House of Cards

The phrase “house of cards” conjures images of many things (aside from, in the most literal sense, an actual house of cards) including instability, fragility, and a lack of permanency. From a birds-eye view, the US housing market does not immediately conjure these images. Some houses are flying off the market, bidding wars still exist, …

The Three Pillars of Inflation

A complex financial “phenomenon” that used to concern only those who were prone to chatting about things like the Federal Reserve and the yield curve at dinner parties, has seeped its way into the limelight with the public. By the title, you have likely guessed this “phenomenon” is inflation. Inflation is abstract, confusing, complex, and …

Well That Escalated Quickly…

It’s difficult to come up with something to say, other than “wow”. The S&P closed down 135 points or -4.4% for the largest point decline in history (Figure 1). First and foremost our timing of “neutral” stance could not have been worse (it happens). So take the “do as we allocate, not as we say …

To Infinity… And Beyond!!

The S&P 500 keeps chugging higher and higher, seemingly with no end in sight. It’s been more than 72 trading days without a 1% pullback and the basket of stocks recently traded at a ratio of 2.42 price/sales which surpassed the ultimate valuation peak of the S&P 500 during the market top in 2000 (see …

3 Months Will Define 5 Years

Today the S&P 500 closed down 45 points or -1.56% after a rather wild day with many interspersed attempts at getting back to unchanged. The last two weeks have been incredibly pivotal in markets since a bout of bad manufacturing data caused the market to sell off last week (where bad data is actually interpreted …

The Slowing Housing Sector

The reason we chose to look at this sector of the economy is threefold: 1). It was the catalyst1 for the previous recession and financial crisis 2). The sector is not nominally impacted by the China trade war 3). It tends to show aging/topping before other sectors because of interest rate sensitivity We would like …

A Poker Game — Featuring the Two Largest Economies

This past week we have seen some positive price action take the market by force, driving the S&P 500 back above break-even for the year (Figure 1). The broader equity market posted a strong rally on Wednesday following two words (yes… two words) spoken by Jerome Powell, head of the Federal Reserve, “just below”. This …

Navigating a Continued Slide

In our previous post the S&P 500 had just slid 3% and FY18Q3 earnings were just about underway. Today, the S&P 500 closed 27 points below the close of the original 3% slide and it has been quite a choppy ride since then, to say the least. We advised a sideline/neutral mentality as volatility in …