Archive | International ETFs

Cash-To-Debt Ratio Demonstrates Why Riskier Assets Have Limited Upside Potential

Cash on corporate balance sheets grew at a 1% pace to $1.84 trillion in 2015. That’s a record level of dollars on the books. On the other hand, debt grew at a clip of nearly 14.8% to $6.6 trillion from $5.75 trillion. That’s a 15% surge in debt obligations. In fact, American companies have grown [...] Continue Reading...


Why Low Interest Rates Do Not Imply Perpetual Increases In Stock Prices

Some investors have come to believe that ultra-low interest rates alone have made traditional valuations obsolete. The irony of the error in judgment? Experts and analysts made similar claims prior to the NASDAQ collapse in 2000. (Only then, it was the dot-com “New Economy” that made old school valuations irrelevant.) The benchmark still trades below [...] Continue Reading...


When You Exit The Stock Market, Don’t Let The Door Hit You On Your Way Out

You cannot make this stuff up. The median stock in the S&P 500 has never been more overvalued on price-to-earnings growth (PEG) and price-to-sales (P/S). On a forward price-to-earnings (P/E) basis – where profitability expectations already reflect pie-in-the-sky speculation – the median company’s shares trade in the 96th percentile. That’s pretty darn pricey! Credit Goldman [...] Continue Reading...


Real Risk Taking Will Not Return Until The Fed Flip-Flops

In a strong bull market, higher volatility stocks tend to outperform lower volatility stocks. The PowerShares S&P 500 High Beta (SPHB):iShares USA Minimum Volatility (USMV) price ratio demonstrates how the bull market in equities has been giving way since the highs in the Dow and the S&P 500 one year ago (May 2015). Similarly, in a [...] Continue Reading...


Should Investors Take Notice When Reward Prospects Diminish?

The world’s central banks devise conventional and unconventional ways to depress interest rates. The impact? Consumers purchase goods and services on credit with favorable financing terms. Corporations issue low-yielding debt in order to buy back shares of their own stock. And governments issue low-yielding treasuries to continue spending far more than they generate in tax [...] Continue Reading...


The S&P 500’s 788,400 Minutes: Measuring One Year-And-A-Half In The Life Of An Index

There may be 525,600 minutes in a normal calendar year. However, there have been 788,400 minutes since the S&P 500 first hit 2050 in November of 2014; there have been 1,314,000 minutes since the NYSE Composite Index rose above the 10,000 level in November of 2013. In other words, lost in the narrative that “there [...] Continue Reading...


Three Charts: What Debt, ‘CapEx,’ and Whole Profits Tell Stock Investors

For several years now, I have expressed concern about the accumulation of debt by governments, corporations and households. Some folks seem to recognize that – across the board – total debt levels are on an unsustainable path. Others have argued that the only thing of importance is the ability to service existing obligations, and that [...] Continue Reading...


No Sales, No Profits, No Bull: What Happens When Valuations And Central Banks Collide

Total business sales – sales by wholesalers, manufacturers and retailers – have fallen 5% from their July 2014 peak of $1.365 trillion. At $1.296 trillion for January 2016, total business sales have dropped back to where they were in January of 2013 ($1.293 trillion). In fact, the erosion of total sales by American businesses are even uglier [...] Continue Reading...


Financial Stress Index Is Screaming, “Bear Market Rally”

What if investors had a way to determine the extent of “stress” in the financial system? And what if those stress levels could tell investors whether or not riskier assets (e.g., stocks, higher-yielding debt, etc.) can succeed without definitive U.S. Federal Reserve intervention? Consider the Cleveland Financial Stress Index (CFSI). The CFSI monitors the well-being of [...] Continue Reading...


What Negative Interest Rates Tell You About The Risk-Reward Backdrop

When a country’s central bank reduces its interests rates below zero (i.e., “goes negative”), the action should boost the relative appeal of stock assets. That is the theory. Unfortunately, recent policy initiatives by the European Central Bank (ECB) and the Bank of Japan (BOJ) have failed to inspire their respective stock markets. The ECB first [...] Continue Reading...


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