Tomorrow will obviously be one of the most important news days of the year for financial markets with the Fed expected at the very least to signal that a rate cutting cycle is in the offing. Indeed, since the Fed last raised rates the yield…
Read MoreAs expectations for a Fed easing cycle have gained momentum, we’ve seen an abundance of comparisons between the current period and the late 1990s. In that period the Fed cut rates and stocks simultaneously levitated into the stratosphere. If we are to follow the logic…
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In this mid-quarter update, entitled “Escalation,” we discuss the backdrop of escalating trade wars and our belief that the environment is more favorable for US Treasury bonds relative to stocks. The trade war is escalating at a time of weakening global growth, thereby weighing further…
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Yesterday we wrote about three macro factors that will act to restrain economic growth through the rest of 2019 and into 2020. Those risks are the baked-in fiscal tightening, the lagged effects of monetary policy tightening, and growth retarding trade policy. Together, they could restrain…
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Despite the S&P 500 having made a new all-time high just a few weeks ago, many of the supposed market leaders have not kept pace. Instead, almost all of the FAANNGs (Facebook, Apple, Amazon, Netflix, Nvidia, Google) peaked out either in the summer or fall…
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The relationship between the performance of emerging market stocks and the US dollar is one of the tightest macro relationships that exists in investing. As we can see in the first chart, the relative performance of EM stocks vs the S&P 500 is highly negatively…
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Last week we wrote how the US dollar could be in for a major move when it breaks up or down out of the major consolidation it has been in for the better part of six months. We wrote that given the setup of the…
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The US dollar is on the cusp of making a major move. The question is which way will it go, higher or lower? The directional movement of the US dollar will have significant asset performance implications once the tug of war between dollar bears and…
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So far this week, we’ve received a few data points that reinforce the manufacturing slowdown taking place in the US. Below is a calendar of events for the last couple days. On Monday, we got the Empire State Survey, a survey of manufacturing in New…
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The IMF made news yesterday by announcing its latest updates to 2019 GDP growth around the world. It guided global growth down and made an especially large cut to Eurozone growth estimates, bringing them down 30bps since January to 1.3%. They also took their estimates…
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Yesterday’s stocks reacted to a raft of overnight foreign economic data that it perceived positively. In this note, I’ll run down the data and my doubts about that reaction. The hits began with China’s Markit manufacturing PMI jumping to 50.5. While the media seems to…
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Investors have been given another slug of wanting housing data this week. First it was building permits which surprised to the downside and today it was pending home sales, which fell 4.9% YoY vs expectations of a 1.8% drop. Both building permits and pending home…
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To the dismay of many observers, US treasury yields have been dead as a doorknob despite the 20% rally in stocks over the last three months. In fact, the US 10-year yield is on the verge of breaking below the 2.56% level it reached on…
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Stocks have been on a tear. Manufacturing has contracted, bringing down GDP and earnings estimates. Was the stock bounce real or just a short covering? Sentiment on stocks has shifted to bullish while sentiment on bonds has moved bearish. In this special video report, CIO Steve…
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The big news of the day relates to the continuation of a trend that has been going on since 2013: the widening of the trade deficit. The trade deficit in dollar terms at $-59.8bn in December and $-622bn for the year broke down to a…
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