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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Last week the 10-year to 2-year US Treasury yield curve spread narrowed from 133bps to 119bps in just three trading days. That 14bps curve flattening was a 2 standard deviation event going back to1990, so it’s safe to say moves like we saw last week…
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This week the Federal Reserve made its first hawkish surprise to monetary policy since December 2018. As opposed to December 2018, when the Fed actually raised rates for the final time in the cycle, the Fed this week signaled rate increases potentially starting in 24…
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For the second month in a row, the US payroll employment report has come in below expectations. The miss this month was not quite as bad as the miss last month, but was still notable. The market was expecting 675K new jobs, but only 559K…
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The US dollar is on the verge of breaking down to the lowest level since 2014. This is not all that surprising. After all, the US money supply continues to grow at a rapid pace relative to other countries and quantitative easing is likely to…
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We believe the US technology sector has reached a level of valuation such that it is has the potential to substantially subtract from portfolio returns going forward. In this mid-quarter update, we: -Highlight how we monitor valuations in the global stock markets while shining a…
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This week saw some doozy inflation readings beginning on Wednesday with the CPI reading and then again on Thursday with the PPI. CPI came in at 4.2% year-over-year, but a whopping 0.8% month-over-month. For context, 0.8% MoM implies 10% annualized inflation! The PPI was also…
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Last week we wrote how interest rates may have room to come down a bit before ultimately heading higher later this year and into next year. This line of thinking was reinforced this week at the Fed’s meeting release and press conference. Powel’s messaging/guidance was…
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10 year Treasury rates peaked at the end of March at 1.74% after having risen from low of just 0.56% back in the summer of 2020. Now, the rate stands at 1.57% even as economic data continues to come in smoking hot and policy remains…
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In this Q1 2021 slide presentation of our quarterly strategy report, we discuss the following topics: -The level of speculative activity in markets this year has been extreme in our view. More money has come into world stock markets in the last 5 months than…
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It’s no secret that money has poured into passive equity vehicles as investors seek low fees above all else. To date, that has worked out just fine since equity indexes have compounded their returns at acceptable, if not above average, rates of returns. But, the…
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The title of this post seems rather obvious in light of this week’s events, but it’s something we have been talking about for months now. Rising interest rates are not kind to tech stocks. Rising rate volatility is not kind for tech stocks. And, rising…
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To say the market is bubblelicious is a bit of an understatement given that retail “investment” in call options and penny stocks is quite literally off the charts, dwarfing numbers we saw in 1998-2000. We’ve hit on those worries like a broken record here and…
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In which we discuss the recent small trader mania. Download slides here: Small Trader Mania Questions? Email us at investmentteam@klcapital.com.
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