MV Weekly Market Flash: A Brief History of Markets and Shutdowns
Read More From MVThe US stock market has been in one of those glass-half-empty moods for some weeks now, down nearly seven percent from the year-to-date high reached on July 31. There are several objects in the grab bag of negative news offered by the financial press to explain Mr. Market’s current malaise, one of them being the seemingly inevitable government shutdown about to happen. Given that the shutdown technically goes into effect on Sunday night (unless Congress has a magic trick to reveal that nobody has seen yet), this would seem to be a good time to take a closer look at...
Read MoreMV Weekly Market Flash: Wild Times For Safe(?) Assets
Read More From MVBonds for safety and equity for growth – this is the basic formula for long-term investment planning, the essence of portfolio construction around a client’s specific return objectives and risk tolerance. With that formula in mind, take a look at the chart below. Without looking at the labels, which one of the two price performance lines would you think represents a common stock index, and which depicts the yield for 10-year Treasury securities? You would intuitively think that the line that moves with less up-and-down variance would be the one representing the safer asset – the one used as a...
Read MoreMV Weekly Market Flash: Oil, Inflation and Consumers
Read More From MVThe Federal Open Market Committee will meet next week to determine whether to raise interest rates again. The broad consensus among those who pay attention to the FOMC’s doings is that they will not raise rates. The inflation measure the Fed pays attention to is more than two percent lower today than it was in September last year (4.39 percent compared to 6.64 percent, expressed on a year-on-year basis). That’s still more than two percent higher than where the Fed wants inflation to be, but it has been moving steadily in the right direction. Holding rates higher for longer will...
Read MoreMV Weekly Market Flash: Petulant China
Read More From MVThis should be the best of times for Apple, the world’s most valuable company with a $2.8 trillion market capitalization. The company is ever so close to knocking rival Samsung off its perch as the leading seller by volume of smartphones. Next week will see the launch of the iPhone 15, the company’s newest model, along with all the overcaffeinated hype that accompanies any Apple new product launch. And even in an environment where overall smartphone sales by unit are set to decline for a second consecutive year, Apple continues to set revenue records in its Services segment, which includes...
Read MoreMV Weekly Market Flash: Not The Cruellest Month, Perhaps
Read More From MVApril is the cruellest month, according to T.S. Eliot in the opening line of “The Waste Land.” Investors would beg to differ and point instead to September, which historically has been the worst-performing calendar month of the year for US equities. The S&P 500 posted losses in each of the past three Septembers: minus 9.3 percent in 2022, minus 4.8 percent in 2021 and minus 3.9 percent in 2020. Well, today being the first day of September, it seems like a good time to ponder what might happen in the month ahead. We think there are some good reasons to...
Read MoreMV Weekly Market Flash: The Trade Winds Theory of Markets
Read More From MVThe financial news media likes nothing more than an easy story. Stocks (or bonds) were up (or down) today because of X, X being the single event of the day to describe why the market did what it did. Every so often, that approach works. On September 15, 2008 the S&P 500 fell by 4.7 percent, a giant move for a single day. September 15 was also the day that investment bank Lehman Brothers declared bankruptcy. It was pretty much on target that day to report that “stocks fell by almost five percent because a giant securities firm failed and...
Read MoreMV Weekly Market Flash: It’s Wyoming Week Again
Read More From MVEvery year, for one week in August, our eyes turn to the great state of Wyoming and the delightful resort of Jackson Hole. There, the great and the good from the world’s major central banks gather to hash out the issues of the day and chart a course for monetary policy in the years ahead. The Jackson Hole meetings come at a particularly poignant time this year, because there is a great deal going on in securities markets and the economy at large. We don’t expect there will be much time for the bankers to enjoy the recreational offerings on...
Read MoreMV Weekly Market Flash: A Deflating Week for China
Read More From MVWe have been in this business long enough to remember all the “Japan as Number One” mania of the 1980s. Those were the days when straight-faced financial reporters informed us that the three square miles of the Imperial Palace grounds in downtown Tokyo were worth more than the entire state of California (yes, really). All that nonsense ended on December 29, 1989, the last trading day of that decade, when the Nikkei 225 stock index hit an all-time high of 38,915. Thirty-three years and change later, that is still the all-time high for the Nikkei index, which closed out the...
Read MoreMV Weekly Market Flash: Yields Rise for (Mostly) Non-Downgrade Reasons
Read More From MVA strange thing happened when we came into work on Wednesday morning this week and plugged into the daily news cycle: we learned, as the rest of the world was learning, that the credit rating agency Fitch Ratings, something of a third wheel to the more well-known Standard & Poor’s and Moody’s, had issued a downgrade on US government debt. Fitch was of course the second US rating agency to deprive Treasury securities of the coveted triple-A rating, fully twelve years after the S&P shock downgrade took place in August 2011. This was not telegraphed in any meaningful way, nor...
Read MoreMV Weekly Market Flash: End of the Cycle?
Read More From MVIt may be, or it may not be, the last time the Fed raises interest rates in the monetary tightening cycle that began in March 2022. After Wednesday’s FOMC meeting, when the Committee voted unanimously to raise rates by another 0.25 percent, we figured the likelihood of another hike at the next meeting, in September, was more or less a coin flip. Then came the second quarter GDP report on Thursday, showing that the US economy grew by 2.4 percent (annualized) from the first quarter, a much stronger showing than expected. Then came this morning’s Personal Consumption Expenditures report, the...
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