Categories ArchivesMarket Research

December 2018 Market Update & Outlook image

Monthly Recap December saw a return to volatility following November's relative calm with the S&P 500 dropping just over 9%.  December's fast and furious drop has lead a lot of forecasters to believe 2019 is going to be a very rocky and volatile year.  To recap, here are just some of the noteworthy events and stories from December: Huawei CFO was arrested in Canada at the behest of American authoritiesThe US became a net exporter of oil for the first time in 75 yearsThe US government shut down as a fight between the president and democrats over wall funding heated upCohen gets prison and said his duty was to hide Trump's dirty deedsThe FED raised it's benchmark rate by .25% ...

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There Have Never Been So Many Bonds That Are Almost Junk image

That was the name of a recent article that appeared in the Wall Street Journal.  The amount of BBB rated bonds, the lowest investment grade rating before junk status, has been growing as a % of the overall bond market. As you can see from the charts above, overall value of US corporate debt has grown incredibly since the financial crisis as low interest rates enticed a borrowing binge. The next downturn could be more painful than usual for creditors, with knock-on effects for shareholders.  Credit markets send two classic signals: The first shows excessive risk taking, when companies pay very little above Treasury bonds—as in the late 1990s and 2007, and again today. Furthermore, the scale of the debt at risk ...

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August 2018 Update image

Monthly Recap August was an extraordinary busy month with Senator John McCain's passing, Musk tweeting about taking Tesla private with the help of Saudi Arabia, Turkey and Argentina continuing to head towards crisis and many more.  To recap things effectively, below are some of the noteworthy events and stories from August:   Senator John McCain, an American hero, dies at the age of 81 after a battle with brain cancer. Arena Franklin passes away...and without a will Cohen and Manafort are both found guilty casting additional concerns at Trump and the White House US and Mexico reach a trade deal: The deal includes several provisions to alter a pact Mr. Trump has long branded “a disaster” for what he considers incentives encouraging ...

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July 2018 Update image

Monthly Recap It was another busy month indeed with GDP reported, continued trade wars/rhetoric and the first $1 Trillion company in history.  To recap, below are bullet points of the important and noteworthy events that occurred in July. Apple became the first company in history to reach a $1 Trillion valuation. US Q2 GDP is reported with 4.1% growth, the highest quarterly growth since 2014.  Michael Feroli, the chief U.S. economist at JPMorgan Chase & Co said “It’ll be hard to repeat this performance on a sustained basis.” The US-China trade war rhetoric keeps going back and forth.  Trump announced a plan to increase tariffs on an additional $200B of Chinese goods (although Trump also hinted at putting tariffs on $500B worth ...

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June 2018 Update image

Monthly Recap It was another busy month with continued talks of trade wars.  To recap, below are bullet points of the important and noteworthy events that occurred in June. The trade war with China picked up with the US and China going back and forth on tariffs.  This uncertainty was a contributing factor for the market selloff that happened during the last 2 weeks of the month.  Read more here Central bank officials voted unanimously to raise their benchmark federal-funds rate by a quarter-percentage point to a range between 1.75% and 2%. It is their second rate rise this year, and they penciled in a total of four increases for 2018, up from a projection of three at their March ...

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May 2018 Update image

Monthly Commentary May was an incredibly busy month and another signal that volatility (geopolitical and market driven) is here to stay.  Turkey, Argentina and Brazil appear to be heading for a currency crisis as their currencies tumbled this month relative to the dollar and other major currencies.  Italian bond yields surged as Italian PM Conte gives up bid for government.  This caused the 10 year Italian bond yield to spike from 1.90% to 3% in a matter of days, whipsawing bond investors.  The trade war against China was halted while Trump started another trade war with Europe.  On top of all this, the North Korean summit was (temporarily) canceled.  All of these factors caused the 10 year treasury bond to ...

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April 2018 Update image

Monthly Commentary April was a busy month and the spotlight was firmly on the Fed, earnings growth and North Korea.  Starting with the Fed, they decided to leave rates unchanged and while continuing to signal more increases are coming, and soon.  They see inflation increasing in the near term which is inevitable with oil prices having risen so much.  The way inflation is measured if oil was at $55 and now at $70, that's a 27% year over year increase.  A research report I recently received believes headline inflation will be around 3% by the summer, but core CPI won't nearly be that high.  The yield curve has continued to flatten this year and we're starting to see almost daily ...

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March 2018 Update image

Monthly Commentary March was another busy month in the markets and in politics as we saw continued volatility in the markets.  Most of the volatility seems to be explained by the threatening and enactment of tariffs against China and more recently Amazon.  Also, Rex Tillerson, the US Secretary of State was ousted from the White House in what appears to be a revolving door.  It also appears Larry Kudlow will replace Gary Kohn but I'm unsure what this will actually mean and what outcome this may bring.  The FTC announced an investigation into Facebook over how the personal data of 50 million users was obtained by a data analytics firm that helped elect President Donald Trump.  This prompted everyone to look into ...

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February 2018 Update image

Monthly Commentary Another month, another unfortunate tragedy this time claiming many lives at a school in Parkland FL.  Since I started these monthly updates, there's only been a few times I haven't had to address a senseless tragedy.  I truly hope this trend stops soon. February started out on a rough note with volatility rearing it's head for the first time in a few years.  The S&P promptly fell 12% in one week which is a fast and furious move.  This was one of the quickest markets drops I've seen since I've been in wealth management.  We are still 5% off the highs as the market has recovered a little over half of the drop.  As frightening as this drop was, ...

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January 2018 Update image

Monthly Commentary For the first time ever, the Philadelphia Eagles are the Super Bowl champions!  What a phenomenal game and as a long time Eagles fan, it was a joy to watch and couldn't be more happy for the entire organization.  The US stock market charged higher in January but started to stumble at the end of the month and into February as the tax benefits were digested.  The Fed kept rates unchanged in a surprise move as Yellen departs and Powell takes the reigns.  The Fed is worried about the potential for inflation to increase this year and have included my own thoughts about this below.  Mnunchin is all for a weaker dollar and stated this publicly at Davos.  ...

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