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Inside The Stock Market ...trends, cross-currents, and outlook

Apr 08 2021

Time For A “Donut” Break?

  • Apr 8, 2021

Despite a resurgence in Small Cap stocks and Commodities, it still feels like an “S&P 500 World” for asset allocators. The financial media remain obsessed with S&P 500 targets, S&P 500 earnings, and S&P 500 stocks. And why wouldn’t they be?

Apr 08 2021

Reading The Short-Term Tea Leaves

  • Apr 8, 2021

The stock market’s technical backdrop remains pretty hard to assail, as evidenced by the current +4 reading on the revamped MTI’s Technical category. But there are a few short-term cracks that bear watching. 

Apr 08 2021

Introducing The “New” MTI

  • Apr 8, 2021

We launched a revamped version of our Major Trend Index. The objective of the new methodology is to increase the flexibility, and even the subjectivity of the MTI. This approach recognizes the “subjective reality,” without forcing us into the tedium of re-weighting sub-factors if they become more or less critical as market dynamics evolve.

Apr 08 2021

The “New” MTI Debuts At High Neutral

  • Apr 8, 2021

Read this week's Major Trend.

Apr 08 2021

A Pricey Alternative To The S&P 500?

  • Apr 8, 2021

This month we focus on the valuations of the MSCI USA Index—which is nearly identical to the S&P 500. This is worth following mainly because the folks at MSCI are kind enough to provide us with much longer-term histories of Cash Flow and Book Value Per Share.

Apr 08 2021

EAFE And EM: Long Past Their “Peaks?”

  • Apr 8, 2021

We applied the “Peak Cash Flow” valuation methodology to the EAFE and MSCI Emerging Markets Index and found them both priced at only about one-half of today’s MSCI U.S. multiple. However, the ratios are already above anything achieved during the 2009-2020 global bull market.

Apr 08 2021

Still Heating Up…

  • Apr 8, 2021

The Fed’s reflationary efforts are showing up everywhere except in the measure that’s engineered specifically to minimize them—the Consumer Price Index. It’s a virtuous circle, until it is not

Apr 08 2021

Putting More And More On Margin

  • Apr 8, 2021

In one year, the bull market has persuaded investors to do something they were reluctant to do near the end of an almost eleven-year bull: Lever Up. Year-over-year growth in Margin Debt reached 49% in February and should catapult far above the “conventional” 50% danger threshold with March’s results.

Apr 08 2021

Snack Time?

  • Apr 8, 2021

As discussed elsewhere in this section, we had a novel idea for asset allocators tired of chasing the S&P 500: Hop off the treadmill and take a “Donut” break!

Apr 07 2021

Equity Financing On The Rise In Some Market Segments

  • Apr 7, 2021

With the equity market at all-time highs and abundant liquidity in the economy, it is probably not surprising to see that CEOs are taking note: Equity issuance is on the rise, especially for small-cap companies.

Mar 05 2021

Bureaucratic Bull

  • Mar 5, 2021

Twenty-one years ago, the bullish bets were on publicly-traded businesses (especially ones with dot-coms after their names). In contrast, today’s bulls seem more beguiled by bureaucrats—the central bankers who, having saved markets and the economy from catastrophe in the last year, are assumed to have mastered the business cycle.

Mar 05 2021

Ruminations On The Fed, Past And Present

  • Mar 5, 2021

If the “Maestro’s” image was dinged from being the “original bubble-blower,” imagine what will happen to Jay Powell’s if stock valuations mean-revert alongside interest rates and inflation over the next few years.

Mar 05 2021

More On The “Rate-of-Change” In Rates…

  • Mar 5, 2021

The liquidity and interest-rate backdrop for stocks has been favorable to such an extreme that we’ve cautioned any minor diminution in this condition could trip up the stock market. On that score, the monetary aggregates and the Fed’s balance sheet don’t pose much concern. On the other hand...

Mar 05 2021

Higher Prices Shouldn’t “Surprise” Us

  • Mar 5, 2021

The Fed has communicated it’s inflation target in uncharacteristically-plain English. Maybe they need to dumb it down more, because it’s the investors in English-speaking countries who have been the most surprised by the recent pickup in the inflation numbers!

Mar 05 2021

NOPE And NOPE!

  • Mar 5, 2021

The calendar would say the U.S. economic recovery and bull market are very young, yet there’s an astounding array of “late-cycle” activity occurring on both Main Street and Wall Street. In the manufacturing economy, bottlenecks have reached levels that have historically been troublesome for stocks.

Mar 05 2021

A “New-Era” Look At The Future

  • Mar 5, 2021

Young readers sometimes give us a not-so-subtle roll of the eyes when we discuss any sort of stock market history that occurred before their date of birth, but it takes experience to appreciate that “there’s nothing new under the sun—least of all in the stock market.”

Mar 05 2021

If You Like TINA, You Should Love “SAMARA!”

  • Mar 5, 2021

Equity investors have had a multi-year love affair with TINA—the belief that “There Is No Alternative” to stocks in a world of ridiculously-low interest rates. This TINA romance has carried on so long that the S&P 500 is nearing valuations last seen in the Tech bubble’s final inning. If the fling with TINA has become prohibitively expensive, we’d like to introduce “SAMARA.”

Mar 05 2021

Small Caps: It’s Still Early

  • Mar 5, 2021

Technical analysts continue to be aghast at the relentlessly “overbought” readings generated by Small Cap stock indexes. However, last month we noted that such extremes had previously presented themselves only at the early or middle phases of a Small Cap leadership cycle—never at the end of such cycles.

Mar 05 2021

Bond Yields “Take Down” An Old Favorite

  • Mar 5, 2021

The “lower for longer” interest-rate thesis propped up the S&P 500 Low Volatility Index for more than a decade. Rising bond yields have since helped drive this former darling to an 18-year relative-strength low. Yet, assets in the S&P Low Volatility ETF are still five-times larger than its High-Beta counterpart.

Mar 05 2021

Lever Up!

  • Mar 5, 2021

Someday, we’ll have a chuckle with our (yet unborn) basketball-playing grandson about the time Shaquille O’Neal was able to raise several-hundred-million dollars in his second SPAC. But while these anecdotes get sillier and sillier, we have a personal bias toward speculative activity we can measure over time. That activity isn’t quite as alarming as the anecdotes, but it’s getting there.