Coincident to the “final” release of quarterly GDP are the updated estimates for corporate profits. While the Q4 headline didn’t much alter from the preliminary version sent out a month ago, there was much in the profit section relevant to both economic cycle and structure. The BEA provides several different breakouts of business profits, but the main emphasis should remain [...]
So far the heavy buying after yesterday’s FOMC admission has held on the eurodollar curve. Most of the contracts along the curve have only given back a few bps after the 15-25 bps moves everywhere yesterday afternoon. The salient interpretation of trading along these lines is one of deep and abiding concerns over “dollar” liquidity and the economy. With the [...]
Stocks finally took a breather last week, down about 1.5%, mostly due to a downdraft Friday that was "blamed" on a good employment report. Jobs increased by 295k in February and the unemployment rate dropped to 5.5% (although that was mostly due to a drop in the participation rate) and that, according to the pundits, means the timeline for a [...]
It is often very easy to fixate on the S&P 500 as if it were the only current proxy of the broad universe of stocks. Like the Dow Jones Industrial Average before it, the 500 has attained synonymy with stocks as it is the most widely publicized and recognized value. But just like the DJIA, the index has its own [...]
With liquidity running somewhat perilously noncommittal since June, you would think the riskiest parts of the credit market would be most affected. That is incorrect and once again stands out as to the bubbly nature of the current age. Aside from liquidity draining enthusiasm into and around October 15 and December 1, high yield debt has not only repriced itself [...]
The US stock market made another all time high last week amid more mediocre - at best - US economic data. Much of the gain was credited to positive developments in the geopolitical arena as a ceasefire was announced in Ukraine and negotiations continued on Greek debt relief with some positive signs that an agreement might be reached. Whether either [...]
The cyclical rebound in global return on equity has further to run in an economic recovery scenario, despite having softened modestly in the past year. Earnings will be a tailwind for stock prices. Global equities are fairly valued relative to corporate profitability. Valuations are not an impediment to further stock price gains, and indeed have scope to increase as investor [...]
Leverage: the use of credit to enhance one's speculative capacity Merriam-Webster Give me a lever long enough and a fulcrum on which to place it, and I shall move the world. Archimedes The Swiss National Bank - the Swiss equivalent of our Federal Reserve - didn't exactly move the world last week but the fallout from their surprise change in [...]
Turning attention to that last bastion of monetary surety, equities, the oil slump might be the greatest challenge yet to the non-stop stock escalator. Earnings especially for the S&P 500 are being revised lower as energy companies weigh on results. And while there may be a tendency to dismiss energy as its own problem, there is much deeper unwinding underneath [...]
Mr. Market is the fictional business partner Benjamin Graham invented in his classic value investing book, The Intelligent Investor. As Mr. Graham describes him, Mr. Market is the business partner of the investor, offering on a daily basis to buy your share in the business or alternatively to sell you his share. There are times when he is wildly optimistic [...]
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