Q1 2017 Was The Peak In Earnings Growth

In previous articles, I have mentioned that wage inflation would have to grow faster to slow employment growth and push down profit margins. The chart below shows the correlation between unit labor costs and profit margins. When unit labor costs go up, margins fall. What I didn’t mention is unit labor costs can be higher than…

The VIX Sets A New Record: 15 Days Below 11

The stock market’s movement on Friday was almost identical to Thursday. The market fell slightly because of the weakness in retail; the VIX stayed below 11 for the 15th consecutive day. As you can see in the chart below, the streak of the VIX being below 11 made another new record, destroying the previous one.…

QE Has Overstayed Its Welcome

The stock market had a small decline on Thursday which was brought about by the collapse in brick and mortar retail stocks. Even with the decline in the S&P 500, the VIX continued its streak of closes below 11. The S&P 500 is still within 1% of its all-time high. The stock market is as…

Healthcare Costs Eating Into Wages & Salaries

Healthcare & Rent Costs Exploding I have discussed the relationship between the hourly earnings growth and the expansion of employment by small businesses. Small firms are very optimistic as is shown in the NFIB small business survey. With optimism and demand for labor prevalent, increasing wages should follow. The net compensation reading for April 2017…

Equity ETF Inflows Hit A New Record High

The VIX rose above 10 on Wednesday, but the S&P 500 still barely moved. The S&P 500 hasn’t moved more than 0.5% intraday in 14 days which is the longest streak since 1971. As you can see in the chart below, the VIX has had a 13 day streak of closes below 11 which is…

The Stock Market Is Being Pushed Higher By A Few Tech Stocks

The stock market’s breadth stinks. Breadth is the measure of the rally’s broad based support. In my last article, I mentioned how Apple is responsible for all the gains in the Dow. The chart below shows that since March 1st, the fantastic five tech stocks which are Facebook, Apple, Amazon, Netflix, and Alphabet gained $260…

Apple Accounts For All The Dow’s Gains In 2017

Apple is often a topic in these articles because it’s such a large company with outsized effects on the indices it’s in. Proof of that is Apple’s gains this year account for 102% of the Dow Jones Industrial Average’s gains. Large cap firms are outperforming small cap ones. Apple is exhibit A of this trend.…

The VIX Closes Below 10 Again

The top story in the markets is the lack of volatility. The VIX has been hovering between 9 and 10 which is historically low. Actual price volatility is 48% of its long run average and has been near that point for 77 days. The chart below shows the lowest closes the VIX has had since…

The VIX Falls Below 10

The stock market closed flat on Monday. The big movement was in the VIX which closed down 7.57% to 9.77. It makes sense that the VIX is near its all-time low given the lack of volatility. The VIX being below 10 is very rare territory. The close today was the lowest since 1993. Volatility is…

The Market Is Reveling In Great Q1 Earnings

The stock market had the tailwind of Macron’s victory at its back, but it didn’t rally Monday morning. As I was predicting from a few weeks ago Macron, the centrist investment banker, won the French presidential election in a landslide. Macron received 66.1% and Le Pen received 33.9% which was below what most of the…