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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When April Gets Interesting

April is off to a rough start for equity investors as the S&P 500 Index declined more than -3% through the week ended April 11th. The more volatile NASDAQ 100 fell more than -4%. Its been popular to blame the decline on “Tax Selling”, the practice of selling last year’s big winners to pay capital gains tax. The[...]

Clear Skies

Negativity has become quite fashionable these days among investors. Not without good reason. Soaring deficits, a dysfunctional congress and manipulated interest rates are just a few. But with the debt ceiling crisis averted for now, there are reasons for short term optimism.

The Smart Money

While equities have made new record highs this month High Yield Bonds have declined, a classic warning sign that has often led to multi-month declines. Does it matter when High Yield Bonds are not invited to the stock market party? We decided to quantify these divergences over the past several years.

Here We Go Again

The path of market prices for the first three months of 2013 is eerily similar to 2011 and 2012. It has gone something like this: The year begins with new optimism over the economy and stabilization in Europe, pushing stocks to new recovery highs. Then as April begins, the U.S. recovery is questioned, markets realize[...]

Gaps In Thinking

Equity markets have enjoyed a powerful start to 2013 as broad indexes like the S&P 500 have gapped higher right from the first minutes of trading. The crazed buying pressure was enough to mark the best January for the S&P since 1997. The gap in prices have some important historic implications for investors.

Searching For Santa

Much is made every year about the “Santa Claus Rally”, the idea that stocks often rally around Christmas and into the end of the year. Is it just a seasonal headline grabber for financial media, or is there really a “Santa Claus” effect on the markets?

Surfing With Sharks

Headlines change but investor behavior stays the same. In December of 2007 we published a commentary entitled Surfing with Sharks where we highlighted several indications the markets may be headed for trouble. It had been five years since the tech bubble burst and memories of the devastating 2000-2002 bear market were[...]

An Alternative View on High Yield Risk

Let’s face it, in a zero interest rate world, yield is hard to come by. Maybe that’s why investors have been stampeding into high yield bonds this year. We certainly aren’t complaining. The long side of our Long-Short High Yield Bond strategy Alternative Income has benefited. But there are emerging signs that it may[...]

Credit Markets: What No One Is Talking About In August

Its Quiet Out There. With NYSE volumes at the lowest levels of the year for the past week, equity markets are marking time until tomorrow’s Jackson Hole Economic Summit where equity investors are clinging to any hint of fresh stimulus from Fed Chairman Ben Bernanke. It was at this conference two years ago that he[...]

Deja Vu All Over Again: Opportunities in Long-Short

In our last commentary in April we warned it was time to pay attention to risk. Since then global equities have suffered steep declines, with S&P 500 losing -6.7% and the International EAFE index falling -10.0% at their worst levels. Where is the opportunity now?