Why Aren’t Stocks Higher?
At this point, 93 percent of S&P 500 stocks have announced their first quarter results, which means that earnings season is almost over. The expectations for earnings were relatively high at the beginning of the season, as Wall Street analysts expected that earning would grow by 11.3 percent. In fact, it was a blow out earnings season, with FactSet reporting that the blended average earnings grown at 24.5 percent –… Read More
Unemployment at 20-Year Lows; Time to Buy?
Market participants and the news media alike are focused on round numbers, whether it’s the hopefully forthcoming Dow 25,000 or the 10-year Treasury crossing three percent last week. Amidst all of the news last week, one round number caught my eye: the unemployment rate crossing below four percent for the first time in nearly 20 years. The chart above shows the unemployment rate, or, more officially U3, for the past… Read More
Cheap Rates
It finally happened. For the first time since 2014, the yield on the 10yr Treasury just traded over 3.0%. For months, many have proclaimed that 3.0% is the Maginot Line that, if crossed, spells impending doom for the markets. While it is easy to get excited about round numbers, the reality is that the economic impact of 3.0% is no different than 2.99%. The Treasury rate that I really find… Read More
Retelling the Story of Concentration Risk
My wife and I were both very fortunate to have inherited some money. When we got married, almost 19 years ago, we found out that about 10 percent of our combined net worth was in General Electric (GE) stock. It was the largest position for both of us, actually. I received the stock when my grandfather died, which was right around the time that Jack Welch took over as the… Read More
$1 Billion Tax Bill
If you’re writing a check to the government tomorrow for tax day, you’re probably not too happy about it. At least you’re not suffering like John Paulson, the hedge fund manager, who is writing checks to the Fed and state for over $1 billion – on top of the $500 million that he paid in estimates last year. I know, I know: it’s a high class problem that we would… Read More
Tariffs, Profits and Global Growth
Concerns about a trade war flared back up again last week. The US released a list of proposed tariffs on some $50 billion worth of Chinese imports. The 25 percent levies reach broadly, including medicine, aviation, semiconductors and consumer goods like dishwashers, snow plows and motorcycles. Beijing was quick to respond with reciprocal tariffs, announcing $50 billion on 106 products including soybeans, automobiles, chemicals and aircraft. Some analysts pointed out… Read More
Big Data, Artificial Intelligence and Machine Learning
Like every industry, the investment community goes through ‘hot’ trends that grab everyone’s attention and a lot people’s dollars. One of the reason that I’ve attended Schwab’s annual conference for the past 16 years is that I like to see these trends in the form of sales pitches to advisors. I didn’t pick up on this in the very early days, but it became obvious after the 2008 financial crisis… Read More
A Look at Tariffs and Trade Wars
This past Thursday, President Trump announced tariffs on Chinese imports citing security concerns and a significant trade deficit and estimated approximately $50-$60 billion in new tariffs. This was a follow up to his previous announcement of a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum. Following both announcements, stocks proceeded to sell-off on fears of a trade-war. Since the simple act of increasing tariffs… Read More
Busting Another Wall Street Myth
Over the last few months, I’ve read multiple articles making the claim that the correlation between stocks and bonds is shifting and that the new relationship will negatively impact portfolios. One recent Bloomberg article, titled ‘Easy Allocation Models ‘Doomed’ as Diversification Breaks Down’ really set me off and caused me to take a closer look at some of these claims. The thrust of the claim is that the recent negative… Read More
Participant Insights 1Q 2018
Click here to view 1Q 2018 Participant Insights.