Sideways Is Corrective
March 1, 2024 Good morning, Following a torrid first 3 weeks of February, things have simmered down so far this week in stocks, bonds, commodities, and currencies. Remember, sideways price action is corrective behavior following steep ascents (or descents in the case of bonds recently). It’s often the pause that refreshes. There is a lot […]
Finishing February
February 26, 2024 Good morning, Nvidia helped propel the tech-heavy equity indices to modest new all-time highs last week. The S&P 500 Index (SPX) gained +1.66% on the week. The equity market melt-up, led by large cap tech companies, continues in the face of higher yields on the short end of the treasury curve last […]
Crazy Good
February 22, 2024 Good morning, Stocks traded down for 6 of yesterday’s 6.5 hour trading session on concerns that Nvidia’s quarterly results (announced after the close) would fall short of impossibly high expectations. That and the latest Federal Reserve minutes show officials are in no rush to cut interest rates. With only minutes left in […]
All The Spotlights Are On Nvidia
February 20, 2024 Good morning, I hope you had a nice extended weekend. Although it feels like ancient history already, last week brought us higher and stickier inflation data, which translated to higher yields (lower bond prices). Stock prices bounced around for most of the week, pulled down by the higher yields but pushed up […]
Markets Recalibrating – AKA Correction
February 15, 2023 Good morning, Recall late last year’s concern that the bond market had rallied, perhaps too much, and priced in Fed rate cuts all year long beginning in March. Leading the concerned camp was the Federal Reserve itself. Tuesday morning’s January CPI (Consumer Price Index – a key inflation indicator) rose more than […]
Why Did Stocks Drop Yesterday?
It’s Not Because of What You May Think By John Lau February 14, 2024 – Stocks dropped sharply yesterday when the CPI numbers came in “warmer than expected”. But yesterday’s CPI did not really show any signs of reversal on disinflation. Instead, it simply reminded us that the S&P 500 at 5,000 is priced for […]
Continues Until It Doesn’t
February 12, 2024 Good morning, Futures are largely unchanged this morning as we start the second week of February. The S&P 500 Index (SPX) was up +1.37% last week and is trading at fresh all-time highs. It has broken through the round number barrier of 5000 and is doing so in the face of higher […]
Discipline
February 8, 2024 Good morning, So far this week, markets have successfully navigated two bond auctions and more Fedspeak without any hesitation. Except for small caps (down -0.63% this week), the rest of the major equity indexes have steadily marched higher, and on average are up another 60 – 70 bps (basis points 1bp=.01%) so […]
Quiet Calendar May Not Dampen Volatility
February 5, 2024 Good morning, Last week, we learned that the U.S. economy is stronger than the market had believed, and that the Fed is not in any hurry to lower rates. Stock and bond market volatility picked up, not unexpectedly. It’s been a while since we’ve seen back-to-back-to-back 1%+ moves on the S&P 500 […]
January 2024 Monthly Letter
Following the everything-rally that was the last two months of last year, performance across asset classes was mixed in January. Stronger than expected economic growth data and strong pushback from central bankers against the market’s overly enthusiastic expectation for rate cuts produced a tough environment for fixed income (U.S. Agg – chart below). Even though […]
December 2023 Monthly Letter
All years have surprises for the financial markets, in addition to what I’m hoping for you, I also hope that there are fewer surprises for markets this year than last. 2023 surprises were harder than usual on investment managers and consequently, fewer managers than usual were able best their benchmark indexes. There was the recession that never came, The Magnificent […]
November 2023 Monthly Letter
Nines across the board! November delivered in spades this year and saved almost every money manager’s skin in the process. The November column below is a stack of 9’s for equity indexes – an unusually high correlation. And +4.5% for the bond composite is arguably stronger than the equity moves on a relative risk basis. […]