There has been a great deal of media hype surrounding new all-time highs in the U.S. stock market. For that matter, there has been a fair amount of puffery when it comes to how well stocks are performing overall. In actuality, we have seen similar levels for the S&P 500 twice before. The S&P 500 traded around the 2925 level in September of 2018 and the 2875 level back in January of 2018. The last 16 months, then, have not…
In January of 2018, the U.S. economy surprised to the upside at nearly every turn. Since that time, however, the fundamentals have slowly deteriorated. Consider the Citi Economic Surprise Index (ESI). The popular measure compares actual data against estimates. Remarkably, the indicator has been trending downward for 15 months. Perhaps ironically, the S&P 500 now trades at higher levels than when the fundamental backdrop had been much stronger. For many stock investors, then, weak fundamentals are synonymous with the exciting…
The Federal Reserve’s “180-degree turn” has worked swimmingly for borrowers and risk-takers alike. The 10-year yield has dropped from 3.24% to 2.62%. That may encourage households and businesses to lever up with more debt. Meanwhile, stocks are surging upward, reaching for the record heights experienced during the September-October peak. The question investors need to ask themselves now is, “Will the ‘Fed Put’ work on the next go-around? It depends. And it likely depends on whether or not the U.S. is…
Leading into 2008, emerging market stocks and international stocks dominated financial shows. “Talking heads” agreed that investors should allocate as much as 50% overseas for a well-diversified portfolio. The reasoning? One should be aligned with the world’s stock market pie. After all, half of the world’s market capitalization belonged to U.S. stocks and half belonged to stocks from elsewhere around the globe. However, the real reason had little to do with market capitalization. In truth, foreign stocks were dramatically outperforming…
