MV Weekly Market Flash: Hard Landing for Retail
Read More From MVIt turns out, apparently, that Netflix was the canary in the coal mine. Recall that a few weeks ago the streaming giant stumbled after an earnings call revealed a decline in new subscribers for the first time in a decade. Netflix stock, one of the highest-flying names of the last decade, plummeted by almost 70 percent in a matter of hours. The concern was that as inflation picks up, consumers might finally be starting to make decisions that result in dropping some items from their monthly budgets, and streaming services might just be one such thing. Not So Defensive Fast...
Read MoreMV Weekly Market Flash: The Pain Trade
Read More From MVA lot of things happened this week, and it has been a challenge to try and connect the moving parts. Stocks are on track to register their sixth straight week of declines, for the first time since the confluence of the Eurozone financial crisis, credit rating downgrade of US Treasuries and a debt crisis debacle in Congress sent equities reeling in the late summer of 2011. The cryptocurrency market appears to be in meltdown mode. And nominal junk bond yields have almost caught up with inflation (not quite, though, as the ICE BofA High Yield index is at 7.4 percent...
Read MoreMV Weekly Market Flash: Risk Is Not a One-Way Street
Read More From MVIn our investment committee meeting this past Tuesday the discussion came, as one would expect, to the Fed and the likelihood that it would be raising the Fed funds target rate by 0.5 percent at the Federal Open Market Committee meeting this week. What effect would that have on the market? Oh, a few spasms in the immediate aftermath of the Wednesday afternoon press conference, as per usual, but in the end probably not much of a net move one way or the other. The Intraday Cyclone Our prognostication was in one sense not too far off the mark: by...
Read MoreMV Weekly Market Flash: The Mixed Message on GDP
Read More From MVOn Thursday morning the Bureau of Economic Analysis reported that first quarter GDP fell by 1.4 percent (on a quarter-to-quarter, annualized basis). The S&P 500 rose by 2.5 percent on the same day. That may sound odd, but in fact the market largely ignored the GDP story and focused instead on a crop of earnings reports from large tech companies that, on balance, came in better than expected. This tells us a couple things: first, how the market responds to macroeconomic data often has little to do with whether you might think the number in question is “good” or “bad”...
Read MoreMV Weekly Market Flash: Earnings Strong, With a Notable Exception
Read More From MVThere have been a couple different stories about corporate earnings out there in the mediasphere this week. You probably know one of them, especially if you yourself happen to own shares of Netflix, which are worth quite a bit less at the end of the week than they were on Monday morning. You may not have heard the other story, though, which is that with a little over 100 S&P 500 companies having reported so far their first quarter results, the consensus estimate for earnings per share growth for the quarter is now 6.6 percent, up from 4.5 percent just...
Read MoreMV Weekly Market Flash: What Peak Inflation Does (and Doesn’t) Mean
Read More From MVIf you were following the flow of economic data releases this week you probably took note of the Consumer Price Index release on Tuesday, from the Bureau of Labor Statistics. The CPI, of course, has been the talk of the town within the last year as inflation has soared to levels not seen since the early 1980s. And this month was no exception; the March headline CPI, including those volatile categories of energy and food items, jumped by 8.6 percent compared to March 2021 – a new 40-year record. You may have also noticed that stocks rose quite briskly on...
Read MoreMV Weekly Market Flash: Cereal Problems
Read More From MVYou have probably noticed that prices at the grocery store are higher than they were a year ago, but some, like cereal and sunflower oil, are a whole lot higher. For most of us in developed Western countries that is an annoyance, but a more or less bearable one. Not so in other parts of the world. On average, food costs account for around seventeen percent of consumer spending in the developed world, but in sub-Saharan Africa, for example, around 40 percent of household spending goes towards food products. That’s a big problem when you see a chart like the...
Read MoreMV Weekly Market Flash: The Jobs Question, Short-Term and Long-Term
Read More From MVIt’s the first Friday of the new month, which means it’s time for another jobs report from the Bureau of Labor Statistics. This month, unlike some in recent memory, was fairly uneventful. The headline unemployment rate ticked down to 3.6 percent, just a tad higher than the 3.5 percent rate in February 2020, right before the pandemic hit. That 3.5 percent, in turn, was the lowest level in more than 50 years. The payroll gains number, which economists tend to focus on more closely than the unemployment rate, was 431,000, a bit lower than expected but still healthy in relation...
Read MoreMV Weekly Market Flash: Mixed Messages from the Bond Market
Read More From MVIf you want to know what’s in store for stocks, pay attention to the bond market. That’s something we tell our clients repeatedly. Interest rates have an outsize effect on equity valuations. The shape of the Treasury yield curve contains all sorts of information about economic expectations. Credit risk spreads signal how much investors are demanding for taking on credits with a higher risk of default. In effect, the bond market is supposed to be the sober, thoughtful repository of market intelligence while the stock market’s day-to-day mood swings reflect a bundle of flighty emotions and mindless groupthink. Dangerous Curves...
Read MoreMV Weekly Market Flash: Pullbacks Long and Short
Read More From MVBelieve it or not, we’re only a couple weeks away from the end of the first quarter. And what a quarter it has been, the lowlight of course being the unthinkable devastation and human misery resulting from an unprovoked war of aggression by Russia on Ukraine. In addition to what is arguably the single most significant geopolitical development since the fall of the Soviet Union, though, this quarter has also witnessed the highest levels of inflation in the world economy in more than forty years. Not to mention the persistence of the Covid-19 pandemic past the Year 2 milestone. That’s...
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