iShares Russell 2000
Why investors are preferring high-quality debt
High-quality bonds can be an investor refuge when there’s market volatility. These securities provide relatively stable cash flows. The default probability is low.
What S&P 500 Index Moving Averages Could Indicate
The S&P 500 Index is trading 1.2% above its 20-day moving average and 6% above its 100-day moving average.
What key PMI indicators mean for stocks and investors
Last week, the Institute for Supply Management (or ISM) and Markit both released their reports on the Purchasing Managers Index (or PMI). The ISM’s report gave its strongest reading since February.
Why Structural Hurdles Could Thwart US Economic Progress
The American economy is facing major structural issues that have the potential to thwart economic progress. The most important hurdle facing the US economy is an aging population.
What’s Leon Cooperman’s Largest Position?
Alphabet reported its 3Q17 earnings on October 26, 2017. The company posted EPS (earnings per share) of $9.57, which beat analysts’ estimates of $8.33.
How Will the Fed Affect the Earnings Recovery Environment?
The dollar index (UUP) rallied about 22% between October 2014 to July 2016.
What Analysts Recommend for Accelerate Diagnostics and Peers
Of the four analysts covering Accelerate Diagnostics in January 2018, three analysts have given the stock a “buy” rating.
Why Do Central Bankers Continue to Surprise Bill Gross?
In his recent webcast by Janus Capital, Bill Gross expressed his surprise at the extent to which central bankers of the developed world (EFA) (VEA) have distorted the financial system.
Will We See a Recession within the Next 2 Years?
In a recent interview, Jim Rogers said, “I’m on record as saying that we’re going to have a recession certainly within a year or two.”
Why Have Analysts Raised their Revenue Estimates for Papa John’s?
In 1Q16, PZZA’s domestic company-owned restaurants generated nearly 48% of Papa John’s revenue, while domestic commissaries and others generated 39.4%.
September Manufacturing Report: Are US Business Conditions Better?
The US September manufacturing PMI (purchasing managers’ index) report indicated an improvement in US (QQQ) (IWM) business conditions.
Key ADP Highlights: 135,000 Jobs in September
The ADP National Employment Report for September 2017 showed some weaker improvement in private sector employment to 135,000 in September compared to the market’s expectation of 125,000.
Why the housing market impacts consumption and equity investors
This article considers the importance of investment, including residential investment, in the support of U.S. consumption data and the implications for investors.
Snyder’s-Lance Reported Mixed Quarterly Results in 1Q16
Snyder’s-Lance (LNCE) has a market cap of $3.0 billion. It fell by 5.2% and closed at $31.80 per share on May 10, 2016.
Must-know: Is income inequality positive or negative for stocks?
At the heart of the ongoing budget debate is the underlying notion that the less fortunate 60% of Americans should be entitled to a reasonable foundation of social services.
Part 6: Mid Cap Growth MLP, Mark West Energy Partners—overbought?
MLP’s—have retail investors gone too far? The below graph of Mark West Energy Partners, MWE, reflects exceptional growth against the S&P 400 mid cap index as well as the Morningstar mid cap growth index. This mid cap Master limited Partnership, MLP, has certainly ridden the MLP bull market. Despite the challenges faced by Chesapeake Energy, […]
Why Buffett Believes US Businesses Aren’t Really Hurting from the US Corporate Tax
The US economy has been improving gradually, but some businesses in the US have suffered a lot over the years.
With consumerism under pressure, will profits follow?
This series looks at trends in personal consumption data as a component of U..S gross domestic product and considers the implications for both equity and fixed income investors.
Sucampo Pharmaceuticals’ Research Pipeline in December 2017
Sucampo Pharmaceuticals (SCMP) recently completed a Phase 3 study for the alternate sprinkle formulation of Amitiza (lubiprostone) in adults with CIC (chronic idiopathic constipation).
Part 3–Starwood Hotels & Resorts—a mid cap growth stock that is fully booked
Strong Momentum in HOT The below graph reflects the strong performance of Starwood Hotels and resorts, HOT, which was particularly strong until the 2008 crisis, and is once gain handsomely outperforming the Morningstar mid cap growth total return index. While just a bit below the S&P 400 index over the years, Starwood Hotels has been […]
Exploring Novavax’s Vaccine Candidates for RSV
According to Novavax, ~64.0 million RSV infections occur every year on a global basis. The global cost of RSV exceeds $88.0 billion.
Must-know: Many investors fear stocks—is this good for markets?
Currently, the S&P 500 is giving year-to-date (or YTD) returns of more than 8%. It posted gains for seven consecutive quarters. The S&P 500 Index (SPY) closed at a new high 34 times in 2014.
Why the S&P 500 Net Profit Margin May Predict a US Recession
Over a good four decades, the S&P 500’s net profit margin has fallen notably when the economy was on the verge of, or already into, a recession.
US Consumer Sentiment at 13-Year High: How Will It Impact Market?
The University of Michigan Consumer Sentiment Index has risen to 100.7 so far in October 2017 compared to 95.1 in September.
Part 4: Mid Caps—why value rallies and growth weakens post Fed taper announcement
Value for the long haul The below graph reflects the recent outperformance of mid cap value shares relative to mid cap growth shares since the 2008 crisis, with a more pronounced 10% outperformance since 2013. The prior article in this series demonstrates that mid cap value dominates mid cap growth in the long run, though […]
How the Event Driven Index Provided Returns in a Flat Market
The Barclay Event Driven Index outperformed other indexes in April 2016, providing a return of 2.3%. Year-to-date, the index had returned 2.6% as of April 30.
The Fed’s take on economic growth as the US dollar appreciates
The Fed believes persistently low inflation and an appreciating dollar will impact gross domestic product (or GDP) growth in the coming quarters. A higher US dollar makes US goods less competitive in overseas markets.
Will George Soros’s Position in IWM Provide a Strong Return?
According to the recent 13F filings, Soros Fund Management has increased its position in the iShares Russell 2000 ETF (IWM) by 36% in 1Q17 compared to the previous quarter.
Ray Dalio: The Next Downturn May Be a Difficult One to Reverse
“The next downturn may be a difficult one for central banks to reverse,” warned Ray Dalio, CEO of the world’s largest hedge fund.
Greenspan’s lament: Consumption is no substitute for investment
Why it’s becoming increasingly difficult to expect sustainable prosperity from additional consumption in the U.S. economy.
Has Britain Really Voted Its Way to Prosperity?
The Brexit referendum aftermath has translated to gains for certain hedge funds, while washing away earlier gains for others.
How Bill Ackman Is Taking Shelter from a Potential Market Drop
Bill Ackman, an activist investor and the CEO of Pershing Square Capital Management, shared his views on how geopolitical risk could affect market movement (SPY) in a CNBC report.
Is rising business inventory growth a bull market indicator?
This article considers the implications of growing business inventories in the context of an improving investment environment and the outlook for investors.
Jeffrey Gundlach: The Fed Has Been Supporting the S&P 500
Gundlach also believes it’s interesting to look at the correlation between the size of the Fed’s balance sheet and the S&P 500 (SPY) (SPXS) (SPXL) level.
Goldman Sachs on Facebook: Annual Sales Growth to Improve 32%
Goldman Sachs estimated that Facebook’s annual sales growth could improve by 32% from 2016 to 2019.
Why does the Fed matter? Because its policies move the market
With monetary policy a huge driver of investment performance, all investors need to be fluent in “Fedspeak.”
Jurrien Timmer’s Take on What Will Drive Markets the Most in 2017
When asked in a recent interview his thoughts about the short-term and medium-term investment story, Jurrien Timmer said that the main issue for the market other than geopolitical risks is its valuation.
Why Office Depot And OfficeMax Were A Merger Of Equals
Starboard’s interest in the office supplies industry is well known. Starboard disclosed a ~14.8% stake in Office Depot (ODP) in 2012. It has been pushing ODP to reduce its store size and cut costs.
Why scheduling the rate hike is a balancing act
Since 2008, the Fed’s monetary policy has been extremely accommodative. However, as the recovery progresses, there are increasing calls for policy normalization.
How Did Boston Beer Perform in 2Q16?
Boston Beer reported fiscal 2Q16 net revenue of $244.8 million, a fall of 2.9% compared to net revenue of $252.2 million in fiscal 2Q15.
David Tepper Discussed the Equity and Bond Market
Tepper thinks that the bond market’s (BND) performance is a good indicator to analyze the equity market’s (QQQ) performance.
Statement Suggests Gradual Rise in the Federal Funds Rate
The Fed raised the target range for the federal funds rate from 0%–0.25% by 25 basis points. Now, the key interest rate in the US will be 0.25%–0.50%.
What Were Jim Chanos’s Largest Holdings in 3Q17?
In 3Q17, Jim Chanos has made a substantial investment in the finance sector (XLF) and various ETFs.
What Commodities’ Outperformance Means for the Business Cycle
Let’s take a look at where we are in the business cycle, what factors are at play, and what stands to work given current macroeconomic influences.
Event-Driven Strategy in a Volatile Market
Event-driven strategy is designed to make an investment in special situations, including mergers and acquisitions, restructuring, split-offs, bankruptcy, and other major events.
Why the private investment recovery supports the bull market
This series examines the current U.S. macroeconomic data pertaining to domestic investment and considers the implications for both equity and fixed income investors.
US Services PMI Unchanged: Will It Affect the Service Industry?
US Services PMI in October The October US services PMI (purchasing managers’ index) report indicates no change in service activity in the United States (QQQ) (SPY) in October 2017. The US services PMI stood at 55.3 in October, showing no change from September. The PMI level didn’t beat the preliminary market’s expectations of 56.0. The […]
What Caused the Muni Defaults in 2016?
In 2016, Puerto Rico defaulted on constitutionally guaranteed GO (general obligation) bonds. On May 3, 2017, Puerto Rico filed for Title III bankruptcy.
Will the August Jobs Report Soften the Fed’s Rate Hike Urgency?
During the Jackson Hole Symposium, the Federal Reserve chair, Janet Yellen, already hinted that if the August jobs report provided a strong performance, there was a chance for a rate hike during its September 2016 meeting.
Important Economic Indicators to Watch Next Week
The most important indicators next week are the global flash manufacturing PMIs. Manufacturing PMIs are important indicators for the economy.
Long-term implications of a disconnect between news and strong equity markets
In the short term, recent market action isn’t as irrational as it might appear. First, there’s no clear link between these events and near-term economic or earnings growth.
Short Interest in Flotek Falling: What Does It Mean?
Short interest in FTK Flotek Industries’ (FTK) short interest as a percentage of float was 21.3% on December 20, compared with 23.3% on September 30. Since the end of 3Q16, FTK’s short interest has fallen 10%. FTK’s share price and short interest as a percentage of float been mostly inversely related in the past three years. […]
Why Marc Faber Believes US Economic Growth Is Weakening
In 1Q17, the US economy saw a growth rate of 1.2%, according to the report provided by the US Bureau of Economic Analysis.
Index ETF Flows: A Turnaround on Tech Street?
The rise of actively selective investors may be the next turnaround story of 2016!
Mario Gabelli on the Bull Market: Where Are We Now?
On November 9, 2017, Mario Gabelli, the CEO and chair of Gabelli Funds, shared his views on market movement, fiscal policy, and his infrastructure and multimedia stock picks.
Cooperman on the Market: Insights from the Delivering Alpha Conference
Legendary investor Leon Cooperman shared his view on the market, oil prices, and his favorite stock picks at the conference on September 12.
October Manufacturing Report: Is the US Business Condition Improving?
The October manufacturing PMI (purchasing managers’ index) report indicates an improvement in the US business condition.
Optimism in Small Business Remained Unchanged in October
According to the NFIB, the small business optimism index remained unchanged at 96.1 in October. The reading was below the consensus estimate of 96.4.
Must-know: What Shiller’s P/E ratio of the S&P 500 suggests
The Shiller P/E ratio measures the current price of an index or security relative to its average earnings over the past ten years. The current ratio stands at 25.7x.
Hawks and doves: Why Fed-watching isn’t for the birds
The FOMC is made up of hawks and doves, and their balance could affect future policy. Investors who follow the Fed need be able to tell the differences.
Shutdown 101: Why perceived wealth distribution isn’t the reality
Inequality: The which of you with patient ears attend The below chart illustrates the dramatic difference in the reality versus the perception of wealth distribution in the US. The top 20% of the US holds 84% of the wealth, which is quite different from European countries, such as Sweden, which holds closer to 36%. For […]
Shutdown 101: Robert Reich versus Larry Kudlow and US debt
Exploding US debt: Going to Vegas, or garden-variety Keynesianism? The below graph reflects the doubling of publicly held debt under the Obama Administration from roughly 35% to 70% of gross domestic product. However, it also reflects the doubling of publicly held debt under the Reagan Bush Administrations from 1981 to 1993. Given the severity of […]
Kudlow’s lament: Is capital on strike in the U.S.?
Investment in the United States The below graph reflects the capital strike in fixed domestic investment in the United States. The “strike” of U.S. capital is the notion raised by CNBC commentator Larry Kudlow that despite record profits at U.S. companies, profits and capital aren’t recycling back into the U.S. economy as investment. As displayed below, U.S. […]
Retirement pick: Gold and the long-term investor
There is often a debate among academics, financial gurus, asset managers, and advisors as to the place for non-traditional assets in a portfolio.
Why US Treasuries struggle with the FOMC and GDP growth
The LSAP program ended in September 2012. It consisted of monthly purchases of longer-term Treasuries and agency-backed securities. The program lowered interest rates in the bond market.
The taper could affect momentum stocks like Keurig Green Mountain
This article considers the risks associated with investing in high momentum stocks in the current environment of declining Fed bond purchases.
The fed tapers: Will small caps weaken relative to large caps?
Determining which index, with its specific risk factors, is the most appropriate for an investor depends upon the investor’s appetite for risk.
Will the S&P 500 outperform the Russell 2000 under rising rates?
Should interest rates begin rising as a result of a progressive Fed taper, post-2008 investment returns based on index-specific allocation could see major changes.
Why growth beat value by 20% post-2008 but may not continue to
Despite the recent outperformance of growth stocks in the post-2008 economic recovery, in the long run, and over several business cycles, academic studies tend to show that value stocks outperform growth stocks.
Why large cap growth stocks may hold up better with rising rates
This article illustrates the extent to which growth stocks can, and have, drastically outpaced value stocks for short periods of time.
Must-know: Momentum trading the Fed taper and your portfolio
This article considers the role momentum has in investing versus simply day trading, and the implications for equity investors.
Tactics or strategy: Momentum trading the taper and your portfolio
This article considers role momentum has in investing versus simply day trading and the implications for equity investors.
Why you should pay attention to Scottish referendum opinion polls
As I write in my new weekly commentary, over the past two weeks, several polls have suggested a realistic chance that the people of Scotland will vote for independence in this week’s referendum.
Must-know: Where investors can find value
Outside of the United States, investors, particularly those with little emerging market (or EM) exposure, should take another look at EM stocks.
Must-know: Are market valuations stretched?
The NASDAQ Biotechnology Index (IBB) is up 14% this year—less than a third of its 122 companies earned any money in the last 12 months.
Overview: What stretched valuations mean for investors
As I’ve been noting for some time, emerging markets (EEM) can offer compelling long-term value.
Can Increased Volatility Lead to More Capital Investment?
The US stock market is currently subject to increased volatility. The past two years have seen market uncertainty heightening.
Does Falling Corporate Profitability Signal a Recession?
Falling profitability of US companies has Joe LaVorgna, chief US economist for Deutsche Bank Securities, feeling a bit pessimistic about the economy.
The Icahn Lift Sends Hertz Stock Speeding along as It Prepares for a Split
Icahn believes that Hertz has good potential value, provided it enacts certain changes. The company is already going in for a split.
Trump and Soros Expected a Brexit, Jeffrey Gundlach Did Not
Billionaire investor Jeffrey Gundlach had positioned himself expecting Bremain to pass. Gundlach, however, sold off his newly acquired European stock positions before the Brexit results impacted the Market.
Bill Gross: The Economy Needs Credit Creation to Multiply Growth
In his Investment Outlook for July 2016, Bill Gross highlighted the importance of credit creation as the growth multiplier in the economy.
Bill Gross: Credit Is the Oil That Lubes the System
Currently, we’re in a highly levered system, especially the developed world. A levered economy depends on continued credit creation for stability and growth.
Lower Rates Aren’t Equating to Higher Equity Prices
Bill Gross provided his view on lower rates no longer resulting in credit creation in the economy. They have also lost their efficacy in raising equity prices.
Bill Gross: What’s His New Normal Thesis?
Recently, Gross has been repeatedly mentioning a “new normal” that the developed world seems to be in. Real GDP growth is around 2% in the US.
Bill Gross: Possibility of Deglobalization in the Economy
Gross warned about deglobalization in the global economy. Trade between nations, exacerbating immigration issues, and stagnant economic growth formed his belief.
Valuation Expert Aswath Damodaran Weighs in on Tesla’s Stock
How markets see Elon Musk converting his vision for Tesla into reality is what fascinates investors already invested or interested in the stock.
Will Brexit Weaken the UK’s Competitive Advantage over the US?
On Brexit, import restrictions and tariff quotas currently applicable to importers in the UK and foreign businesses that export to the UK are set to change.
Is Student Debt the Next Bubble to Hit the US Economy?
Many are likening the current student debt situation in the United States to the mortgage debt situation that led to the 2009 financial meltdown in the US economy.
Why Is College Education So Expensive in the United States?
The rise in delinquencies on student loans in the United States (SPY) (IWM) (QQQ) can be partially attributed to the accelerated rise in college tuition and fees.
Are Asian equity ETFs like EWJ and FXI in purgatory for 2014?
The Japanese ETFs—DXJ and EWJ—performed very well. Meanwhile, both Korean and Chinese ETFs—EWY and FXI—have been flat, with China still in slightly negative territory.
Gundlach Says This Chart Is ‘Early Warning Indicator’ of Recession
Jeffrey Gundlach seems quite bearish in his views about the US economy (IWM) (QQQ).
Gross Notes Investors’ Shift to Less Risky Alternatives
Central bankers can only hope to stimulate the economy with lower and lower rates as long as there are takers for their low or negative yielding sovereign debt.
The ‘Three Big Forces’ That Drive All Economies
The “three big forces” Ray Dalio believes that “three big forces” drive all economies. These are: productivity growth the short-term debt cycle the long-term debt cycle An economy has to go through upturns and downturns Central bankers need to study the determinants of productivity for their economy. The determinants could include the costs of education, […]
Ray Dalio: What Does the Future Hold?
Ray Dalio shares his view on the economy You won’t find many investors who do not follow Ray Dalio’s views on the economy and markets (SPY) (QQQ) (IWM). During a speech at the New York Fed’s 40th Annual Central Banking Seminar, Ray Dalio had a few things to say about the future. “Debt will not […]
How a Donald Trump Win Could Impact China
Republican presidential candidate Donald Trump stated that he intends to weaken trade links between China and the US, and that he would be likely to introduce trade policies against China.
Paul Krugman to the Fed: Don’t Raise Rates
Inflation is moving up towards its target, but it still has a ways to go before it gets there. Paul Krugman believes raising rates could keep inflation from reaching that target.
Paul Krugman Sees a ‘Trump Slump’ in the Making
While Krugman agrees that the US economy (SPY) (IWM) (QQQ) has been adding jobs at a good pace and is also closer to full employment, he attributes the achievement to the low-interest rate regime.
Must-know: Minimizing ETF losses by observing max drawdowns
In practice, asset owners (both retail and institutional) want to avoid significant portfolio drawdowns even if the benchmark index declines.
Why the biggest risk to equity portfolios is the equity market
The Federal Reserve Bank could end its bond buying program by the end of this year, so it’s important for investors to know how this development could impact their portfolio.
Why an undiversified portfolio could mean fewer profits
Another common investor mistake is to have an under diversified portfolio. In a 1991 to 1996 study of the customers of a large US discount brokerage, more than 25% held only one stock and more than 50% held three or fewer stocks.