2022 has been a tough year so far for risk management. This appears to us related to the inflation problem the US is experiencing. As long as inflation persists, the ineffectiveness of duration will likely persist. We think inflation will persist and are thus broadening…
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After President Biden’s speech, the consensus seemed to coalesce around the idea that the sanctions put forth were not as strong as they possibly could have been. Chiefly, due to a disagreement with Europe, Russia was allowed to remain in the SWIFT payment system—the system…
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Of course, the backdrop right now is Russia—a large petroleum-producing country—threatening to invade Ukraine. This is clearly roiling the oil markets and leading to ever higher prices. Have those prices gotten ahead of the fundamentals and technicals? US West Texas Intermediate oil prices tend to…
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Tomorrow we get the consumer price index year-over-year for January, with expectations for 7.25%. This would take the CPI to a new high for the cycle, rising from 7% year-over-year from December. We would like to see the print undershoot and offer several reasons why…
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Since May 2020, the Chinese Yuan has defied the path of other emerging market currencies, strengthening by almost 12%. This has left it overvalued compared to other emerging market countries. While Yuan strength made sense in 2020 when the USD was weakening. It is curious…
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For all the following charts, we are looking at the sector performance and internals of our group of companies within each sector in North America. We look at the top 85% of market cap, so we consider both large and mid-caps. In the table below,…
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Below we highlight a few takeaways from Fed Chair Jerome Powell’s confirmation hearing today before the Senate Banking Committee, broken down by topic. -Focus on “less accommodative” moves -Powell made numerous statements indicating that COVID, though prevalent, will not be as pressing in policy decisions…
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In this quarter’s strategy report, Forward Thinking 2022, we discuss the following: -US economic growth is expected to be quite robust in 2022, despite the disruptions from the Omicron variant. Capital spending is expected to lead economic growth, which makes sense as companies invest in…
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This Friday we’ll see where the US CPI comes out. We recently got the November print for the Eurozone CPI, and it came in hot, hitting 4.9% year over year. This makes it all the more interesting to see the latest ZEW Inflation expectations for…
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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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