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Weekly Market Commentary
Its not simply the magnitude of the number, two billion dollars, nor the redundancy of these tales of corporate hubris. No, its the laissez-faire manner in which business continues to ignore its customers that encapsulates a feeling of angst, disrespect and depression that overtakes an average observer when confronted with headlines about oil companies, pharmaceutical firms, technology megaliths, or financial institutions.
Weekly Market Commentary
Celebrations normally reserved for heroic events or political ascension have been breaking out during earnings season, as first quarter (2012) portfolio valuations accelerated and year-over-year comparisons show margin expansion. Doing what they do best, market pundits have been turning flax into gold, proclaiming that the recovery has begun. Another anecdotal elixir. One always wonders whether the chicken or the egg comes first. In this case, proclaiming it to be so precedes the actual fact.
Weekly Market Commentary
Machines talking to machines. That is how some describe the machinations of Wall Street currently. Clearly, as volatility dissipates, the balance of orders becomes driven by execution systems and tonality that looks to outsiders as more artificial than negotiated between two parties. Thus, a chain reaction a decade in the making has supplanted the human factor, opening up new avenues for greed and opportunity. All the while, obstacles and inefficiencies are being manipulated out of financial trading. Of course, this is not an American phenomenon, it is a global one.
Weekly Market Commentary
As markets regroup from their phenomenal start to the year, certain groups have transformed the conversational dynamic. Focusing as I do upon longer term demographics, I have noticed a shift from traditional consumer cyclical brands toward epic population issue sectors, such as agriculture, healthcare, energy and infrastructure. Beyond the obvious significance of these topics, trading machinations within those secular themes have transformed during the last year. One notices a steadier stochastic pulse to equities within these sectors, emblematic of a longer attention span.
Weekly Market Commentary
As markets regroup from their phenomenal start to the year, certain groups have transformed the conversational dynamic. Focusing as I do upon longer term demographics, I have noticed a shift from traditional consumer cyclical brands toward epic population issue sectors, such as agriculture, healthcare, energy and infrastructure. Beyond the obvious significance of these topics, trading machinations within those secular themes have transformed during the last year. One notices a steadier stochastic pulse to equities within these sectors, emblematic of a longer attention span.
How high is up?
Europe hopes the latest (bailout and reg) moves will help it get its act together. (Good luck with that.) China applies the brakes. Labor looks strong, but can it continue? The Fed debates the need for more stimulus (without any consensus). Facebook moves closer to IPO (and investors beg to participate). The world lectures Iran and finally takes harsh measures (stand by to help Saudi). Investors hope to keep the mo going for another quarter, while being tempted to take profits along the way. Can we finally start focusing on Obama vs. Romney?
How high is up?
Although performance in our portfolios was good during the first quarter, it is likely that my defensiveness might be costing us during the current rally. Right now, my allocations reflect a lack of conviction that the rally can sustain, so while cash is king is a handy catchphrase, in our case it is our best defense against the kind of draw-down that ruins portfolios. Our methodology is not to have one or more security rupture the probability of continued portfolio progress, point A to point B. In that sense, we successfully continued our steady climb in valuation appreciation.
Weekly Market Commentary
Hard data hasnt been collected, but its a safe bet that we waste more food and energy resources than we think. A green boom is a common dialogue amongst some communities but, not universal. In fact, green technology is often a luxury that only wealthy nations can talk about. And yet with so much money being wasted, there are no permanent solutions for spreading the bounty. Alternative energy and agricultural science are in their gestational periods, historically, and far from being the immediate solution to environment mis-management.
Weekly Market Commentary
Instead of playing old fashioned fundamentals, gamblers are trying to pre-empt the true north of the markets by risking cash on dangerous bets about real estate, commodities, energy and bonds. In the meantime, the game continues for those who seek cover from the mayhem. Right now, there is little support for bonds or stocks. Yields are too low, and equity valuations have gone through a dangerous cycle. Thus, one might expect turmoil to continue. My risk rankings suggest that there is still more potential for the secular (bear) cycle to continue than there is momentum to reverse that course.
Weekly Market Commentary
What constitutes a recovery? Is it simply the absence of negative news, or must it also imply a robustness of capital, capital gains, and euphoria.
It seems to me that we are currently in rejoice only because the steady drumbeat of negative noise has abated somewhat. While it may foretell the redirection of a bear market/economy, we cannot yet proclaim the regeneration of a secular bull cycle.
Weekly Market Commentary
Spread amongst positive innuendo about the Eurozone austerity discussions and strength in the global oil markets, was consternation about contentious earnings reports and a build up in selling pressure upon equities whose values are bumping up against relative strength resistance points. The state of the financial markets is net-neutral. The most important characteristic of the markets today is the aging of intermediate recovery trends and the high number of equities that amble along laterally. Any entry into long term probabilities would be done today at high risk.
Weekly Market Commentary
Historically, its difficult to have economic expansion without job growth, fiscal expansion, and consumer confidence. And yet, despite low interest rates, and a leveling-off of unemployment, we find ourselves in the middle of an economic recession. Of course, phrases like recession, expansion, and depression do not represent points in time, but, rather, periods during which these phenomena occur. So to suggest that we might be in any one of these economic cycles also implies that we must define the time line, the trends direction and magnitude, and our place within it.
Weekly Market Commentary
As I have written, the early-season rally is growing tired and overextended. While there is nothing specific which might have accounted for last weeks stall, the evidence is clearer that relative strength quotients in equities are growing outside sustainable levels. Usually, such valuations precede a reversal in equity direction. Last week also saw a continuation of mediocre earnings acceleration patterns. The number of companies that actually beat analysts estimates is at its lowest since the credit crisis in 2008.
Weekly Market Commentary
Last weeks performance was distracting. Spread amongst positive innuendo about the Eurozone austerity discussions and strength in the global oil markets, was consternation about contentious earnings reports and a build up in selling pressure upon equities whose values are bumping up against relative strength resistance points. The state of the financial markets is net-neutral.The most important characteristic of the markets today is the aging of intermediate recovery trends and the high number of equities that amble along laterally. Entry into long term probabilities would be high risk.
Weekly Market Commentary
Historically, its difficult to have economic expansion without job growth, fiscal expansion, and consumer confidence. And yet, despite low interest rates, and a leveling-off of unemployment, we find ourselves in the middle of an economic recession. Of course, phrases like recession, expansion, and depression do not represent points in time, but, rather, periods during which these phenomena occur. So to suggest that we might be in any one of these economic cycles also implies that we must define the time line, the trends direction and magnitude, and our place within it.
Weekly Market Commentary
Time is a luxury many investors seem not willing to indulge. A stop/start economy, seemingly moving valuations laterally, has them on the edge of their seat, hoping that something exciting happens to their net worth. Ominously, however, the recently completed holiday season comes replete with its own set of hangovers. Some economists now worry that households took on too much debt, and might cause spending in the ensuing months to contract. More foreboding is that banks and brokerages are reporting that some cash for our holiday expenditures was withdrawn from retirement fund accounts.
Weekly Market Commentary
In recent discussions with clients, I have answered questions about good new versus bad news and short-term versus long-term probabilities. As my readers are aware, I have become increasingly bearish in my asset allocations, a factor which derives from a combination of very short-term information along with macro, secular data. In short, my analysis quantifies policies, valuations, and fundamentals which have dragged down the prospects for global earnings acceleration (in the near-term). Notice that I refer to these statistics as decelerators, not necessarily absolute impediments.
Weekly Market Commentary
Relative strength integers are congesting at resistance points each time our New Year rally attempts to gain traction. I am skeptical that we can sustain an upcycle. Although short cycle rallies are tempting, the dominant secular theme always prevails. We have a lot of work to do to dismantle the negative fundamentals which precipitated our current bear market. Thats not to suggest that portfolios cannot make money in here. Our portfolios have found success in mid-maturity corporate bonds, as well as trading with a shorter pulse in utilities, basic materials and technology shares.
Weekly Market Commentary
As junctures go, the post-holiday euphoria might be short-lived. Despite a sprinkling of good numbers, the headwinds are too great when considering a secular change from bear to bull. I would be careful about being drawn into a sucker rally. As I wrote in my current Quarterly, markets today are much more synchronized in their direction. While we wait, impatiently, for the Eurozone to get its act together, other regional bourses are held hostage. Growth becomes relative to how the other guy is doing, not absolute in its own right.
Weekly Market Commentary
Leave it to global austerity to bring confidence in markets to a grinding halt. Our global credit crisis allows for very little wiggle room in addressing both a moral and economic bankruptcy that has now engulfed the worlds financial markets for four years specifically, and nearly two decades, generally. In recent weeks, efforts to create multinational solutions worldwide, and bipartisan solutions domestically, have erased some doubt that the problem of overspending will be addressed, but only quenched an immediate taste for something positive to occur.
Weekly Market Commentary
I expect that the year-end will be rife with psychological mania of this kind, yielding to an extremely volatile attention span. Despite the numbers, a new landscape is emerging which trades upon hype, happiness, and expectation. It could cost us the opportunity to tune in to dormant themes that might be next years capital gains winners, or, possibly, to overlook them altogether while wallowing in excess negativity.
Weekly Market Commentary
I expect that the year-end will be rife with psychological mania of this kind, yielding to an extremely volatile attention span. Despite the numbers, a new landscape is emerging which trades upon hype, happiness, and expectation. It could cost us the opportunity to tune in to dormant themes that might be next years capital gains winners, or, possibly, to overlook them altogether while wallowing in excess negativity.
Weekly Market Commentary
We yearn for improvement, yet do not wish to lower our standards of evaluation. Year-over-year uptrends are indeed showing some progress, but dont factor in the bigger issues of jobs loss, savings depletion, home and portfolio devaluation and most importantly the loss of innocence/confidence that our institutions know how to do it better and can help us to sustain enthusiasm for something better ahead.
Weekly Market Commentary
Like a train wreck, the global markets have maintained a vicious shakeout whose collapse is frightening not only for the Europeans but for America and its trading partners. For the past several months we have been building a slow crescendo which, like a great symphony, has many codas yet to play. Clearly, a correction to overborrowing, overspending, and over-expecting is in place. Turbulence and volatility, both in the markets and political discourse, is the order of the day. The foundation of trust which underpins all capital exchange and political governance is nearly in default.
Weekly Market Commentary
Any euphoria about last weeks intermittent triple-digit rallies has to be couched in a context of longer-term developing downtrends and a desire to see any positive news as bear-busting. Alas, the ongoing downcycle persists and is likely to be the primary determinant to market performance for the foreseeable future. As junctures go, last week represented a few days of post-holiday welcome relief, but hardly the initiation of a change in secular direction. The headwinds are too daunting when analyzing market and sector relative strength quotients.
Weekly Market Commentary
Incredibly low interest rates are telling us a story that few seem able to decipher. For well over a year, interest rates on cash deposits have been near zero, while the reward for being a long-term Treasury investor has hovered below 3%. The last time rates coalesced around 2% was more than a generation ago. Concurrently, the economy has lost buying power, jobs, and valuation. As every global bourse in my universe struggles to gain upside traction, a worldwide decline in sentiment, earnings acceleration, and pricing power has diminished the foundation of free-exchange and capital markets.
Weekly Market Commentary
A violent shakeout in global equity bourses is reverberating to U.S. shores, and exacerbating the fear that a second global credit/equity crisis is likely. In response, the domestic equity markets shook significantly last week, despite intraday bargain-hunting and attempts to forget altogether an unresponsive fundamental framework. In hindsight, my call towards a more conservative asset allocation model this past summer was fortuitous. The financial markets dont trust the underlying fundamental statistics, and the public doesnt trust the financial markets.
Weekly Market Commentary
For those of us seniors, the problems are now owned by the next generations. For them, it is a striking and overwhelming legacy which, not of their doing, they must attempt to fix. If asked by a younger person, your son or daughter perhaps, can it get better? can you respond with a straight face and without remorse that it might? I am not a pessimist. I worry, however, about the effect of our economic transgressions upon the psyche of young adults and children.
Weekly Market Commentary
The Fed, and a majority of global state treasuries, have made the decision that keeping money inexpensive is at least one of the tools they can use both to sustain economic growth. This policy has been a boon to those with money, and a severe hindrance to those without. A vexing conundrum exists when monetary policy is designed to promote the flow of money into dynamic expansion but the spigot gets blocked because psychology and momentum are running in the opposite direction. In the meantime savings rates have nearly disappeared, along with whatever savings the losers in this game had.
Weekly Market Commentary
There is one certainty about todays markets: nothing is certain. Traversing the economic landscape is akin to walking across a room with a trap door looming unseen. It is not just equities which pose this risk. Austerity programs worldwide are forcing interest rates down, and bid prices to fall as well. In effect, waiting until maturity is ones greatest hope for financial recapture in a bond portfolio. As strongly as capital gains drove bond investing during a period of declining rates, strategic options dont exist anymore as long as interest rates remain pegged to these low levels.
Weekly Market Commentary
A fixation with tangible metals is both forward looking as well as reflective melancholy. Because the price of commodities had risen in the past, people might expect it to do so again. In the case of commodities trends lose their appeal when everyone already knows that the valuations have become inflated. In todays case we have been in a twelve year commodities price expansion. While some might try to eke out the last few cycles of profit within that trend, others wonder how much greedier can the trend enthusiasts be. There are no linear cycles that last forever and no free lunches.
Weekly Market Commentary
When the Federal Reserve Board runs out of tools to fix the economy, its an even worse scenario. They are not simply useless, they become irrelevant. And so, last week the Fed meekly bought more long-term treasuries in an effort to salve the economy by keeping interest rates, all across the time spectrum, low. Instead, what they wrought was disdain, confusion, and declining confidence. Ive said it before. Low interest rates today are analogous to giving free drinks at closing time. You can lead a horse to water, but you cant make him spend.
Weekly Market Commentary
September has been a wild ride for global markets, and October is expected to bring more of the same. On the horizon is a key inflection point at which portfolio allocation might either protect or bury any portfolios. As global economic recovery sputters there is a new urgency about either continuing on a portfolio path of growth, or reverting altogether to a default cash position. Within each scenario, however, is a psychological uneasiness that borders on shock and awe. It is much more difficult to manage clients downside risk appropriately, than to pick winners when all stocks are rising.
Weekly Market Commentary
With the market recovering only slightly last week, I am once again reminded of my admonition that the market and the economy are not interchangeable, one-and-the-same phenomena. In fact I coined the term parallel disconnect to refer to two paths which seemingly move in lock-step, but which are not innately connected in any way. To be sure, they are sometimes confused one for the other, but in real terms the events and triggers which guide one do not necessarily, or specifically, impact the other.
Weekly Market Commentary
A number of factors have conspired to make investing not the same game it used to be, not the least of which is the excessive need for speed and immediacy of information. Keep in mind that before the internet, fortunes were also won and lost. The difference is access and acceleration of information digested. The human brain just isnt wired for that type of speed when processing data. As a result, many investors are unprepared for the impact of exogenous events upon their plan. When the market moves at a snails pace, it is unacceptable, when it moves at warp speed it is too fast.
Weekly Market Commentary
A number of factors have conspired to make investing not the same game it used to be, not the least of which is the excessive need for speed and immediacy of information. Keep in mind that before the internet, fortunes were also won and lost. The difference is access and acceleration of information digested. The human brain just isnt wired for that type of speed when processing data. As a result, many investors are unprepared for the impact of exogenous events upon their plan. When the market moves at a snails pace, it is unacceptable, when it moves at warp speed it is too fast.
Weekly Market Commentary
A new political dynamic is overspreading the globe. It's a force not only of political will, but fiscal interests. It sets up a defensive, cash-only paradigm which favors no one but those who have capital. Ironically, this new renaissance is concentrated not in regions of vast wealth already, but in the more distressed areas of the globe. The implications are vast. Foreign investment in these regions in agriculture, water purification, industrial development, and manufacturing could prove to be the next revolution in capital spending that saves the markets and people in need at the same time.
Weekly Market Commentary
Has the markets crisis been averted because Congress passed a debt-ceiling bill or because the bear panic last week wiped out a lot of doubters? Not at all. One can forget the immediate knee-jerk responses. The most powerful ally we have now is time. The indecision and ambiguity which triggered the panic is still firmly entrenched in boardrooms and kitchens around the globe. Multiple solutions only confuse the markets direction. While spending and stimulus are probably whats needed to avert a recession, neither is going to happen in this climate of political intractability.
Weekly Market Commentary
Historically, the most potent bull markets and vibrant economies are led by significant consumer demand and corporate capital expenditures. We know, today, that corporations are sitting on cash reserves and that consumer demand is lacking owing to confusion and concern about fiscal and monetary policy and governments direction. In addition, there has been a drastic decline in disposable household spending, shifting the burden to government intervention to keep production incentives viable.
Weekly Market Commentary
Since the end of the internet bubble in the late 1990s, the medias search for the next it sector of the market has been incessant. Let me suggest an area for your consideration: crops and farmland. While a debate rages about climate change and global warming, it is indisputable that the search for fertile natural resources is basic to humankind. Today, any magnitude of population shift is based less upon need than vanity but a focus upon survival in some distressed areas redirects our attention to the search for replenishable natural resources.
Weekly Market Commentary
Technology has indelibly changed our lives. One sees this evolution in the way we process information and the multitude and complexity of decisions we are called upon to make but the overriding issue to me is not whether we have the technology to execute complex decisions but whether or not there is an imperative to do so.In other words, simply because we have it does not necessarily mean we have to use it. This is particularly relevant to the financial industry because the complexity of market derivates, multiplied by infinite factors has created a system that cannot support its own weight.
The Ultimate Shell Game
As governments are forced to shift policy from spending to saving, the instruments they have at their disposal become obsolete without consumer support and/or confidence. The acquisition of ?things? paid for by leverage, margin, and debt is a fruitless endeavor in today?s climate. As a result a truer ?new paradigm? must develop which: Shifts the focus from hard asset leverage to savings and cash, Raises secular interest rates, Globalizes investment capital, trade, and profitability and Provides for a fairer, equal playing field in financial assets.
Weekly Market Commentary
Last week, the market digested less-than-spectacular end of quarter data about earnings, interest rates, valuations, investor sentiment, inflation and exports and took a lurch towards the downside. Investors and observers are growing weary over interday advances which recede at the slightest inference of declining fundamentals.The market wants growth. It needs sustained positive valuations because the flow of investment capital requires a secure landscape. If manufacturers slow down making things, or hiring people, the drip of capital becomes inert.
Weekly Market Commentary
Market trading is driven more and more by machines talking to each other triggering buy and sell orders that are algorithmically pre-programmed. Gone are the days of floor traders executing the specialist?s book, doing favors for each other and ?working the bid.? Today?s syncopation is well orchestrated and devoid of human response or emotion. Machines aren?t the enemy, however. They are simply the new reality. As the burden of making trillion dollar bets shifts from to machine, greater efficiency and lack of peer pressure gives the markets a new benchmark of necessary change.
Weekly Market Commentary
?Which way is the market going?? That?s one unanswerable question. What we do know, empirically, is that the global credit markets are poor; pricing in most stocks is inefficient and governed by short term trading and speculation; sustainable economic growth is non-existent; and inflation is rampant in consumer goods and raw materials. Even if we?re correct with our asset allocation, we are playing defense and hoping to minimize any downside damage. If hindsight and backtesting are any indication, I would posit that the current equity market continuum is poised for more downside potential.
Weekly Commentary & Outlook
So what is the state of the economy and the financial markets? Poor. Whether it?s drought, weather disasters, human disasters, or economic uncertainty, the markets seem to be going nowhere. The most potent markets are driven by cash, confidence, and confluence. But with two bear markets in the last decade, behavior and attitudes have changed. There has been a drastic decline in consumer confidence brought on by the dot.com bubble and by the horrific events of 9/11 and their reverberations. No matter how accessible cash became, it only seemed to lead to some kind of disaster.
Weekly Market Commentary
The funny thing about perpetual motion devices is that they give the impression of constant, and sometimes complicated, activity, but in reality they don?t actually go anywhere. Such is the state of global bourses, traversing an active up, then down, then up again pattern, yielding a great big net-nothing. The problem, though, with such market-driven perpetual motion is that unless the ?axis of ascent? is rising it must either be neutral or falling. And in today?s climate since the run-up in markets dating back to 2008, many securities are doing just that, declining or going nowhere.
Weekly Market Commentary
Last week, I wrote about a phenomenon in global markets ?at the top? as being almost like perpetual motion inertia, constant movement, seemingly ending up static. Why does that exist, and what can we do to enhance its portfolio benefit and to reduce its incumbent risk? I believe that today?s risk derives from overvaluations created from ?efficiencies? which magnify profitability, but don?t reflect declining top line revenue or demand. Indeed, as stock prices have migrated upwards, relative strength quotients within my proprietary measurements have disconnected, instead moving downwards.
Weekly Market Commentary
Investors cheered the execution of world terrorist Osama Bin Laden last week, by parking money in defensive sectors such as Non-Cyclicals and withdrawing from tangible assets while they waited for what many believe might be an inevitable disruption and reprisal. Obviously, patriotism was running high but confidence was not. Can the markets persist in gaining new capital inflows, or will money recede in cyclical fashion into cash and defensive investing? It depends on whom you ask. Speculators see exogenous moments like this as reason to gamble short-term in currency exchange.
Weekly Market Commentary
It looks to me as if some are confusing a market rally, an extension really, for an economic revival.The Fed Chairman declared last Wednesday that we are only half-way through a decade?s long process of recovery. The primary engines of capital gains today are price pressure, speculation, natural resources and inflation.It?s no wonder that Energy, Basic Materials, and Technology are in the vanguard, while ?traditional? front-end engines of economic prosperity languish.At first blush this reveals that the consumer is not the driver of prosperity at this time.
Results 51–100
of 206 found.
