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Credit Spreads Send A Warning For Stock Investors
Bloomberg led its article “Credit Markets Signal Warning for a Relentless Equity Rally” with the following paragraph: Stocks are close to the most overvalued against corporate credit and Treasuries in about two decades. The earnings yield on S&P 500 shares, the inverse of the price-earnings ratio, is at its lowest level compared with Treasury yields […]
Jan 8, 2025
Outflows Of TLT Are Tremendous
Outflows from bond ETFs, such as TLT, have been tremendous over the last two months. ETFs, unlike mutual funds, allow dealers to redeem shares for the underlying securities and vice versa. The exchanges most often occur when the demand to buy or sell the ETF is high, thus creating a small arbitrage for the dealer. […]
Jan 7, 2025
Corporate Executives Are Bullish And Bearish
Corporate executives are sending vastly different messages to their respective investors. Based on one indicator, they must be pretty bearish, yet another reeks of bullishness. Let’s take a look at corporate executives’ Jekyll and Hyde-like behavior and try to make some sense of their actions and what they might portend for their companies. As we […]
Jan 6, 2025
Is A Breadth Rotation In Order?
The percentage of S&P 500 stocks outperforming the index on a rolling 21-day period fell below 15% late last year. That aligns with the record low set last July. Needless to say, the market’s breadth is historically horrendous. Last July, after months of significant outperformance by the mega-cap stocks, the poor market breadth corrected quickly. […]
Jan 3, 2025
Back To Back 20 Percent Gains: What’s Next?
While 20% gains in the S&P 500 are not uncommon, as circled below, back-to-back 20% gains have only occurred three times since 1950. The most recent back to back 20%+ gain was 2023 and 2024. Accordingly, given the rare performance of the last two years, lets look back and see what history teaches us. The […]
Jan 2, 2025
Scenarios For 2025
Over the past couple of weeks and into the next few weeks, you will likely be inundated with economic forecasts and stock market scenarios for 2025. We do not want to add to your pile of scenarios, but we think it may be valuable to share the latest thoughts from our colleague Jim Colquitt of […]
Dec 31, 2024
Google’s New Quantum Chip is Out of This World
AI machine learning receives most of the publicity concerning today’s technological advancements, but the potential in quantum computing is just as exciting, if not more so. There’s a fundamental difference between quantum computing and AI. Artificial intelligence utilizes classical binary computing, where information is processed in bits, which can either be in an on or […]
Dec 30, 2024
2024 in Review
2024 was an unbelievable year for the S&P 500 up 28% YTD. The index constituents’ average and median returns are 15.7% and 11.8%, respectively. Altogether, this year’s index returns dwarf the long-term average S&P 500 return of 7.9% since 1928. The Finviz heatmap pictured below shows the 2024 returns of the stocks in the index. […]
Dec 27, 2024
Inflation Forecasts Can Reflect Political Bias
The Fed uses many inflation gauges to develop its forecasts. An important one that Powell has flagged many times is inflation expectations. However, there is a weakness in using inflation expectations as an input to the Fed’s forecasts. Inflation expectations are collected from two primary sources: markets and surveys. Both traders and individuals have political […]
Dec 26, 2024
Our Christmas Wish To You
We want to take this opportunity to wish you, your family, and your loved ones a very merry and joyful Christmas. We also want to say “Thank You” for all of your support, loyal readership, and the friends we have made through sharing ideas over the last year. While it may be deemed “politically incorrect” these days to say such […]
Dec 24, 2024
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