Categories ArchivesMonthly Updates

August 2016 Update image

Market Scorecard   The month of August was relatively boring compared moments in the past few months.  The Fed's meeting at Jackson Hole culminated with Janet Yellen and Richard Fischer suggesting there could be one or two rate hikes coming before year end or shortly thereafter.  Just one week later, employment for the month of August rose by only 155,000, which missed estimates by a decent margin.  The hawkish tone from the Fed will most likely be switched yet again as we saw weak manufacturing and services data.  What you may not have heard about Jackson Hole is they held a session on negative nominal interest rates and brought in Marvin Goodfriend as the lead presenter.  He is a believer of ...

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July 2016 Update image

Market Scorecard   The markets continued to trek higher following the Brexit bounce in late June. All of the major indices posted solid gains during the month, with the S&P posting a 3.52% positive gain.  US Q2 GDP was released at month-end and posted a meager +1.20%.  We were very surprised since we actually expected a strong GDP report powered by consumer spending which makes up roughly 70% of the economy.  While consumption was strong, investment fell -1.20% and government expenditures fell for the first time since Q4 2014.  The biggest surprise was the GDP deflator which went from +.50% to +2.20% (a delta of +1.70%) which caused GDP to fall to 1.20% instead of being 2.90%.  The GDP deflator is ...

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June 2016 Update image

  June was an exciting month in the markets with all eyes on Europe and Britain's vote to remain or leave the EU.  In looking at the market decline, it is clear that the investment community was surprised at the outcome of the referendum in the U.K. What is most surprising is that they were surprised. Going into the referendum, polls showed remain vs. leave were about even with 10% or so undecided.  The money bets seemed to be significantly in favor of staying which could be a reason why the selloff was so severe from institutions reversing positions. Brexit Breaking up is hard to do, especially when it involves relationships among key players in the global economy. After a referendum on ...

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May 2016 image

  Dear clients, potential clients and valued contacts, May turned out to be a fairly boring month.  While we speculated there would be sell in May and go-away, things didn't quite play out in that fashion.  The Fed has gone from dovish to hawkish back to dovish and then back again to hawkish since December of 2015.  As as result, the US dollar (and as a result commodities and stocks) have gotten whipsawed.  The Fed claims to be data dependent, but I'm not sure what data they are looking at.  While new home starts jumped in April half  of the strength in the report came from the  Northeast.  In April 2015, the Northeast built 1,000 homes.  This April, they built 5,000 ...

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April 2016 image

Dear Clients and Friends, April was a month which saw most global markets continue to rebound off their February lows. It was also a very newsworthy month where the Doha meeting failed to agree to terms on oil production cuts mainly due to Saudi Arabia's fixation on Iran, Brazil started the impeachment process of Dilma Rouseff and the Fed maintained it's current interest rate policy while leaving the door open for a June increase. As you can see from the images below, P/E ratios for the S&P are still climbing, mainly as a result from falling profits. The Atlanta Federal Reserve maintains a forecasting model for GDP which they update regularly. The most recent forecast expected GDP for Q1 to be ...

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March 2016 image

Dear Friends and Clients, February was a very volatile month in the markets where a negative feedback loop persisted in the first half of the month.  The 10 year treasury bond fell below 1.60% as flight to safety and deflationary pressures were top of mind.  WTI crude hit a 12 year low closing at almost $26 on February 12th and rebounded to almost $34 by end of the month on the heels of talks by Russia and Saudi Arabia reducing oil output.  Chesapeake and Linn Energy fell 40% and 50% respectively early in the month on fears of bankruptcy.  The 10 year Japanese treasury bond went negative while the German 10 year bond came very close to going negative as well.  In fact, there’s over $7 Trillion (yes Trillion!) ...

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