Weekly Commentary

  Ultimately, earnings growth matters. After all, investors only own the future. When you buy a stock, you’re purchasing a fractional share of future cash flow streams that the company generates from earnings and dividends. You’ve bought it at its current earnings, but have likely paid a higher valuation in anticipation of future growth in […]

Despite the shock and sharp rally in oil prices due to the Saudi Arabian oil facility attack, there is some underlying good news to consider at this stage of the cycle. [i] The majority of economic releases last week showed improvement from the previous period or beat forecasts. Consumer credit expanded by $23.3 billion in […]

  Regardless of what economic, geopolitical, corporate, Trump tweet, or market-moving event occurs, all equity investors need to be prepared for risk. Risk is the underlying ingredient that creates excess returns over “risk-free” assets like government bonds. Here’s a look at the current risk premium over various asset classes. [i]     Risk will show […]

  For the first time since the middle of 2008 Financial Crisis, the S&P 500 Dividend Yield is greater than the yield on 5-, 10-, and 30-year treasuries. [i]     Simply put, stocks are paying more income than bonds which is pretty rare. Historically, bonds tend to pay more income than stocks while offering […]

  President Trump’s remarks concerning his ongoing trade war with China took on epic proportions last week as he simultaneously attacked the Chairman of the Federal Reserve and the President of China Xi Jinping on Friday. [i]     Calling Chairman Xi an “enemy” while wanting trade concessions out of him only fuels more Chinese […]

  Last week in our blog “What Else Can Go Wrong,” we accurately predicted several outcomes that would increase equity market volatility.  The S&P 500 did, in fact, post another quarter without any earnings growth, as corporate America officially enters an earnings recession. [xi] Simultaneous to that, both Walmart and Alibaba posted impressive year-over-year growth […]

  The old adage of Murphy’s law states, “Anything that can go wrong will go wrong.” This probably applies to our current season of worry. Moody’s Chief Economist Mark Zandi sums it up well with the following chart. [i]     It’s not surprising to see the equity markets flutter in weakness, especially as Q2 […]

  While we believed a 50 basis-point rate cut was the best course of action, the Federal Reserve ended up cutting rates by the minimal 25 basis points. On July 31, the Fed said:  “In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided […]

   The U.S. economy expanded by 2.2% in Q2, the slowest pace since Trump announced his global war on trade. [i]     When you break down the four component parts of the U.S. economy, the strengths and weaknesses come into clear focus. [ii]     When you break down the four component parts of the […]

  We’ve written in the past on our view that President Trump is waging a trade war to maximize his influence on the Federal Reserve. Though we believe he is prosecuting a case against China, the uncertainty he is creating in global GDP growth, in our opinion, is causing the Fed to consider cutting interest […]