MV Weekly Market Flash: The Cost of Easy Money

According to the teachings of traditional financial theory, investors make rational choices when deciding which assets to include in their portfolios, based on their particular return objectives and tolerance for risk. “Choice” implies evaluating the relative merits of the cash flow prospects for Company ABC versus Company XYZ, or the...

MV Weekly Market Flash: Earnings May Matter in 2H19

Second half already? As the third quarter of Year 2019 gets underway, pundits great and small will no doubt be pondering what surprises the remaining months will have in store for us. We kick off the back half of the year with tidings of great perseverance, as our economy now...

MV Weekly Market Flash: Greenbacks in Wonderland

Sweden, France and Germany are all in the news this week, and not just because they all have teams competing in the quarterfinals of the Women’s World Cup (we are hoping that by the time this article comes to press one of those three – France – will be en...

MV Weekly Market Flash: The Insurance Cut and the Melt-Up

Here’s a quote from a mainstream media fixture. How recent is it? “Financial markets have soared during the last month on expectations of a cut in rates. The Federal Reserve’s top officials…may have grown increasingly reluctant in the last several weeks to risk causing turmoil on Wall Street by leaving...

MV Weekly Market Flash: Risk-Off, With a Side Helping of Large Cap Equities

Let’s go back in time exactly one year – to June 14, 2018. Someone from the future visits you and tells you that in the first four months of 2019 – from the beginning of January to the end of April – the S&P 500 will rise by 17.5 percent....

MV Weekly Market Flash: The Problem of Non-Quantifiable Risk

Consider the following: at some point between now and the end of July there will in almost all likelihood be a new prime minister in the United Kingdom, as current PM Theresa May has stated her intention to resign within that time frame. Now consider this: the next prime minister...

MV Weekly Market Flash: Strange Curves

Well, we’re 22 trading days into the pullback that started after the last S&P 500 record high set on April 30. That’s 123 fewer than the 145 trading days it took for the last pullback to regain its previous high, from September 2018 to April 2019. Which, by the by,...

MV Weekly Market Flash: Volatility, The Good and The Bad

In our annual market outlook back in January (wait, is it already Memorial Day weekend?!) we had two principal things to say about volatility. First, that we expected to see a higher level of volatility as one of the key defining characteristics of risk asset markets in 2019; second, that...

MV Weekly Market Flash: Seven and Ten In China

This week’s financial news cycle has been all about China, and a wacky week it has been. On Monday major global equity indexes experienced their biggest pullback since January as trade tensions continued to fill up the Twitter feeds of the investor class and their trader bots. Not that it...

MV Weekly Market Flash: The Performance Art of Trade Talks

Remember last Friday? Investors were in the sunniest of moods, with another month of robust job numbers on top of a better than expected first quarter GDP reading. Even productivity was improved, as we mentioned in our commentary last week (not that anyone was paying attention to the single most important...

MVCM Quarterly Newsletter Q1 2019

First Quarter Review: In Like a Lion, Out Like a Lamb Shattered nerves gingerly stepped back into the post-New Year capital markets, wondering if the demons of December had finally been laid to rest or if there was more pain ahead. The answer presented itself fairly quickly and stayed constant...

MV Weekly Market Flash: The Most Important Metric Nobody Cares About

It’s the first Friday of the month, and we all know what that means. Jobs Friday! We know, because lots and lots of words get put to paper describing the latest trends in the labor market (which, by the way, continue to be resoundingly strong, with the lowest unemployment rate...

MV Weekly Market Flash: Could Inflation Be the Wild Card Spoiler?

In these weekly commentaries we periodically float “wild card” theories about the global economy. These are not outcomes we expect to happen, but alternatives with in our view a better than zero, less than fifty percent (more or less) probability. We do this not for the sake of near-term predictions,...

MV Weekly Market Flash: As Goes the Property Sector, So Goes China

There is a predictable visual theme that accompanies articles covering the quarterly release of China’s GDP growth statistics. Pictures of vast, creepily empty real estate development projects festoon the pages of analytical pieces by the likes of the Financial Times and the New York Times, introducing readers to little-known place...

MV Weekly Market Flash: The Bull Is In the Eye of the Beholder

New fiscal quarter and same old bull market, or so it would appear. Which probably should not come as much of a surprise, given the veritable absence of anything markets would find new and newsworthy. The Fed pivot has come and gone, the trade war turned out in the end...

MV Weekly Market Flash: What To Expect When You’re Expecting…Bond Returns

The bond market has been an active place of late. The Fed’s monetary policy pivot back in January (and an even more dovish position in March), a tempered outlook on global economic growth and related concerns have sparked a broad-based bond rally, with falling yields across most fixed income asset...

Webinar for 403(b) Plan Sponsors: How to Ensure that You’re Covering Your Bases

MV Financial hosted a webinar focusing on and discussing how 403(b) Plan Sponsors have several unique characteristics and challenges on March 27th, 2019. The webinar pertained to plans on individual contracts, such as TIAA’s Legacy platform, or ones moved to an open-architecture investment arrangement, discussing the opportunities to enhance plans...

MV Weekly Market Flash: Back to Wonderland

It’s quite a world, this one we inhabit. Today is Brexit Day! Article 50 goes into effect at 11 pm Greenwich Mean Time…except, of course, that it doesn’t, because our esteemed and honourable Members of Parliament are still having an existential debate regarding what Brexit is all about (real time...

MV Weekly Market Flash: Something’s Gotta Give

Well, the first quarter of 2019 is about to enter the history books, and it’s been an odd one. On so very many levels, only a couple of which will be the subjects of this commentary. To be specific: stocks and bonds. Here’s a little snapshot to get the discussion...

MVCM Quarterly Newsletter Q4 2018

Fourth Quarter Review: The Rule of 19.8 Strikes Again The fourth quarter was barely underway when a sharp pullback occurred in equity markets that would wind up extending through the entire quarter. By all accounts the lowlight of this dismal three months was Black Christmas Eve, when the S&P 500...

MVCM Quarterly Newsletter Q3 2018

Third Quarter Review: Smooth Sailing at Home, Rough Seas Abroad On August 22 we had an event (or rather a non-event) that perhaps symbolizes the times in which we live. The S&P 500 hit a “record” for bull market duration: 3,453 days. Financial media outlets cheered and devoted much air...

MVCM Quarterly Newsletter Q2 2018

Second Quarter Review: Flat, but Bumpy In the aggregate, not much happened in US equity markets in the second quarter. The S&P 500 managed to wring out a price gain of about 3 percent from start to finish, but directionally the trend was mostly sideways, bounded on both the upside...

MVCM Quarterly Newsletter Q1 2018

First Quarter Review: All Was Quiet, Then It Wasn’t January 2 was the first trading day of 2018, and it looked just like the last few weeks of 2017. Nearly absent volatility and a relentless push upward characterized most of January. The S&P 500 set record after record – an...

MVCM Quarterly Newsletter Q4 2017

Fourth Quarter Review: Good Old-Fashioned Window Dressing Professional money managers are fond of their old chestnuts – tales of how the market moves to the rhythms of the seasons. How many times have you heard “sell in May, go away” or watched a sober-faced pundit explain the “January effect?” Well,...

MVCM Quarterly Newsletter Q2 2017

First Quarter Review: The Shape of Things Stock markets around the world rallied in the second quarter. The S&P 500 set a succession of new highs from May into the second half of June. But it would be mistaken to ascribe this performance to a simple continuation of the trend...

MVCM Quarterly Newsletter Q1 2017

First Quarter Review: A Surge and a Nothingburger While animal spirits were out on a rampage in the final weeks of 2016, some skeptical voices could be heard from the sidelines. This is all an illusion, the skeptics would say, observing that even the most politically savvy operators would have...

MV Weekly Market Flash: The EU’s Weak Link

Any mention of the European Union in recent days is likely to elicit a bemused shake of the head at the inexplicable ineptness of the entire British government as it dithers over how to dig itself out of the hole its leaders dug for themselves three years ago in deciding...

MV Weekly Market Flash: Sometimes Bad News Is Actually Bad News

How do you tell whether someone is a novice investor or a seasoned observer of the ways of the capital markets? Simply pose a question like the following: “Growth data show a marked slowdown in economic activity in key economic regions like China and the European Union. Good or bad...

MV Weekly Market Flash: The Value Investor’s Lament

Happy meteorological spring! Not that the calendar’s third month is bringing much in the way of springlike conditions to many parts of the US, including our own Chesapeake Drainage Basin Region. There’s not a whole lot of warmth in the world of value investing either – and there has not...

MV Weekly Market Flash: Inflation Never?

Just a couple years ago, the notion of “secular stagnation” was a favorite topic of conversation in the tea salons of the chattering classes. Secular stagnation is the idea that structural forces are at play pushing the growth rate of the global economy ever farther away from what we call...

MV Technical Market Comment: Greece, Europe and Global Asset Markets

Yesterday, Greece’s citizens resoundingly rejected the most recent proposal by the country’s creditors to implement new austerity measures in exchange for continued financial assistance. The size of the “no” vote was a surprise to observers of the situation and leaves Greece’s economic future, and its continued participation in the single...

MV Weekly Market Flash: Return of the Corridor Trade?

As we wind our way through the random twists and turns of the first quarter, a couple things seem to be taking on a higher degree of likelihood and importance than others: (a) the Fed is back in the game as the dice-roller’s best friend, and (b) corporate earnings are...

MV Weekly Market Flash: Troubled Technicals and Hyper Headlines

Every time the topic of “technical analysis” comes up in our weekly commentary, we need to begin with the customary disclaimer. There is nothing magical about the tools of the technical trade. 200 day moving averages, round numbers, head-and-shoulders formations – these are all silly things with no inherent meaning....

MV Weekly Market Flash: And There It Is, the Powell Put

There is something almost symmetrical about it all. On December 19 last year the Federal Reserve delivered a hawkish monetary policy statement that sent the stock market into a tailspin. Two days later the US government shut down. Fast forward to January 25 of this year. The US government reopened...

MV Weekly Market Flash: Why So Glum, Davos Man?

It wasn’t all that long ago that Davos Week was a big deal. Confident, important communiqués about the state of the world delivered by important, impeccably tailored men (and a few women here and there). The rest of the world’s inhabitants might live out their quotidian habits in a perpetual...

MV Weekly Market Flash: Breadknives and the Algos That Make Them

What do global capital markets and the Warrumbungle National Park in New South Wales, Australia have in common? Topology, for one. In the chart below we have juxtaposed an image of one of the best-known features of Warrumbungle, known affectionately as the Breadknife, with yesterday’s price trend graph for the...

MV Weekly Market Flash: Earnings Season Darling Or Another Dead Cat Bounce?

The world of finance has its own particular lexicon, handed down from generation to generation of Wall Street and City folk. “Dead cat bounce” is one of the more colorful, if dolorous, examples of the patois of equity traders. It refers to a relief rally after a sharp pullback that...

MV Weekly Market Flash: Our 2019 Market Outlook

In May 2018 the US economy achieved a milestone of sorts, outlasting the growth cycle of 1961 to 1969 to become the second-longest expansion in the country’s history. In 2019 an even more auspicious accomplishment is in sight. If the economy does not experience a recession between January and July...

MV Weekly Market Flash: The Rule of 19.8 Percent

If you are a regular reader of our weekly column you may recall a somewhat nitpicky piece we penned back in August called “What Record Bull? where we took issue with the much-trumpeted theme in the financial press that week about the apparent new longest-ever bull market. It wasn’t, as...

MV Weekly Market Flash: Breathe In, Breathe Out, Repeat

The month of December opened with the continuation of a relief rally that started just after Thanksgiving. The S&P 500 had dipped into correction territory but was clawing its way back up. The index closed on December 3 just 4.8 percent shy of the last record high set on September...

MV Weekly Market Flash: China’s Rebalancing, Interrupted

The Lunar New Year in 2019 falls on February 5, a bit shy of two months from now. According to a New York Times article today, managers in some factories in China – where Lunar New Year is one of the big holiday events of the year – are letting...

MV Weekly Market Flash: Slowdown, Recession or Recession-Plus?

Financial markets move to the metronome of data, but not only data. Optics and perception also factor into the equation. Experience tells us that perception can quite easily become reality. Thousands of trader-bots are primed on any given day to lurch this way and that, often on the basis of...

MV Weekly Market Flash: Does the Fed Put Still Exist?

In the canons of Fed Scripture there was the Greenspan put, which begat the Bernanke put, which begat the Yellen put, and the Governors saw that it was good, and the Governors rested on the seventh day. And then came Jerome Powell, and the put was no more. Or was...

MV Weekly Market Flash: Theresa May and the Turkeys

It’s not Thanksgiving week over in London, but British prime minister Theresa May is likely in a mood to give thanks anyway. The object of May’s thankfulness would be the spectacle of hardline Eurosceptics in her own Tory party, led by the decidedly odd duo of Boris Johnson and Jacob...

MV Weekly Market Flash: The Defensive Rotation’s Uphill Climb

Earlier this fall we coined the phrase “sector spaghetti”  to describe a phenomenon we observed in the US equity market, namely the absence of any sector leadership. The small concentration of tech shares that have driven performance for the lion’s share of this bull market started to fall sharply back in...

MV Weekly Market Flash: Relief, Risk and the Big Unknown

There were lots of think pieces leading into the US midterm elections earlier this week. We didn’t contribute to the genre, mostly because there is nothing statistically meaningful to say about an event with a very small sample size (n = 10, if you want to go all the way...

MV Weekly Market Flash: Four Octobers

So October just happened. With a couple relatively calmer days seeing out the year’s tenth month and seeing in the eleventh, it is a good time to take stock of what has, and what has not, happened in the story thus far. What hasn’t happened, as of today, is a...

MV Weekly Market Flash: Narrative Battle Comes into Focus

Be careful what you wish for, because it might come true. A couple weeks ago, bond investors were wishing upon their stars for a retreat in yields from the 3.25 percent the 10-year Treasury had just breached. Well, retreat it did, falling below 3.1 percent in early Friday morning trading....

MV Weekly Market Flash: The Italian Debt Job

An up and down week on Wall Street may end on a slightly positive note, if the sentiment we are seeing on this Friday morning makes it through the afternoon. Don’t mistake this for some kind of definitive trend, though – what’s been happening this week is much more about...

MV Weekly Market Flash: Four Takeaways from the Pullback

So here we are, with a full array of tricks and treats to test investors’ nerves as the month of October gets rolling. A quick brush-up for our clients and readers on the nature of pullbacks is in order. Since the current bull market began in 2009 there have been...

MV Weekly Market Flash: Bonds Away, We’re Okay

It doesn’t take much these days. “Pretty bad market today, huh?!” came one comment from a fellow runner during a muggy 5K outing on Thursday evening. Was it? Apparently so. Thursday’s S&P 500 posting of minus 0.82 percent was the biggest daily drawdown since the second half of June, when...

MV Weekly Market Flash: Wages, Prices and Rates

The Federal Open Market Committee (FOMC) meeting this week came and went without much ado. The 25 basis point rate hike was fully expected, the assessment of economic risks remained “balanced” (Fed-speak for “nothing to write home about”) and the dot plots continued to suggest a total of four rate...

MV Weekly Market Flash: Sector Spaghetti

Usually when we append a chart to one of our commentaries, the aim is to shed light on a particular trend. Sometimes, though, the trend in question is actually the lack of a trend, and such is the case this week. Behold the chart below and call up your metaphor...

MV Weekly Market Flash: The Law of Gravity, Post-Crisis

Round numbers and anniversaries…the little human foibles so beloved of our financial chattering class. This past week, of course, marked the 10-year anniversary of the great collapse of the House of Lehman. No surprise, then, that the print and digital channels were all atwitter (pun partially intended) with reminiscing and...

MV Weekly Market Flash: Four Rate Hikes and an EM Funk

Happy September! Now that the month is upon us, the kids back at school and the weekends filling up with tailgates or trail runs (or both, even better), it’s time to think about that possible rate hike a couple weeks away. Just kidding – we’re not thinking much about a...

MV Weekly Market Flash: Fall Event Risk Outlook

Is anyone else not quite ready for back to school season? Every year it seems that the calendar races by that much faster – which of course just means that we’re getting older and grayer. Anyway! Labor Day weekend is here and thus begins the critically important fall season for...

MV Weekly Market Flash: What Record Bull?

This past Wednesday, apparently, was one of those red-letter special days in US stock market history. The current bull market, which began in 2009, became the longest on record, based on the daily closing price of the S&P 500. So said the chattering heads, not just on CNBC but on...

MV Weekly Market Flash: The Pastor and the Peril

Pundits who follow financial markets are always ready to supply a narrative to the crisis of the day. “Stocks fell today because of X” is how the story usually goes, although “X,” whatever it may be, is likely only a strand of a larger fabric. These days market-watchers are focused...

MV Weekly Market Flash: Public Markets, Private Markets and Asset Allocation

The languid dog days of August are truly upon us. Risk asset markets would seem to be feeling the soul-draining humidity as much as runners and cyclists slogging through day after day of relentlessly damp blankets of heat while training for fall goal races. The S&P 500 hovers just below...

MV Weekly Market Flash: The Great Rotation That Wasn’t

Sentiment travels quickly in the hyperkinetic world of the global capital markets. Just a week ago, the talk of the town was all about the Great Rotation. After weeks, months…nay, years! of underperformance, value stocks looked poised to unseat the great megatrend in growth stocks. Remember one week ago? Facebook...

MV Weekly Market Flash: Soybeans and Sustainable Growth

They say numbers don’t lie, right? So what to make of the 4.1 percent real growth rate in US gross domestic product (GDP) from the first to the second quarter of the year? We feel quite comfortable in predicting that the narrative of today’s news cycle will be anything but...

MV Weekly Market Flash: The Cash Equivalent’s New, Old Look

Something interesting happened earlier this week – well, interesting for those who like to read meaning into round numbers. The number in question is 2, as in 2.0 percent, as in the yield on the 3-month US Treasury bill reached on July 18, the first time this widely used proxy...

MV Weekly Market Flash: Flat Curves and Rising Markets

If you have paid any attention to the daily dose of financial media chatter over the past month or so (and we are of the firm opinion that there are many, many more productive ways to spend one’s time) you have no doubt come into contact with the phrase “flat...

MV Weekly Market Flash: A Second Half of Contradictions

The financial news headlines on this, the first Friday of the second half of 2018, seem fitting. Appropriately contradictory, one might say, providing a taste for what may lie ahead in these next six months. First, we have news that Donald Trump’s splendid little trade war is happening, for real...

MV Weekly Market Flash: China In Trouble For the Right Reasons

It’s been one of those weeks where a virtual hailstorm of headlines overwhelms the normal mechanics of cognitive functioning. So much so, that one could easily turn one’s attention away from China for a brief second and turn it back to find that the currency has plummeted in a manner...

MV Weekly Market Flash: The World’s Most Loved, Least Useful Stock Index

Did you hear the news this week? General Electric, one of the world’s oldest going concerns, was dropped from its august perch in the Dow Jones Industrial Average. That index of 30 companies will no longer include the only company still in business today that was a constituent member of...

MV Weekly Market Flash: Technocracy in Trouble

Investors price a variety of assumptions into their asset valuation models every day, based on cyclical factors like interest rates and inflation expectations. Behind all these short term variables, though, is a more fundamental assumption about how the world works. That assumption is grounded in the primacy of what, for...

MV Weekly Market Flash: Volatility Heads for the Valley

At the beginning of this year we foresaw the potential for a spike in volatility. For awhile back in February and March that looked like a prescient call. Now…maybe not so much. As the predictable humidity settles into the Potomac region it would seem that the only high-octane energy around...

MV Weekly Market Flash: Another Summer of Europe

2011, 2012, 2015…ah, memories of summertime Eurozone crises past. On the cusp of the summer of ’18 it would appear not entirely unreasonable to imagine that we are due for another languid spell of troubled waters across the Atlantic. Political dysfunction in the southern periphery was on full display this...

MV Weekly Market Flash: A World of Pain for Consumer Staples

It’s a very good thing for US large cap equity investors that consumer staples companies make up only 7.4 percent of the S&P 500’s total market cap, while the tech sector accounts for 25.4% of the index. The chart below shows why. Tech stocks have outperformed the market for most...

MV Weekly Market Flash: Baby Blues

We came across one interesting little data point this week amid the usual news avalanche. The US birthrate reached a 30 year low in 2017: fewer babies were born here last year than any year since 1987. What caught our eye was the odd timing. Birth rates tend to be...

MV Weekly Market Flash: Populists March on Rome, Investors (Mostly) Shrug

You may recall, dear reader, that there was a national election in Italy back in March that proved to be highly inconclusive. We’ll give ourselves a modest pat on the back for prognosticating ahead of that event its most likely outcome – a non-decision with power hanging in the balance as ascendant...

MV Weekly Market Flash: Eurozone Falling Out of Sync

Yes, it’s already May. Three days into the year’s fifth month, we are pleased to say we have not yet had to listen to the first seasonal “sell in May and go away” pronouncement by a stupidly grinning CNBC pundit. It’s coming, though, as surely as May flowers follow April...

MV Weekly Market Flash: The Well-Tempered Correction

We’ve sort of gotten into the habit of referring to the 2018 equity market pullback in the past tense, which is not technically correct as the S&P 500 still languishes around 7 percent below its late-January record high. But the sense of drama that accompanied those big plunges in February...

MV Weekly Market Flash: Emerging Markets Resilient, But Currencies Could Spell Trouble

Investors who went bullish on emerging markets equities in the immediate aftermath of the 2016 US presidential election must have looked daft to the conventional wisdom of the day. That wisdom (such as it was) saw non-US markets generally and EMs in particular being on the wrong side of the...

MV Weekly Market Flash: Volatility Is In the Eye of the Beholder

The unseen world is a very strange place. Quantum mechanics, the physics that describes the way things work at the subatomic level, has been validated as a scientific theory again and again since its discovery in the early 20th century. Quantum mechanical laws perfectly describe the workings of literally everything...

MV Weekly Market Flash: 1-2-3-4, I Declare a Trade War

There are weeks when covering financial markets is interesting and engaging, where all sorts of macroeconomic variables and corporate business models demand analysis and discerning judgment for their potential impact on asset prices. And then there are weeks like this week, when none of those things seem to matter. “OMG...

MV Weekly Market Flash: When Tech Sneezes, the Market Catches Cold

In the stock market, as in life, all is not equal. In the case of the S&P 500, the inequality derives from that simplest of mathematical formulas: share price times number of shares outstanding – i.e., market capitalization. The importance of any industry sector – from the standpoint of its...

MV Weekly Market Flash: Carlyle, Tolstoy and the 2018 Investor

History is simply a collection of the biographies of great people, the charismatic heroes and anti-heroes whose supreme self-confidence, fanatical drive and decisiveness write the chapters of the ages. So believed Thomas Carlyle, the 19th century Scottish philosopher and historian who penned works on Napoleon, Frederick II of Prussia and...

MV Weekly Market Flash: The Fork in the Road

Readers of a certain age might remember a perennial favorite among the many outstanding skits performed by late-night TV host Johnny Carson (hi, kids! – ask your parents or their parents). Playing a manic movie review host named Art Fern, Carson would suddenly display a spaghetti-like road map and start...

MV Weekly Market Flash: Bad News Good, Good News Better

It hasn’t been quite the V-shaped recovery of many pundit prognostications. The S&P 500 briefly entered technical correction territory last month, and flirted ever so coquettishly with the 200-day moving average, a key technical trend variable. The ensuing relief rally has seen a couple peaks, but is still climbing the...

MV Weekly Market Flash: The Ides of March Come Early This Year

What a difference a year makes. For Exhibit A, consider the upcoming election this weekend in Italy. Wait, what? There’s an election in Italy this weekend? Must’ve missed that one…what with steel tariffs, Jared Kushner, incoherent crossfire between Trump and his own party on the issues of the day…only so...

MV Weekly Market Flash: Hope Accelerates – Will Reality Follow?

Every fiscal quarter, publicly traded companies and the securities analysts who cover them engage in a series of time-honored rituals. The rituals follow the elaborate pantomimes of a Japanese Kabuki drama, and the underlying message is almost always the same: Hope Springs Eternal. Consider the chart below, which shows quarterly...

MV Weekly Market Flash: The Dollar Is Sitting Out This Party

So, everything’s back to normal, right? The sharp pullback that began with the hourly wage number exactly two weeks ago has assumed its usual V-shape, with 5 straight trading days in the green following the technical correction level of minus 10.2 percent reached on February 8. Just like that silly...

MV Weekly Market Flash: The Peril and the Promise of Higher Rates

Watch the bond market: that was a core theme of our recent Annual Outlook and earlier commentaries in this brief, suddenly volatile year to date. Benchmark Treasury yields jumped on the first day of the year and never looked back. For the first month equities kept pace with rising yields,...

2018: The Year Ahead

In a period of time characterized simultaneously by contradiction and continuity, we sum up our 2018 outlook thus: Things Don’t Change, Until They Do. The benign tailwinds of moderate, steady global growth will not last forever. Neither we nor anyone else can point with certainty to the date when the...

MV Weekly Market Flash: Another Miss for Productivity

Longtime readers of our research and commentary know that we spend quite a bit of time dwelling on the economic metric of productivity. Our reason for that is straightforward: in the long run, productivity is the only way for an economy to grow in a way that improves living standards....

MV Weekly Market Flash: Our 2018 Investment Thesis

We will be publishing and distributing our Annual Outlook next week, a 24-page opus reflecting not only our analysis of the quotidian variables likely to be at play in the economy over the coming twelve months, but also a commentary on today’s world in a larger historical context. Meanwhile, we...

MV Weekly Market Flash: Exuberance and Edginess

The S&P 500 has appreciated 3.6 percent in price terms in the first eight days of trading this year. It seems highly unlikely that the index will match this pace for the year’s remaining 242 trading days, so it’s reasonable to wonder what’s going to happen next. It’s always a...

MV Weekly Market Flash: Bomb Cyclones and Melt-Ups, Hello 2018!

Sometimes the New Year starts off with a genteel slowness, allowing folks to ease their way back into the normal routine of things after the holidays. Sometimes, though, the New Year accelerates from zero to eighty in the space of barely a day. 2018 seems a likely candidate for that...

MV Weekly Market Flash: People Are Calendar-centric; Markets Are Not

So, it’s that time of year again. Those endless “year in review” digests, the “10 best songs/books/episodes/tweets of 2017” listicles, the prognostications about what 2018 has in store. As if anyone actually knows. Yet, despite the fatuousness of the Old Year / New Year content factory, we absorb it all...

MV Weekly Market Flash: Frothing at the Bit(coin)

At least tulips were pretty to look at, on 17th century Amsterdam streets. Pets.com actually facilitated the sale of real products in its millennial heyday (at a steep loss, sure, but still). Was gold really 300 percent more glittery in January 1980 than it was in January 1979? Who knows,...

MV Weekly Market Flash: Yellen’s Lesson, Powell’s Challenge

As 2017 draws to a close, two data points strike us as particularly noteworthy candidates for summing up the year in asset markets. The S&P 500 is up more than 20 percent in total return, and the Fed has raised interest rates three times. Investors have good cause to bemoan...

MV Weekly Market Flash: Groundhog Day in December

Today is the first day of the last month of 2017, which means that predictions about asset markets in 2018 will be flying about fast and furious over the coming three weeks. As practitioners of the art and science of investment management ourselves, we know that quite a bit of...

MV Weekly Market Flash: The Turkeys of 2017

In this holiday-shortened week, our thoughts easily start to drift towards all the delicious, rich food we will be ingesting between now and early January when we wake up with newfound determination to go out and conquer the next marathon, or the first triathlon, or just the first visit in...

MV Weekly Market Flash: Still Quiet on the Investment Grade Front (Junk Jitters Notwithstanding)

There has been considerable chatter over the last week or two by observers and participants in the junk bond market. Prices for HYG, the iShares ETF that tracks the iBoxx US high yield bond index, started to fall sharply at the beginning of this month and continued through midweek this...

MV Weekly Market Flash: More Fuel in the Tank for Energy Stocks?

Every industry sector has its own received wisdom. In the energy sector, the two pillars of conventional wisdom for much of the past eighteen-odd months could read thus: (a) crude oil will trade within a range of $40 to $60, and (b) the fates of crude prices and shares in...

MV Weekly Market Flash: Tax Mania!

Like most of our fellow investment practitioners, we subscribe to a variety of daily market digests – those couple paragraphs at the market’s opening and closing bell that purport to tell us what’s up, what’s down and why. A brief summary of these digests over the course of 2017 might...

MV Weekly Market Flash: Bond Bull Goes for the Thousand Year Gold

The current bull market in US equities, the pundits tell us, is the second-longest on record. That may sound impressive, given that domestic stock exchange records go back to the late 19th century. But it doesn’t even hold a candle to the accomplishments of the current bull market in bonds....

MV Weekly Market Flash: The Market’s Next Big Non-Event

And the band plays on. Some random convergence of factors could conceivably interrupt and reverse today’s upward push in the S&P 500 before the benchmark index ends with its seventh straight record close…but those would likely be bad odds to take. Yesterday was the 30 year anniversary of 1987’s Black...

MV Weekly Market Flash: What’s Next for Emerging Markets?

One of the odder stories in a year of general strangeness in the capital markets is emerging markets. Contrary to the vast majority of expectations in the wake of last November’s presidential election, this asset class has been the darling of diversified portfolios in the year to date. The MSCI...

MV Weekly Market Flash: Sunny Skies and Swan Songs

Another week, another string of record highs for U.S. equities. But this wasn’t just your normal “upward drift for no particular reason” set of days. It was an “upward drift for no particular reason AND a 20 year record smashed!” sequence of new highs. Yes, the last time the S&P...

MV Weekly Market Flash: The Reflation Pony Returns

Gentle reader, please indulge us our seeming obsession with the subject of inflation. Yes, we know that other macro metrics matter as well, but inflation is both the big mystery – as we discussed in last week’s column – and arguably the heavy hand pushing and pulling the market to...

MV Weekly Market Flash: Inflation, Economists and the Rest of Us

Where’s the inflation? That question has lurked behind most of the major headline stories about macroeconomic trends this year. Jobless rate falls to 4.3 percent. Where’s the inflation? GDP growth revised up to 3 percent. Where’s the inflation? The Fed has an official dual mandate of promoting price stability and...

MV Weekly Market Flash: Will the Market Party Like it’s 1987?

The equity market bulls had been running for more than five years. Over this time interest rates had come down dramatically, inflation was muted and most every fiscal quarter delivered a reasonably predictable uptick in real GDP growth. Markets had weathered a spate of political and financial scandals, as well...

MV Weekly Market Flash: Giving Up on the Greenback?

In our commentary last week we made brief mention of the surprising strength of foreign currencies versus the US dollar in the year to date. This week served up yet another helping of greenback weakness, and it is worth a closer look. Perhaps the most intriguing aspect of the dollar’s...

MV Weekly Market Flash: Marathon Bull

Talk of endurance is all the rage these days. Fall race season looms for runners and triathletes contemplating their next attempt at 26.2 or 140 or whatever mileage benchmarks await the end of the arduous training programs through which they (we!) have been slogging all these humid summer months. In...

MV Weekly Market Flash: Competing Narratives for Back to School Week

It’s that time of year again. Here in the mid-Atlantic region we are getting the first taste of dry, cool nights in place of midsummer’s relentless humidity. High school cross country teams are running through our neighborhoods to get in some practice before the season’s official start in a few...

MV Weekly Market Flash: Rocky Mountain High

Jackson Hole is, by all accounts, a lovely redoubt, high up in the Rocky Mountains of Wyoming. As has been the case every August since 1978, the monetary mandarins who set the agenda for the world’s central banks will dutifully traipse up to this hiking and skiing paradise next week...

MV Weekly Market Flash: Drifts and Shocks

Should you be concerned about the somewhat bumpy ride US stocks have encountered in the past couple days? Or is this a welcome chance to get in some long overdue bargain hunting before the S&P 500 resumes its lazy upward drift to a series of new highs? The answer would...

MV Weekly Market Flash: Bonds and the Limits of Historical Data

There’s not much interesting going on in the stock market these days, even less so than in the August “dog days” of years past. Oh sure, the Dow breaks 22,000 and local news stations go into one of their predictable round-number happy dances (as if the Dow Jones Industrial Average...

MV Weekly Market Flash: Markets and Political Risk

Over the past few months, we’ve had a number of conversations with clients that go something like this: Client: Wow, these are crazy times, huh? Politics! Never seen anything like this! Us: Yep, they sure are crazy times. Client: So, why does the stock market keep going up? When should...

MV Weekly Market Flash: Copper, the New Texas Tea?

Investors with broad-based commodity exposure haven’t had much to cheer about in the year to date. The Bloomberg Commodity Index, for example, was down more than five percent at the end of the year’s first half. The main culprit? Crude oil prices, and the tendency for commodity indexes to be...

MV Weekly Market Flash: Summer of Confusion

Some foreign words don’t have English translations that do them justice. Take the German “Schadenfreude,” for example. “Delight at the expense of another’s misfortune” just doesn’t quite pack the same punch. The Russian word “smutnoye” also defies a succinct English counterpart to fully import its meaning. Confusion, vagueness, a troubling...

MV Weekly Market Flash: 2017 Halftime Report

Hard to believe it, folks, but Year 2017 has already passed its halfway point. While many are still getting the most out of a holiday-interrupted week, at the beach or in the mountains or anywhere that the Twitterverse cannot find them, we will take this opportunity to contemplate what was,...

MV Weekly Market Flash: Prices, Rates and the Lowflation Era

Investors who like nice, clean narratives keep getting flummoxed by the global economy’s refusal to serve up steady sequences of consistent data points. This was a week, after all, when bond markets around the world took a Super Mario-sized beating in the wake of the ECB chairman’s musings about recovery...

MV Weekly Market Flash: Confusing Times in Emerging Markets

It may be as good a sign of the times in which we live as any: in the space of five business days, Argentina (1) stunned global credit markets with a $2.75 billion 100-year bond (yes, a bond that will come due long after all of us reading this article...

MV Weekly Market Flash: The Market’s Leadership Problem

Investors tend to be predisposed to a “follow the leader” mentality -- to latch onto a narrative that purports to explain why company ABC or sector XYZ is running out ahead of the pack. Unfortunately for those in search of a leadership theme on the cusp of the summer of...

MV Weekly Market Flash: Brexit Shrouded by (London) Fog

Ah, to be alive at a time when “hey, did that really just happen?” can be the go-to phrase of any given day. To be perfectly honest, we did not give much more than a perfunctory review to the news some time back that UK prime minister Theresa May was...

MV Weekly Market Flash: The Value Effect’s Time of Troubles

Every profession has its core mantra. The mandarins of medicine solemnly invoke the Hippocratic oath (first of all, do no harm). “Equality under the law” say the Doctors of Jurisprudence. In the practice of investment management, generations of money men and women since the 1930s have been trained thus: “in...

MV Weekly Market Flash: Stocks Are From Mars, Bonds Are From Venus

Another week, another record for stocks. Sadly for those of us inclined to jump at “buy the dip” opportunities, the window now appears to bangs shut almost before we even know it’s open. It took a mere five trading days to fully atone for last Wednesday’s mini-squall, with two new...

MV Weekly Market Flash: Inconsequential Tremors

Anyone who has lived for some time in a city like Los Angeles or Tokyo knows what an inconsequential tremor is. You feel that shaking motion, perhaps hear some objects rattling on your desk. You momentarily catch your breath, and then it’s all over, usually within the span of less...

MV Weekly Market Flash: The Fed and the Spread

Three years ago, one could have driven a fleet of semitrailers through the open space between the 2 year and the 10 year US Treasury benchmark note yields. While there still is some distance between the two, it would be somewhat more amenable to a single row of Priuses (Prii?)...

MV Weekly Market Flash: Popular Data, Invisible Data

It’s Jobs Friday, always a fun day for financial pundits as they craft ways to put a defining, click-friendly metaphor on the latest signal of health (or lack thereof) in the labor market. This month’s winning metaphor is that staple of kids’ birthday parties, the bouncy house. “US jobs growth...

MV Weekly Market Flash: The Hard, the Soft and the Ugly

Another Friday, another “hard” piece of data that comes in shy of expectations. The Bureau of Economic Analysis released the first estimate of Q1 2017 real GDP growth, and the 0.7 percent quarter-on-quarter growth rate was a bit below economists’ consensus estimate of one percent. As a standalone data point...

MV Weekly Market Flash: Eurozone Is Priced for More of the Same

How much of an X-factor is European political risk in 2017? We got a partial answer (not much) from the outcome of the Dutch elections last month, which maintained the status quo even as the traditional center right and center left parties fared relatively poorly. We will get another drip-drip...

MV Weekly Market Flash: End of the Complacency Trade?

From the beginning of January to the beginning of March, the S&P 500 set a total of 13 new record highs. Twelve of them happened after January 20, which no doubt made for an unhappy crowd of “sell the Inauguration” traders. Since March 1, though, it’s been all crickets. The...

MV Weekly Market Flash: Noise and Signals in the Labor Market

Last month, White House press secretary Sean Spicer instructed us that the 235,000 payroll gains recorded for the month of February were a direct and unambiguous consequence of the “surge in economic confidence and optimism that has been inspired since [Donald J. Trump’s] election.” This month it would appear we...

MV Weekly Market Flash: The Dog Days of Spring

It is something of an annual tradition: at some point, usually in the middle of a humid and lazy Atlantic Seaboard August, we will write something about the “dog days” of summer in investment markets. You know – light trading volume and mostly listless price direction, occasionally punctuated by an...

MV Weekly Market Flash: Oddities Down the Risk Frontier

The S&P 500 has taken something of a breather this past month. After notching yet another all-time record on March 1, the index has mostly been content to tread water while the animal spirits of investors’ limbic brains wrestle with the rational processors in their prefrontal cortices. This past Tuesday’s...

MV Weekly Market Flash: Peak Populism?

It was Game On week. No, not the NCAA basketball tournament with its annual goody-bag of Cinderella stories and humble pie for top seeds, but the opening salvo of the elections in Europe about which we’ve all been chattering since the beginning of the year. What message will those discontented...

MV Weekly Market Flash: Crunch Time for “Secular Stagnation”

One of the great debates among the economic literati in recent years has been whether the subpar growth trends of late are cyclical or more long term in nature. The bearish long term view goes by the name “secular stagnation,” with advocates including former Treasury secretary Lawrence Summers making the...

MV Weekly Market Flash: Japan and the Fifty Percent Curse

The heady cocktail of animal spirits and hope that is the so-called reflation-infrastructure trade has many fans, but perhaps none more so than the monetary policymaking committee of the Bank of Japan. One of the first casualties of last year’s big November rally was the yen, which plummeted in value...

MV Weekly Market Flash: Some Vague Hints of Discontent

Spring has come early to the US East Coast this year, with the good citizens of Atlantic seaboard cities ditching their North Faces and donning shorts and flip-flops for outdoor activities normally kept on ice until April. Grilling, anyone? Equity investors, meanwhile, have been enjoying an even longer springtime, full...

MV Weekly Market Flash: Political Risk and the Cloak of Invisibility

Over the past couple weeks we have been snooping around some of the contrarian corners of the world, to see what those folks not completely enamored of the “Trump trade” have been up to (Eurozone, Brexit, what have you). While we were away, all manner of things has gone down...

MV Weekly Market Flash: Let the Real Brexit Madness Begin

This year, the month of March will serve up more than an endless succession of college basketball games and unappealing concoctions of green beer. Almost nine months after the surprise vote last summer, the United Kingdom will finally get to show the world what its exit from the European Union...

2017: The Year Ahead

In summary, while we have profound concerns about how markets will evolve over the coming years –concerns we elaborate in more detail elsewhere in our Annual Outlook – our base case for 2017 attaches a relatively low likelihood to either a robust bull market or the onset of a multi-period...

MV Weekly Market Flash: A Contrarian Case for Europe?

Contrarian investors come in all shapes and sizes, but they all share a variation of this basic way of looking at the world: when the crowd looks one way, it pays to look the other. Today there is an undisputed crowd looking one way -- the Trump reflation-infrastructure trade that...

MV Weekly Market Flash: GDP Matters, Productivity Matters More

It would appear that a lesson in US civics might be in order for Mr. Market. Investors breathlessly followed the staccato blast of tweets and executive orders emanating from Week One at the White House, rekindling the reflation-infrastructure trade that had seemed, tentatively, to be starting to take off the...

MV Weekly Market Flash: Shape-Shifters

Fed-watching isn’t quite the sport it was one year ago. The investing herds these days tend to be more fixated on tweets than on dot-plots. Nonetheless, the FOMC will meet again in eleven days, and what they decide to do (or not do) in January and beyond will have an...

MV Weekly Market Flash: Our 2017 Investment Thesis

Our Annual Market Outlook will be published next week. Please find below the Outlook’s Executive Summary. • 2016 may earn a place in the record books as one of the strangest years in capital markets history. Very little that was expected at the beginning of the year happened, and much...

MV Weekly Market Flash: The Valuation Ceiling’s Moment of Truth

It’s a new calendar year, but markets continue to party like it’s late-2016. Remember Murphy’s Law? “If something can go wrong, it will” goes the old nostrum. U.S. equity markets, in the pale early dawn of 2017, exhibit what we could call the inverse of Murphy’s Law. “If something can...

MVCM Quarterly Newsletter December 31st, 2016

Fourth Quarter Review: Stranger than Fiction Like every calendar quarter, the last quarter of 2016 contained three months. From the standpoint of asset market performance, though, we might as well just breeze right through the first month and eight days and start in the waning hours (East Coast time) of...

MV Weekly Market Flash: Dr. Pangloss’s Market

“It is demonstrable that things cannot be otherwise than as they are; for as all things have been created for some end, they must necessarily be created for the best end.” Thus spake Dr. Pangloss in Voltaire’s satirical short story Candide. Stripping away the eighteenth century rhetorical flourishes, Pangloss’s philosophy...

MV Weekly Market Flash: Magic Numbers and Animal Spirits

So here we are again, nearing one of those seminal milestones in stock market lore. The Dow Jones Industrial Average, comprised of thirty (mostly household name-y) large-cap stocks, is an index whose main claim to fame is that its life span as a barometer of market sentiment extends all the...

MV Weekly Market Flash: Return of the Dot-Plotters

Fiscal policy is where all the cool kids hang out now, as we noted in last week’s commentary. But the monetary policy nerds at the Fed got at least a modicum of attention this week as the dots settled on the Fed funds plot chart Wednesday afternoon. As was widely expected,...

MV Weekly Market Flash: Fiscal Policy and Its Limits

Happy (Fiscal) Holidays Opinions among the politico-financial commentariat appear to be converging on the basic idea that “fiscal policy is the new monetary policy.” Out with the obsession over FOMC dot-plots, in with infrastructure! Does a more robust fiscal policy, if in fact implemented, presage a structural bump-up in GDP?...

MV Weekly Market Flash: Predictions Were 2016’s Biggest Loser

2016 has been a rough year for the predictive sciences. The two marquee debacles, of course, were the Brexit vote in June and then the U.S. presidential election in November. On both occasions, the polls said one thing – with varying but largely robust degrees of confidence – while the...

MV Weekly Market Flash: The Melt-Up Has Arrived

We’ve seen this before. Well, not this, exactly. History doesn’t repeat itself, but it does rhyme from time to time. Periodically, over the past while, we have floated the idea that the bull market we’ve been in since 2009 won’t sing its swan song until we have had a good,...

MV Weekly Market Flash: The Infrastructure-Reflation Mirage

The Efficient Market Hypothesis, one of the cornerstones of modern financial theory, argues that asset prices always reflect every single shred of information available to investors. Such information, aver EMH’s acolytes, is instantaneously processed by investors through a rational, omniscient, net present value-weighted assessment of probability-weighted future outcomes. Any mispricing...

MV Weekly Market Flash: One Question Answered, Three More On Tap

In this space last week we presented a case  for “guarded optimism” in risk asset markets, regardless of the outcome of the presidential election. Then the Tuesday Surprise happened. It would be reasonable for one to ask us whether we are still of that cautiously optimistic view we expressed one week...

MV Weekly Market Flash: Apocalypse Where? The Case for (Guarded) Optimism

The most contentious U.S. presidential election in modern history is approaching its dramatic conclusion, and the media discourse is saturated with breathless prognostications of doom and gloom. Even the stock market has gotten in on the act, with the S&P 500 retreating eight days in a row and flirting with...

MV Weekly Market Flash: Quarterly Diversions and the Long Term Growth Mystery

It has been called the window into the soul of the modern economy; the headline macroeconomic data point against which all others are measured. Many claim that Gross Domestic Product fails to capture a large part of what actually constitutes progress in the living standards of human beings around the...

MV Weekly Market Flash: A Whole Lot of Nothing

It’s enough to make one sort of miss those crazy Octobers when goblins and other malevolent spirits wreak havoc on asset markets. Remember 2014? A weird flash crash in U.S. Treasury yields spooked investors already jittery about the Ebola virus making sensational front page headlines. The S&P 500 fell to...

MV Weekly Market Flash: Oil Smooths the October Glide Path

To alternately channel-flip between cable TV’s political shows and its business & markets fare is to see a tale of two Americas. On the one there is fever-pitch intensity about, apparently, the end of the world as we know it. On the other, the blood pressure levels of financial news...

MVCM Quarterly Newsletter: September 30, 2016

Third Quarter Review: New Highs, Old Corridor The transition between the second and third quarters this year was interesting, in the manner of that old Chinese curse (may you live in interesting times). The political world was still reeling from the shocking outcome of the Brexit vote in the UK,...

MV Weekly Market Flash: Fat Fingers and the Wisdom of Crowds

“Money never sleeps, pal” said Gordon Gekko to his young protégé Bud Fox in the 1987 hit movie Wall Street. That sentiment rings ever more true nearly 30 years later; money not only never sleeps, but it races around in a hyper-caffeinated 24/7 frenzy from time zone to time zone,...

MV Weekly Market Flash: New Adventures of the Old Corridor

Way back in the middle of July, we wrote about what investors might expect come September. With the year’s ninth month drawing to a close, we pulled up that piece to see how our midsummer musings actually panned out. It concluded with the idea that, while surprises may percolate up for a...

MV Weekly Market Flash: What We Learned from Policy Week

The tumult and the shouting dies, the Captains and the Kings depart. Rudyard Kipling’s 1897 “Recessional” comes to mind as we contemplate the remarkably quiet aftermath to September’s much-hyped marquee policy events. Yes, there was a frisson of excitement in equity markets after the Fed lived up to its reputation...

MV Weekly Market Flash: How Hard Is the Valuation Ceiling?

We’re halfway through September and markets have gone a bit wobbly, as some random character in a Bridget Jones sequel might say. Nothing yet to require the smelling salts, but the VIX volatility index has perked up into the high teens while the S&P 500 is back to flirting with...

MV Weekly Market Flash: A Central Bank Declaration of Independence?

Central banks in developed and (most) key emerging markets operate independently from their national governments. This independence is what endows monetary policymakers with the ability to act in times of economic strain while elected officials, hemmed in by unyielding partisan constraints, bicker haplessly on the sidelines. Increasingly, though, a taskmaster...

MV Weekly Market Flash: Here We Go

For anyone who likes to keep a record of these things, the S&P 500 broke out of its last corridor fever back on July 8, when it finally topped the previous record close set on May 21, 2015. The large cap benchmark index went on to set five more consecutive...

MV Weekly Market Flash: Janet Yellen’s Long-Term Angst

People, and markets, get fidgety in late August. It’s the time of year when summertime fun turns into tedium. Kids are actually looking forward to getting back into the school routine. Asset markets, meanwhile, jump at any tidbit of event-driven news that can make the time to Labor Day weekend...

MV Weekly Market Flash: The Flash Crash of ’62, and Other Bear Market Anomalies

Remember the Flash Crash of 1962? Of course you don’t. Neither do we. But it happened. On May 28th, 1962 the S&P 500 plunged 6.7 percent in a single day, seemingly out of the blue. Concerned investors noted immediately that this was the biggest single day retreat in the stock...

MV Weekly Market Flash: Another Whiplash Week (and Month, and Year) for Oil

As July came to a close the chatter among oil price watchers in the financial media was about the onset of “bear market territory” as Brent crude prices fell some 20 percent from their recent June highs. That might have been newsworthy were the asset in question Dow Jones or...

MVF Research Special Comment: Presidents, Politics and the Market

Less Than Meets the Eye “Craziest Election Ever!” “The Old Rules No Longer Apply.” "Presidency or Reality TV?” The breathless headlines come out on a daily basis, and so do questions from our clients about what this very strange election season may mean for their portfolios. We have not written...

MV Weekly Market Flash: Event Risk Italiano

It has been, to say the least, an exceedingly strange summer in the world of risk asset markets. Alongside a near-daily stream of general news items suggesting that the basic rules of the world as we have long known them no longer apply – from the price of money to...

MV Weekly Market Flash: Consumers Spend, Businesses Save, Stocks Shrug

The headline number was underwhelming. Today’s quarterly release by the Bureau of Economic Analysis showed real US GDP growing at a rate of 1.2 percent for the second quarter of this year – less than half the 2.5 percent clip projected by analysts. Moreover, the already tepid first quarter growth...

MV Weekly Market Flash: It’s Quiet at the VIX…Too Quiet?

A deadly terrorist attack in Nice last Thursday was followed by a failed coup over the weekend in Turkey. China’s contentious “Nine-Dash Line” in the South China Sea is on a potential collision course with the U.S. military. A dismal post-Brexit PMI reading in Britain offers the first piece of...

MVCM Quarterly Newsletter: June 30, 2016

Second Quarter Review: Yet Another Stall-Out One is the loneliest number, as the song goes, but 2130 may be the stubbornest. 2130, of course, is the all-time high price at which the S&P 500 closed in May 2015, a full year and two months ago as of this writing. A...

MV Weekly Market Flash: When September Comes

We are heading into the dog days of summer, and this one has a distinctly retro feel to it. Just a few weeks ago we used this space to comment on the US stock market’s having a distinct 1970s vibe to it. But the big socio-cultural phenomenon of the moment...

MV Weekly Market Flash: Trading Places

It is perhaps appropriate that jobs reports in the middle months of 2016, the Year of Anything Goes, confound the consensus expectations to a much greater degree than they did in the comparatively sane world of 2015. Last month the FactSet analyst consensus projected payroll gains of 160,000 for May;...

MV Weekly Market Flash: That Seventies Market

We have talked a great deal about the “corridor market” in our commentaries this year, observing that US large cap stocks have traded in a largely sideways patterns since the beginning of the fourth quarter of 2014. Over this time the S&P 500 has spent three quarters of its time...

MV Weekly Market Flash: And Then There Were 27

It was almost three years ago to the day. On July 1, 2013, Croatia became the 28th country to join the European Union. “Joyous Croatia Joins Europe Amid a Crisis” ran the New York Times headline of that day. The article noted that the accession of the Balkan republic represented...

MV Weekly Market Flash: Tempest in a (British) Teapot

One week from today we will (probably) know the answer to the Big Question: Are they in or are they out? Britain votes on the future of its relationship with the European Union on June 23, deciding whether it wants to continue to be part of an organization it joined...

MV Research Insights: 2016 Halftime Report

The Glass Is Half-Empty, and also Half-Full We all know the old trope: optimists see the glass as half-full, pessimists as half-empty. This year – and indeed for more than a year before that – the Cassandras and the Pollyannas seem to be as close to equilibrium as possible. Since...

MV Weekly Market Flash: Ten Year Bunds at the Event Horizon

Today’s WMF is brought to you by the number 10. It’s the tenth day of the month, and it’s a day when 10-year debt is front and center on the capital markets stage. Switzerland and Japan have already crossed over into 10-year NIRP Wonderland, offering investors the curious opportunity to...

MV Weekly Market Flash: A Picasso Jobs Report

Picasso’s 1932 painting “Girl Before a Mirror” is, like most of the artist’s work, open to wide and contentious speculation about “what it all means,” and in that sense it bears a likeness to today’s jobs report. Does the weak headline payroll number suggest an economy confronting its own dark...

MV Weekly Market Flash: Risk in the Summertime

It’s that time of year again. On the cusp of Memorial Day weekend, the shopworn adage reliably rears its head: Sell in May, Go Away? Like most Wall Street folklore this ever-present refrain, a compulsive go-to theme for the financial pundit class, holds a kernel of relevance inside a fog...

MV Weekly Market Flash: Bank of Japan Goes Full Hedge Fund

Japan was in the news this week mostly for the upside surprise in first quarter GDP; at 1.7 percent, the real growth rate was well ahead of expectations and a reversal of the 4Q2015 contraction. Will better-than-expected growth temper some of the recent chatter about more aggressive foreign currency intervention...

MV Weekly Market Flash: Mopey Retailers, Perky Consumers

Americans love to shop, and as our shopping habits go, so goes the economy. Such is the conventional wisdom, in any case. Consumer spending has consistently accounted for around 70 percent of our gross domestic product (GDP) for many decades now. Every so often, though, a narrative takes hold to...

MV Weekly Market Flash: Jobs OK, Productivity Not So Much

In September 2010 the US economy lost 52,000 jobs, according to the Bureau of Labor Statistics report released on the first Friday of the following month. Why is that important? Because September 2010 was the last month in which we had negative job creation. Ever since – and periodic breathless...

MV Weekly Market Flash: The BoJ’s “Bazooka” Backfires

The language with which the financial press documents the doings of central banks has taken a notable turn towards military vernacular in recent years. We have “shock and awe” campaigns to talk up growth prospects, and jaw-clenched proclamations of doing “whatever it takes” to stave off collapses in currency, bond...

MV Weekly Market Flash: Fifth Time’s the Charm at the Valuation Ceiling?

The Passover holiday starts this evening, and children in Jewish households around the world will be preparing for a traditional rite of passage in reciting the Four Questions to their elders. Investors watching the two month-long rally in equity markets may well have a question of their own: Why is...

MVCM Quarterly Newsletter: March 31, 2016

First Quarter Review: V Is For Volatile Symmetry lovers will appreciate the geometry of the first three months of 2016: a near-perfect V-shaped trajectory for US stocks. The S&P 500 fell 10.5 percent from the close on December 31, 2015 to February 11 of this year. The index then enjoyed...

2016: The Year Ahead

2015 was a key transitional year in capital markets. In the US the year signified the end of an era. From 2009 through 2014 US equity markets grew at an average annual rate of 12.6 percent largely due to the efforts of the US central bank – the Federal Reserve...

MV Weekly Market Flash: China Goes Back to the Sugar Fix

The big news after last month’s National People’s Congress in Beijing was the announcement by Premier Li Keqiang of the government’s intention to set a range, rather than an individual target, for annual real GDP growth. The range was to be between 6.5 and 7.0 percent, seen as striking a...

MV Weekly Market Flash: The Bovespa Bounce

The home page for Barron’s online this morning is an instructive sign of the times. One of the lead articles is headlined thus: “Investors Regain Interest in U.S. Stocks,” going on to talk about a $4.6 billion of net inflows into global equity ETFs and mutual funds in the past week. Just...

MV Weekly Market Flash: Learning to Love the Slow-Growth Recovery

It’s April Fool’s Day, but nothing in the way of impish pranks came from the Bureau of Labor Statistics this morning. The BLS served up another predictable, steady helping of employment data, headlined by monthly payrolls growth of 215,000, slightly ahead of expectations, and a slight uptick in the unemployment...

MV Weekly Market Flash: The Underperforming (Non-US) World

After the three year bear market of 2000 to 2002, stock indexes around the world enjoyed a sustained bull cycle with broad participation across all major regions from the US to Europe, from Latin America to developed and emerging Asia. Most major markets set all-time highs in October 2007. Then...

MV Weekly Market Flash: Welcome Back to the Corridor

The punch bowl was not even half empty after Mario Draghi served up another round of stimulus last week, but Janet Yellen & Co. filled it right back to the brim on Wednesday and the party rolled on. The surprisingly dovish statement after this week’s FOMC meeting acknowledged what credit...

MV Weekly Market Flash: Quality Rally, We Hardly Knew Ye

In a fundamental sense, not a whole lot has changed for the global economy since the beginning of the year. Economic growth remains below trend just about everywhere, hindered by the well-known headwinds of weak demand, stagnant wage growth and supply-demand imbalances among others. US companies continue to experience earnings...

MV Weekly Market Flash: Still a Long Way to Go for EMs

Animal spirits are running high in the month of March to date. A whole dealer’s choice of assets ranging from global stocks to crude oil to the South African rand and Turkish new lira are all climbing out of the depths of despair in which they had been mired for...

MV Weekly Market Flash: Nice Rally, But Don’t Get Too Comfortable

Since setting a multi-year low on February 11 the S&P 500 has enjoyed a robust relief rally, gaining 6.7 percent through the 2/25 close. The rally has garnered plenty of skepticism, but there are some impressive aspects. It has been fairly broad, with seven of the ten major industry sectors...

MV Weekly Market Flash: Wages, Prices and the Fed’s Trilemma

Amid the volatility and daily event fetishes that have driven asset markets hither and yon this year, the US economy continues to steadily plod along. The data points are a mixed bag: missed GDP and productivity numbers here, consumer confidence and retail gains there. But the overall picture is relatively...

MV Weekly Market Flash: NIRP Nihilism

It’s just a natural continuation of conventional monetary policy, say the central bankers who have unleashed the hounds of negative interest rate policy – NIRP – into the capital markets. The Swedish Rijksbank is the latest to join the club, setting the key bank overnight repo rate at minus 0.5...

MV Weekly Market Flash: Headlines Heading South

China’s slowdown, cash-strapped emerging markets, the negative interest rate contagion – news from the world economy has been almost uniformly negative for much of the past twelve months. The bright spot amid the gloom has been the relatively upbeat US economy, the strength of which finally convinced the Fed to...

MV Weekly Market Flash: Kuroda Comes to Wonderland (Sort Of)

Negative interest rates – or “Wonderland” as we have come to call them – up to now have been a distinctly European fashion. The common currency Eurozone has them. So do non-currency zone neighbors Switzerland and Denmark. Nowhere else did they exist – until now. The Bank of Japan surprised...

2016: The Year Ahead

2015 was a key transitional year in capital markets. In the US the year signified the end of an era. From 2009 through 2014 US equity markets grew at an average annual rate of 12.6 percent largely due to the efforts of the US central bank – the Federal Reserve...

MV Weekly Market Flash: Slow Burn Pullback

As unrelentingly negative as this January has been, the prevailing sentiment appears to be weary resignation rather than panic. The typical pattern we have seen over the course of this recovery is for a sharp and swift drawdown followed by an equally swift recovery. That pattern probably drew its strength...

MVCM Quarterly Newsletter: December 31, 2015

Fourth Quarter Review: As Go Earnings, So Go Stocks The quarter began hopefully enough. The S&P 500 recovered most of what it had lost in the August-September pullback over the course of a month-long rally. Most, but not all. The index set an all-time high in late May and fell...

MV Weekly Market Flash: 2016 Investment Thesis: Executive Summary

Our Annual Outlook will be published next week. Below is the executive summary. 2015 was a key transitional year in capital markets. In the US the year signified the end of an era. From 2009 through 2014 US equity markets grew at an average annual rate of 12.6 percent largely...

MV Weekly Market Flash: Think Before You Panic—Lessons from 1997-98

There has been almost nothing “happy” about the New Year thus far. It’s probably a good thing that investors had a whole weekend in which to shake off New Year’s Day hangovers before showing up to face a sea of red arrows on Monday morning. Those red arrows, of course,...

MV Weekly Market Flash: 2015 Markets in Review: Not Great, Could Have Been Worse

A popular parlor game for investors over the past couple weeks has been to guess whether the S&P 500 would finish the year out in positive or negative territory. Technically, of course, a calendar year is no different than any other string of 365 consecutive days. But we all know...

MV Weekly Market Flash: Five Observations for a Post-12/16 World

Credit is due to the Yellen Fed for setting clear expectations and then delivering on them. Markets expected a 25 basis point increase in the target Fed funds rate, accompanied by an accommodative policy statement, and that is just what they got. “Monetary policy remains accommodative” was the key phrase...

MV Weekly Market Flash: 203 and Counting

The S&P 500 reached an all-time nominal high water mark of 2130.82 on May 21 of this year. Since then 203 calendar days have elapsed, making this by far the longest post-peak recovery gap in the past three years. The chart below shows the price performance of the benchmark index...

MV Weekly Market Flash: One of Those Weeks

The headline macro calendar does not dispense its favors evenly throughout the year. Some weeks are notable more for the sound of crickets chirping than anything else, while others are a cacophony of urgent headlines sending market indexes hither and yon. This past week falls resoundingly into the latter category....

MV Weekly Market Flash: Giving Thanks

It has become something of a tradition for us here at MV Financial, on one occasion during the year, to do something a little different for our weekly commentary. In the days leading up to Thanksgiving, as we prepare to gather with friends and loved ones, we briefly turn our...

MV Weekly Market Flash: Adele and the Gross Domestic Product

“The Gross National Product measures everything, in short, except that which makes life worthwhile” – Robert F. Kennedy in a campaign speech at the University of Kansas, March 1968. Stock markets rise and fall, interest rate policies are set and reset, people feel good or not so good about their...

MV Weekly Market Flash: Volatility: Peaks, Valleys and Mesas

Since its inception in 1990 the CBOE VIX index – the so-called “fear gauge” – has shown itself to be a fairly good barometer of market risk. The index’s mean reversion tendency is particularly useful; the long term average value of 20 (shown as the dotted green line in the...

MV Weekly Market Flash: Hello, Rate Hike

Stocks threw a mini-tantrum earlier in the week after Fed Chairwoman Janet Yellen made it pretty clear that she really, really wants to get that first rate hike on the board in December. Today’s jobs release from the Bureau of Labor Statistics goes a very long way to help make...

MV Weekly Market Flash: The Presidential Year Curse, and Other Popular Delusions

It’s never too early to start thinking about next year. Sure, we still have a holiday season and a Fed decision, among other fun-filled events, to get through before 2015 rings out. But now is when we start to focus on our strategic allocation models and plan out scenarios for...

MV Weekly Market Flash: Quality Rally or Melt-Up?

Investors in US large caps have more treats than tricks in their candy bags so far this October. Since testing the current correction’s lows in late September, the S&P 500 has rallied by a bit more than 9 percent, and seems poised to extend those gains even further heading to...

MV Weekly Market Flash: Two Cheers for China’s Consumers

In what has become an increasingly event-driven year for capital markets, Monday looms large on the calendar with the expected announcement of China’s third quarter GDP growth. Given China’s front-and-center role in the recent stock market correction, investors will want to see what the data say about how things are...

MVCM Quarterly Newsletter: September 30, 2015

Third Quarter Review: After the Gains, Some Pain Every stock market correction is miserable in its own unique way. The tag lines for some recent reversals are nothing if not colorful: think “Ebola Panic”, “Taper Tantrum” and “Fiscal Cliff” just to name three pullbacks of 5 percent or more that...

MV Weekly Market Flash: Oil Rally: The Real Deal or Another False Dawn?

Those brave enough to wade into the markets on August 25, at the depths of the recent pullback in risk assets, have been amply rewarded. The S&P 500 is up 7.8 percent since then (as of the 10/8 close). But oil bulls have fared even better. Spot prices for the...

MV Weekly Market Flash: Jobs and the Limits of Monetary Policy

A cold, wet rain has been falling along the Eastern Seaboard for the past couple days, and that proved to be an appropriate climate for this morning’s September jobs release. If there was any good news to be found in the report it was not apparent in the headline numbers....

MV Weekly Market Flash: Pullbacks of a Feather…

So here we are, somewhere along the path of the latest double digit reversal in large cap US stocks. Whether this is a technical correction – a bump in a still-bullish road – or the early stages of a long winter of discontent remains to be seen. In our opinion,...

MV Weekly Market Flash: Fed At the Credibility Cliff

The Fed did the right thing yesterday. Below trend inflation, modest wage growth, tepid productivity and sub-80 percent capacity utilization all point to a US economy that, while growing, is far from running hot. The urgency for an immediate rate hike simply was not there. Given the elevated threats evident...

MV Weekly Market Flash: Emerging Markets: An Unconvincing Quarter Century

Emerging market (EM) equities have long enjoyed a position as a core strategic asset class for diversified long term investment portfolios. Using the traditional tools of modern portfolio theory (MPT), investment advisors place EM assets in the high growth / high risk portion of the allocation pie: delivering outsize gains...

MV Weekly Market Flash: Goldilocks Versus the Bears

The ninth month of the calendar year is not off to a promising start for risk asset markets, as world stock indexes continue to swoon for no apparent reason. While Wall Street struggles, though, things on Main Street do not seem bad at all. The four charts below present a...

MV Weekly Market Flash: Five Things We Learned This Week at the Crazy Farm

Well, that happened. The technical correction we have all talked about for the past four years finally showed up and sent pretty much any asset class with a risk component into a tailspin. The magnitude of the correction (thus far) is nothing particularly out of the ordinary as these things...

MV Weekly Market Flash: Large Cap Fortress Breached

Dog days indeed. August has taken one of its characteristic twists for the worse, with a global pullback in risk assets finally encroaching on US large cap equities. On the heels of increasing instability in China, collapsing commodity markets and little to cheer about elsewhere, the S&P 500 had retreated...

MV Weekly Market Flash: China, Reserve Club Dreams and the Fed

Ah, yes, it is turning out to be another one of those unpredictable Augusts. US East Coasters woke up Tuesday morning to news of a major devaluation of the Chinese currency, the renminbi (RMB). Global asset markets then spent several days lurching this way and that as investors attempted to...

MV Weekly Market Flash: Summer of Misery for Commodities

“Every unhappy family is unhappy in its own way.” The opening sentiment in Tolstoy’s great novel Anna Karenina works just as well for commodities markets in the summer of 2015 as it did for Russian aristocratic clans in the 19th century. Every major commodities “family” – from precious metals to...

MV Weekly Market Flash: And Now…The Dog Days of Summer

Yes, it is already that time of the year. August is upon us, otherwise known as the dog days of summer. This is the season of potato salad, beach volleyball and light-volume trading sessions on equities exchanges. Those light volumes have a habit of cutting short hard-earned vacations as random...

MV Special Midyear Comment: The Current State of the Markets

To Our Clients: We have heard from a number of you over the past several weeks with questions about what is happening in the markets – whether there is potentially cause for concern given some recent developments, and what else may be having an impact on your portfolio between now...

MV Weekly Market Flash: The Economic Consequences of the (Eurozone) Peace

Well, that was quite a week. Not often do we see the human frailties behind the bland policy statements, but raw emotions were on full display as European policymakers scraped together a 12th-hour deal to – for now – keep Greece in the Eurozone. By all accounts Prime Minister Alexis...

MVCM Quarterly Newsletter: June 30, 2015

Second Quarter Review: Stuck in Second Gear…or Reverse 2Q2015 was not a banner quarter for the majority of core asset classes around the world. The S&P 500 set successive record highs in April and May, each time edging up just a little higher than last time. But the rallies failed...

MV Weekly Market Flash: Yet Another Week of Crises Deferred

The more things change, the more they stay the same. A week that started off with a surprising and spine-tingling “OXI” – No – from Greece’s citizens, amidst much animated chatter among the punditry about the inconvenience of the democratic process to orderly asset markets, ended with yet another application...

MV Technical Market Comment: Greece, Europe and Global Asset Markets

Yesterday, Greece’s citizens resoundingly rejected the most recent proposal by the country’s creditors to implement new austerity measures in exchange for continued financial assistance. The size of the “no” vote was a surprise to observers of the situation and leaves Greece’s economic future, and its continued participation in the single...

MV Weekly Market Flash: Not Dead Yet: Dividend Stocks in a Rising Rate World

It seems like the easiest trade in the world: interest rates go up and the price of high dividend stocks go down. Yield-intensive shares have taken a beating this year, none more so than the beleaguered utilities sector. While the S&P 500 is struggling to stay above break-even for the...

MV Weekly Market Flash: The Euro Standard

“These arguments are not arguments against the gold standard as such. That is a separate discussion which I shall not touch here. They are arguments against having restored gold in conditions which required a substantial readjustment of all our money values”. – John Maynard Keynes, The Economic Consequences of Mr....

MV Weekly Market Flash: …Baby One More Time – Party Like It’s 1998!

Britney Spears and ‘N Sync were blowing up the charts, President Clinton was dominating the headlines in a most unfortunate way, and households all across the country were lovingly attending to their pet Furbys. 1998 seems a world away from that which we inhabit today, seventeen years later. Yet the...

MV Weekly Market Flash: Interest Rates and your Bond Portfolio

​Interest rates are once again the trending topic as anticipation for the Fed’s June policy meeting next week grows. Last week we considered the potential impact of a Fed rate hike on equities and the possibility of a pullback. This week we shift the focus to what the Fed action...

MV Weekly Market Flash: Rate Hike? Buy the Pullback

Rate hike chatter is back front and center in the wake of this morning’s relatively strong jobs numbers. Payroll additions exceeded expectations while hourly wages, which historically correlate closely with Fed policy, also ticked up ahead of consensus. Today’s data do not make for a complete picture, and the Fed...

MV Weekly Market Flash: Reversing Reversals

Well, that was interesting. On April 20, all the chatter among bond traders was about the imminent plunge of 10-year German Bund yields into negative territory. Instead they were caught off guard by a sudden, steep and seemingly inexplicable reversal. The 10-year yield doubled within two days, on its way...

MV Weekly Market Flash: Another Summer of Tranquility, or Peaks Ahead?

History doesn’t repeat itself, but sometimes the rhyming is uncanny. As the first half of 2015 heads into its final month, perhaps its most distinguishing feature is the resemblance to 2014 through the same third week of May. An early stock market pullback with volatility spikes, a sharp recovery in...

MV Weekly Market Flash: Japan – Halfway to Zero

“Stocks always go up in the long run, except when they don’t” may be how Yogi Berra would have described the performance of Japan’s asset markets for the past quarter century. In the depths of the global financial crisis in early 2009, the Nikkei 225 stock index was worth less...

MV Weekly Market Flash: Stunted Growth?

This week we found out that US labor productivity – the output of goods and services per hour worked – of nonfarm workers fell by 1.9% for the second consecutive quarter, bringing the 5 year average to a measly growth rate of only 0.65%. This information comes on the tail...

MV Weekly Market Flash: The Meh Market

We are now one third of the way into 2015. What can we say about the state of things in the capital markets? US equities would appear to merit little more than “meh”. The S&P 500 saw out the month of April with a 1 percent drop and the Nasdaq...

MV Weekly Market Flash: Brent Breaks Out – More Upside Ahead?

It’s been a good couple weeks to be on the long side of a crude oil futures contract. Animal spirits were in full force Thursday as hedge funds and others poured into the market, driving Brent crude futures to their highest level for the year to date. As the chart...

MV Weekly Market Flash: Fed Wars: Rosengren v. Bullard

In one corner, the Beantown Bruiser. In the other, the Show-Me State Slayer. Let the policy rumble begin! It has been yet another week of all Fed, all the time. This week’s will they-won’t they chatter took the form of a policy square-off between St Louis Fed President James Bullard...

MVCM Quarterly Newsletter: March 31, 2015

First Quarter Review: Upside, Downside Large cap US equities dominated the capital markets through last year’s 4th quarter. For the three years ending 12/31/14, the S&P 500 enjoyed a cumulative price appreciation of more than 60%. That is a bit more than three times the rate at which average earnings...

MV Weekly Market Flash: Emerging Markets: In Search of Lost Growth

If you parked a chunk of cash in emerging markets equities at the beginning of this year, you are probably giving yourself a pat on the back for your keen investment acumen. While the S&P 500 struggles on either side of break-even for the year to date, the MSCI Emerging...

MV Weekly Market Flash: Tricky Currents Ahead

Happy 2Q2015! A new quarter means another earnings season, and this may be one of the most impactful ones in recent memory. In the larger context of a weakening macroeconomic picture, punctuated by today’s lackluster jobs report, earnings are likely to weigh heavily on the near-term fortunes of asset indexes....

MV Weekly Market Flash: Small Caps: Dollar Haven or Danger Zone?

Large cap US stocks are barely treading water for the year to date; the S&P 500’s marginally positive return of 0.34% through Thursday’s close derives entirely from dividends. Meanwhile, small cap stocks have opened up a comfortable performance gap relative to their larger cousins. The S&P 600 small cap index...

MV Weekly Market Flash: Kabuki in the Eccles Building

It’s still a Fed market. The Kabuki drama that is the two-day Fed Open Market Committee conclave raised itself to new heights of artfulness this week. In her best imitation of a photon being a wave and a particle at the same time, Janet Yellen maintained that the Fed can...

MV Weekly Market Flash: Currency Conundrums

Paris, Je T’Aime There seems to be no end to the euro’s woes. The Old Continent’s currency has fallen 25% against the dollar from its high mark last summer, and is closing in on parity. That’s good news for tourists dreaming of springtime in Paris; somewhat more surprisingly, it has...

MV Weekly Market Flash: Beware the Ides of March

March 15 – the Ides – falls a week from this coming Sunday. But this year it’s actually two days after the ancient Roman feast of Lupercalia (and anniversary of the death of Julius Caesar) that has the soothsayers buzzing. That’s when the Fed convenes for its next policy session,...

MV Weekly Market Flash: NASDAQ Fever, v2.0

It was a giddy era, a time of seemingly endless possibilities. At the beginning of 2000, New Media upstart AOL announced a planned takeover of one of the storied blue-bloods of the print world, Time Warner. Silicon Valley was awash in engineers and secretaries alike cashing in their millions in...

MV Weekly Market Flash: Look Who’s Growing, Too

The narrative has been the same for the past five years: Europe as the global economy’s new sick person. The ill-fated single currency union, goes the narrative, has joined Japan as the ageing, no-growth patient being kept alive on life support and the jawboning feats of Dr. “Whatever It Takes”...

MV Weekly Market Flash: A Tale of Two Oils

The collapse in oil prices was arguably the headline economic story of 2014. The malaise carried into January of this year, with prices of key benchmark crudes hitting six year lows last month. A sharp rebound in the first two weeks of this month has observers wondering if the slide...

MV Weekly Market Flash: Growth Trumps Rates?

The job numbers released by the Bureau of Labor Statistics this morning were broadly upbeat for the American labor force. Even wage growth and labor force participation, which have been the “yes, but” metrics in recent months, showed movement in the right direction. There is an important caveat to the...

MV Weekly Market Flash: Volatility in 2015: Peaks and More Peaks

Volatility is back. For most of the past two years we have enjoyed a comfortable world of low risk & high returns. Stocks rose steadily with little drama save for an occasional pullback in the neighborhood of 5% with an immediate V-shaped recovery. This environment started to change last fall....

MV Weekly Market Flash: Lower for Longer

Shock and awe? That would be the right term to apply to the Swiss National Bank when it lifted the floor off the Swiss franc’s conversion rate against the euro last week. Any time currencies trade up or down in high double digits in the course of a single day...

2015: The Year Ahead

Growth is the big question on investors’ mind as 2015 gets underway. The bond market doesn’t expect there to be much, as evidenced in current spreads between nominal yields and inflation. Growth is particularly subdued in Europe, where aggressive stimulus led by the European Central Bank is perceived as the...

MV Weekly Market Flash: Retail Sales Slowdown

2014 was a year of both higher job growth and consumer confidence, which in turn helped boost retail sales for most of the year. A post-recession high for December consumer confidence, in conjunction with lower gasoline prices, should be a winning combination for more discretionary spending amongst consumers. However, the...

MVCM Quarterly Newsletter: December 31, 2014

Fourth Quarter Review: Return of the Pullback There is a certain quality of déjà vu to the opening days of 2015. Just three months ago, as we were preparing our commentary for the quarter ended September 30, global equity markets were trading sharply in a context of falling energy prices...

MV Weekly Market Flash: Jobs, Money and Growth

The monthly jobs report came out this morning, telling us that U.S. nonfarm payrolls added 252,000 new able bodies to the workforce. Meanwhile the headline unemployment number dropped to 5.6%, the lowest since June 2008. This would appear to be good news, indicating that the growth narrative for the U.S....

MV Weekley Market Flash: Divergent: The Different Worlds of the Fed and the ECB

Revelers around the world are still shaking out the post-New Year’s Eve cobwebs, but ECB Chairman Mario Draghi rang in the year with words of sober clarity. Deflationary risk in the Eurozone is significantly higher than it was six months ago, Draghi told the German Handelsblatt, and may require “measures...

MV Weekly Market Flash: You Can Go Your Own Way: The 2-Year / 10-Year Split

As 2014 comes to an end we naturally ponder the year that was and the trends that shaped the investment narrative. There are plenty of contenders for story of the year honors, from the plunge in energy prices to the return of geopolitics and the soaring U.S. dollar. We would...

MV Weekly Market Flash: Melt-up? Earnings vs. Animal Spirits

Over the past several weeks we have considered various scenarios for capital market performance in 2015 among various asset classes. For U.S. equities we have converged on a base case that sees continued upside in price performance, but with that upside more or less limited by earnings growth. In other...

MV Weekly Market Flash: Greek Drama, Act III

Not too many people were paying much attention as the curtain raised on Act I of Greece’s financial drama. That was back in the fall of 2009. World equity markets were recovering from the Crash of 2008, and market pundits had weightier issues on their mind than the woes of...

MV Weekly Market Flash: Bulls in the China Shop

A quick glance at recent headlines in the world’s second largest economy doesn’t reveal much in the way of good cheer. There is the recent collapse of Shanxi Platinum Assemblage Investment, one of the so-called “shadow banks” that figure prominently in real estate and other speculative ventures. Many China watchers...

MV Weekly Market Flash: Giving Thanks

On this holiday-shortened week we like to take a brief pause from the focus on day-to-day trends that normally fill up the pages of our Weekly Market Flash, and reflect on things at a more expansive level. 2014 has had its ups and downs, but mostly it has been a...

MV Weekly Market Flash: The Home Stretch: Charting a Course to 12/31

With a little more than one month left until the Champagne corks pop on New Year’s Eve, it’s a good time to survey the investment landscape and see how we might be ringing out 2014. With U.S. equity market indexes back in double digits, it looks very likely to be...

MV Weekly Market Flash: Time for a Check-up: Assessing Performance in the Health Care Sector

The health care sector has done more recently than to supply therapies and cures for mental and physical ailments. It has also showered investors with very healthy portfolio gains. In 2013 the S&P health care sector index returned over 41%, a good 10% more than the broad S&P 500 index....

MV Weekly Market Flash: Russia: The Economic Cost of Geopolitics

It’s not a good time to be a consumer in Russia, particularly if that consumer is drawing her salary in the local currency. Since the beginning of 2014 Russia’s currency, the rouble, has declined by more than 30% against the U.S. dollar. In the past week alone it has fallen...

MV Weekly Market Flash: Hello Goodbye: QE at Home and Abroad

QE is dead. Long live QE. As the week opened, the single thing on which nearly all market pundits agreed was that the Fed would announce the end to its bond-buying program, known as QE3, at the conclusion of its Open Market Committee meeting on Wednesday. Sure enough, the Fed...

MV Weekly Market Flash: Right Back Where We Started From

For a brief few intraday trading moments last week the S&P 500 fell below the level of 1848 (year of revolutions!) where it started 2014. The ensuing v-shaped rally has pushed the index fairly comfortably back into positive territory. But the price-equity (PE) ratio remains a bit below where it...

MV Weekly Market Flash: The Growth Debate

There were not too many headline macroeconomic numbers out this week, a week in which a large dose of volatility returned to global equity and commodity markets. One data point that did stand out was a 14 year record low number of claims for unemployment benefits. The seasonally adjusted number...

MVCM Quarterly Newsletter: September 30, 2014

Third Quarter Review: Uninspiring Gives Way to Unsettling Late summer is often called the “dog days” of the calendar cycle. That is not always true in financial markets – the mayhem of August 2011 comes to mind – but this year the moniker was apt indeed. After a torrid second...

MV Weekly Market Flash: Crude Realities: Oil Supply Overwhelms Demand

Volatility is back in risk asset markets, at least for the time being. There is no one single factor to explain the wild intraday gyrations in major stock indexes, all of which are experiencing a pullback of varying magnitudes from their high water marks. Europe’s economic woes, growing fears about...

MV Weekly Market Flash: The Never-Changing Story

Every now and then we go back to the annual market outlook we published back in January, to see where our views have changed and where they are more or less the same. With regard to the economic landscape it appears that our views have changed very little indeed: the...

MV Weekly Market Flash: The Dominant Dollar

The S&P 500 is up by about 8% for the year to date, even after Thursday’s pullback (an increasingly rare one-day reversal of more than 1%). Meanwhile the EAFE index of developed international stocks is in the red for the year, and recently red-hot emerging markets have also given up...

MV Weekly Market Flash: Nae Today, Sí Demà?

In the end the cooler heads prevailed. By a wider margin than the final polls had suggested, Scotland chose to remain in the United Kingdom. Turnout was over 85%, validating the outcome of a peaceful, democratic process. Unsurprisingly, this news has given yet another shot of cheer to the capital...

MV Weekly Market Flash: The Cupertino Circus

Apple is a phenomenally successful company, and at $607 billion it is also the world’s most valuable enterprise. So it is probably not surprising that new product announcements would command Wall Street’s attention. But there is a level of showmanship and high drama to Apple’s product launches unparalleled in the...

MV Weekly Market Flash: Jobs: The Great Opt-Out Continues

Weaker than expected employment data is the main item on today’s macroeconomic menu. August payrolls fell below the closely-watched 200,000 number for the first time since January; at 142,000, the payroll numbers stand in sharp contrast to recent GDP, manufacturing, consumer confidence and other data points suggesting a steady, if...

MV Weekly Market Flash: Magic Numbers, Catalysts and Pullbacks

On Tuesday this week the S&P 500 closed above 2000 for the first time ever. When we say “above”, we mean “right on top of”: the actual closing price was 2000.02. On Wednesday the index inched slightly upwards to a close of 2000.12. Of course, there is nothing inherently special...

MV Weekly Market Flash: Continent at the Crossroads

European Central Bank Chairman Mario Draghi is spending a few days this week in the pleasant late-summer climes of Jackson Hole, Wyoming, site of the annual central bank symposium hosted by the Kansas City Fed. Chances are, he won’t be spending too much time savoring the many recreational delights of...

MV Weekly Market Flash: Summer of Noise

It’s summertime, but the living has been anything but easy for the past couple weeks. A news cycle full of geopolitical flare-ups, health crises and dissension at the Fed has brought volatility and wild intraday price swings back onto center stage. Yet there appears to be less to the daily...

MV Weekly Market Flash: Yellen’s Dilemma

Major U.S. equities indexes gave up all their July gains and more on Thursday, the final trading day of the month. The Dow Jones Industrial Average, which has lagged the S&P 500 and the Nasdaq Composite for many months, finished the day in negative territory for the year to date....

MV Weekly Market Flash: Earnings Season 1, Efficient Markets 0

The Efficient Market Hypothesis (EMH) is a theory about asset prices and information. At the heart of this theory is the assertion that capital markets are fully efficient. According to the EMH, asset prices always reflect every single piece of information that could reasonably impact the asset’s value. As new...

MV Research Insights: The Perils of Past Performance

Summary Overview Past performance is not a reliable indicator of future returns: every SEC-registered investment firm is required to disclose some form of this message in all public advertising media. Yet past returns – most often recent past returns – do play an outsize role in influencing portfolio selection decisions...

MV Weekly Market Flash: Hiccup or Catalyst?

Thursday offered up a textbook case of how asset markets react to the sudden appearance of an X-factor. In this case the event was the tragic crash of a Malaysian Airlines commercial plane, which appears to have been shot down by an anti-aircraft missile near the border of Russia and...

MVCM Quarterly Newsletter: June 30, 2014

Second Quarter Review: The Great Calm As the second quarter opened, U.S. equity markets were stuck in neutral. The S&P 500 was trading in a fairly tight corridor on either side of 1850, the level at which it started the year. There were no significant pullbacks, but no breakout on...

MV Weekly Market Flash: Yellow Card for Portuguese Banks; Markets Unfazed

On Thursday morning investors on the U.S. side of the pond woke up to a whiff of 2011: trouble in the European financial sector. Shares in Banco Espírito Santo (BES), Portugal’s second largest bank, were suspended from trading as rumors spread that severe financial difficulties may threaten the bank’s viability...

MV Weekly Market Flash: A Tale of Four Commodities

We normally think of commodities as a single asset class: an alternative investment exposure alongside equities and fixed income. An examination of commodities trends in 2014 to date should disabuse anyone of the idea that there is much in the way of close correlation between the major commodities sub-classes. Global...

MV Weekly Market Flash: Stocks & Bonds: Everyone Gets a Trophy

One of the many unusual exhibits on display in today’s asset markets is the seemingly tandem performance of U.S. stocks and bonds through the first half of 2014. Consider the two side-by-side charts below, both showing the price performance of the S&P 500 and the 20+ year Treasury bond. The...

MV Weekly Market Flash: Money For Nothing And The VIX For Free

That ain’t workin’, that’s the way you do it… Way back in the day, when Dire Straits composed their satirical riff on the easy-money world of MTV and rock celebrities, interest rates were still coming down from the double-digit rates of the early 1980s and the hangover of stagflation still...

MV Weekly Market Flash: Let the Dog Days Begin

Summer weather has returned in full. For those of us who call the Mid-Atlantic region home, that means lots of humidity and the intermittent torrential downpour showing up just in time for the evening commute. It’s summertime in the markets as well. Average daily trading volume on the New York...

MV Weekly Market Flash: Negative Rate Wonderland

If the European Central Bank had announced three or four years ago that it was preparing to drop its overnight deposit rate below zero, the Euro could easily have plummeted and yields on European benchmark securities would likely follow close behind. Negative interest rates are the latest frontier in the...

MV Weekly Market Flash: Europe’s Elections: Less Drama Than Meets The Eye

The dominant media narrative in the wake of last Sunday’s European Parliamentary elections is the strong showing by an array of extreme, mostly right-wing parties. Consider the following smattering of headlines emanating forth from major media outlets this past week: A Rubicon Moment for the EU? – New York Times,...

MV Weekly Market Flash: Where Did All The Risk Go?

2013 was a very good year for U.S. equities. Even more impressive than the 32% total return on the S&P 500 was the very low level of risk that accompanied it. Based on the Sharpe ratio, a widely-used measure of risk-adjusted return, the S&P 500’s 2013 performance was in a...

MV Weekly Market Flash: The Split Market: How Will It Un-split?

On Tuesday this week the S&P 500 reached an all-time high, nudging past the psychologically important level of 1900. The broad market index has since pulled back, but remains above the 50-day moving average: indeed, it has maintained a positive distance from this intermediate support level for all but a...

MV Weekly Market Flash: Send in The Crowds

Today’s Gen Y-ers are intuitively proficient at tapping into the cloud to glean wisdom from multiple sources. Friends, circles, people you have never met and never will meet, all can contribute to a steady drip-feed of insights about anything from where to get your hair done to the best place...

MV Weekly Market Flash: The Planets Align

This has been an unusually busy week for the world of top-down investment analysis. Four headline events took place in the space of the past five days: the report on 1Q14 GDP, the Fed Board of Governors meeting, a release of the ISM manufacturing index and, to cap it all...

MV Weekly Market Flash: The Strange Case of European Bonds

Sometimes a picture can convey a thousand words, encapsulate an entire story. Consider the chart shown below. It shows a ten year comparison of the Italian 10-year government bond yield with the Italian unemployment rate. The chart shows that while unemployment in Italy is far and away at a ten...

MV Weekly Market Flash: Japan: Is the Sun Finally Rising?

Japan’s stock market is bringing up the rear this year. The MSCI Japan index is down -7.6%, lowest among the developed economies this index tracks. Selling pressure on Japanese shares was in full throttle during the first half of April; not coincidentally, perhaps, this period also represented the beginning of...

MVCM Quarterly Newsletter: March 31, 2014

First Quarter Review: Struggling to Break Out After closing out 2013 at (mostly) record highs, major US equity market indices turned sour in the month of January. Since that time the stock market has struggled to maintain any kind of sustained upward momentum. A late surge helped the S&P 500...

MV Weekly Market Flash: Sector Stories

Our brains are wired to seek explanations for things - to weave a sensible narrative around events in the hope of making them seem less random or threatening. We see this play out every time a reporter stares at us assuredly from behind the anchor desk and tells us that...

MV Weekly Market Flash: From the Eurobond to the “Flash Boys”

Michael Lewis, the ex-Salomon Brothers trader turned investigative author, has always had a particular sweet spot for the world of finance. His knack for shining a bright light into the obscure, murky corners of Wall Street was on display again this week with the publication of Flash Boys. In the...

MV Weekly Market Flash: Candy Crush: End of the Silly Season?

Stop us if you’ve heard this one before: an Internet company with an unproven, highly risky business model values itself at gajillions of dollars and offers its shares to credulous investors who never seem to learn their lesson… 2014 has been a choppy year for equities thus far, with the...

MV Weekly Market Flash: Utilities: The Wild Ride Continues

The utilities sector is the traditional safe port in a storm among the nine major industry groups that make up the U.S. stock market. It is typically the last space investors vacate when risk turns up and the threat of a market correction looms. Over the last twelve months, however,...

MV Research Insights: The Anatomy of Pullbacks

Summary Overview In risk asset markets the occurrence of a significant pullback is nearly inevitable: sooner or later, the market will give up a sizable chunk of the gains it earns during periods of growth. There is much debate in the investment community about how to manage pullback risk: when...

MV Weekly Market Flash: Event Risk Is Back

This week has served up a large plate of negative macro events, and global asset markets have reacted accordingly. The S&P 500 is currently hovering right around its recent technical support level of 1850, about 1.5% down from the record high set a week ago and about where it was...

MV Weekly Market Flash: The Winter of Economic Uncertainty

The markets seem to like what new Federal Reserve Chairwoman Janet Yellen has to say, which may be surprising since Ms. Yellen herself has expressed some confusion about the current economic data in front of the Fed. After one of the now seemingly routine DC snowstorms derailed the February 13th...

MV Weekly Market Flash: China’s Currency Challenge

China’s currency, the renminbi (RMB), has a relatively brief history as an asset that rises and falls according to market supply and demand. Up until 2005, the renminbi’s rate was tightly pegged to the U.S. dollar. China’s economic policymakers then began a series of gradual moves to liberalize the currency,...

MV Weekly Market Flash: Ukraine, Markets and the Geopolitical X-Factor

The magnitude, timing and predictability of cash flows are what determine the returns investors expect to receive from any given asset. With that in mind, it is worth considering the language of a Standard & Poor’s credit report issued today regarding Ukraine’s credit rating, which it dropped from CCC+ to...

MV Weekly Market Flash: What’s Next for Emerging Markets?

Asset markets have settled into a gentler pattern in recent days, erasing a sizable portion of the losses suffered during the first five or so weeks of the year. The rising tide has extended to that most battered of asset classes: emerging markets. This asset class has been the big...

MV Weekly Market Flash: Volatility Gap Due To Close?

On February 3rd the S&P 500 experienced its most severe pullback since the period from May 21 – June 24, 2012. Oddly, the magnitude of the pullback was exactly the same to within two decimal points: -5.76% in each case. Here at MVCM we use 5% as a marker for...

MV Weekly Market Flash: The Market and the Economy

This week we got two seemingly contrasting readings on the state of play in early 2014, and what may be in store for investors, businesses and households this year. The stock market pulled back, with the S&P 500 extending its loss for the year to date north of 4% by...

MV Weekly Market Flash: Return to Risk-Off?

Bond yields plunging. Defensive, high dividend stocks holding firm as riskier exposures sharply weaken. Emerging markets bloodbath. If it were not for the frigid temperatures plaguing the East Coast, it might seem like we’re back in the summer of 2011, with investors scurrying into whatever safe havens they could find...

MV Weekly Market Flash: The Vanishing Trade Deficit

If there were an equivalent of People magazine’s “Sexiest Person of the Year” award for macroeconomic statistics, the trade balance would never be it. Unemployment, GDP, consumer spending…these are the celebrity metrics whose fortunes and failings we love to follow on Twitter feeds. The trade balance is sort of an...

2014: The Year Ahead

The question weighing on our minds as 2014 gets underway is: How much more? From its low point in March 2009, the S&P 500 gained a cumulative 200% through the end of 2013. Last year was the best since 1997 for broad-based U.S. equities, and the results are even more...

MV Weekly Market Flash: Jobs and the Fog of Uncertainty

Just when you thought it was safe to go back into the water… One of the overriding narratives of the past several months has been a building case for stronger than expected economic growth. The headline numbers – GDP, employment trends, housing and consumer confidence to name a few –...

MV Weekly Market Flash: Pondering the “Big Melt”

Temperatures in much of the northern U.S. are well below freezing, so it would seem that melting fears are not weighing on the minds of our citizenry. In the climate-controlled offices and trading floors of investment houses, though, the topic is very much in the discourse. The new buzzword is...

MV Weekly Market Flash: 2013: The Year In Review

There are but a couple trading days left in 2013. This has been a good year to be an equity investor, particularly an investor in U.S. equities. In fact, the real stomach-churning roller coaster ride this year was not in stocks, but in fixed income instruments. A somewhat off-the-cuff utterance...

MV Weekly Market Flash: The Price of Certainty

There was an interesting article in the Wall Street Journal this week, which perhaps slipped under the radar amidst all the frenzied taper talk. That piece was about a company called Genscape. There is a connection between that article and the big story of the week. Success in the capital...

MV Weekly Market Flash: Where’s the December Effect?

Last week we wrote about the strange relationship between economic news and recent market performance. Major stock indexes were turning sour ahead of a possible Fed taper in mid-December, even as the economic news looked more promising than it has for a number of years. The sourpusses have continued to...

MV Weekly Market Flash: Economic Cheer vs. Taper Tantrums

Just in time for the holidays, recent headline economic news should bring on a rush of good cheer. Nonfarm payroll gains have topped the critical 200,000 level for three of the past four months, while the unemployment rate has fallen to 7%. GDP was revised upward for the third quarter...

MV Weekly Market Flash: Giving Thanks

Another holiday season is upon us. Whether preparing a traditional turkey meal, pushing the envelope with avant-garde culinary experiments, or celebrating the rare and delightful convergence of Thanksgiving and Hanukkah, this is a time of year when we like to take a moment to breathe, stand back from the daily...

MV Weekly Market Flash: The Mystique of Round Numbers

16,000. 4,000. 1,800. It’s the harmonic convergence or planetary alignment– pick your divine sign – of the capital markets. The three most widely tracked U.S. equity indexes are all flirting with these perfect round numbers, these Platonic metrics of stock market performance. The Dow Jones Industrial Average closed above 16,000...

MV Weekly Market Flash: The Perils of the Financial Tabloids

If you stand in the check-out line of a supermarket on a regular basis, then you know that a significant percentage of Americans have an extreme interest in the goings-on of anybody named Kardashian, or the unfortunate apparel choices of Miley Cyrus, or the latest rehab adventures of Lindsay Lohan....

MV Weekly Market Flash: With a Tweet and a Prayer

What a difference eighteen months make. That’s the amount of time which has elapsed since Facebook’s ill-fated debut into the public markets: a debut marked by overly optimistic pricing, trading glitches, and sour investors resolutely not “liking” the social media behemoth. Not so this time around. November 7th marked the...

MV Weekly Market Flash: Growth Markets and False Dawns

We have been in a growth market environment since March this year, when the S&P 500 recaptured and surpassed its previous record high of 1565. Is this going to become the next macro growth market – only the third since 1954 – or will history record it as yet another...

MV Weekly Market Flash: How Now, Low Dow?

“The market was up (or down) today,” says the financial news anchor. Almost invariably that comment will be followed by the daily performance numbers for the Dow Jones Industrial Average, and maybe also the S&P 500 and/or the NASDAQ Composite Index. Those three have become a kind of holy trinity...

MV Weekly Market Flash: Market Mind Games

What is a stock index? Essentially, nothing more than a relationship between the aggregate earnings of a group of companies and the price which investors are willing to pay to purchase those earnings. That relationship is expressed in the price-to-earnings (P/E) ratio. If XYZ Company’s net income for the last...

MV Weekly Market Flash: Next Up: 3Q Earnings

The depressing Washington sideshow is certainly not over. It appears that we have at least another six weeks of empty rhetoric and vainglorious posturing to endure while policymakers search for a clue about how to run the government and pay for things. But investors, weary of this unbecoming spectacle, are...

MV Weekly Market Flash: Event Risk…and Relief Rallies

In the past three years, event risk has become a dominant paradigm in market performance. We have seen the Eurozone crisis, political dysfunction in Washington, and the occasional geopolitical flare-up send markets into a brief, sometimes deep contraction. These events have then been followed by the other dominant paradigm of...

MV Weekly Market Flash: The Curious Case of the Volatility Gap

Last week we wrote about “taperphobia” in the wake of the Fed’s decision to back off from plans to start reducing the size of its QE3 monetary stimulus program. After that announcement on September 18, the S&P 500 jumped 1.2%, and then gave back all those gains and more over...

MV Weekly Market Flash: Taperphobia

Sapiens est, qui omnia pacata mente tueri potest (Wise is the person who can regard all things with a calm and tempered mind) With apologies to Lucretius for the slight paraphrasing of his great insight from “The Nature of Things”, it would be nice if there were more calm and...

MV Weekly Market Flash: Steady Tack into Taper Week

By the end of the business day next Wednesday we will know more than we know today about what specific course of action the Fed plans to take – if any – to begin the process of weaning markets off the QE drug to which they have been hooked up...

MV Weekly Market Flash: The Fed’s Jobs Dilemma

Investors and market pundits call it “Jobs Friday” – the first Friday of every month when the Labor Department releases a batch of data about the previous month’s employment trends. The one number that gains the most chatter is the headline unemployment number, but that is just one piece of...

MV Weekly Market Flash: Thirty Days Has September

April may be the cruelest month for those cutting a mid-month check to Uncle Sam, but for investors it’s another 30-day month – September – that comes around every year to spread misery. Right? So say many of the market pundits spouting their wisdom on CNBC. We say: Not so...

MV Weekly Market Flash: The Era of Glitches

“Be careful about what you wish for. You might get it”. Since the late 1980s the world’s financial markets have undergone a radical democratization, opening the door for retail investors even of modest means to access markets and assets previously the exclusive domain of the very wealthy, at a steadily...

MV Weekly Market Flash: The Inflation Question

The latest data points on US inflation trends reminds us once again that the much-anticipated road to rising interest rates is likely to not be anything resembling a predictable, linear trajectory. The July Producer Price Index, which measures price trends at the wholesale level, edged up 0.1% for a 1.2%...

MV Weekly Market Flash: Is The “China Turn” At Hand?

The world’s second largest economy has influenced many asset markets beyond its own borders this year, from emerging markets equities to energy and industrial materials commodities. Much of that influence has been negative. The MSCI Emerging Markets index was down -8.4% for the year to date as of August 8,...

MV Weekly Market Flash: The Dog Days…and Beyond

Volatility has been conspicuously absent from asset markets for most of 2013. Even during the brief pullback from late May to late June volatility levels didn’t come anywhere near where they have been during other flashpoints over the past several years. It’s been an unusually calm summer – but whether...

MV Weekly Market Flash: The Vanishing Act of Low Correlations

Hedge funds are back in the news this week. The latest Master of the Universe to be scorched by the sun and come crashing back to earth is Steven Cohen. Cohen, the sole proprietor of $15 billion hedge funds SAC, is in the crosshairs of a major insider trading scandal...

MV Weekly Market Flash: Equities Fever

Sentiment in risk asset markets has taken a sharp turn for the better in 2013 year to date, and the bulls are making a rather compelling case that the good times may roll on for awhile yet. The S&P 500 surged to yet another record level on a jetstream-strength tailwind...

MVCM Quarterly Newsletter: June 30, 2013

Second Quarter Review: Credits, Currencies and Commodities The second quarter of 2013 saw a 5.7% price correction in the S&P 500, but that was a sideshow compared to the main event. A dramatic surge in credit yields started in early May and peaked as the calendar was transitioning to the...

MV Weekly Market Flash: Bernanke to Market: Party On

The phrase “BlackBerry Panic” gained currency back in the dark days of 2008. It was a wry, very apt touchstone for how policymakers kept one nervous eye on the flashing screens of their smartphones while trying to figure out how to save the financial world from ruin. Well, it’s 2013...

MV Weekly Market Flash:The Bond Bear’s Shadow

They conferred in elegant conference rooms in the classical-style École des Beaux Arts building that houses the Federal Reserve Board, to discuss the problems created by years of pumping cheap money into the economy. The need for that cheap money is no longer a present day reality, they said. In...

MV Market Flash: Hard Times for Hard Assets

Bond rates are rising. This week the Fed met and the world learned the true meaning of “tapering”: not a slip of the tongue, but a stated willingness on the Fed’s part to contemplate a phasing out, over time, of the QE programs that have kept assets afloat through the...

MV Weekly Market Flash: Rehab? Investors Say No, No, No

The doctors may be at odds about how and when to start reducing the morphine treatment, but the patient is having none of it. When Dr. Bernanke chose to use the word “tapering” during the Fed’s May 22 meeting, carry trade investors of all stripes heard the flow of their...

MV Weekly Market Flash: Japanese Equities Fall…and Fall…And Fall

For most of this year Japanese equity markets have been on a roll, but the unusual run of good news for chronically underperforming Japan did a massive about-face a couple weeks ago. On May 23rd the Nikkei 225, a broad index of Japanese stocks, took a 7.3% plunge from the...

MV Weekly Market Flash: From “Risk On, Risk Off” to “Risk Here, Risk There”

For the past three years the dominant paradigm in investment markets has been “risk on, risk off”. You know – if it’s Tuesday it must be gold and the Japanese yen, but come Thursday animal spirits are back and it’s full-on into small caps and frontier equities. Over this time...

MVCM Weekly Market Flash: The Pullback that Still Isn’t

As of the market close on Wednesday of this week the S&P 500 had appreciated by more than 22% in price terms from November 15, 2012. What’s special about November 15? It was the date when the market pullback that began a couple months earlier reached its low point. From...

MVCM Midweek Market Comment: Apple Embraces the Earnings Culture

Tech has always been a bit different. Among the staid dark suits of other industry sectors like finance or manufacturing, tech likes to play the part of disruptive rebel. Tech companies live to upend the apple cart (as it were); to invent new paradigms that we all – whether willingly...

MVCM Midweek Market Comment: A Tale of Two Ex-Havens

“Safe haven” is the term we use to describe the things in our portfolios that help us sleep better at night. The imagery is rich – amidst the violent tempests of unruly seas there are quiet, sheltered harbors that protect us from Poseidon’s ravages. Or so the thinking goes. Here...

MVCM Quarterly Newsletter: March 31, 2013

Record Finish to a Strong Quarter… The first quarter of 2013 was one for the record books. Like a sprinter who summons up that last burst of energy in the final ten meters of the 100 meter dash, the S&P 500 leaned in and closed out the quarter at an...

MVCM Midweek Market Comment: What’s Up with Emerging Markets?

Investors as of late have been heartily cheering the rally in US equities that (at least until today’s bad reaction to the latest job numbers) has propelled the Dow Jones Industrial Average and the S&P 500 into all-time record high territory. Now, it often happens that when the animal spirits...

MVCM Midweek Market Comment: Cyprus: Fury Unites the 1% and the 99%

Cyprus is a tiny country by most measures, with a population of just over 1.1 million. Most Cypriots who have local bank accounts hold well under €100, 000 in those accounts. They are Cyprus’s own 99%. Russia is a very large country, with a population over 140 million. A tiny...

MVCM Midweek Market Comment: Catalysts

For several weeks now – really since the torrid pace of the January rally slowed to a more measured gait in February – market observers have spoken of the absence of a catalyst to move things more definitively in one direction or another. This week we got, if not a...

1527: Hello, Goodbye?

Will there be a party? Probably not – 1527 is not the S&P 500 all time high water mark. But it is a significant milestone for longtime market observers because it was the peak achieved during the technology bubble; to be specific, the closing price of March 24, 2000. Putting...

MVCM Midweek Market Comment: Flirting With the Bulls

As of the February 6 close the S&P 500 was about 6% higher for the year to date in terms of price appreciation. The Dow Jones Industrial Average was ahead by 6.7% for the same time period. Interestingly, both averages are very close to their all-time high water marks. And...

2013: The Year Ahead

The world has changed considerably since 1982, the year when the last macro growth market in equities began (it ended in March 2000). The balance of global economic power has shifted. Vibrant middle classes have emerged in some parts of the world, and appear to be in decline in others....

2012 Year in Review: The Year of Living on the Edge

On the surface it seems we should have little to complain about and lots of good cheer to take us through the holiday season and into the New Year. U.S. equity markets have been in double digit positive territory for most of the second half of the year. Broad market...

MVCM Midweek Market Comment: Happy Birthday to You, ETP’s!

This January the first exchange-traded fund (ETF) in the U.S. – now called the SPDR S&P 500 – will celebrate its 20th anniversary. Exchange-traded products (ETPs), including both exchange-traded funds and exchange-traded notes (ETNs), offer a multitude of benefits to investors including lower fees and direct exposure to a wide...

MVCM Midweek Market Comment: Reasons to be Thankful

Every day we watch what is going on in the world and are constantly given reasons to be concerned, stressed and worried about our immediate futures and beyond. As we get ready to celebrate this traditional holiday, it is a good time to remind ourselves that we do indeed have...

Election’s Over: What Happens Next?

On September 14 of this year the S&P 500 ended the day at 1465, representing its 52-week high closing point. This turned out to be peak – at least so far – of a synthetic rally that had begun earlier in the summer. We call it “synthetic” because the rally...

MVCM Quarterly Newsletter: September 30, 2012

Nowhere (Not) To Hide… A scan of the performance of broad-market benchmark indexes in the third quarter reveals what would seem to be a quality problem – there simply were not that many places where an investor could go and not make money. What a difference from the third quarter...

Midweek Market Comment: Transition: Synthetic Rally to Organic Growth?

At the end of the third quarter the S&P 500 was perched at 16.44% year to date, a stark contrast to where we were at the same time last year at -8.68%. Driving this rally, as we have noted in a handful of these market commentaries, have been the policy...

Midweek Market Comment: Elections, Taxes and Investment Strategy

With less than one month to go until Election Day the political narratives are in full swing. Dead-center in the crosshairs of the economic debate is the subject of taxes: what will happen to the Bush-era rates on income and capital gains, what about the payroll tax, Medicare contribution taxes...

Midweek Market Comment: QE3: The Two Key Questions

Note: Our Midweek Market Comment is actually an end of week comment this week, in order to focus on the Fed’s latest quantitative easing announcement made Thursday September 13. The odds seemed to be on something happening, and the chorus of conventional wisdom grew louder as the week went on...

Are Equities a “Cult”?

Thirty three years ago, in August 1979, Business Week magazine trumpeted the demise of the stock market in an article titled “The Death of Equities”. Somehow it always seems that these types of grandiloquent proclamations are perfectly timed…to be spectacularly wrong. The Business Week cover came before the longest macro...

Inside the Libor Scandal: What It Means and Why It Matters

What is Libor? It’s a word that has been much in the news over the past several weeks. It’s reasonable to imagine that there are more people in the world who know that there is a scandal involving Libor than there are people who know what Libor actually is, and...

MVCM Quarterly Newsletter: June 30, 2012

False Dawns, and Chasms Averted (Again) As it would happen, the S&P 500 hit its high for the year to date right at the end of the first quarter, on March 31. Almost as if on cue the second quarter ushered in the third act of that staple of spring...

Liquidity, Credit and Solvency

“You only live once” has become the popular catch phrase among the young crowd this year. YOLO – as the ubiquitous t-shirts proclaim on the Ocean City boardwalk where high school seniors from the DC area flock en masse for the annual rite of passage known as Beach Week. Back...

The Anatomy of an IPO

The Holy Grail Those three letters have a magical effect. I-P-O, the Holy Grail that impels impassioned entrepreneurs to pursue their dreams and create the next great thing that will revolutionize the world, joining the storied pantheon of stars gone public from Gordon Moore to Steve Jobs, Bill Gates, Jeff...

MVCM Quarterly Newsletter: March 31, 2012

Rare Glimpse of the Old Normal There was relatively little to complain about for the first three months of 2012. A significantly warmer than average winter had people out of doors in their spring clothing all up and down the Eastern Seaboard. The investment climate was similarly temperate and forgiving....

First Quarter Flowers, Future Showers?

The first quarter of 2012 will come to a close in just three days, and unless something completely unforeseen crops up between now and then (always a possibility, mind you), major market indexes will finish in positive low-to-mid teens territory. The Russell 3000 index currently stands just above 13% while...

All Over Again?

In the fourth quarter of 2010 equity markets began a rally that carried into and beyond the first quarter of 2011. The primary catalyst for that rally had been the implementation by the Fed of a new quantitative easing program in November – actually the rumors for QE2 began in...

2012: The Year Ahead

In 1989 a political scientist named Francis Fukuyama wrote an article titled “The End of History?” in the international affairs journal The National Interest. Due no doubt to the timing and the provocative title, the article became a must-read among the foreign affairs chattering classes and led to a 1992...

2011: The Year in Review

Much of what happened in investment markets over the course of 2011 made very little sense to the thinking person, but the year appears to be ending in a way that we think is fitting – that encapsulates all he weirdness of the past twelve months. On the first trading...

Directionless Volatility

This is the second installment of the MVCM Postmodern Finance Series, a new thought leadership series providing analysis and commentary on the changing landscape of global markets, economies and national fortunes. The two most noteworthy characteristics of markets in 2011 are these: first, they have been more volatile for a...

MVCM Quarterly Newsletter: September 30, 2011

3Q 2011 In A Word: Dysfunction 3Q 2011 is likely to earn a place in the annals of financial history. Not because of the magnitude of difference between the market close of June 30 and that of September 30 – the S&P 500 lost 13.9% for that period, bad but...

October Surprises

The S&P 500 briefly entered bear market territory on Tuesday, extending the magnitude of its losses to more than 20% from its 52-week high point. Downside momentum accelerated through the mid-afternoon hours, as has become the custom. Then, in the mere blink of an eye, the trajectory reversed course, bravely...

The New Permanence of Volatility

This is the first installment of the MVCM Postmodern Finance Series, a new thought leadership series providing analysis and commentary on the changing landscape of global markets, economies and national fortunes. It’s the same thing every day. Actually it starts before bedtime the night before. Japan opens just about when...

A Healthy Dose of Agnosticism

With all the headaches that peripheral countries in the Eurozone have been causing in recent months it is perhaps appropriate that we start off this commentary with a lesson in the Greek language. “Agnostic” has a loaded meaning when rendered into the English language – it generally is used in...

MVCM Quarterly Newsletter: June 30 2011

Much Ado in All Directions The S&P 500 ended the second quarter at 1320, not too far away at all from where it began the period at 1332 on April 1. In between the market went up, it went down, risk went on, risk went off. Market performance in 2011...

Special Comment: Postmodern Portfolio Theory

Modern Portfolio Theory – the intellectual framework that underlies the methods by which the vast majority of investment managers and advisors execute decisions on behalf of their investing clients – is approaching its 40th anniversary. In a world where anybody with $1000 and an online trading account can buy once-exotic...

Summertime in Wonderland

It’s a sign of the world in which we live. On a day when the political conversation in the swamplands alongside the Potomac River is all about the debt ceiling, and the nasty powder keg that will blow up in the face of the global capital market if US policymakers...

Health Check on the Economy

It never makes sense to go for too long without a health check, neither for a person nor for an economy. Now, we all know that how healthy we are on any given day depends on some things that are part of the here and now – have we been...

Treasuries and the Rating Agencies: Newsworthy or Non-Event?

In the profession of journalism there is a time-honored saying: Does a story qualify as “dog bites man” or “man bites dog”? The idea being, of course, that the former happens all the time and is not worthy of a second glance, while the latter is most unusual and probably...

MVCM Quarterly Newsletter: March 31 2011

A Quarter of Fury and Fortune In our Annual Market Outlook at the beginning of 2011 we expressed the view that the most likely thing we could count on for the year ahead was volatility. The first quarter certainly did not disappoint on that front. Ongoing questions about the nascent...

X-Factors Run Amok: An Uncertain and Volatile Landscape

There shall not be found among you any one that…useth divination, a soothsayer… Deuteronomy 18:10 Over the centuries a vast amount of human effort and resources has gone into the forecasting industry. We humans, of course, have a basic, deep-seated desire to know the future – and have always shown...

The Year Ahead: Annual Market Outlook 2011

“Reality” is a relative term. Things that appear solid and permanent – all the material objects in the world around us – are mostly empty spaces when viewed at sub-atomic levels. If an atom – consisting of a nucleus of protons and neutrons at its core and electrons orbiting in...

End of the Free Lunch? A New Era for Fixed Income

“Money for nothing…” begins the reprise of the classic Dire Straits song about fame in the age of MTV. If we were to relate that tune to the investment climate of the last ten years or so we would slightly modify the ending: “…and your risk for free”. There has...

Portfolio Migration (1): A Strategy for the New Economic Landscape

This is the first in a series of articles on the implications of the changing shape of the world economy for investment management and portfolio asset allocation. Tectonic dislocation of the earth’s plates can be an unpleasant experience for people caught along the fault lines. Those that survive must adapt...

MVCM Quarterly Newsletter: September 30 2010

Thirty days has September… As the market lurched around in August, mostly downwards on low volume and a drumbeat of dour economic data points, it would have been easy to conjure up fears of a September meltdown once all the money came back from vacation. Such fears were sent packing...

Quantitative Easing and the Expectations Game

As this long summer of torpid heat, freakish storms and persistent economic jitters enters the home stretch, the term “quantitative easing” is back in the news alongside the pre-Labor Day back-to-school sales, college football predictions and the rest of the usual seasonal habits and rituals. Quantitative easing, or QE, is...

The Growth Paradox: GDP, Businesses and Consumers

For once, it seems, you actually could attribute the stock market’s performance to the day’s big news item. On Friday morning we learned that US GDP growth slowed to 2.4% in the second quarter, and at the end of the day the market was flat. You get the sense that...

The Apple of Our Eyes

The market has been going sideways for much of the past two months – sideways with extreme lurches up and down reflecting the persistent uncertainty among investors about where the global economy is headed. Are Greece and Spain going to render the Eurozone a failed experiment in unifying distinct national...

MVCM Quarterly Newsletter June 30 2010

The Highs and the Lows… The second quarter saw equities markets reach up and set new 52-week highs, with the S&P 500 closing out at 1217 on April 23. By the end of the quarter the index was flirting with the 1000 level and technical bear market territory (defined as...

The 3:30 Club

It’s 3:30 p.m. Do you know where your assets are? Every evening news commentator will dutifully report the daily close on Wall Street, usually giving the point and percentage gain or drop at the closing bell for the Dow 30 Industrials, the S&P 500 and the NASDAQ Composite. These days...

In the War Room

It is 3:00 a.m. and all is quiet in the sleeping hamlets of Washington DC, New York City, and Palm Beach. But on the other side of the world markets are in real-time freefall: Japan’s Nikkei down another 3%, Hong Kong and Shanghai extending their double-digit losses for the year-to-date....

Volatility, the Sequel

If you’re kayaking through rough waters and suddenly you find yourself out of the rapids, gently gliding along a calm sun-speckled surface, you may have one of two reactions: (a) take a deep breath, lay your paddle down and close your eyes to savor the warmth and peace of the...

All-American Bull

The news of this Monday morning could be seen as a brief vignette for the tenor of the year as a whole. In the US another set of data points supports a positive market case that seems to be getting better by the week - the “fits and starts” theme...

MVCM Quarterly Newsletter March 31 2010

Seize the day… —-because one hath no better thing under the sun, than to eat, to drink and to be merry… -Ecclesiastes 8.15 Come, let us go while we are in our prime; And take the harmless folly of the time. -Robert Herrick “Corinna’s Going a-Maying” An unusually harsh winter...

View from the Kayak: More “Starts” than “Fits”

We’re in the kayaks again, navigating the twists and bends that comprise the economic landscape of the first quarter 2010. As the quarter draws to a close we are reminded of the language we used to describe the year in our Market Outlook back in January: Fits and Starts. That...

The Price of Illusory Growth

How the mighty are fallen, seemingly by the day. Whether the personal scandal of some prominent celebrity in the field of sports, politics or the media establishment, or the business malfeasance of a trusted corporate name with blue chip pedigree, we citizens are the unfortunate witnesses to ceaseless revelations of...

The Year Ahead: Annual Market Outlook 2010

Dawn of a New Decade: Fits and Starts Apocalypse (Not) Now One year ago the world economy teetered on the edge of the abyss as the financial system upon which it was built appeared headed for systemic collapse. Instead, the system was (at least for the time being) saved by...

The Path to Tomorrow

Twelve months ago the world was falling apart. In September 2008 Lehman Brothers collapsed and it seemed that the rest of the financial world was following close behind: AIG, Merrill Lynch and then the entire swathe of what had once been known as the “money center” banks: Citigroup, Bank of...

Bubbles in Wonderland

Recession-Plagued Nation Demands New Bubble to Invest In                                    -The Onion, 14 July 2008 The headline in the satirical newspaper The Onion was funny when it came out just a bit over a year...

Mind the Gap

Anyone who has ever ridden the London Tube can relate: the eel-like form emerges from the tunnel’s blackness into the dim hues of the platform area and creaks to a loud stop in front of the passengers assembled at Covent Garden, or Regent’s Park or wherever. A deep, stentorian English...

Sunrise over Asia

Katrina Lamb writes from Southeast Asia, where she is taking stock of how this part of the world is holding up under the strains of the global economic crisis. The 32nd floor coffee lounge of the Shangri-La Group Traders Hotel in Kuala Lumpur provides a sweeping panoramic view of the...

The Year Ahead: Annual Market Outlook 2009

Tectonic Plates, Colliding More than a few people today are no doubt feeling like Dante in those memorable opening lines of “The Divine Comedy”: lost, looking for the way back home, and fearful of what lies in store. The good news, of course, is that after descending to the depths...

Of Mice and Managers

As investors, we love to believe in market wizards who hold the secret to making serious money. In fact there is no such secret, but admitting it is like abandoning a childhood faith. -Jane Bryant Quinn, Washington Post 12/21/2008 There is no secret ingredient. -Mr. Ping, “Kung Fu Panda” 2008...

We’re Here, What’s Next?

Economy, Economy, Economy On the evening of Election Day 2000, as candidates Al Gore and George W. Bush headed towards that inconclusive night and interminable recount battle, NBC’s Tim Russert famously held up a little white board with “Florida, Florida, Florida” scrawled hastily in black magic marker, underscoring what that...

The Limits of Analysis

It’s not different this time. It’s different every time. No two market environments are ever the same. That’s a fact born of the reality of markets – they are complex places where unpredictable things happen all the time for reasons that are elusive and ever-changing. It’s something of an uncomfortable...

Market Tectonics, Balance Sheets and You

The financial sector of our economy is going through momentous, necessary changes and will look very, very different on the other side of this market meltdown. Meanwhile life, economic and otherwise, goes on. These are two things worth keeping in mind while the tone of public discourse and commentary escalates...

As Goes the Financial Sector

It’s still too early to start writing the historical perspective on this decade – the 00s or the ‘Oughts or the Decade of Nought? It’s a fairly educated guess, though, that when the talking heads of the future turn their attention back to our present the word “bubble” will percolate...

The Bubble Decade

It’s still too early to start writing the historical perspective on this decade – the 00s or the ‘Oughts or the Decade of Nought? It’s a fairly educated guess, though, that when the talking heads of the future turn their attention back to our present the word “bubble” will percolate...

Bulls, Bears and Opportunities

Investors buy stocks because they think they will outperform bonds over the long term despite higher short-term volatility. That’s certainly been true for the past 25 years or so. From August 1982, when the stock markets hit their low points for that year, through April 2008 the annual average total...

The DNA of an Economic Crisis

The week of March 10-16 has already secured its place in the annals of US financial history. By comparison with what has happened over the past eight days nothing in the past 30 years – not the market shutdown after September 11, 2001, not the bursting of the tech bubble...

Sideways Markets and the V-Word

In our 2008 Market Outlook back in January we opined that the defining word of the year was likely to be volatility. Not Bull, not Bear, but Volatility. Well, so far this year the level of volatility is truly eye-popping. On 20 of the 36 trading days from January 2...

The Year Ahead: Annual Market Outlook 2008

Bad Moon Rising Volatility returned to world asset markets in 2007 in a major way. The S&P 500 finished the year with a total return of 5.49% and risk (measured by standard deviation) of 9.66%. By comparison in 2006 the S&P 500 returned 15.79% with a bond-like risk level of...

When Fear Takes Over

On October 9, 2002 the S&P 500 index hit 777, its low point for the 2000-2002 bear market. That was 49% off the high of 1527 reached on March 24, 2000. The technical definition of a bear market on Wall Street is when stocks fall 20% or more from their...

Economy versus Credit Markets, Round II

Every morning we come into the office, switch on the computers and let the guessing game begin. What will be the top-line news for the day? Reports trickle in from the credit markets – another bank is disclosing more bad loan exposure and its CEO is getting ready to “spend...

What About the Fundamentals?

As we write this the stock market has recovered to the previous high points set back on July 19th. As we start the 4th quarter – typically a period of strong seasonal performance – a new conventional wisdom is quickly taking hold. The CW says that the credit crunch is...

The Prudent Man and Mr. Market

“Those with responsibility to invest money for others should act with prudence, discretion, intelligence, and regard for the safety of capital as well as income.” Judge Samuel Putnam, Harvard College versus Amory, Massachusetts (1830) That time-tested quote is one of the foundations on which the investment profession in our country...

A Day in the Kayak

You have heard us refer in these e-updates to the image of being in kayaks, paddling down the river alert to what may lie around the next bend. To properly reflect the realities of current market conditions we need to change the image slightly from river to sea kayaking –...

Bad Medicine and Good Health

How healthy are you? When we ask that question it could have two meanings. The first might be: how are you feeling today? Are you doing okay or a little run down? The second could be: how healthy are you generally? Are you always in the doctor’s office or do...

Supply and Demand

Here’s a quick economics lesson for all those who didn’t take Econ 101 in their freshman year of college. The price of any product or service in a market economy is a function of the amount of that product or service available – the supply – and the extent to...

Market Timing’s Siren Song

In Greek mythology the Sirens were sea deities who lived on an island surrounded by rocky shoals and dangerous currents. The Sirens would play enchanting music to lure the crews of passing ships, who would of course perish on the shoals as they approached. In Homer’s epic The Odyssey the...

Road to Where?

Where are we going? The multitudes are asking the question with some urgency these days. Indeed, the topography of our investment map looks a bit rocky. Last week the S&P 500 closed just about 5% off its 52-week high set back in February. So far this week the trend has...

Of Goldilocks and Gravity

“When Wall Street sneezes the world catches cold” is what the market old-timers say. This morning we woke up to the reality of a new world in which a nasty winter flu can blow in from places far away from Wall Street – like the icy wind from the steppes...

The Risk Disconnect

People don’t like risk. Yes – we know that risk can bring reward – no pain, no gain as they tell us at the gym while we’re trying valiantly to keep to our New Years resolutions. Still, when it comes to our portfolios most of us prefer to think about...

The Year Ahead: Annual Market Outlook 2007

2007 is upon us, and though the “in with the new” sentiment of the new calendar year does not necessarily portend the onset of new trends in the markets, it is nonetheless a good time to take stock of what may lie in store ahead. Taking into account as we...

Mean Reversion and Market Tectonics

In finance we often talk about mean reversion, otherwise called central tendency or – less pretentiously – what goes up comes back down and vice versa. It’s sort of a comforting thought to think that market excesses or anomalies correct themselves and revert to established longterm trends – maybe not...

Of Managers and Markets

Heading into the fall holiday season we think it is fair to say that – on the surface at least – the markets have given us more treats than tricks so far. As of October 10th the S&P 500 had returned 10.02% year-to-date and most of our asset classes have...

Pausing in the Corridor

The Fed took a pause from – or perhaps even brought to an end – the longest sustained rate increase campaign since data on the Fed funds rate started being recorded in 1954. Meanwhile the stock market continues to drift through the dog days of August in the narrow corridor...

A Tale of Two CWs

That sound you heard a few days ago was a collective sigh of relief from investors that the second quarter was finally over. It was not a fun time to be long in just about any given asset class – there was nowhere to hide. The S&P 500 lost 1.44%...

Nowhere to Hide

The merry month of May was anything but that for most investors, and the markets have kept humming the same dismal tune going into June. Both the Dow and the S&P 500 have given up over 3% since May 1 (through June 6) while the NASDAQ composite has lost twice...

Sprints and Marathons, Exuberance and Endurance

There has been plenty of exuberance in the markets thus far in 2006, following one of the strongest first quarter performances in recent years with several asset classes returning double digit returns for the first three months. As we move towards the end of the first half of the year,...

What Does It All Mean?

You frequently hear from me that the short term is unknowable. In an earlier e-update this year we noted that the markets were punished in the final week of 2005 when investors took note of the (slightly) inverted yield curve. In the past this rare occurrence had been a predictor...

Realignments on the Horizon

March and October are two months in the calendar year when many investors hold their breath going in and breathe a sigh of relief when they make it through with no major negative outcomes – witness the Dow Jones in October of 1987 and 1989 and the NASDAQ collapse that...

X-Factors

“Nothing is certain except death and taxes” goes the old maxim. We would add one more notion to this pantheon of certainties: at the beginning of any given year, we do not know what subset of all possible phenomena – call them X-factors – will have the biggest impact on...

In With the New

A very happy New Year to one and all! The markets have opened the year with effervescence befitting a fine Veuve Cliquot, this after most major US indices fought their way to hold gains for the year as they reached the 2005 finish line. The Dow didn’t quite make it,...