This Market Does Not Spook Easily October 2021 is shaping up to have more treats than tricks, following a scary September. After a rough start to the week, the market mounted a powerful rally on Thursday and Friday, with the S&P 500 posting a 1.82% gain to reach its highest level in a month and representing its best week since July. All the other equity indexes enjoyed similar returns, with the [...]
Objective? Reach the "Winner" Square The stock market over the last few months parallels Hasbro’s Chutes and Ladders: “an exciting up and down game for little children.” On Monday the market slid down with energy prices spiking, festering fears of a U.S. default, and Facebook leading a sell-off in the Nasdaq following a negative “60 Minutes” story on Sunday night. A deal in Washington to extend the federal government debt ceiling [...]
Panic or Pivot? In the 1995 classic animated film “Toy Story” in a time of crisis Buzz Lightyear proclaims “Sheriff, this is no time to panic…” to which Sheriff Woody replies “This is the perfect time to panic!” Sheriff Woody would probably be experiencing incredible trepidation with elevated inflation, the possibility-albeit remote-of a government default, higher proposed taxes, tightening monetary policy, a volatile geopolitical landscape, China’s new anti-business policies, supply chain [...]
Stocks Move with the News It was a rollercoaster week on Wall Street, as investors dumped stocks on Monday as concerns over the possible collapse of China property company Evergrande and overall worries about China’s crackdown on indebted firms unnerved traders. Evergrande is the largest property developer in China, and its financial troubles could lead to a domino effect particularly in Asia. The market had closed below its fifty-day moving average [...]
Friend, Foe, or Fiction? The 50-Day Moving Average. Stocks touched their lowest levels in four weeks Friday, with the S&P 500 closing slightly below its 50-day moving average. Some chart-reading traders have expressed concerns that a key support area has been violated, possibly signaling an upcoming sell-off. The chart below illustrates, however, that over the last twelve months the equity markets have generally snapped back quickly following each breach of the [...]
New Vaccine Mandates The definitions of “transitory” found on the internet range from “of brief duration” to “not permanent.” We believe that the two major economic challenges of inflation and COVID-19 will not be brief or permanent, so perhaps somewhere in the middle of the transitory range. Looking at inflation, the Labor Department reported on Friday that U.S. producer price index rose 0.7% in August, down from a 1% jump in [...]
Gloomy or Growth-y? The stock market continues to chug along to new record highs despite the extraordinary challenges presented by the pandemic during the last 18 months, as well as the stiffening headwinds still to be confronted with new variants, a bloated national debt, and uncertainty over additional fiscal stimulus all brewing. Channeling the Grateful Dead, one might say “troubles ahead, troubles behind, U.S. economy you better watch your speed...” There [...]
Powell's Policy Persists On Friday, at the Jackson Hole Economic Symposium, Chairman Powell delivered the message that whereas tapering is coming, the Delta variant makes the timing uncertain. He also made it clear that the plan to taper does not suggest that any interest rate increases are contemplated in the near term. In brilliant messaging, he also added that “the prospects are good for continued progress toward maximum employment.” In other [...]
Currency, Covid, Chaos, and (Yes) Catalysts In a week of troubling headlines, we take notice that the Dollar reached its highest level of 2021. We monitor the strength of the greenback as a proxy for the world’s perception of the attractiveness and safety of U.S. financial markets. The most troubling news story was the collapse of the Afghan government following our withdrawal which resulted in chaos and panic. An informed discussion [...]
'Stunning Loss of Confidence' So far 2021 has provided an incredibly smooth ride for investors, but the news flow last week suggested some turbulence on the horizon. The Delta Covid-19 variant cases and deaths surged, both consumer and producer prices spiked, consumer confidence plunged, and political wrangling in the U.S. House of Representatives cast doubt on the passage of the infrastructure bill. The U.S. is now averaging 124,000 new cases a [...]