It’s the last trading day of 2023, and not much is happening around the market. Stocks have edged higher this week, and bonds rallied on light volume. We expected this much, as we previously wrote, but this could be the “calm before the storm” with important economic data coming over the first two weeks of […]
Human capital is an important input for growth at non-manufacturing tech companies such as NVDA. It fills a role as vital as CAPEX to a manufacturing company. Employee knowledge accumulates over time, carries positive externalities, and is often the lifeblood of innovation at these firms. However, current accounting principles were developed prior to the rise […]
Some institutional investors must only report their holdings by the end of a month or quarter. As such, they often undertake window dressing trades around the end of these periods to give the appearance they held the “right” positions. Friday, December 29th, marks the last trading day of 2023. That means today is last call […]
Corporations predominately borrow from banks and credit investors via the corporate debt markets. Most often, banks and credit investors have similar views as to pricing corporate loans/debt. Today, their views are starkly different. The graph below compares bank lending standards to the yield premium of junk bonds versus U.S. Treasury securities. As shown, spikes in […]
Houthi rebels are attacking Red Sea vessels and greatly limiting traffic in one of the world’s most critical shipping lanes. Four of the world’s five largest container shipping companies, accounting for slightly over half of the world’s container traffic, have suspended transit through the Red Sea. As the graphic below shows, the alternative route, around […]
In Tuesday’s Commentary, we shared four indicators of market breadth. While they all show robust breadth was driving markets higher, they also point to high levels of overboughtness. We stumbled across the following analysis from Sentimentrader, which further confirms the market is temporarily overly optimistic, overbought, and due for a correction. The graph below shows […]
Per a Bloomberg article entitled World’s Biggest ETF See Record $21 Billion Flow on Stock Rally, the ETF SPY saw a massive $20+ billion inflow of funds last Friday. Interestingly, the Nasdaq 100 (QQQ) had a record $5.2 billion outflow. At the same time, the equal-weighted S&P 500 (RSP) saw inflows of $2.1 billion last […]
The S&P 500 is only 2% below record highs set two years ago. It appears highly likely the index will set new record highs in the next week or so. The bigger question is what comes after that. While the Fed’s policy stance, economic data, and coming Q4 earnings will help form expectations, let’s focus […]
The VIX index, measuring the implied volatility of the S&P 500, is now at its lowest level since the pandemic started. Some bears warn that the very low VIX forewarns of trouble ahead. In one sense, they are correct. A spike in the VIX from very low levels, as we have today, ultimately precedes steep […]