The uncertain coronavirus-impact on the US economy (demand, supply chain disruption and credit) has resulted in a ~19% SPX decline from 2/19 peak. During the first few weeks of February, we called attention to the unsustainability of new highs based on a lack of cyclical
Good news: The global economy was rebounding and the US was carrying strong momentum at the start of the year. The US economy is in great shape as we head into what looks like a fairly significant shock. New coronavirus case counts in China are
On Wednesday, we explained how ‘convexity hedging’ by banks and insurance companies accounts for most of the recent momentum in bond yields. The virtuous cycle will likely continue but momentum/volatility will begin to decelerate as we near the ‘zero-bound.’ The Fed has said it won’t
The S&P 500 is still short-term oversold with high levels of realized volatility capable delivering a test of last Friday’s low. A retest below 2900 could push the CBOE equity put/call ratio back to bearish extremes, but other equity sentiment indicators have yet to signal
Economic conditions have yet to match downbeat market expectations. The mismatch only adds to the uncertainty, which has fueled large scale ‘risk off’ positioning out of equities and into bonds. Fed fund futures are pricing in another 50bps of rate cuts this year. Bond yields
As holdings appreciate in value over a period of years, investors are fortunate enough to be faced with the question of what to do with significant embedded long-term gains. Since it’s unlikely that an entire portfolio appreciates at the same rate, we will focus on
Over the last several days, markets had priced in a 50bps Fed rate at the 3/18 meeting. Today’s off-schedule decision to move this forward by two weeks is getting less-than-positive initial market reaction for two reasons: 1) off schedule rate cuts feel a bit like
Rising expectations for policy support and short-term oversold conditions deserve credit for this morning’s bounce. Fed fund futures pricing now implies 50bps of rate cuts this year and trending toward 75bps. Powell’s unscheduled Friday press conference seemed to endorse present market expectations for a rate
Tomorrow’s release of official China PMI’s has consensus looking for manufacturing at 45 (down from 50 in January) and services at 50.5 (down from 54.1). Manufacturing matters most and anything between 44 and 46 would be considered ‘in-line’ given the circumstances, while a sub-43 number
MSFT became the latest US large cap name to lower the bar based on supply chain disruptions, while Nestle’s decision to restrict overseas business travel with US companies undoubtedly considering similar measures.
