Markets
Wall Street vs. Main Street Investment Attributes
Market leadership is constantly changing as sub-sectors come in and out of favor and particular investment attributes ebb and flow in popularity. One new theme in 2016 is the resurgence of “Main Street” type investments and overall investment exposures relative to “Wall Street” investment exposures. More simply put, mass market exposures are outperforming higher-end, upper income/luxury…
Read MoreChina Slowdown Will Plague Markets For Years
What a start to the year. CJF’s contrarian prediction of 1,860 on the S&P came to be on January 20th. Subsequently, the market rallied strongly on the hint of more quantitative easing out of the ECB, and the adoption of negative interest rates by the Bank of Japan. Any doubts that 2016 will be a…
Read More2016
“I would say happy new year but it’s not happy; it’s exactly the same as last year except colder.” -Robert Clark I find the quote fitting for financial markets, and CJF prognostications, after a very tough 2015, and an inauspicious start to 2016, with a week-one tailspin around the globe. The setup for 2016 isn’t…
Read MorePolicy Driven Markets are Treacherous
Volatility in the stock market is rising, intraday swings more violent, and high-to-low ranges increasing. The lurching action of the market is not driven by fundamentals, it’s difficult to profit from, and disconcerting. There isn’t a single item to pinpoint with respect to market angst, rather, a combination of factors, leading to manic sentiment changes.…
Read MoreBlack Friday Retail Dud; Online Share Shift Accelerates
Bah humbug. Black Friday jumped the shark sometime around the turn of the century. Nonetheless, a disproportionate amount of retail and media focus continue to emphasize Black Friday’s importance as an event. While declining over several years, this year got markedly worse, to the point where media reports were forced to highlight the “normality” of…
Read MoreQui 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…
Read MoreMidsummer Issues Persist; Divergent Global Central Bank Actions Create Challenges
The market moves fast. Thankfully, in the rest of the world, trends of all kinds, generally move at a measured pace. The market overreacts to events and day-to-day happenings based on crowd think and behavioral issues. A change in trend will often start with a subtle data point or indicator, which in hindsight, ignites a…
Read MoreOn Sentiment; How the Market Mini-Crashed and Exploded Right Back
The stock market is on fire. As negative, dour, downbeat, and gloomy was August, the market this fall (early fall), is contrastingly, positive, nonchalant, optimistic, and even euphoric. So it goes; a fast 11% sell off over 6 trading days, on little more than poor sentiment, and a 3% Chinese currency devaluation, followed by an…
Read MoreAmazon and Wal-Mart; Atypical Market Rally Driven by Disintermediation and Secular Trends
Wal-Mart recently hosted an Analyst Day to update Wall Street on current operating trends and strategy. The amount of investment needed to modernize the store base, and improve the overall customer offering is staggering. Wal-Mart will experience a second consecutive year of earnings decline in 2016. The stock took the update poorly, falling over 12%…
Read More5 Investment Patterns That Don’t Make Sense
2015 is shaping up to be a challenging year for investments. The market swoon in mid-August caught most off-guard, and the subsequent violent recovery arrived right after several prominent investors turned bearish, or at least hedged. Markets don’t need to make any sense, and at times, understanding “why” the market is getting crushed, or exploding,…
Read MoreDovish Fed Minutes Ramp Market; Valuing the Yellen Put
The September 16-17th FOMC minutes were released Thursday afternoon, continuing the market’s Beast Mode reaction to Fed dovishness. The S&P 500 completed the best week of the year, barely down-ticking from 1,893 to 2,015. The market rallied 7% from the lows after the September Employment report to the highs yesterday. The 122 handle rally takes the…
Read MoreUtilities Utilities Utilities; sound investment for a slower growth, low rate world
What a rally! In two sessions, the S&P 500 rallied 5%, almost 100 handles from the Friday low. The ex-post “cause” of the rally seems to be the punk September Employment Report, which boxes the Fed into a corner. Yellen’s inertia, and dovishness, during the September press conference, coupled with the subsequent soft employment data,…
Read MoreGlobal 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…
Read MoreBrazil’s Economic Miracle; Seeing the Monster
The depth of corruption and scandal at Petroleo Brasileiro (Petrobras) isn’t your typical run of the mill emerging market scam. A conflux of events around the world, built up over decades, fostered the conditions for a defrauding of this magnitude. Post financial crisis, global central bank stimulus, created an environment devoid of scrutiny, resulting in…
Read MoreEmployment Report & Markets; Forcing a Fed Rate Hike
While the odds on a Fed rate hike are still vacillating, the strong jobs report, and recent market action are now forcing the Fed’s hand. The Fed needs extreme market conditions to justify not hiking. The point has arrived where stock and bond markets are strong enough, even with the prospects of a hike, that diminished Fed credibility should…
Read MoreChina Central Bank Governor, Zhou Xiaochuan; China Bubble has Burst
News out of China is opaque; often altered, editorialized, or outright censored. It is rare to receive a straightforward assessment, based in fact, irrespective of the congruence with the China governmental aims. Zhou Xiaochuan (ZX) is a maverick Central Bank governor, versed in global economics, and financial markets. ZX is a reformer, pushing to open…
Read MoreEmerging Market Doldrums
Not out of the woods yet – no way. The world has changed in the past week, and unmistakably, extreme volatility (mostly of the down kind) is back within financial markets. The potential of Fed rate hike cycle, in the not too distant future, is wreaking havoc. An unintended consequences of the extended period of…
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