It’s not often that such a market rally, now nearly 2 months in the making, can frighten investors, but this particular rally has served to uncover some strange happenstance when we look under the hood. With the FOMC/Fed on the sidelines and a China/U.S. trade deal seemingly on the horizon, the market fundamentals will eventually…...
Why rising rates and a flatter curve signal a potential downturn: The U.S. economy has seen a prolonged period of growth without a recession. As the business cycle has matured, the U.S. yield curve has flattened substantially. We expect further flattening and an increasing likelihood of curve inversion as the Federal Reserve continues to raise interest rates. Historically, an inverted yield curve has been a…...
Market and Volatility Commentary V-Shaped Recovery, Low Positioning = More Upside, Commodity Sector Trades The V-shaped recovery and Positioning Global Quantitative and Derivatives Strategy Marko Kolanovic, PhD AC In early January we explained the flows behind the Q4 market collapse, arguing that market should recover its losses (here, here). After an initial short covering rally,…...
When momentum develops, it can become a driving force greater than fundamentals and rational considerations. Such was the case for the market in Q4 2018 and with the S&P 500 (SPX) falling into a technical bear market and such has been the case in Q1 2019 with the S&P 500 rallying some 16%+ off the…...
It was a headline heavy week that drove the S&P 500 (SPX) absolutely… nowhere. In fact, after a strong start to the trading week, an a subsequent pullback in the middle of the week, by week’s end the S&P 500 was up a scant .005% for the week. We can look toward the abundance of…...
This has been one heck of a market rally, but it comes on the heels of one heck of a market drop late in 2018. And that’s the context we have to define and work with as we review the current state of the market and what drives the market going forward. From a pure…...
U.S. Equity Strategy: Buybacks to Remain Strong Amidst Uncertainty Buybacks have been a key theme through this cycle with S&P 500 companies returning ~$5 trillion to shareholders since 2009 and contributing ~2% to annual EPS growth (S&P 500 divisor has fallen to 1999 levels, see Figure 30). Despite the recent market volatility, buyback activity has…...
In the following video, Wayne Nelson discusses the Technology Select Spider ETF (XLK). He offers some technical analysis that may be bombarded with some near-term fundamental earnings headlines from the tech sector. Some of those earnings will come from Apple Inc. (AAPL) after the closing bell on 1/29/19 and Microsoft (MSFT) in the days to…...
The trading week commenced with a degree of frenzied selling pressure on Tuesday and within the context of slowing global growth and geopolitical uncertainty. Highlighting fears of a slowing global economy was the IMF downgrading its global growth outlook. With a failed Brexit vote and a U.S. government shutdown inside its 4th week, investors took…...
The S&P 500 (SPX) and its peer indices have had quite the bullish move off of the Christmas Eve 2018 lows and finished the week with it’s strongest daily move of the week. Technically speaking, the S&P 500 has repaired a good deal that had broken down during the 20% drawdown, which occurred during the…...
