Perspectives

Because a picture is worth a thousand words, we wanted to share a few pictures of what a bubble looks like.   Many of us experienced our first memorable bubble in the 1990s.  It's come to be known as the "Tech Bubble," and this is what it looks like on a chart.  Between January of 1995 and December of 1999, a 5 year window, the Nasdaq grew to 9.1 times is starting value.  It was one of the most exciting periods the stock market had ever known.   However, the Nasdaq Victory Party ended… View More

The Federal Reserve did what just about everyone expected earlier today and raised short-term interest rates by 0.25 percentage points. The federal funds rate is now in a range from 1.25 - 1.50% and the Fed is now paying banks 1.50% on their reserve balances.  Today's move was the third 25 basis point rate hike in 2017, matching the Fed's median projection for rate hikes that it made a year ago. At present, the Fed's "dot plot," which it releases at the last meeting of every calendar quarter, p… View More

Stocks were little-changed last week as the conference committee convened to reconcile the differences between the House and Senate tax bills.  Several challenges remain, but momentum for a compromise remains strong; Republicans hope to have the bill on the president’s desk before Christmas. Financials, Industrials, and consumer-oriented stocks outperformed; these areas should benefit the most from tax reform and deregulation.  Utilities was the worst performing sector as dividend-yieldi… View More

With 2017 coming to its close, we continue to find conflicting opinions on the state of the economy and the outlook for the stock market.  On November 14th, Bank of America shared the results of a survey that it says demonstrates investors are “increasingly showing signs of ‘irrational exuberance’, putting more chips on the table even as they worry equities have become overvalued.”  Bank of America’s chief investment strategist was quoted as saying, “Icarus is flying ever close to … View More

If 2003 is any guide, we don’t believe investors should overthink the short-term impact of tax cut in 2018. The 10-year rose from 3.1% to 4.6% in six weeks after the 2003 tax cut was passed, GDP surged in 2004, and those companies with vast amounts of cash overseas outperformed. From a longer term point of view, the efficacy of the tax cut will rest with one question – will companies actually use their cash to invest in capital projects? If so, productivity should rise, real GDP will grow, a… View More

Today, the Senate Budget Committee voted to pass the tax reform bill, and it will now make its way to the senate. In the background, Trump is working to get tax reform through. He's turned from against the Alexander - Murray bill to supportive of it. He's also agreed to the risk pool legislation sponsored by Susan Collins. To be blunt, it appears he's working overtime to gather the necessary votes to get tax reform through the Senate. However, tax reform still has a number of significant hurdle… View More

Some will dismiss the growth as "the rich getting richer," but the facts say otherwise. Usual weekly earnings for full-time workers at the bottom 10% are up 4.6% versus a year ago; earnings for those at the bottom 25% are up 5.3% from a year ago. By contrast, usual weekly earnings for the median worker are up 3.9% while earnings for those at the top 25% and top 10% are up less than 2%. Yes, that's right, incomes are growing faster at the bottom of the income spectrum than at the top. A higher e… View More

Markets were mixed Last week, with small and mid-cap stocks gaining while large cap stocks were mostly unchanged. Tax reform once again dominated headlines: the House passed its version of the legislation, while the Senate bill advanced out of the Finance Committee on a party line vote; the Senate may schedule a vote in two weeks. Retailers outperformed; Wal-Mart’s digital and e-commerce initiatives helped produce a +2.7% increase in same-store-sales, the company’s best quarterly performance… View More

Click here to view a side-by-side comparison of the House and the Senate versions of a new tax plan. We will continue to provide updates as more information becomes available.    … View More

Stocks lagged last week as competing visions of tax reform weighed on investor sentiment; small cap stocks and sectors which respond to economic growth, such as Materials and Industrials, underperformed. On Thursday, the Senate revealed its proposal for tax legislation which differs from the House version that was released last week. Republican lawmakers now face the challenge of crafting a bill that can pass both chambers with a simple majority vote. The market’s negative reaction this week m… View More