How quickly the narrative changes when it comes to the markets. A week ago, inflation was skyrocketing, interest rates were soaring, and the mood was gloomy regarding risk assets. This week it’s as if things flipped 180 degrees. Rising recession risks combined with lower commodity prices is feeding the growing belief that inflation has peaked. This is leading to the idea of the so called ‘Fed pivot’ by year-end. This is just a fancy…
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  The standard definition of a bear market is clearly ‘arbitrary and capricious.’ There’s nothing magical about a decline of 20% that all of a sudden morphs a correction into a bear market, but we hit just such a threshold this week for the S&P 500. This process has been going on all year. First non-profitable tech/growth companies were taken out back and shot late last year. Then crypto was annihilated. Next the FANG type…
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  The markets have turned treacherous again after a brief bounce the last couple weeks. As we have noted over the years, there are times the markets become like a toddler – they can focus on only one thing at a time. Now it’s all about inflation. How high is it going? For how long? And what will the authorities do to fight it (if anything)?   On Friday we got another hot consumer price…
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  Market Recap   You’d think this was a boring week if you looked at just the S&P 500 return and didn’t watch trading during the day (which no one should – it will drive you nuts!!). But it was actually one of the most volatile weeks since the COVID crisis.   There was a lot of nervousness coming into this week due to the Fed meeting. While stocks dipped slightly after the half-point hike…
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  We are all probably glad to close the book on April, at least from a market perspective. Almost all asset classes lost ground during the month, but some of the heaviest selling was in leaders of the last few years. The so-called FANG group of Facebook (now Meta), Amazon, Netflix, and Google were all sharply lower in April. Facebook lost -7%, Amazon roughly -25%, Netflix -47%, and Google -16%. Apple and NVDIA are sometimes…
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  It was a rough week for everyone. Bonds, stocks, commodities – basically everything was down. There wasn’t a ton of economic news to drive the selling. The main report was existing home sales which was a touch soft, but not dramatically so (down -2.7% in March versus February).     Inventories remain exceptionally tight, with the months supply ticking up to just over 2 (red line below).     But of course, this data…
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  Large-cap U.S. stocks pushed higher this week and bond yields jumped. Most equity sectors performed reasonably well, with energy leading the way. Healthcare was the only sector in the red. Over the last month every sector is in the green, with gains ranging from +2.4% (consumer defensive) to +14.1% (energy) . Why the rally? Of course, there are no end of pet theories floating around, but in our mind it boils down to the…
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  I’m not sure where you start with a weekly letter like this. The news out of Ukraine is heartbreaking and becomes more so as each day passes. The twists and turns in the financial markets pale in importance to the humanitarian crisis underway. If financial matters are the furthest thing from your mind this week, then this letter is worth skipping. End the week with the following thought – when you see humanity’s worst…
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  Market Recap   A tough week for most stock markets around the world as jitters about Russia and Ukraine added to worries about inflation and central bank policy. In our world of omnipresent social media, it feels like everyone has gone from a COVID expert to an Eastern European/Russian history guru in the last couple weeks. Such is human nature I guess. But headlines about Russia conducting strategic defense drills over the weekend are…
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