Perspectives

Parts of the global economy continue to face new lockdowns because the pandemic is not over. But the endgame still appears to be the availability of effective medical vaccines, which will allow economic re-openings. The U.S. is providing further evidence. Recent U.S. economic data has been strong overall. Retail sales surged +9.8% m/m in March, initial jobless claims plunged to 576,000 last week (the lowest since the pandemic hit last year). The NY Fed manufacturing index rose to 26.3 in April a… View More

One of our research providers developed their “L-E-S” model about 20 years ago to keep track of what we believe are the most basic building blocks of market health – Liquidity, Earnings, and Sentiment. There is currently a yawning gap between the recent performance of the market and what their model suggests its performance will be over the next two years. Naturally, it is extremely risky to be short risk assets at all when M2 is growing at 27%. Still, one could argue that it will be diffi… View More

The next several months are likely to test the resolve of the Federal Reserve to maintain its “all in” support. U.S. policymakers continue to target employment. There’s still some labor market slack, but the U.S. economy is picking up quickly now. U.S. mobility measures have already been increasing (ahead of herd immunity). This trajectory remains consistent with timely industry data (eg, TSA travel statistics, restaurant reservations). The Conference Board measure of U.S. consumer confid… View More

2020 will be a year we will all remember. Not only was it the year the global economy was abruptly shut down for the Covid-19 Pandemic, but it was also the year we saw the biggest (by a very large margin) fiscal and monetary stimulus ever. So far, it looks like 2021 is another year we will never forget. The fiscal and monetary stimulus numbers in 2020 are bigger than they were in 2021, and the proposed tax increase to pay for it all will be the biggest tax increase since 1968. On March 31, 2021… View More

We recognize that we may occasionally add to the cacophony of market commentary from time-to-time. Here, in one place, we wanted to present what we believe are the most important facts and our current opinions. FACTS Consumer net worth was, remarkably, up 10% in 2020 and is now at an all-time high at $130 trillion Personal savings is roughly $1.3 trillion greater today than it was one year ago The $1.9 trillion fiscal stimulus package is about 9% of nominal GDP; more than $1 trillion will be… View More

Tomorrow marks the 1-year anniversary of the 3/23/20 market low. Roughly +75% later, the only historical comps even in the ballpark are the first 12 months off the 1982 low (+58%) and the first 12 months off the 2009 low (+69%). One of our themes over the last year has been, unique crisis / ordinary market, and in that spirit, we want to reemphasize how different year 2 off the low looks typically looks compared to year 1… performance tends to be more in line with historical averages and it’… View More

We hope you all had a great weekend. We wanted to share with you an email that a good client of ours sent this weekend. He wrote that we probably know all of this, but he found it fascinating and an easy read. He wrote that he finally understands where we are at and why the markets keep going higher. The article he sent was entitled “Americans have never been RICHER” and the introduction went like this. Contrary to what the media will have you believe, the U.S. Consumer is actually in exce… View More

Spring is in the air and with it comes hope in the fight against Covid-19. We have attached a data sheet to this email that shows the progress that has been made in the US on Covid-19. The infection rate, hospitalization rate, and most importantly, the death rate are all falling rapidly. In the US, there have already been more than 95 million doses of Covid-19 vaccines administered, and the CDC estimates that we already have over 60% of the US population immune to Covid-19. With improving Covi… View More

On Saturday the US Senate passed President Biden’s American Rescue Plan, a $1.9 trillion spending package designed to deal with the economic and health effects of COVID-19. Although there are still a few steps left in the process, President Biden is well on his way to signing into law a very large fiscal package within the next week. Some minor changes were made to the legislation during the Senate’s 24-hour amendment process last night but we believe the legislation will come in just slight… View More

4Q Earnings Season Wrapping Up The fourth-quarter earnings season is just about completed now, and pretty much all things considered, it was a strong showing across the board. Every sector saw greater than expected earnings growth except energy which was still dealing with extremely low oil prices. That will change in 2021. Sales growth also showed significant improvement with only the utilities and the energy sector finishing the quarter below initial expectations. Earnings Growth To Take The… View More