When most economic prognosticators forecast inflation, they often base it on money supply changes. At first blush, such makes a lot of sense. The more money that exists, the less its worth, ergo the more inflation. However, such logic fails to consider how often money circulates. Monetary velocity quantifies the rate at which money is […]
Last week JB Hunt Transportation Services (JBHT) warned that the freight trucking sector was slowing down. JBHT’s President said: “Simply stated, we’re in a freight recession.” UPS echoed their sentiment on Tuesday. First-quarter revenue for UPS fell short of expectations and 6% below last year’s level. Further, they guided forward revenue projections lower. Carol Tome, […]
The graph below from Bloomberg provides an interesting analysis of what odds, so to speak, various markets assign to a recession. To help explain the logic, the S&P is pricing in a 60% chance of recession. From the market peak in January 2022 to the trough in October, the market fell 27%. The graph shows […]
Individual investors bought a net $78 billion in stocks and ETFs in the first quarter. As reported in the Wall Street Journal, data from Vanda Research point to the third-largest quarter of purchases in history. The prior two were the first quarter of 2021 and 2022. In both quarters, individual investors bought about $80 billion. […]
Cathie Wood of ARK Invest put a 2027 price target on Tesla shares at $2000. Such implies that Tesla will climb by 1135% over the next five years. Even more stunning, its market cap at a $2000 valuation would be $5 trillion. The entire auto industry, including Tesla, has a market cap below $2 trillion. […]
Many investors are questioning whether we are in the grips of a bear market or if the bull market resumed with the October 2022 lows. The yield curve, leading economic indicators, and Fed policy point to a recession. 40 years of trustworthy recession indicators say avoiding a recession and bear market would be extremely rare. […]
In late 2020 and throughout 2021, earnings didn’t matter. That statement is a little tongue in cheek, but there were many instances where investors looked beyond bad sales and earnings, or even poor forward guidance, and focused solely on stock buyback plans. It didn’t matter that earnings growth stalled or the CEO expected weaker sales. […]
Throughout 2022, higher bond yields scared off equity investors. Such a relationship is not surprising given how much yields rose last year and the fact that higher yields do not bode well for profit margins or valuations. The graph below highlights the strong correlation between TLT and SPY. Our circular highlights show the local peaks […]
After falling about 15% from October 2022 to late January 2023, the dollar index bounced by about 6% but has since given that up and sits on what is becoming critical support. While many view this as a critical period for the future direction of the dollar index, its relationship to other assets is equally […]