The HOPE analysis we presented in Monday’s Commentary addressed the typical progression of economic data leading to recessions. The H in HOPE stands for housing. Housing is often the first segment of the economy to feel the weight of higher interest rates. The Commentary shows a graph of plummeting homebuilder confidence. Such is not surprising […]
A golden cross occurs when a shorter moving average crosses above a longer moving average. Conversely, a death cross occurs when a shorter moving average falls below a longer moving average. The graph below shows the equal-weighted S&P 500 just experienced a golden cross with the key 50 and 200-day moving averages crossing. The equal-weighted […]
Last year, as the market trended lower, higher dividend stocks sheltered investors from the storm. Within higher dividend stocks are a special breed called dividend aristocrats. To be considered an aristocrat, stocks must pay a consistent dividend and continuously increase the size of their dividend payouts. The graph below shows the performance of NOBL (ProShares […]
Michael Kantro, CIO of Piper Sandler, uses the HOPE cycle to show the order in which economic activity typically deteriorates before a recession. Michael’s HOPE model comprises Housing, New Orders (ISM), Corporate Profits, and Employment. Per his graphic below, the HOPE cycle is progressing as it typically does before a recession. Housing and ISM New […]
Silvergate Capital (SI) fell 40% on Thursday and is down by nearly 80% over the last six months. Silvergate is a crypto-friendly bank. Driving its shares significantly lower was an announcement the bank’s deposits tumbled by over $8 billion to only $3.8 billion, in what it calls a “crisis of confidence.” Further, Silvergate is laying […]
The Fed Funds Futures market implies the Fed will raise the Fed Funds rate to 5%, keep it there for a few months, and then gently lower it by nearly 50bps before year-end. Such is referred to as the goldilocks forecast. Goldilocks portend little volatility in the Fed Funds rate. In economic terms, it means […]
Many passive investors, such as those in retirement plans, use the start of a new year to reconsider their passive investment and reallocate accordingly. Often one of the decisions is how to split their stock allocations between large-cap and small-cap stocks. For those choosing between large-cap and small-cap stocks, we present a few graphs below […]
Entering 2023, investors seem to singularly focus on the Fed’s interest rate policy, not the elephant in the room. The media pontificates on whether the Fed should hike by 50bps or 75bps. They continually debate whether they will hold rates around 5% for the remainder of the year or when a pivot might occur. While […]
Looking back at what drove asset prices is a crucial part of the forecasting process for 2023. In hindsight, it’s obvious the Fed’s monetary policy stance and policy expectations were the critical determinants of asset prices. To reduce inflation, the Fed raised the Fed Funds rate by 4.25% and reduced its balance sheet by over […]