Kuby’s Commentary

Dream Week for Value Stocks

Last Week: Treasury yields rose sharply during the week after signs that U.S. consumer spending remained strong and on receding trade tensions between the U.S. and China. Additionally, both the CPI and PPI showed some signs of inflation.  The “Crowd” got caught all-in on the recession trade, long bonds and stocks that were categorized as recession-resistant, and a dramatic rotation into cyclical and value stocks was unleashed. The Russell 2000 Value [...]

2019-09-16T09:26:52-05:00September 16th, 2019|

Ebb & Flow and a Field Goal

Last Week: The economic releases were consistent with a slowing economy in August, with the manufacturing ISM cracking below the 50 level (contraction) and the BLS jobs report coming in at 130,000 versus an estimate of 158,000. Neither of those reports should be cause for alarm, in a fact with a longer-term perspective the jobs data remains very positive: Whereas a sub-50 in the ISM report suggests contraction, it is also [...]

2019-09-09T09:53:07-05:00September 9th, 2019|

The China Seesaw: Short Shallow Swings

Last Week: Once again the market movement seemed to be dictated by the tone of the trade talks. Whereas there were no actual developments, a Chinese request for “calm” in the trade war and the absence of any inflammatory tweets from the White House combined to lift traders’ moods and triggered a 2.8% rise in the S&P 500. The month of August followed the seesaw pattern of the previous 18 months, [...]

2019-09-03T09:50:46-05:00September 3rd, 2019|

The Tweet Hit the Fan

Last Week: My commentary from the previous week finished on an upbeat note, “The tone on trade improved over the weekend after President Trump said that Tim Cook made a “very compelling argument” that the tariffs on Chinese imports gave Samsung an edge over Apple. Trump also tweeted that “We are doing very well with China, and talking!” The market rallied on Monday and held those gains until Friday morning when [...]

2019-08-26T10:13:44-05:00August 26th, 2019|

Recession Obsession

Last Week: On Wednesday night I got into an Uber and greeted my driver by saying that it was a beautiful evening. “Yes” he responded, “but the 2-10 curve has inverted and there is a recession coming in 18 months”. I’m not joking. That actually happened. The market had suffered its worst decline of the year that day as the yield inversion had triggered a tidal wave of algorithmic generated sell [...]

2019-08-19T10:49:18-05:00August 19th, 2019|

Much Ado

Last Week: There is much ado about the plummeting interest rate offered by the Ten-Year Treasury. Many experts are interpreting those declining rates at as harbinger of an impending recession. It’s interesting to take note that we have seen this pattern twice before since the Great Recession of 2009.  If we add a chart of GDP to this chart, we see that in general the economy has been slowing when the [...]

2019-08-12T11:38:52-05:00August 12th, 2019|

October 2018 Reprise? Let’s Hope Not

Last Week: The first movement of August 2019 sounded like a reprise of the atonal first stanza of October 2018, with Fed and Trade policies combining to hurt the ears and wallets of investors. On Wednesday the Fed delivered a 25-basis point reduction in the target range for short-term rates, but their statement suggested that the easing of trade tensions reduced the need for further rate cuts. Coincidentally (?) on Thursday [...]

2019-08-05T13:37:35-05:00August 4th, 2019|

FOMOTINA Rally Resumes

Last Week: As we approach half-time of earnings season, the usual pattern of companies reporting results that are above estimates is unfolding. Those positive “surprises” are responsible for the decrease in the expected overall earnings decline to -2.6% from -3.4% last week. Revenues are expected to increase at a tepid 4.0% clip, and the trailing P/E ratio is a rather elevated 19.8, while based on growth expectations for later in the [...]

2019-07-29T10:28:55-05:00July 29th, 2019|

Rally Pauses with a Whiff of Fear

Last Week: The news flow created slightly more fear than greed, as Fed officials talked down the likelihood of a 50-basis point rate cut and President Trump on Tuesday reiterated his threat to impose further tariffs on Chinese imports. Earnings season got off to a mixed start with CSX lowering its full-year guidance as CEO James Foote called the economic backdrop “one of the most puzzling I have experienced in my [...]

2019-07-23T09:50:13-05:00July 22nd, 2019|

FOMOTINA Rally

Last Week: FOMOTINA: A rally fueled by the combination of Fear Of Missing Out with There Is No Alternative. Another week of gains for the S&P 500, which advanced 0.78% to top 3000 and close at a record high. The narrative (song) remained the same, as Fed Chairman Jerome Powell’s congressional testimony left the fed-funds futures market suggesting a 100% probability of a cut of at least 25 basis points at [...]

2019-07-18T16:17:41-05:00July 15th, 2019|