Choppy Waters Lie Ahead

When the world entered the throes of the sharp recession in the spring, we expected a sharp rebound followed by a gradual and choppy economic recovery. The initial recovery resembled a “V” pattern, but the path has since cooled and looks more irregularly higher. Two key factors have driven economic momentum: 1) massive monetary and […]

A Cautious Outlook

Stock prices have roared back strongly through the second quarter, as investors grew increasingly optimistic over prospects for economic reopening and the unprecedented monetary policy support that provided a strong tailwind for equities. At this point, however, stocks are looking somewhat richly valued and we think investors may be looking past some key risks. We […]

Recession Created by Bugs

The U.S. economy is in free-fall, perhaps headed for its deepest recession of the post-war era. Typically, recessions are necessary to corrects that build up during an expansion—for example, restoring liquidity, improving savings, purging bad debt, and realigning exorbitant risks. In the economic recovery that just ended, however, there were very few excesses or problems […]

Our Perspective on Recent Volatility

In a few short weeks, the financial markets in the US have experienced their fastest decline in history as CoViD-19 was officially elevated to a “pandemic” as it spread out of China, infecting populations around the world while triggering tremendous levels of panic selling in the financial markets. While data from earlier this quarter suggested […]

Earnings vs Politics

Following a near bear market to close out 2018, the S&P 500 posted its best year since 2013. Although the market traded at compelling valuations and a similar setup to prior pauses in global growth, anxiety set the cadence most of the year, keeping cash on the sidelines and the markets primed for a strong […]

Muddy Waters Ahead

The third quarter began with a continuation of market strength as trade war tensions seemed to deescalate following the June meeting between the U.S. and China. Corporate earnings came in higher than expected with 77% of S&P 500 companies beating estimates, above the five-year average, and the market enjoyed a brief reprieve from the volatility […]

A Spoonful of Fear Keeps the Bull Market Healthy

Heading into the 2nd quarter’s earnings season, corporate profitability proved better than anticipated, and markets continued to climb higher on renewed optimism. The sanguinity quickly soured at the start of May, following an abrupt halt in US-China trade talks and a surprise ban on trading with one of China’s largest telecom conglomerates, Huawei Technologies. After a […]

A Pause in an Upward Trend

Stocks continued to rebound following the volatile end to 2018, cautiously climbing a wall of worry as equities adjusted to better than feared forward guidance while anxiety over a looming recession subsided. The market has almost fully recovered to its prior highs, with a decisive move likely to play out over the upcoming earnings season. […]

Outlook is Constructive

When it comes to the stock market, December proved to be anything but merry. It was the worst on record since the Great Depression. In our view, the investing environment was one that felt like death by a thousand cuts. While no one cut on its own was fatal, the compounding effect turned serious. An […]

A Needed Correction

Since the Great Recession, investors have gotten used to very low interest rates and extremely accommodative monetary policy. This remained true even as signs of economic recovery and expansion began to take hold. That environment appears to be changing, and bond yields have now spiked to the point where they have caused an equity market […]