This week, we found out that cryptocurrency exchange FTX was the latest one without a seat. (more…)

Weekly Update

Inflation Has Plateaued

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Published November 4, 2022

 

Stock investors had a bit of a panic attack this week. The Fed Chair Jerome Powell continued hammering markets with his inflation-fighting warrior pose, a pose that most all market-watchers now agree he was late in adopting. Powell is making up for lost time, of course, by ratcheting up interest rates at a breakneck pace. The sudden acceleration has been a very cold shower for some business processes with private equity and venture capital investors reducing their activity by a third or more in the most recent quarter. (more…)

Weekly Update

The Market Bottoms Well Before the Economy Does

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Published October 21, 2022

 

These days, there is much talk about a coming recession. By the time the recession gets here, if it does, the stock market will have already suffered much of its decline and will be near its low point. The article below from an analyst at JP Morgan presents a historical perspective of the timing between recessions and stock market bottoms. (more…)

Weekly Update

Corporate Earnings Are the Next Shoe to Drop

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Published October 14, 2022

 

Investors await corporate earnings data over the next few weeks with concerns high that declining earnings outlooks will be the next shoe to drop on stocks. The chart below highlights where we have been on corporate earnings and how things have changed. (more…)

Weekly Update

Bulls Find Some Traction

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Published July 29, 2022

 

In a bull market, investors buy the rumor and sell the news, with the selling being typically light. In a bear market like we are in now, this week showed us it is the opposite. Investors fear the news, sell stocks down on the fear, buying them back when the news, though bad, is not quite as terrible as it could be. So it was with the Federal Reserve announcement this week. (more…)

Weekly Update

A Bit of Calm Returns to Stocks

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Published March 25, 2022

 

The stock market has settled down quite a lot in recent days as this chart of the volatility index shows. When volatility jumped down over that blue trendline, and kept going down, it was a likely sign that stock investors could breathe a little easier. Nevertheless, we also note that volatility has been generally elevated since mid-November and has a ways to go before true calm returns to the market. (more…)