One More Hike and Then a Pause?

Global financial markets have moved past the shock from the abrupt failure of Silicon Valley Bank and a few other banks as well as the forced takeover of Credit Suisse. There will be lingering fears of additional fallout, since many financial institutions are sitting on portfolio losses arising from the cyclical rise in bond yields, […]

A Correction Is Healthy

A host of factors have recently been pressuring the stock market. The S&P 500 Index has nearly doubled from its bear-market low in March 2020, signifying one of the strongest 16-month gains in post-war history! After such a robust, uninterrupted advance, it simply feels overdue for a correction. Moreover, compared to historical norms, valuation measures […]

The Reopening

Over the last year, we witnessed policymakers’ experiment with ways to force the economy out of its steepest dive since the Great Depression, applying massive fiscal and monetary stimulus at light speed. The Fed used the power of its record-setting $7.6 trillion (and growing) balance sheet while Congress voted $5.5 trillion of fiscal stimulus to […]

Thank God It’s 2021

2020 will go down in history as a year we all wish we could forget, but never will. The unprecedented coronavirus pandemic changed everything. While the economic and earnings recession was short but deep, the humanitarian crisis remains devastating. The U.S. alone has already seen more than 15 million cases (over 75 million globally) and […]

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 […]