Kuby’s Commentary

It’s a Mad Mad Mad Inversion

Last Week: The last six months have certainly been “interesting”. A dramatic rally in January and February recovered about most of the horrific losses of October- December, followed by a brief nasty sell-off to kick off March which quickly reversed into a Mad March bounce which lasted until Friday’s swoon, which left the S&P 500 down 0.8% for the week. Whereas the market was responding to policy issues (monetary and trade) [...]

2019-03-25T12:50:07+00:00March 25th, 2019|

Mad March Bounce

Last Week: The global bounce-back equity rally resumed, as the S&P 500 posted its best week since November by gaining 2.89%. The narrative remained the same with accommodative monetary policy, subdued inflation, reduced trade tensions, and aggressive stimulus programs in China. The economic data was tepid as durable goods, new home sales, industrial production, and the Empire Manufacturing Index all came in slightly below expectations. January retail sales exceeded expectations, but [...]

2019-03-18T09:42:42+00:00March 18th, 2019|

Cold Porridge

Last Week: The temperature of the global economic data porridge was cold enough to nudge the stock market pendulum towards risk-off, as the ECB and China both reduced growth forecasts while the U.S. jobs report was downright frigid. Concerns shifted from monetary tightening by the big bad Fed to the prospects of an impending global recession. Things were not all quiet on the eastern front, as North Korea has rebuilt its [...]

2019-03-11T10:04:14+00:00March 11th, 2019|

The Pendulum Rests

Last Week: Inertia:  a property of matter by which it remains at rest or in uniform motion in the same straight line unless acted upon by some external force. With no changes to the narrative to motivate traders, the stock market pendulum has recently found a resting place. Fed Chair Jerome Powell’s communications provided support to current expectations that the rate hike cycle was on pause for the foreseeable future. A [...]

2019-03-04T09:03:30+00:00March 4th, 2019|

Predictable Pattern Persists

Last Week: One of George Carlin’s best comedy routines was the insight from the Hippy Dippy Weatherman that the forecast for tonight would be dark. With continued dark overnight with widely scattered light by morning. Over the past two months, market gurus have been forecasting progress on trade talks with China and an accommodative Federal Reserve. Like the sun rising and setting, for another week the trade and Fed narratives remained [...]

2019-02-25T11:00:32+00:00February 25th, 2019|

Chameleon on the Run

Last Week: Where have all the Bears gone? Or perhaps the long-established visual of Bulls and Bears should be replaced with a cluster of chameleons (it’s actually a starship of chameleons according to Wikipedia, but that sounds made-up). The same chameleons that were relentlessly selling stocks from October through Christmas Eve have been buying ever since. They are strange computer-generated animals who seem to be almost entirely motivated by “blending in” [...]

2019-02-18T16:22:51+00:00February 18th, 2019|

The Early Bird Sells too Soon

Last Week: The market held onto its post-Christmas gains as reasonably good corporate earnings outweighed new evidence of a slowing global economy and continued uncertainty over trade policy. On the earnings front the blended (combines actual results for companies that have reported and estimated results for companies that have yet to report), year-over-year earnings growth rate for the fourth quarter is now 13.3% today, which is above the earnings growth rate [...]

2019-02-11T08:49:38+00:00February 11th, 2019|

Bears Hibernate while Patriots Win

Last Week: What a difference a month makes. December was one of the worst months for the stock market in history, with December 24, 2018 the worst Christmas Eve on record. Flip the calendar forward, and 2019 kicked off with the best January performance in 30 years. The triple headwinds of the Fed, the trade war, and the economy dissipated and then shifted to provide a decent tailwind. Most notably, Fed [...]

2019-02-04T10:10:21+00:00February 4th, 2019|

It’s a Profit Deal

Last Week: The holiday-shortened trading week started with a doink (yes, I’m still mourning the Bears loss) as the IMF cut its forecast for world economic growth in 2019 to 3.5% from 3.7%, leading to a 1.42% loss in the S&P 500, the largest market decline since Christmas Eve. Most of those losses were recouped by Friday’s close, driven by reasonably good corporate profits reports and a deal to reopen the [...]

2019-01-28T09:41:34+00:00January 28th, 2019|

Wag the Dog Rally

Last Week: The market continued its recent rebound, as the narrative has shifted to include a more dovish Fed policy as well as a positive resolution of the trade war with China. The momentum-based trading models (are there any other trading models these days?) all flashed “buy, buy, buy!” leading to a 2.9% gain for the week and a 6.5% rise for 2019, which is its best start since 1987. For [...]

2019-01-21T18:21:22+00:00January 21st, 2019|