June 13, 2019

Could a Fed Rate Cut Be Bearish?


After the S&P 500 suffered one of its worst May’s in decades, stocks are rallying so far in June on expectations the Federal Reserve is about to cut interest rates. The next Federal Reserve Open Market Committee meeting is set for June 19, 2019. Based on the Bloomberg World Interest Rate Probability screen (WIRP),...

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Could a Fed Rate Cut Be Bearish?

After the S&P 500 suffered one of its worst May’s in decades, stocks are rallying so far in June on expectations the Federal Reserve is about to cut interest rates. The next Federal Reserve Open Market Committee meeting is set for June 19, 2019. Based on the Bloomberg World Interest Rate Probability screen (WIRP),[...]

Have Corporate Profits Peaked?

After marking a new all-time high in April, the S&P 500 Index fell -6.3% in May, making it the worst May for the index since the Flash Crash of 2010, and the second worst since 1962. Escalating Trade War headlines are partly to blame for the recent increase in volatility, but there are other headwinds for markets that[...]

Bear or No Bear-Here’s What to Expect Next

Is the Bear finally here? The wild price swings in U.S. equities over the past few weeks have a lot of investors wondering if this kind of volatility is normal, and whether it means we’re on the brink of a new bear market. Staking claim on a new bear market can be tricky since the official definition usually requires[...]

What's Next for Equities

Well it’s official, the lazy days of summer are over. The kids are back in school, Wall Street is back to work and Halloween decorations are already showing up in stores. Volatility in markets has returned, and our risk models are beginning to make adjustments to portfolios. September and October are notorious for[...]

What the Fed is Watching

Last week we shared how the Bloomberg World Interest Rate Probability Indicator reading reached the 100 percent level for a rate increase at the March 15th FOMC meeting. (See Beware The Ides of March) While we pay close attention to WIRP, it’s not the only data point pointing towards higher interest rates.

Bond Investors: Beware the Ides of March

While stocks are off to a strong start this year, most bond indexes are down and the risks for bond investors continues to grow. The culprit? Rising interest rates. When rates rise, bond prices fall. The next Federal Open Markets Committee interest rate announcement is March 15th. What is the probability of another[...]

Winning Streaks:Why You Should Pay Attention

The current rally in U.S. equities is quite extraordinary. New all-time highs, falling volatility and broad sector participation are just a few of the characteristics of the rally that started in November 2016 and continues today. The current momentum is especially interesting considering it was born in the backdrop[...]

Chapter 11 Filings Reach 2008 Level

Economic imbalances, anemic global growth and the bursting of the commodity super cycle has created a challenging environment for over-levered companies, a climate strikingly similar to 2008.

Raising Rates Into Defaults

Yesterday markets saw a large default in the energy space.  Arch Coal filed for Chapter 11 bankruptcy citing tumbling domestic coal demand as the reason. Arch Coal’s default on $3.2 billion will raise the metals and mining sector’s trailing 12-month default rate from 11% at the end of December to 15% through today. [...]

The QE Experiment: What Now?

In the coming days the Federal Reserve is set to end Quantitative Easing, the six year economic stimulus experiment. Quantitative Easing, or “QE” has been a hotly debated topic over the years. We have discussed its impact on markets and investor behavior often. Whatever one’s view on the moral hazards of QE, there is[...]