Posts Tagged ‘ fed policy ’

Inmates Running the Asylum; Fed Policy 8-years into Recovery

September 16, 2016
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Inmates Running the Asylum; Fed Policy 8-years into Recovery

Last week, a Fed Governor, made comments hitting Bloomberg, that the Fed was not a handmaiden to the markets. The comments, not part of a major speech, and difficult to find on Google, were striking, and provocative, conjuring memories of a period when this would never need to be said. Today’s baffling Fed communication strategy involves speeches of voting members, non-voting members, incorporates guidance, including some guidance that makes its way to the cover of the WSJ through Jon Hilsenrath, and includes a full blown black-out period where no comments are allowed at all. What happened to the time when there was a Fed meeting, and sometimes unexpected things happened? Post-financial crisis, markets are viewed as fragile by policy makers. The extent to which markets are actually fragile is debatable,...

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ISM sinks to post-2009 lows; Industrial Economy Recession a Catch 22 for Fed

December 2, 2015
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ISM sinks to post-2009 lows; Industrial Economy Recession a Catch 22 for Fed

November ISM sank to the lowest level since 2009. Stunning, that the ISM (Institute for Supply Chain Management) survey, formerly known as NAPM (National Association of Purchasing Managers), printed 48.6, the lowest level since the throes of the financial crisis. For perspective, the last time the ISM printed sub-48, in June 2009, the S&P was 900. Today, at 2,100+, the market is a cool 134% higher. The S&P is up by 1,200 handles, after having earned approximately 620, the cumulative EPS for the market from 2010-2015. The market is up at a much faster pace than earnings as the multiple swelled from 12x to 17x. What a 6-years. Awkward that December marks the potential lift-off, delayed that is, of a sea change in Fed policy: the end of ZIRP (zero interest rate...

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Qui n’avance pas, recule

November 16, 2015
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Qui n’avance pas, recule

We all eat at restaurants, go to stadiums, and walk down the street. The tragically successful terrorist attacks in Paris highlight the vulnerability of the human condition at any instant. While this has always been the case, and will continue to be so, civilization, and human progress, over past centuries and decades, reduces the chance of random death from a vulgar, inhumane cause. Radical Islamic terrorism is so deplorable because the aim is to destroy, to undo, to move backwards in time, and to return to a harsher world. The impossibility of the ultimate success of the radical Islamic movement is matched with the fervor of the very small percentage of the world population that supports this movement. To create the scale necessary to carry out such large scale...

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Global Growth Scare + High Valuations = Bear Market Dynamics

September 29, 2015
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Global Growth Scare + High Valuations = Bear Market Dynamics

It’s been a difficult market since the dog days of summer. After 10-months of exceptionally low volatility, a fierce downdraft set in during mid-August. Lower stock prices, and volatility, will persist, simply because the conditions to go right back to the old dynamic aren’t in place. There isn’t enough global growth to support stock prices at high valuations. Full stop. Investors got complacent, extrapolating higher trends in stocks price as growth around the world slowed; a bad combination. For perspective, the market (S&P 500) got close to 18x forward (1-year ahead) earnings at the high of 2,131. An 18x multiple represents an incredible move from the 12x multiple the market achieved during most of 2011. QE set in motion exceptionally low interest rates and a stock-market re-rating. The ability...

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Primark is Coming; US Specialty Apparel Sector Disrupted

September 22, 2015
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Primark is Coming; US Specialty Apparel Sector Disrupted

Business models that don’t evolve are always threatened by disruption. The US specialty apparel sector is a fascinating case study in businesses, and brands, entrenched for long periods of time (decades), seemingly safe, but now facing imminent destruction. The concept of the shopping mall is dated; millennials have different habits than teens in the 80s & 90s. It’s no longer a valid plan to simply have a store in the mall, pay high rent, and expect shoppers to arrive, happy to pay high prices. Consumers (especially young ones) are more “global culture aware” and use technology/apps to find the very best price points. The retail graveyard is full of stores that failed to invest in technology, kept prices too high, and never modernized distribution to incorporate faster turnover of...

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Snap, Crackle and Pop; Uninterrupted 18-month Bull Market!

March 25, 2014
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Snap, Crackle and Pop; Uninterrupted 18-month Bull Market!

Over the past 18-months, the S&P 500 surged 43%, without more than a 6% drawdown. That dear reader is a Bull market. This post is somewhat backward looking based on the writing hiatus at CF. The forward plan is for content at regular interviews from here. Where we stood: Entering June 2012, the market stood at approximately 1,300 (S&P 500). Concerns: Europe redux EM collapse Fed policy “the boat was already missed” Since June 2012, the market powered ahead, in retrospect, making all of the above concerns appear overblown relative to the investment opportunities at this time. At a minimum, the above concerns were dramatically ill-timed. CF’s outlook for 2012 was bullish but not enough so.  In the 2012 themes post: Crackerjack 2012 predictions: No recession <check> Valuation matters and...

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