Earnings Still Matter!

One of the most important new trends is that stocks are becoming more volatile during earnings season. As you can see from the chart below, earnings moves are 4 times the size as the average daily move. The most obvious explanation that many give for this is the prevalence of ETF investing. ETF investors don’t…

Tech Earnings Are Great

Tech Isn’t A Bubble I have made it clear that the current stock market isn’t like the technology bubble of the 1990s. The biggest reason is because technology stocks aren’t overvalued compared to their earnings. The most misleading chart that bears show is the chart of the Nasdaq which makes it look like we are…

Fund Managers Bearish On America & Tech

U.S. Versus The World With the stock market reaching another record high let’s look at valuations across the globe. As you can see from the chart below, North America has the second highest current P/E ratio and the highest forward P/E ratio. North America has a relatively low 15-year earnings growth rate and book value…

Credit Spreads Tightest Since 2007

Spreads Tighten But Retail Is Weak Many investors are focused on the record highs in the S&P 500 and the Nasdaq and the VIX staying below 10 for another day, but I think the biggest story of Wednesday’s trading session is the tightening of bond spreads. As you can see from the chart below, the…

Will The JCB End Its Addiction to Government Bonds?

Bank Of Japan Is In Trouble The unwind potential of the central banks’ assets that is about to hit the market is remarkable in its scope; the fact that it’s all happening at once only adds to the drama. There could be currency implications if the ECB decided to increase its bond buying while the…

GOP Healthcare Plan and the VIX

Tuesday the Dow fell because of weakness from Goldman Sachs (the Dow is price weighted and Goldman has a high price) while the other indexes were mixed. Ignoring today’s action and focusing on the last few weeks of trading, there’s no question the market has been unusually quiet. As you can see from the chart…

Government Pushes Hiring Up In June

Government Helped June Labor Report The private sector drives jobs growth in America, so most economists view public sector growth as bad because it’s unsustainable. The worst case would be a growing public sector and a shrinking private sector since the public sector needs private sector money to survive. As you can see in the…

No Restrictions On Junk Debt, No Problem?

This week will be the first week where earnings start to flow in quicker. So far, as of July 13th, 30 firms have reported earnings. Of the 30, 24 beat, 3 matched, and 3 missed estimates. An 80% beat rate is very high, but it’s too early to call it a signal for how the…

VIX Below 10 Handle: Should Be Even Lower

The stock market had an amazing week as optimism surrounding earnings season pushed stocks higher. Investors are ignoring the nonsense in Washington because it’s mostly hot air. The fact that there disfunction in Washington instead of it easily passing bad laws caps the amount it can hurt stocks since nothing is getting done. The S&P…

Bond Spreads Are Extremely Tight

The Producer Price index increased 0.1% month over month, but on a year over year basis it fell from 2.4% in May to 2.0% in June. The decline was caused by the rise in oil prices dropping out of the metric. The core PPI was up 0.1% month over month and 1.9% year over year…

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