MV Weekly Market Flash: Fed Versus Market On Inflation
Read More From MVWhen the yield curve inverted before the 1990 recession, the widest spread between the 10-year and 2-year Treasury yields was (0.43) percent. Ahead of the 2001 recession the curve inverted again, with a maximum distance of (0.46) percent. Before the financial Category 5 event struck in 2008 the inverse spread between the 10-year and the 2-year never got wider than (0.20) percent. With this perspective, what are we to make of the fact that the 10-2 spread today is around (0.70) percent, the steepest inversion any time since the crazy days of the Volcker Fed in the early 1980s? Getting...
Read MoreMV Weekly Market Flash: The Next Big Piece of Tech Real Estate
Read More From MVMoney doesn’t sleep, and neither does innovation. Figuring out how to make the most money from innovation is what technology firms do pretty much all day, every day. In the vast swath of tech innovation that is artificial intelligence, Microsoft has just plonked down a major stake in the ground. It would be fair to say that the multibillion-dollar investment into OpenAI, an artificial intelligence startup and the parent company to ChatGPT, the generative AI program that launched a million thought pieces, has the undivided attention of Microsoft’s rivals in the upper pantheon of the Big Tech kingdom. A great...
Read More2023: The Year Ahead
Read More From 2023:Every year has its expressions – those words or phrases that sum up the fleeting Zeitgeist. Remember “Bridge to the 21st Century?” Probably not, because its day in the sun was way back in 1997, and in any case this century of ours has so far turned out to be quite different from those hopeful exhibits and Fleetwood Mac soundtracks that festooned the National Mall at the beginning of Bill Clinton’s second term as president. But here we are nearly a quarter-way into the 21st century, and one of the defining expressions of our time is “polycrisis.” In 2022 this...
Read MoreMV Weekly Market Flash: Earnings Downgrades Bottoming Out?
Read More From MVMore layoffs in the tech sector. Reserve provisioning by banks against the likelihood of further deterioration in their consumer and small business loan portfolios. A pronounced and protracted slowdown in online advertising. Another month of underperforming retail sales. The signs of slowdown are growing. Analysts’ earnings estimates are finally catching up to the market, which decided already in 2022 that conditions were headed south. The current consensus for S&P 500 fourth quarter earnings, the reporting of which started in earnest last week, is a year-on-year decline of 4.9 percent. That’s quite a bit lower than the estimates those same analysts...
Read MoreMV Weekly Market Flash: Euroscepticism
Read More From MVOne of the big stories late last fall was the abrupt about-face turn by the Chinese government on its zero-Covid policy. Following a series of highly unusual public protests in a number of cities the government backed away from the draconian lockdown policies that had bedeviled its citizens and its economy for the better part of the year. The reopening theme caught fire among foreign investors, and suddenly China was hot again. In the last couple months of the year it was not unusual to see the Shanghai and especially the Hong Kong markets register intraday percentage moves in the...
Read MoreMV Weekly Market Flash: Our 2023 Investment Thesis
Read More From MV2022 was a bad year for most kinds of core investment assets, from the least-risky Treasury securities to the most volatile corners of the equity market. Persistently high inflation forced central banks to adopt an increasingly hawkish posture on interest rates as the year progressed. The Fed funds rate rose more sharply, in a more compressed window of time, than at any time since the early 1980s. By late summer it seemed that both headline and core measures of inflation were peaking; yet the Fed’s unswerving insistence on rates remaining higher for longer took the wind out of the sails...
Read MoreMV Weekly Market Flash: The Year In Three Phrases
Read More From MVThis is our last weekly commentary of 2022, so it seems like a good time to reflect back on the year that has been. Next week we will go charging head-on into the year ahead, and whatever things good, bad and otherwise that may entail. Not too many investors will be sad to bid goodbye to 2022, but we will duly note that it could have been worse, on many levels. Every year has its own bespoke words and phrases that attempt to capture and bottle the essence of the twelve months just passed. Here are our three contributions. #1:...
Read MoreMV Weekly Market Flash: Due Diligence Is Due for a Comeback
Read More From MVThe year 2022 is winding down to a close. In the world of financial markets that primarily means one thing: predictions, predictions, predictions. Everybody has an opinion about what 2023 will bring to stocks, bonds, oil, the dollar, cryptocurrencies and everything else under the sun. The vast majority of these predictions will turn out to be way off the mark, for the simple reason that nobody knows which of the many threats and opportunities out there, known and unknown, are going to be the ones that matter and which way they will drive asset prices. Who was baking a global...
Read MoreMV Weekly Market Flash: Market Intelligence, Or Not
Read More From MVThere was a curious dynamic playing out in the stock market during Wednesday’s Federal Open Market Committee confab. The Fed speaks – market goes down. Journalists ask questions – market goes up. We took the liberty of illustrating this odd dynamic in the chart below, showing the intraday trading patterns around the key events of the FOMC official statement and subsequent press conference. To fully appreciate this chart, it is important to understand who is doing most of the trading here. More precisely, what is doing the trading, because it is not a bunch of humans watching the TV and...
Read MoreMV Weekly Market Flash: The Oil Price Surge That Wasn’t
Read More From MVIt’s been one of the go-to conversation starters of the year – how about those gas prices huh? Prices are higher for all manner of goods and services, but there is a special place in the heart of our petrol-besotted nation for those flashing red signs at the local Shell or Sunoco station, telling us exactly, to a penny, what the price of a gallon of the stuff is today versus what it was a day, a week or a month ago. So, here’s a good conversation starter for today: the average price nationwide for a gallon of regular gas...
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