Tesla Smoke & Mirrors

Tesla is the ultimate representative of this current environment. It consistently loses money, misses expectations, and maintains its status as an exciting growth company. Businesses with strong fundamentals are few and far between. Today I saw a stat that said the FANG (Facebook, Google, Netflix, Amazon) stock performance makes up 90% of the S&P 500’s…

How Are Earnings?

Going into this earnings season earnings were expected to decline 2% year over year. Earnings expectations are a farce unfortunately. Analysts may have always been lowered expectations to foster earnings beats, but this practice has become painfully obvious recently because of the current environment where EPS growth has been negative while stocks have been rallying.…

Speculating On Future Fed Policy

My edge when it comes to speculating on future monetary policy is that I remain objective when making projections. The so called ‘Fed skeptics’ have been closer to projecting actual Fed policy than mainstream investment bankers and commentators. The Fed itself has also had a terrible track record at predicting its own policies. This is…

Fed Caught Between A Rock & A Hard Place

The long term consequences of the Fed’s policy mistakes are obvious. Low interest rates created the tech and real estate bubbles, so having interest rates lower for longer is going to cause more damage. We are already seeing these effects bear fruit as the S&P 500’s median price to sales ratio is the highest ever.…

The Election Signals Tough Roads Ahead

The market is ignoring the elephant in the room. In terms of the presidential race, most voters and economists think both presidents would be a bad choice. It will be tough for either candidate to get anything passed through Congress because he/she will not have a mandate. A mandate is when the president gets his…

Netflix: Tech Boom 2.0

            It is always important to invest with the macroeconomic back drop in mind. However, this concept is actually hurting investors this year. In fact, not only is economic weakness not being priced into the market, but individual earnings reports aren’t mattering either. Capitalism cannot work when there is no cost of capital. Investors begin…

When Will The Monetary Madness End?

            The U.S. economy is in an interesting situation. The manufacturing economy started weakening in 2014. Industrial production has declined for 13 straight months which is the longest streak outside of a recession ever. Earnings peaked in 2015 and have been declining ever since. Both the Russell 2000 and the NYSE peaked in 2015. All…

Will Politics Kill World Trade?

Terrorism and the influx of refugees fleeing the war-torn Mid-East for Western Europe have triggered a revitalization of nationalistic sentiment among the electorate, a phenomenon Donald Trump has used as a veritable springboard on the way to winning the GOP presidential nomination. But the populist shift has also served as a drag on global trade…

Check Your Money Markets: Reform Kicked In On Friday

If you’re in a prime money market fund and you don’t know what happened today, you need to read up. On Friday, new rules went into effect that will require prime funds to report a floating net asset value and would, in some cases, allow funds to gate investors. For anyone who may be unaware,…

Friday Recap: Bank Earnings, China PPI, Yellen

It looks like we’re going to head into the weekend on an upbeat note thanks largely to, i) bank earnings, and ii) China PPI. Below, find a bit of Street commentary on results from JPMorgan, Citi, and Wells Fargo courtesy of Bloomberg: From Goldman’s Richard Ramsden: JPM Strong FICC rev. drives beat Total rev. outperformance…