Kuby’s Commentary

Turkey and Tiger

Last Week: The S&P 500 slipped 0.25%, the yield on the Ten-Year Treasury slid 10 basis points to 2.85%, while the U.S Dollar strengthened over 1% to a new 2018 high. The chart below shows the link between the strength in the dollar and the S&P this year, particularly since the end of March when the “Trade War” dialogue started dominating the headlines. It’s hard to tell how the dollar and [...]

2018-08-13T13:16:11+00:00August 13th, 2018|

The Theme Remains the Same

Last Week: Our TIEs (Trade, Interest rates, Earnings) theme remained the dominate narrative, with relatively benign developments on the Trade and Interest rates front and continued spectacular Earnings. Unlike most quarters when analysts make downward revisions to earnings estimates as the reporting season approaches, in the first and second quarters of 2018 analysts increased expectations ahead of earnings reports. Even with elevated expectations, 78.2% of the index reported first quarter earnings [...]

2018-08-06T09:27:20+00:00August 6th, 2018|

The TIEs that Bind

Last Week: In the words of the legendary rocker Bruce Springsteen, “You can’t forsake the ties that bind”. In today’s market those “TIEs” are Trade, Interest rates, and Earnings. Trade continues to dominate the narrative, probably because President Trump is a master at controlling the story line. Global trade is a complicated issue, particularly as we have had a long period of globalization resulting in a supply chain web that is [...]

2018-07-30T14:38:50+00:00July 30th, 2018|

The Good the Bad and the Confusing

Last Week: Wow, what a strange week. Let’s call it the Good, the Bad, and the Confusing. The Good: Corporate earnings are terrific. It now looks like 20.8% net profit growth on a 9% revenue increase. The Bad: US housing starts fell 12.3% in June to a nine-month low, making for the biggest percentage decline since November 2016 and the biggest relative to expectations since January 2007. Every region experienced a [...]

2018-07-23T10:19:49+00:00July 23rd, 2018|

Earning Season Trumps

Last Week: Global trade tensions once again dominated the news, as the U.S. announced additional tariffs on $200 billion of Chinese goods. Curiously, the S&P 500 responded by rallying 1.5% and the Dow Jones Industrial Average 2.3%. I believe Fed Chairman Jerome Powell summarized the landscape well, as he explained that whereas the economy is in a “good place” now, trade disputes could end up being negative for the economy if [...]

2018-07-19T10:58:25+00:00July 16th, 2018|

Goldilocks and the 74 Hot Dogs

Last Week: Goldilocks is still alive and well, as evidenced by the Bureau of Labor Statistics initial report on the labor situation in June, which was neither too hot nor too cold. While the unemployment rate increased slightly from 3.8% to 4.0%, the entire increase was due to an estimated approximately 600,000 people entering the workforce in search of work; such an estimated increase typically is taken as a sign of [...]

2018-07-15T22:36:06+00:00July 9th, 2018|

TINA has Left The House

Last Week: “TINA”, which stands for there is no alternative (to equities), has been the battle cry for the bulls during this nine- plus year rally in the market. The gamble by the Federal Reserve that pushing short-term risk-free interest rates down to zero percent would stimulate investment in riskier assets paid off handsomely. Most of the money flowed into the S&P 500, being the most liquid equity basket, which helped [...]

2018-07-02T10:24:26+00:00July 2nd, 2018|

Still Resilient and Rotating

Last Week: Resilient? But wait, you might be thinking, didn’t the market decline last week? Indeed, the S&P 500 did lose 0.89% and the DJIA 2.72%, while the Russell 2000 managed to post a fractional gain.  Given the escalation in trade tensions, I think those results show tremendous resiliency. By way of comparison, the Shanghai Composite Index fell 4.4% for the week, and is now down 13% this year. Rather than [...]

2018-06-25T14:15:31+00:00June 25th, 2018|

Resilient. Week 3

Last Week: Once upon a time, a long time ago, in February and March, the market declined, and volatility spiked over concerns of a trade war and tightening monetary policy. Last week Investors (traders?) displayed tremendous resilience to those concerns. On the heels of the previous weekend’s disastrous G-7 summit, which threatened the NAFTA talks, on Friday the U.S. imposed tariffs on $50 billion of goods from China, which immediately said [...]

2018-06-18T09:19:58+00:00June 18th, 2018|

Resilient. Week 2

Last Week: Once again, the market proved resilient, with the S&P 500 gaining 1.6%, despite numerous troubling global headlines.  Most of the unsettling news relates to trade issues, which clearly could become significant impediments to the global economy if the proposed tariffs become reality. The market seems to be viewing the slew of trade policy tweets as negotiating ploys or bluffs, rather than actual policy statements. I hope that proves to [...]

2018-06-11T10:10:25+00:00June 11th, 2018|