Recent Commentary
A Higher P/E Ratio Results In A Great Year For Stocks
A Higher P/E Ratio Results In A Great Year For Stocks This year’s 25%+ YTD advance in the S&P 500 stock index is a very pleasant surprise to most investors. What accounts for the great year in stocks? About 20% appreciation came from multiple expansion (a...
The Bond Market Takes Center Stage
Barron’s recent fall 2019 Big Money Poll reported that only 27% of money managers are bullish on the stock market for the next 12 months, down from 46% in the spring survey and 56% a year ago. The latest reading is the lowest percentage of bulls in over 20 years. A...
Our Annual Q And A
Q. Will the impeachment inquiry (and possible impeachment) of President Trump put a lid on stock prices, or cause share prices to fall? A. The impact of impeachment on the markets is not clear. From the beginning of Richard Nixon's impeachment inquiry to his...
The Bond Market Takes Center Stage
Is the growing “consensus” that’s calling for recession correct? Not in our view. The leading/coincident indicator ratio tends to plunge consistently for long periods of time in the lead-up to recessions, unlike the three instances of sideways movement we...
Why Investors Should Care About Rate Cuts
To date, about one-half of companies in the S&P 500 have reported Q2 earnings. Seventy-seven percent of companies have reported a positive EPS surprise, a very strong showing. The overall earnings decline is expected to be 2.6% for the quarter. For CY 2019,...
P/E Ratios and Bull Markets
The current economic expansion is celebrating its 10th birthday this month — the longest on record. What accounts for its longevity? In our view, the lack of an economic boom. No boom, no bust. The next recession may be the most widely anticipated of all time. ...
The Realities of the Trade War With China – and What to do With Trade Sensitive Stocks
Investors are happy with year-to-date returns (the S&P 500 is up 12%), but the market is actually trading at the same level it was 16 months ago. We’ve had big up and down moves, but in the end, we have been trendless. We think valuations have a lot to do with...
The Bull Market Powers Higher
As we expected, many companies (about 67%) are beating the bottom line consensus estimates for Q1. The earnings bar was set low by both the companies and analysts coming into earnings season making the forecasts easier to beat. And the prior periods of weak guidance...
The Fourth Industrial Revolution
What a difference a quarter can make. Last week Fed Chairman Powell all but admitted that he and the Fed were wrong raising the Fed funds rate in December and all but called off interest rate increases in 2019. They expect one increase in 2020. The initial market...
New Sector Leadership
The stock market continues its amazing run from the December 24th low and is now up about 18% since then. The percentage of stocks in the S&P 500 that are trading above their 50-day moving averages crossed above 90% for the first time in nearly three years. A...