Perspectives

The big headline is that year-over-year inflation came in at +4.2%. What the headline leaves out is that inflation hit a period low in May 2020, meaning much of the inflation data we are seeing now is simply “catching up” to where things would have been if we had never had the 2020 recession. It also fails to mention that inflation almost ALWAYS runs higher during the recovery from a recessionary period. Summary: More often than not, stocks appreciate in an inflationary environment Cash l… View More

We remain focused on the economy’s progression through the traditional start-of-cycle sequence, that is: a catalyst – in this case, the broad distribution of the vaccine and the re-opening of the economy – leads, in succession, to an increase in activity, demand, output, revenue, investment, and profits. By our lights, the durability of the expansion is largely defined by the self-reinforcing increase in corporate investment fueled by the post-contraction repair of the revenue stack. The s… View More

It’s been more than a year since the Technology sector has made any relative progress vs. the S&P, it’s the longest stretch of indifference since roughly 2013. Granted the bar has been high given the broader market’s run, but nevertheless, it continues to mark a noted shift in tone, made all the more significant given a static Fed and some great earnings last week. Last May over 70% of Technology stocks were in a relative uptrend vs. the S&P (easy to find a leader), while today’s… View More

In a gallop poll out today: Current Economy Evaluations Improved, but Have Been Better During Pandemic In the new survey, 28% describe current economic conditions as either excellent or good, while 26% say they are poor. Last month, 23% rated current conditions as excellent or good and 31% as poor. The April ratings are not the best they have been for this aspect of the index during the pandemic. In November, positive evaluations of current economic conditions exceeded negative ones by 13 per… View More

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