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Covid

Despite Wall Street Hype, Inflation is Not Imminent

Retail sales rose a record 5.3% M/M in January after three months in a row of decline.  No doubt the $600 checks from the late December “helicopter” money drop played a large role.  The Atlanta Fed now says that their GDP model pegs the current quarter’s growth at +9.5% (Annual Rate (AR)).  In addition, Industrial Production was up nearly 1% (0.9%) in January.  So, why worry?  Infections and hospitalizations are …Read More

Markets Are Bubbly – The Economy, Not So Much

Not a Bubble?  The equity markets have been driven by momentum and speculation these past few weeks, not by underlying business fundamentals.  We had GameStop, followed by Silver, then Pot stocks, and now SPACs, all driven by retail.  PE ratios are in the top 1% of their historical range.  Junk bond yields are at all-time-record low levels (sub 4%).  In January, the worst stocks based on business fundamentals, significantly outperformed …Read More

The Recovery Will Be Weaker And It Will Take Longer

While markets were slightly higher on the week (see table), there was a clear rotation back toward technology after several weeks of a lull for that sector.  This is clearly shown by the week’s Nasdaq outperformance.   January 22 January 15 % Change DJIA 30,997 30,814 +0.6% Nasdaq 13,543 12,999 +4.2% S&P 500 3,841 3,768 +1.5% Markets continue to ignore economic reality and continue to be focused on a rosy …Read More

“V” vs. “u” and the Flawed Inflation Narrative

The equity markets finally took a breather last week (ended January 15th), with the S&P 500 falling a mere 1.5%; that’s down from its record high a week earlier.  Perhaps the really poor economic data played a role, but then again, equity markets like such poor data because it means more stimulus (Biden’s $1.9 trillion plan), and markets know that much of the stimulus always finds its way into the …Read More

We Don’t Live in “Normal” Times

The equity markets are in one of those rare moods where they continue to rise no matter the news, even when there are riots in the nation’s capitol complex, and when non-farm payrolls fall -140K.  Would you say this is “normal?” Regarding inflation expectations, interest rates rose rapidly along the Treasury yield curve with the 10-year T-Note yield rising from 0.93% (93basis points) from its close on January 4th to …Read More

Using 2020 Hindsight: The Emerging “New Normal” Picture

Using 2020 Hindsight: The Emerging “New Normal” Picture The year finally ended, and, as has been typical, the latest data continued to be downbeat. Despite the weak economic data, the equity market ended the year at all-time highs.  The S&P 500, at 3,576 was up 10.5% for the year after falling 34% in the February/March period, quite the reversal. The current market mantra is that, with the vaccines now in …Read More