Weekly Commentary

These last few weeks have seen a quieter equity market with lower volumes and volatility moderating from some recent spikes.[i],[ii] As earnings season winds down, we have seen better than expected revenue numbers from Corporate America. As observed in the chart below, 57% of Russell 1000 companies that have reported so far have beaten sales […]

  It appears the economy might be coming off the life support provided to us by the Federal Reserve. Since 2009, the Fed has expanded their balance sheet by about $2 trillion to get to where we are today. Source: Federal Reserve. In its April meeting, the Fed continued to trim their purchases of Treasuries […]

  In the Phillips & Company 2014 Q2 Look Ahead, I noted that while year-over-year earnings per share (EPS) growth was strong in 2013 Q4, most of it came from margin expansion as opposed to revenue growth.[i] Companies grew profits mainly by controlling expenses. While efficient operations are important, cost controls can only go so […]

  Another tax season is over, making this an excellent time to examine the size of the tax bite that you sustained and to consider strategies to reduce your taxes for coming year. The 2013 tax year included two changes that may have increased your taxes: a 39.6% marginal tax rate for those with adjusted […]

  Volatility. I’m not referring to tremors or seismic events in the title. US and Global equity markets added some significant volatility this week in light of a weaker than expected start to the earnings season.[i] Volatility is up with only a few companies reporting earnings. Most significantly, Alcoa reported a revenue miss of $97M, […]

  The US jobs report on Friday was only exceptional in one regard. It wasn’t the 192k jobs added in March to the US economy. It wasn’t the paltry 1k manufacturing jobs created. What was exceptional was the fact that we have now recovered all of the jobs lost during the “Great Recession”.[i] It may […]

  One of my favorite poets, T.S Elliot, wrote in his seminal poem The Dry Salvages (1941), “We had the experience and missed the meaning.”[1] It’s quite possible we are about to encounter a global event where we might just miss the meaning. While much of the world debates the importance of Russia and Crimea, […]

  With the Federal Reserve taking extraordinary measures since 2008 to lower interest rates, we know that rates will have to go higher eventually; it’s a question of when and how quickly? The Fed typically offers vague guidance on future interest rate policy, much like parents answering a child’s constant inquiries of “Are we there […]

  I often try to assess whether we are in an equity bubble (unsustainable price valuations on stocks) to add perspective to the allocation work we do at Phillips & Company. This week in Barron’s and during a private investment strategy meeting I attended, one of the more prolific investment firms (GMO) suggested that we […]

  On Thursday, the Fed released its quarterly net worth statistics for American households and nonprofit organizations.[i] The data suggests that household net worth is now at record levels, over $10 trillion above 2008 levels, thanks to gains from stock, bond, and real estate investments. Further, recent credit card data from the Survey of Consumer […]