Morning Notes — Fiscal Stimulus Plan Next Thursday
The US Jobs Report for December disappoints with nonfarm payrolls down -140,000 vs consensus for +50,000 and November’s +245,000.
Morning Notes — Banks
We turned incrementally positive on cyclically sensitive ‘value’ sectors in mid-September. Our level of conviction level increased on October 21 when 10-year Treasury yields broke through 0.79%, again on the November 9 when PFE/BNTX vaccine data exceeded expectations and again last week as the 5-year/30-year
Morning Notes — Bond Yields (Part II)
Upward pressure on bond yields has been in our forecast since mid-September and a key piece in our preference to add cyclical/value exposure (Financials, Materials and Industrials). In past editions, we explained that the slope of the yield curve (defined as the spread between 5-year
Morning Notes — Bond Yields
At some point higher bond yields become a problem for equity multiples. In a world without QE, bond yields reflect market expectations for future inflation. The Fed can mostly anchor short-term (2-year) yields through interest rate policy, but market participants determine yields further out the
Morning Notes — Welcome Back
A Democrat surprise in GA this week would likely trigger a further decline in the US dollar, an increase in bond yields and some downside for the S&P 500 (SPX). We see immediate technical support for the SPX at ~3620, with stronger, secondary support in
Year End Letter
Three years ago, we had a dream of building a best in class investment management and wealth advisory firm.
Morning Notes — Tech Multiples
The positive PFE/BNTX data on 11/9 brought higher bond yields and curve steepening. The rise-over-run between the 5-year Treasury yield and 30-year Treasury yield is the key metric for relative sector performance. Spreads wider than ~130bps should benefit Industrials, Financials and Materials.
Morning Notes — Fiscal Spending and Bond Yields
The perception around fiscal spending has already begun to shift away from ‘more is better.’ We discussed this back in early October after a sell-side equity strategist argued the potential benefits of an estimated
Morning Notes — Outlook
We’ve held a bullish equity outlook since credit spreads narrowed in late March. Our bullish outlook was based on a strong belief that unprecedented liquidity (monetary and fiscal channels) would outlive the pandemic and strong corporate balance sheets would be able to absorb a temporary
Morning Notes — Curve Steepening
We’ve had a pro-cyclical/value bias since mid-September. At the time, financial conditions remained extremely favorable, Tech multiples had stopped expanding and bond yields were lifting off a six-month base. We gained more conviction after the 11/9 PFE/BNTX data steepened the Treasury yield curve and pushed