For years preceding the COVID-19 pandemic, call option volume averaged about 15% of daily NYSE volume. This was a normal level of speculation that investors were used to. Then, as the chart above illustrates, in 2020 call buying just exploded. As of this writing the…
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A definite feature of the last decade has been the persistent underperformance of European and Asian stocks vs US stocks. Foreign stocks have underperformed with such consistency that it’s almost expected at this point. Nonetheless, we may be at a tactical point where a mean…
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This week Jerome Powell tossed the market a bone by hinting that the Fed would be patient in raising short-term interest rates due to the continued slack in the US labor market and inflation that would likely be “transitory”. Yet, today, the unemployment rate dropped…
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We find compelling evidence that seasonal factors exist, historically leading November and December to be the highest 2-month combined returns all year. In our allocation portfolios, we have increased our equity exposure significantly in an effort to capitalize on these year-end trends. Please find below…
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By now investors are quite aware of the consequences of financial repression via negative real interest rate policies. Since interest rates on “risk free” government debt are too low to even compensate for inflation, it pushes investors out the risk spectrum in an effort to…
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In this quarter’s strategy package, we share our analysis on Japan’s Reopening Trade. In the full slide presentation, we cover the following: -Japan seems to have crushed the COVID-19 virus (for now at least) with daily new cases under 400/day. Lockdowns are over and the…
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Fed funds futures for 2022 and 2023 have broken out to new highs, likely on the back of rising inflation expectations. As things stand now, the market is looking for three hikes by the end of 2023, with the effective fed funds moving from 8bps…
Read MoreEarlier this week we saw some tremors in the equity markets with the largest single-day selloff in stocks in months. The likely China Evergrande debt default was “blamed” for the weakness, which was then promptly reversed as the week progressed. Questions remain, however, about the…
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In this Mid-Quarter Update, we discuss our analysis on the following topics: -Recent readings on consumer confidence have rolled over. The surveys are validated by the stagnation in real consumer spending in the last few months. -In conjunction with the slowdown in house sales and…
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Just when everyone thought we had COVID-19 whipped, the delta variant came along and US cases inflected higher. The 7-day moving average was about 13,000 in early July and has jumped about 10-fold to 132,000 as of yesterday. The first place this can be seen…
Read MorePresident Biden recently set a target for 50% of all vehicle sales in the US to be fully electric, plugin hybrid, or fuel cell by 2030. Assuming a modest 1% annual growth in new car sales, total new car sales in the US would be…
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The United States is just at the beginning of a housing boom that could last for the next five years. Of course, most folks who are either homeowners or are in the market to buy a home understand that prices have gone up quite substantially…
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Public attitudes toward energy companies are changing, and with it capital investment in energy companies is shrinking. Perhaps nothing speaks louder than actions. In the first quarter of 2021 investment in environmental, social and governance (ESG) focused funds hit a record high by a wide…
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We believe the technology sector is broadly breaking down. That’s the bad news. The good news is that the correlation between pure growth stocks and pure value stocks has plunged. This means that growth only explains about 5% of the movement in value stocks right…
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Interest rates have been falling in recent months leading some to speculate that the “re-opening” trade has run its course. This in turn begs the question as to whether the “value” trade is over. On both accounts, we see signals that still point to an…
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