Junk Bond Spreads The 4th Tightest To Start A Year Since 1998
2018 Starts Off With A Bang The stock market is looking like it’s about to do the impossible, have a repeat performance of 2017 which was in the 99th percentile in terms of risk versus return. The first two days have been great. In the S&P 500, the first two days of 2017 were up…
Could Rising Oil Prices Help The Economy?
TV Sentiment For The Next 12 Months The chart below shows the financial TV sentiment for the economy, stocks, volatility, emerging markets, inflation, treasury yields, and commodities from 2013 to 2018. It’s amazing to see how this sentiment indicator had almost 100% optimism for inflation in 2017, but inflation didn’t perk up. As a result…
2018 Won’t Be A Repeat Of 2017
Global Equities & EM Debt Should Have A Solid 2018 The chart below shows the major asset classes’ performance in 2017. Global equities were up 23.9%. I expect a smaller increase this year because equities in many markets were left for dead in 2016. Optimism is now high, meaning it’s tougher to meet expectations. Even…
The Technology Sector Was Up 38.8% In 2017
Momentum & Growth Dominate 2017 Since 2017 is now over, let’s look at the performance of various assets to get an idea of where they may be headed. The table below shows the month, quarter, and year performance of the headline indexes, various factor investment strategies, and each sector. Unsurprisingly, volatility was down for the…
Rule of 20 Signals Stocks Are Expensive
Final 5 Bear Market Signposts Let's review the bear market signposts individually to see if they imply a bear market is coming. 11 of the 19 warning signs have been triggered. In previous articles, I’ve reviewed the first 14 of them and determined that 4 are unreasonable, meaning less worry should be given about an…
Active Investing Faces Cyclical & Secular Headwinds
The Shift From Active To Passive Investing We reviewed the first 10 bear market signposts in a previous article. This article will look at the next few. Remember that, of the first 10, I felt 3 were irrelevant. The 11th signpost is triggered when the net percentage of consumers who think stocks will move up is…
11 of 19 Bear Market Warnings Signaled
Bear Market Signals Triggered In previous articles, we've reviewed the 30 risks for 2018. Now let’s look at the 19 bear market signposts. As you can see from the image below, 11 of the 19 signposts have been triggered already. The first trigger is the Fed raising rates by more than 75 basis points. This…
Bitcoin May Have Topped
The Bitcoin Peak Might Be In There’s a belief system among long term investors in bitcoin, known as hodlers, that bitcoin will always rally. The concept is if this rally ends in an elongated correction of 50% or more, there will eventually be another rally which brings it to new heights a few years down…
Margin Expansion Expected To Drive Earnings 11.8% Higher In 2018
2017 Earnings Were Led By Energy, Materials, and Tech At the beginning of the year, I expected 5%-7% earnings growth for 2017 based on the trend of earnings reports missing estimates. As we’ve discussed throughout the year, this year has been different from the past few because it has come close to meeting the initial…
This Could Be The Longest Expansion Since 1854
Santa Clause Rallies Don’t Happen As Often As They Used To Stocks indexes were down slightly on Tuesday because of AAPL. Apple fell 2.54% because of reports of weak demand for the iPhone X. If the iPhone X sells badly, the company will shift its focus to lower priced products like the iPhone 8, hurting…
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