The Pendulum SwingsWhen things are going well and prices are high, investors rush to buy, forgetting all prudence. Then, when there’s chaos all around and assets are on the bargain counter, they lose all willingness to bear risk and rush to sell. And it will ever be so - Howard Marks
Markets Big Bet on a Dovish FedThe S&P 500 is pushing into an area of clear technical resistance. What's more - fundamentally it's no longer cheap at approx 18.5x forward earnings. My thinking is the market is not an attractive risk/reward bet at these levels... and are under-appreciating the task in front of the Fed.
Do Upside Gains Easily Outweigh the Downside Risks?With the S&P 500 some 14% off its lows - trading just below 4200 - at 17.5x fwd PE - what's the potential upside reward? And do those potential gains outweigh the downside risks?
It’s All About Bond YieldsThe market is currently being led by one thing: what we see with bond yields.
Why Bad (Jobs) News Could be Good NewsA 'bad print' for the number of jobs created (or lost?) over July could actually be good news for stocks. On the other hand, a strong number only amplifies the Fed's resolve to hike
Remain Vigilant When Adding RiskOver the next few weeks we will hear how US companies navigated a difficult Q2. More importantly, we will also receive guidance looking forward. This will lead to analysts lowering their earnings targets... something the stock market is yet to price in.
CPI Exceeds 9% YoY – Fed to Stay the CourseCPI for June was a white-hot 9.1% YoY. But should that be a surprise? Not really. What it does suggest is two consecutive rate hikes of 75 basis points... however most of that has been priced in.
Negative Impact of Labor Costs on EarningsThere are three things I want to see before I utter the words "the bottom is in". One of those three are Q3 earnings revisions... they are coming and this is one big reason why...
Sell this Bounce… and Why NZ is Worth WatchingWe are in the midst of a bear market rally - but I don't trust it for three reasons. Separately, is New Zealand a canary in the coal mine regarding the impact of raising interest rates?
Recession: The ‘Cost’ of Unwanted InflationToday the Fed reminded us they have one objective (and only one): to bring inflation back to its target level of 2.0%. However, the unspoken narrative was sacrifices will need to be made (i.e. expect a recession)
