Don’t blink because you might miss it. Market strategy shifted at the end of last week and beginning of this week. The 7 winners that have lifted market averages to records as recently as two weeks ago became pariahs within a couple of days. Sentiment changed overnight from large cap growth (7 stocks) to small and midcap stocks. As far as growth vs. value there was no question that small cap and value were the...
Our clients have been telling us, and we hear you. You want to know what the impact of this year’s election may have on your portfolio management. We do not base investment decisions on politics. Markets certainly do react in the short term, to election results for instance, and those reactions can be short lived - very short lived with the election of Donald Trump in 2016. Back then, the Futures markets indicated an extreme...
Cash in money market accounts is yielding 5% or better. FDIC online savings accounts earn around 4.3%. Purchasing 1 year US Treasuries provides a yield of better than 5% and is state tax free. How long will this high rate continue? Of course, no one knows, and predictions have ranged from up to 5 rate cuts in 2024 to more recently, no rate cuts in 2024. Predicting interest rates is no more accurate than predicting...
Today the SP500 made a new high today Monday 6/17. Market optimism is at a high based on typical risk measurements such as the Volatility Index or VIX. Investors are optimistic about at least one interest rate reduction and maybe two this year. Three interest rate deductions next year are expected. Stock splits are in the news especially in the semiconductor area-Broadcom and Nvidia and with the announcement and then subsequent split, the stock values...
We have not discussed the yield curve in quite a while. The classic yield inversion that began in mid 2022 continues. Historically, as mentioned, this has led to a recession within the next year. Analysts developed a consensus in regard to the “inevitable” recession in 2023 that did not happen. How about 2024? Recession? What is the yield curve doing now? It is still inverted and there are now many signs that the economy is...
Read an interesting article in the SF Chronicle titled “No buy year spreads on social media”. I can’t say that I frequent personal social media such as Facebook, Twitter or X, TikTok, Instagram but for those who do this campaign for “No Buy Year….” is an interesting social/personal finance experiment where spending is a concern. Pick one item that is a usual purchase and meets a minimum amount and take the pledge and “just do...
The SP 500 breached the 5300 mark recently. Artificial Intelligence related stocks keep soaring. Inflation moderating. Goldilocks market? Not so fast. There appears to be continued nervousness in regard to inflation. Every piece of price and economic news is parsed for signs of the arc of inflation. This market vulnerability leaves the market subject to volatility. Today, after digesting the blow out earnings of Nvidia, a semiconductor stock benefiting from the artificial intelligence boom, markets...
How many times can I repeat bad news as good news? Last week, the Fed had its meeting-not every month but 8 scheduled per year-announcing no change in interest rates but expect cuts this year. Previous to the Fed meeting, inflation numbers caused concern in regard to any decline in interest rates this year. The fact that the Fed said it will lower rates do not raise rates was perceived bullishly by markets. Even more...
Don’t like the direction of stock market averages or interest rates. Wait a day. This week's news on inflation discouraged analysts and markets from expectations that the Federal Reserve will lower interest rates this year. Markets still expect at least one possibly two rate decreases this year but not until the end of 2024. Facebook announces huge expenditures on LLM, or large language models related to artificial intelligence. Although the revenues and earnings met market...
We are not prognosticators but except when we make an observation about current markets. We seem to be in the midst of the first correction in a long time with Year-to-Date averages performance Nasdaq -7.5% SP500 -6%. The heuristic bias that is very strong is whatever is happening now will persist forever. Markets are moving higher and that will persist. Markets are moving lower and that will persist. That is why it is hard for...
Why can’t we all just get along. This week there was a piece in Axios, a newsletter about politics and current events that specializes in easy reads. This piece was put together by the founders of Axios. Here is a link to a piece titled Behind the Curtain: America's reality distortion machine. “ Why America isn't as divided as we think, according to data The focus is that Americans agree on much more than they...
A recent study attempts to pinpoint the reason there is so much pessimism about the economy among the American population. The research focuses on the current high interest rates affecting Americans in the cost of credit card debt and auto loans: Americans' credit card, auto loan delinquencies spiked in 2023 Credit Card and Auto Loan Delinquencies Continue Rising; Notably Among Younger Borrowers - FEDERAL RESERVE BANK of NEW YORK The impact is being felt greatest...
