The big “trick” with liquidity is trying to discern and work out “where” and “when.” A good deal of that is about liquidity as it actually exists; not what you see today but what it may look like tomorrow. That vital disparity can be nothing but havoc, especially when conditioned to look at correlations as something durable – which is [...]
Margin debt again escalated in June, putting some emphasis back into the smaller caps and their high beta compatriots. After surpassing the dot-com bubble’s previous levels for both nominal margin usage and negative investor net worth in February, some caution was re-admitted if only briefly. There wasn’t much discernable impact on the broader market indices, more than suggesting that margin [...]
Since the vast majority of business cash flow is derived through profits, the basis for the declining cash flow incidence resides within the profit function of US business. Since there are multiple avenues to arrive at aggregate profit estimates, there is the potential for disagreement as to the assumed health of net income across domestic business. The primary complication is [...]
We still may not know the difference between cause and effect, but margin debt balances dropped in March for the first time in ten months. The $14 billion decline in margin debt was also coincident to an increase of $6 billion in relative cash balances in equity accounts at FINRA dealers. That meant total investor net worth “improved” by a [...]
If you go to the “fact sheet” for the Russell 2000 index trying to find the standard PE valuation metric, the only one provided by the index keepers is something called “P/E Ex-Neg Earnings.” The current valuation offered is 22.61, which sounds much more reasonable than the latest (April 25) raw PE estimate from the Wall Street Journal: 101.65. The [...]
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