Perspectives

U.S. equities were lower last week (S&P 500 -2.4%) for the sixth straight week (the longest stretch in over ten years). During the midweek selloff, the S&P 500 hit the lowest point since March 2021 and the NASDAQ since November 2020. The bearish case for equities focused on monetary tightening, persistent inflation, China COVID lockdowns, recession fears, and extended valuations. The only positive sector for the week was consumer staples (+0.3%); the worst sectors were REITs (-3.9%) and … View More

Equities fell last week with the S&P 500 down 0.2%, masking a huge rally on Wednesday and a big decline on Thursday. This was the fifth straight week of equity market decline. Equities fell due to headwinds from a continued back-up in yields (10-year yields were up 24 basis points). Best sectors were energy (+10.2%) and utilities (+1.3%); worst sectors were REITs (-3.8%) and consumer discretionary (-3.4%). 1Q Earnings Season In Line With Historical Average; Outlooks More Worrisome With mo… View More

The vast majority of Strategas’s published research reports can trace their origins to questions from clients we receive when they are on the road. What follows are some simple answers to the questions they are currently getting most frequently. We are happy to hop on a call to discuss them in greater detail should you have further questions about their answers. 1. What is your most non-consensus view? Where do you think the consensus is potentially most offsides? We have a relatively high co… View More

"Transitory" is out, "expeditious" is in. As most investors expected, the Fed raised short-term interest rates by half a percentage point (50 basis points) earlier today, leaving the range for the federal funds rate at 0.75 – 1.00%. The 50 bp rate hike was the largest at any one time since May 2000, near the peak of the first internet boom. And at least two more 50 bp hikes are likely at the meetings in June and July. Prior to the meeting, we had anticipated a half percentage point rate hike … View More

Equities were sharply lower last week (S&P 500 -3.3%) as stocks made their lowest close of the year. The week was capped off by a big Friday selloff. Some suggest risks are skewed toward a near-term rally given factors, including weak sentiment, low positioning, and oversold conditions. Treasuries were little changed, pausing after the big backup in yields over recent weeks. Best sectors were materials (-0.8%) and technology (-1.3%); worst sectors were consumer discretionary (-7.9%) and REIT… View More

U.S. equities were down last week, with the S&P 500 falling 2.7%. The week’s slide was broadly attributed to increasingly hawkish central bank commentary by the Fed and the ECB. Q1 earnings so far are outpacing expectations. The only positive sectors were REITs (+1.2%) and consumer staples (+0.4%); the worst performing sectors were communication services (-7.7%) and energy (-4.6%). 2020 saw both supply & demand shocks as health concerns mounted. But fiscal & monetary support were … View More

Corporate Tax Reform Worked Revenue is surging, exceeding what CBO and critics predicted By The WSJ Editorial Board April 19, 2022 Democrats are still looking to raise $1.6 trillion in new taxes this year, and even Joe Manchin says he’d support a corporate tax increase. The West Virginia Senator might reconsider if he looks at the actual revenue results of the 2017 tax reform that cut corporate tax rates. Reform has been a winner for the economy and federal tax coffers. Remember the claim… View More

U.S. equities were lower last week, with the S&P 500 down 2.1%. (Small-cap stocks were modestly higher.) Some bullish talking points didn’t get much market traction, including peak inflation, better supply chain trends, and consumer resilience. These positions were overshadowed by fear around inflation, supply chains, and geopolitics. Best performing sectors (and the only ones positive) were materials (+0.7%), industrials (+0.4%), energy (+0.3%), and consumer staples (+0.2%); worst perform… View More

When interest rates go up, many analysts start to worry about recessions. That's not wrong to do, after all Federal Reserve rate cycles are important. Lately, the market has settled on expectations for a total of about 2.25% or more of interest rate hikes this year. The result is a jump in many longer-term yields. The 10-year Treasury yield is 2.77%, while the typical 30-year mortgage has climbed from 3.2% in December, according to Bankrate.com, to 5.1% recently. So, some analysts think that a … View More

The S&P suffered its first quarterly decline since the depths of the pandemic in Q1 of 2020 (-5.0%). Growth (-8.6%) meaningfully lagged value (-0.6%). The biggest development in Q1 was the dramatic repricing of the Fed rate hike path and expectations for an earlier start to and more aggressive balance sheet runoff phase. Late in the quarter, markets priced in a ~80% probability of a 50bp rate hike in May and ~200 bp in cumulative hikes by the end of 2022 following the 25 bp liftoff at the Ma… View More