Will Central Bank Liquidity Dry Up In 2019?
Central Banks About To Break The Market I think that many investors who are saying the Fed’s balance sheet unwind will be a nothingburger are tired of the story and they think it’s overkill. They are also myopic in their thinking. The chart below shows that even though we have been talking about an unwind…
Healthcare Vote Tuesday
Draghi Won’t Taper? The bond market gives us a picture of what investors are expecting from policy makers. The chart below shows the bond spreads the riskier European countries are trading at compared to the German Bund. The spreads of these countries, formerly known as the PIGS, have been tightening in the past few months.…
Earnings Estimates For Q3 Drop Further
This week will be the biggest earnings week of the year as 190 firms are reporting, including Facebook, Alphabet, and Amazon. Those three reports will shape the performance of the market for the next few months. If 2 or 3 miss estimates, the rally could be halted, especially in the Nasdaq which has had a…
Q2 Expected To Have 2.25% Annualized GDP Growth
Q2 Optimism Along With Weak Philly Fed The two Q2 GDP forecasts from the Fed increased slightly even though one of the most important economic reports of the week showed a sequential decline. This was because it was a July report which is outside the second quarter. We’ll go over the changes in the forecasts…
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…
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