According to Bloomberg’s Matthew Boesler, the U.S. economy reached an important milestone in October that ought to put it on a more sustainable footing going forward: wage growth eclipsed mortgage rates for the first time since 1972. In data published earlier this month, the Labor Department announced that average hourly earnings comprising more than 80% […]
Five Things to Consider -Week of November 25th 2019
Value Stocks Are Back in Vogue, for Now Could value stocks be back for good? According to the article, one Bank of America poll definitely indicates a positive view, with confidence in value up 21% from October. This could be partially due to the increasingly large gap in P/E ratios between value and growth stocks. […]
The First Pillar: Buyer Behavior Matters
One of the “Pillars” of our investment process is Buying Behavior. In essence, we want to see positive cash flows into a stock from individuals / institutions with ostensibly the best knowledge of the company and its prospects. With the exception of buying during “quiet periods” when earnings are about to be announced, “insiders” (Including […]
Lots of Cash on the Sidelines
According to an article in the Wall Street Journal, “nervous investors have socked $3.4 trillion away in cash.” At the same time, hundreds of billions of dollars have come out of equities in favor of the aforementioned money market funds and bonds. Wow – we haven’t seen this kind of conservatism since the financial crisis. […]
Five Things to Consider- Week of September 16th 2019
How the Minivan Once Saved Chrysler – Now It’s Near the End of the Road This article embodies an automotive paradigm shift that has been occurring over the last few years. The car consumer has become very sport utility vehicle centric. This article emphasizes that not only is this preference one of practicality – but […]
What Happened to the Cannabis Stocks?!? A Cautionary Tale
Earlier in the year, we discussed the dangers of buying into the hype around TAM (Total Addressable Market) in valuing speculative businesses. We did this in the context of a red hot IPO of a company called Beyond Meat. Since reaching its high of roughly $225/share in mid to late July, the stock is down […]
Repos: No, the Fed isn’t coming for your car—but it still could signal a problem
A bit of humor to lead into a complex, but important topic. This week the Fed has had to intervene several times in the cash markets to provide liquidity (i.e. buy treasuries) where buying demand dried up, Treasuries were oversupplied and consequently rates spiked. The so-called “Repo” operation, allows Primary Dealers to exchange collateral for cash, up to $75 billion worth each day. In this way, the Fed can keep short-term rates within its target range (roughly 2.00%, but lowered to 1.75% today)—an important part of implementing its monetary policy. Depending on the reporting source, overnight rates were said to have spiked to 8-10% at one point prior to Fed intervention.
A Lack of Consensus – Should We Be Worried?
We’ve discussed previously the dissent of two Fed voting members of the most recent Fed rate cut in July. This was somewhat unprecedented. Since then we’ve had a suggestion from a former Fed governor that the Fed should shape policy based upon a political agenda. Add to that further disagreements in public by current Fed […]
Another “Great Rotation”?
We’ve seen a brutal rotation over the last week in many asset classes. Brutal in the sense of its speed and magnitude. Starting with bonds. After a downward trajectory in yields all year, this trend accelerated dramatically in July and August – most notably, the yield on 30-year Treasuries fell almost 60 bps in 60 […]
Validus Global Growth Composite Commentary
Market Views August was a volatile month across most asset classes characterized by negative sentiment surrounding trade and a global growth slowdown. Further, the specter of recession in Europe, more Brexit shenanigans and a global manufacturing recession all fueled concerns and raised recession probabilities. The VIX Index began the month at 16.12 and finished 17% […]
