flattening yield curve

TRADE FRICTION TAKING A TOLL

The major stock market averages opened lower again today on trade tensions (Dow -278 pts; SPX -.9%). All eleven market sectors are down, led by Energy, healthcare, consumer discretionary, and communications (all down about 1%). European stock markets closed down over 1% as well, and most Asian markets closed lower last night. The one exception seems to have been the Shanghai Composite, which closed slightly higher on the session. Commodities are mixed today. Corn futures surged as flooding threatened crops. Copper rose .9% today after falling about 8% so far this month. WTI crude oil fell 2.7% to trade around $57.50/barrel. Bonds are trading mostly higher, especially safe-haven Treasuries. The 10-year Treasury yield fell to its lowest level since September 2017.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

TRADE WAR JITTERS CONTINUE

Stocks headed lower again this morning on (what else?) trade war headlines. The Dow is currently down 350 pts and the SPX is down .7%. All eleven major market sectors are lower, led by tech (-1.2%) and materials (-1.3%). The VIX Index spiked to nearly 22, suggesting traders are getting nervous. European markets closed down by nearly 2% and Asian markets were down nearly that much overnight. China’s Shanghai Composite Index was down 1.5% last night and has fallen almost 13% since April 19th. Commodities are down today, except for gold. WTI crude oil is down 1% to trade around $61.50/barrel. Bonds moved higher as the 10-year Treasury yield fell back to 2.44%. Junk bonds, however, are down about .4%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

ANY EXCUSE TO CONSOLIDATE

The major stock market averages gapped down at the open today (Dow -177 pts; SPX -.33%). Utilities and communications sectors are modestly higher, but most everything else is in the red. The energy sector is down .8% along with oil prices. Industrials are down 1% on weakness in Boeing (BA). European markets closed lower by about .3%, whereas Asian markets are up overnight.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

COOLER HEADS ARE PREVAILING

Stocks opened sharply higher today, recovering from last week’s dip. The Dow is currently up 265 pts and the SPX is up .9%. All eleven major market sectors are the in green, led by energy (+1.7%) and tech (+1.3%). European stock markets are poised to close roughly .5% higher, and most of Asia was up overnight. Commodities are moving with stocks. WTI crude oil climbed back to $60/barrel. Most of today’s stock rally is owed to the fact that bonds are finally selling off. Investors have fretted about the fact that Treasury bond yields have fallen back to 14-month lows, suggesting that perhaps the bull market has come to an end. In fact, today CNBC’s Bob Pisani said that the dividing line among investors is whether or not one believes an economic recession is imminent in 2020.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

SENTIMENT U-TURN ON BOND MARKET CONCERNS

The major stock market averages rolled over this morning. The Dow is currently down 379 pts and the SPX is off by 1.7%. The Nasdaq is down 2.1%. Energy, financials and materials—the sectors that tend to do poorly when interest rates drop—are down by more than 2% in early trading. On the other hand utilities, real estate and consumer staples—defensive sectors that do well in slower growth, lower-rate markets—are in the green. European stock markets closed down more than 1.5%, although most of Asia was in the green overnight. Commodities are mostly lower today. WTI crude oil backed down to $58.50/barrel. The bond market is rising as yields fall. Clearly, some capital is draining out of stock and flowing into bonds today. The 10-year Treasury yield fell to 2.43%, the lowest since December 2017.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

December 6, 2018

December 6, 2018

Stocks sank at the open despite better than expected economic data. For the first couple of hours, most major market sectors were down more than 3% before bouncing off the lows. This could be the correction’s capitulation flush. While the Dow was down about 770 points, it is now down 436 pts. The SPX is currently down 1.7%. The more defensive sectors (consumer staples, utilities) also dumped at the open but are trying to claw their way back. Foreign markets aren’t serving as a safe haven. European markets closed down more than 3%. Asian markets were down roughly 2% overnight. The dollar is weaker, but that’s not helping commodities, most of which are trading lower. WTI crude oil fell back to $50.60/barrel, but quickly bounced back over $51. Bonds are catching a bid as you might expect. The iShares 20+ Year Treasury Bond ETF (TLT) is up .6%. High-grade corporate bonds, which have lagged lately, are up as well today. Junk bonds continue to struggle. The 2-year and 10-year Treasury yields are down around 2.71% and 2.85%, respectively. The difference between those two yields, 14 basis points, is very small and that’s spooking equity markets. Looking back at the last two months, any volatility in rates has been greeted with fear. The market doesn’t like it when rates rise, and neither does it approve when rates fall. Both are somehow begin viewed as bad news.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

December 4, 2018

Stocks fell at the open, giving up yesterday’s post-G20 meeting rally. The Dow is currently down 587 pts and the SPX is down 2.3%. A number of sectors are down more than 2% in early trading: consumer discretionary, financials, industrials, tech, materials. Only utilities are catching a bid. This is clearly a risk-off trade. Foreign markets closed mostly lower last night and early this morning. The VIX Index is back up to 19., but it should be higher if traders were really frightened. Today’s selloff is mostly due to program trading (i.e. “the machines”). The dollar is flat and commodities are trading higher. WTI crude oil, which was crushed in October & November, is edging back up toward $53/barrel. Bonds are faring well today as yields tick lower. In fact, over the last few days, Treasury bond prices have skyrocketed. And remember, bond prices run inverse to yields. So the 10-year Treasury yield is all the way back down to 2.92% for the first time in 2 ½ months. And all of the sudden, investors are again concerned about the yield curve. The difference between the 10-year and 2-year Treasury yields is down to just 10 basis points, or .10%. At the same time, junk bond prices continue to glide lower. The SPDR High Yield Bond ETF (JNK) is now off 6.4% from its January peak. So we’re seeing a risk-off trade in the bond market today as well.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

September 12, 2018

Stocks opened mixed (Dow +71 pts; SPX -.14%). Telecoms and consumer staples are leading the way, up more than 1%. Tech and financial sectors are lagging. A little optimism just crept in with this headline: “US Proposing New Trade Talks with China in the Near Future.” European stock markets will close up modestly but Asia was broadly negative overnight. The dollar is a bit weaker today against a basket of foreign currencies, so commodities are getting some life. Irion ore is up nearly 2% today, and WTI crude oil is up 2.8% to trade above $71/barrel, the highest in a month. Bonds are bouncing back a bit after yesterday’s beating. The 5-year and 10-year Treasury yields are hovering around 2.86% and 2.96%, respectively. That’s not much of a gap between the two, meaning that the yield curve is still very flat. The difference between the 2-year and 10-year yields is only about .22%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

August 24, 2018

August 24, 2018

Stocks gapped higher this morning (Dow +154 pts; SPX +.6%). Flip-flopping from yesterday’s session, cyclical sectors like materials, energy and tech are leading the way. Utilities and consumer staples sectors are flat. This comes despite impeachment talk in Washington, no apparent progress in trade talks with China, and Fed Chair Powell’s comment that our economic expansion supports the case for further gradual interest rate hikes. The reason for today’s rally appears to be the durable goods report (see below). The VIX Index fell back toward 12 this morning, indicating very little expected volatility over the next 30 days. European stock markets are poised to close about .3% higher but Asia was mixed overnight. The Chinese stock market can’t get out of its own way. The Shanghai Composite Index is down 21% this year. Today, the dollar is weaker and not surprisingly commodities are higher. WTI crude oil is trading up around $69.50/barrel. Copper is up over 2% after having fallen more than 20% this year. Bonds aren’t moving much. The 2-year Treasury yield, which tends to reflect Fed rate hike expectations, has gone nowhere for the last month. In other words, investors don’t believe the Fed will more aggressive with rate hikes. And yet, the difference between the 2-year and 10-year yields has fallen to just 19 basis points (.19%).


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

August 16, 2018

August 16, 2018

Stocks gapped up at the open this morning (Dow +365 pts; SPX +.94%). Consumer discretionary, financials, industrials and telecom sectors are all up over 1% in early trading. The VIX Index, which spiked to nearly 15 this week, sank back under 13 today. European markets will close up about .8%, whereas most of Asia was down overnight. The dollar is down slightly, giving a little room for commodities to rise. WTI crude oil is back up around $65.50/barrel. Copper is up nicely after taking a massive 20%+ beating this year. Bonds are trading roughly sideways. The 5-year Treasury yield at 2.76% hasn’t moved much in a week. The 10-year Treasury yield ticked up slightly to 2.89%. The yield curve—difference between the 10-year and 2-year—is as flat as it has been this year.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

August 8, 2018

August 8, 2018

Stocks opened lower today on escalating trade tensions with China. The Dow is currently down 38 pts and the SPX is flat.  Losses are led by energy as well as the defensive sectors. On the other hand, banks, semiconductors and retailers are higher in early trading. Most European markets are poised to close lower by .3% and China’s stock market gave up the prior session’s gains last night. WTI crude oil sank nearly 4% to trade at $65.50/barrel after Chinese import data revealed modestly lower oil demand over the last few months. Traders are eager to jump to the conclusion that trade tariffs are damaging commodity demand. The fact is that economists are expecting global oil demand to grow 1.5% this year vs. the historical average 1%. So don’t be surprised if oil prices continue the uneven march higher. Bonds are mixed in today’s trade. The iShares 20+ Year Treasury Bond ETF (TLT) is up .1% (but is still down 6% this year). Corporate bonds—represented by the iShares IBOXX Investment Grade Corporate Bond ETF (LQD) are down about .1% today. Yields aren’t moving much. The yield curve remains pretty flat; the spread between the 2-year and 10-year Treasury yields is hovering around .30%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

July 25, 2018

July 25, 2018

Stocks opened mixed (Dow -75 pts; SPX +.17%). This is essentially the mirror image of yesterday’s trade. Utilities, real estate and consumer staples are in the green, whereas industrials, financials and consumer discretionary sectors are trading lower. It’s just more of the same back-and-forth without a discernible trend. Whereas European markets were up nicely yesterday, they’re poised to close down today. Bloomberg’s Macro Man column calls it “unremarkably quiet” as a result of “global confusion.” Anyway, commodities are trading a bit higher today (gold, copper, oil). WTI crude oil is trading flat at $68.60/barrel. Bonds are mostly unchanged. The 5-year Treasury yield, after a brief run higher last week, is sitting at 2.81% and the 10-year yield dipped to 2.94%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

July 19, 2018

Stocks gapped down at the open (Dow -86 pts; SPX -.29%). Utilities and real estate are rebounding, but most everything else is down in early trading. European markets are about to close down .4% and most of Asia was down overnight. China’s market is still down 20% on the year. WTI crude oil is trading up 1% to $69.50/barrel. Bonds are trading nearly flat yet again, and this month-long absence in yield volatility is not normal. That fact has some technical analysts calling for an upside breakout in yields sometime soon.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

July 12, 2018

Stocks are rebounding from yesterday’s rout (Dow +209 pts; SPX .7%). The tech sector is up 1.5% in early trading; industrials and healthcare sectors are up 1%. Consumer staples and utilities are down slightly. The VIX Index crated back down to 12.8 and VIX August futures are trading around 14.5. So market volatility isn’t expected to spike in the near future. Bonds are mostly unchanged today and we’ve noticed that over the last month bond market volatility has tanked. The 5-year and 10-year Treasury note yields are at 2.76% and 2.85%, respectively.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

July 6, 2018

Stocks opened higher this morning as the jobs report and trade tariffs dueled for traders’ attention. The Dow is currently up 120 pts and the SPX is up .8%. Indeed, this is a traders’ market with low volume, lots of back-and-forth, but no real trend. At the moment, all eleven market sectors are in the green, led by healthcare (+1.3%). Biotechs are rallying on the back of a positive clinical trial for Biogen’s new Alzheimer drug. European markets are poised to close slightly higher on the session and Asian markets were (surprise, surprise) higher overnight. The VIX Index is back town to 13.6 and VIX July futures are trading down around 14.8. Oil is rising again; WTI crude is up around $73.60/barrel. The Bloomberg Commodity Index is up .3% today but still down on the year. Copper continues to struggle on fears that the emerging trade war could dent China’s economy. Bonds are trading higher in price—lower in yield—despite a positive jobs report. The 5-year and 10-year Treasury yields are hovering around 2.73% and 2.83%, respectively. So as an investor, you get only 10 more basis points in yield for locking up your money over an additional 5 years. The yield curve continues to flatten, and the Federal Reserve is increasingly squeezed between that fact and the fact of strong economic growth. Bloomberg Economics now believes the flat yield curve will convince the Fed to pause rate hikes. 


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

June 25, 2019

Stocks fell at the open on fresh trade provocations by the Trump Administration. The Dow and SPX are currently down 366 pts and 1.3%, respectively. Again, industrials and materials—which would fare the worst in a trade war—are down about 1%. The tech sector is down nearly 2% as semiconductors are also seen as vulnerable. On the other hand, defensive sectors like utilities and telecoms, are in the green. Asian stock markets continue to fall. The Shanghai Composite is down 20% from its January highs. The US dollar is about 5.5% stronger than it was in mid-April, and the Bloomberg Commodity Index is down 4.5% over the same period. WTI crude oil is down slightly to trade at $68.36/barrel. OPEC agreed to a vague increase in oil production.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

June 22, 2018

Stocks gapped up at the open (Dow +167 pts; SPX +.4%). We’ll see if it holds. At the moment, the energy sector is leading, up 3% in the wake of an OPEC meeting. Telecoms and materials are also up over 1%. Tech, on the other hand, is lagging (-.4%). It seems investors didn’t like earnings announcements from Red Hat (RHT), Oracle (ORCL) and Micron (MU) earlier this week. European stock markets are poised to close up about 1% and Asia was mixed overnight. Trade war jitters have hit China’s stock market especially hard. The Shanghai and Shenzhen Composites are down 12-16% this year, around 2-year lows. The US dollar has strengthened against a basket of foreign currencies as a result of trade concerns. Not surprisingly, most commodity prices have fallen. Gold, iron ore, and copper are down on the year. Oil is still up though; WTI crude oil shot back up to $68/barrel (see below). Bonds are modestly higher in price, lower in yield today. The 5-year Treasury yield ticked down to 2.76% and the 10-year yield is hovering around 2.90%. The yield curve continues to flatten; the difference between the yields on the 2-year and 10-year Treasury bonds is down to just .36%. It’s hard to escape the conclusion that the stock & bond markets are telling us two different stories about the future. Stocks are worried about rising inflation but believe the economy is on a firm footing. Bonds, however, are telling us that inflation and growth are not going to accelerate.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

April 24, 2018

Stocks popped at the open but quickly turned around. The Dow is down 53 pts and the SPX is down .12%. The telecom sector is up over 1.5% after Verizon (VZ) reported first quarter earnings. Utilities and financials, which usually move opposite these days depending on interest rates, are both in the green. But tech, industrials, materials and consumer discretionary are sinking. WTI crude oil is trading back up over $69/barrel. Very few saw that coming at the beginning of 2018. Interest rates continue to march upward and that—along with earnings announcements—is the story of the day. The 5-year Treasury yield is up around 2.83% and the 10-year yield just touched 3% for the first time since the beginning of 2014. Remember that over the last six months scads of Wall Street strategists and economists have said a 3% 10-year would absolutely upset the stock market. We’ll see.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

April 17, 2018

Stocks surged at the open, following yesterday’s gains. The Dow is currently up 256 pts and the SPX is up 1%. Consumer discretionary, industrials, tech, materials and real estate sectors are all up over 1% in early trading. In fact, all eleven major market sectors are in the green. The VIX Index, which measures investor fear, is down around 15.6, signaling that the stock market correction is resolving. Commodities are mostly higher on the day. WTI crude oil, recently boosted by geopolitical tensions, is trading down modestly to $66.11/barrel. Short-term bonds are selling off, and yields are resuming their march higher. The 2-year Treasury yield is trading up to 2.40% (a fresh 9 ½ year high), and the 5-year is up around 2.69%. Meanwhile, longer-term bonds aren’t moving much. The 10-year Treasury yield is hovering around 2.83%. And of course, that means the yield curve (difference between short and long rates) is flattening again. The Fed seems intent on two more rate hikes this year, which affects the short end. But inflation expectations have stagnated, and that affects the long end.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

April 13, 2018

Stocks gapped up at the open but quickly gave way. The Dow is currently down 39 pts and the SPX is flat. Defensive sectors are showing some strength today, as well as energy. But financials (especially banks) are down after some key earnings announcements. Despite that, the VIX Index is down around 17.8. WTI crude oil is up yet again, around $67.409/barrel, to new 3-year highs. The headlines cite rising geopolitical tensions, but whatever the reason, it can’t be supported by fundamentals. Bonds are mostly unchanged today. The 5-year Treasury yield is hovering around 2.67% and the 10-year yield is trading at 2.82%. However, the 2-year Treasury yield continues to rise and at 2.36% is the highest since 2008. The yield curve continues to flatten.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.