interest rates

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High Valuations and Seasonal Trends Make September a Scary Month


Published August 27, 2021

We have written often in recent weeks about how extended the market seems to be. Some of this content has come from Schwab. Back in the late 1990s, Schwab notified clients more than once that the market’s valuation was excessive and to be careful. Similarly, they have been proactively warning this summer of higher-than-normal market valuations and a market ripe for some downside action. There are notable differences between now and the late 1990s. (more…)

Weekly Update

What the Bulls See


Published July 2, 2021

Last week we brought you a global outlook from Schwab. This week, we bring a mid-year outlook published by Invesco, the company responsible for the Nasdaq 100 ETF (symbol: QQQ) that our models focus on. Needless to say, Invesco is very positive on the outlook. (more…)

Weekly Update

The Stock Market Shudders as the Fed Starts to Shift Gears


Published June 18, 2021

This year’s stock market has been all about rotation with money moving into value stocks and out of growth stocks. The narrative has been that rising inflation would push up interest rates. The hike in rates in turn raises the denominator of the classic stock price valuation (e.g. earnings/interest rates) which devalues high-flying growth stocks. The beneficiaries of this narrative have been cyclical sectors like materials, industrials, and energy. This week that narrative took a beating. (more…)

Weekly Update

The Nasdaq Rolls Over


Published March 5, 2021

The market’s preferred narrative has changed over the past month leading to a selloff in the tech & consumer-heavy Nasdaq. When the current market rally started way back in April 2020, the argument was that the stable earnings growth and global presence of the mega-cap tech and consumer stocks like Amazon, Facebook, Nike, et al. would be the best place for stock investors to park their money. These brands are substantially online or ‘digital’ in their business operations, and less likely to be impacted by the new stay-at-home lifestyle. (more…)

Weekly Update

Interest Rates: Getting Back to Normal


Published February 26, 2021

 

Interest rates have ripped higher along with stocks as expectations for a very strong post-pandemic economic recovery gain traction. This week, however, that rise in rates appeared to reach a point where concerns crept in. Stocks tumbled as investors worried that the rise in rates was too high, too fast. (more…)

Uncategorized, Weekly Update

China Maybe Gets Some Mojo


Published July 10, 2020

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The Wall Street Journal’s excellent daily blasts: The Daily Shot and Real-Time Economics provide a quick overview of economic and market trends and data. We were struck by a set of charts in one of this week’s blasts from those sources. Coinciding with the news that the Chinese government had notably expanded measures aimed at supporting the Chinese stock market, these charts could be read as a broader initiative by China to sort of take global market share while the U.S. pulls back on the global stage. We are very far from geopolitical experts, of course, but we are pretty good at seeing trends (being trend-followers!). This looks like a trend in the making to us (or continuation of a bigger trend, depending on your time frame). Herewith are a series of China-related charts. May be the start of something bigger and longer-lasting.

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Uncategorized, Weekly Update

All Hail the Central Banks!


Published February 7, 2020

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We were reminded again this week of the psychological power of central banks over today’s market participants. An announcement early in the week of new money(!) pushed into Chinese markets by the Chinese central bank (PBOC) made stock investors forget all about the potential global economic hurdle that is the coronavirus (with investor enthusiasm aided by a reduction in the spread of the virus). (more…)