Economy

Keep an Eye on the Yuan & Corporate Spreads May 28, 2020

Posted by Steven Vannelli, CFA in Economy, Markets

Since the March 23, 2020 low, when the Federal Reserve announced basically unlimited liquidity via a variety of programs, corporate spreads have narrowed, and the stock market has risen substantially. In the chart below, I overlay US investment grade spreads over the S&P 500 Index….

Here’s 5 Reasons Why Gold Miners Have Massive Outperformance in the Tank May 15, 2020

Posted by Bryce Coward, CFA in Economy, Knowledge Leaders, Portfolio Management

As I write this note on a dreary Friday afternoon from Boulder, CO I am reminded of my town’s origin. Its first non-native settlers established the town 1858 as a base camp for gold and silver miners. Nestled literally at the foot of the Rockies,…

Here’s Where Friday’s Employment Report Could Really Disappoint May 05, 2020

Posted by Bryce Coward, CFA in Economy

Given the surge in unemployment claims over the last month the US unemployment rate is expected to rise to 16% in April from just 4.4% in March. Shocking as that number is, we have no problem with that forecast. But for some reason economists surveyed…

Important Divergence Between Equities and High-Yield Credit April 30, 2020

Posted by Steven Vannelli, CFA in Economy, Markets

While not 100% correlated, there tends to be a pretty good relationship between movements in the S&P 500 and credit spreads, both investment grade (IG) and high-yield (HY). As stocks sold off in February and March, credit spreads widened rapidly. And, then on March 23,…

Here’s Why 2/3rds of US Oil & Gas Companies May not Exist a Year from Now April 21, 2020

Posted by Bryce Coward, CFA in Economy, Markets

Energy companies are facing a life or death moment in 2020 with the price of WTI crude oil falling to $13.64/barrel as of this writing. Indeed the collapse in energy prices combined with poor fundamentals leading into the COVID crisis make most of the oil…

Why the Fed Cut Rates by 50bps: Will it Help? March 03, 2020

Posted by Steven Vannelli, CFA in Economy, Markets, News

Despite the relief rally yesterday, financial conditions have tightened significantly in the last couple weeks. This likely explains why the Fed just made an emergency 50bps cut to the fed funds rate. The graph below highlights that the two main areas of weaker financial conditions…

A Selloff, But Not An Actionable Low…Yet February 25, 2020

Posted by Bryce Coward, CFA in Economy, Markets, Portfolio Management

Watching while the largest equity market in the world falls by a whopping 8% in four trading days brings us back to the 2008-2009 meltdown period of the financial crisis. Normally an 8% drop in such a short time frame would present an interesting intermediate-term…

Ready for Action? February 24, 2020

Posted by Steven Vannelli, CFA in Economy, Markets, News

Former Fed Governor and now professor at the University of Rochester, Narayana Kocherlakota penned the following short opinion piece in Bloomberg this morning: Fed Shouldn’t Wait to Cut Interest Rates: Narayana Kocherlakota By Narayana Kocherlakota The world economy is facing a material risk in the…

What’s Behind the Breakout in Gold? February 20, 2020

Posted by Bryce Coward, CFA in Economy, Markets

This week’s breakout in gold is an epic expression of our times in which potential economic problems are quickly followed by massive actual and expected responses by central banks and governments. The problem de jour (for both markets and the public) is of course the…

A JOLT to Job Openings & Asset Expectations February 11, 2020

Posted by Steven Vannelli, CFA in Economy

This morning the monthly job openings and labor turnover (JOLTS) report was released, and it came in significantly shy of expectations. While Bloomberg’s consensus estimate was for 6.925 million job openings, the actual number came in at 6.423. It is important to keep in mind…

A Recovery, But of the Square Root Variety February 06, 2020

Posted by Bryce Coward, CFA in Economy

Regular readers of this blog and of our other commentary know that we have been been looking for some kind of cyclical rebound in economic activity starting in the first quarter of 2020. By many indications, we are getting just that, and right on time….

Why Coronavirus is Scary for Financial Markets January 31, 2020

Posted by Bryce Coward, CFA in Economy, Markets

As we write, US stocks are down about 1.6% on the day, foreign developed market stocks are down 1.8%, and emerging market stocks are down about 2.4%. This type of corrective action did not really come as a surprise to us. Indeed just two weeks…

Mid-Quarter Update: Spotlight on US Corporate Profits December 04, 2019

Posted by Steven Vannelli, CFA in Economy

US corporate profits are down from the 2014 peak. In this mid-quarter special report, we dive deep into corporate profits, taxes, profit margins and the increasing government debt levels that have propelled stock and bond prices higher, in our view, leading to rising equity and government…

Consequences of an Inflection in the Chinese Yuan November 21, 2019

Posted by Steven Vannelli, CFA in Economy, Markets, Portfolio Management

As hopes for a trade deal fade, similar to May and August, the CNY is devaluing against the USD again. In our work there are a handful of fairly mechanical relationships that should follow if the CNY continues to devalue. First, in the US, stocks…

Economic Growth Has Not Hit Bottom Yet November 21, 2019

Posted by Bryce Coward, CFA in Economy, Markets

Even as left tail risks to US and global economic growth seem to have been mitigated over recent weeks (more accommodate financial conditions, rising of some PMI data, worst case trade outcome seemingly a lower probability now), incoming data continue to suggest the nadir of…

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Economy

Keep an Eye on the Yuan & Corporate Spreads May 28, 2020

Here’s 5 Reasons Why Gold Miners Have Massive Outperformance in the Tank May 15, 2020

Here’s Where Friday’s Employment Report Could Really Disappoint May 05, 2020

Important Divergence Between Equities and High-Yield Credit April 30, 2020

Here’s Why 2/3rds of US Oil & Gas Companies May not Exist a Year from Now April 21, 2020

Why the Fed Cut Rates by 50bps: Will it Help? March 03, 2020

A Selloff, But Not An Actionable Low…Yet February 25, 2020

Ready for Action? February 24, 2020

What’s Behind the Breakout in Gold? February 20, 2020

A JOLT to Job Openings & Asset Expectations February 11, 2020

A Recovery, But of the Square Root Variety February 06, 2020

Why Coronavirus is Scary for Financial Markets January 31, 2020

Mid-Quarter Update: Spotlight on US Corporate Profits December 04, 2019

Consequences of an Inflection in the Chinese Yuan November 21, 2019

Economic Growth Has Not Hit Bottom Yet November 21, 2019

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