Reading time: 4 minutes The U.S. Market The U.S. is undergoing a rolling correction as industry after industry corrects and then stabilizes. Higher interest rates will benefit some industries more than others, and the key is that the industries most benefitted by higher rates are only benefitted as long as Read more
We note that interest rates are now above where they were when the pandemic began; the economy is sitting on many trillions of newly-created dollars; and analysts are vying for more aggressive 2020 GDP growth targets. Even the Federal Reserve is raising its growth targets, and while the majority of Read more
We believe that 10-year rates will rise above 2% over the course of 2021; U.S. core inflation will move towards 3%, and total inflation (including the more volatile food and energy) towards 4%. In the context of a rising dollar, we are not bullish on emerging markets as a group. Read more
A lot of “bubble talk” is making the rounds. We concur with the recently published opinion of Ray Dalio, who sees bubbles in certain areas of emerging technology stocks, but not in the market as a whole. Market valuations are getting elevated, but are not in a bubble; stock prices Read more
Fourth-quarter earnings continue to come in very strong. As of now, the fourth quarter of 2020 is coming in positive — 2% up from the final quarter of 2019, when analysts had expected an 11% decline. Consensus now expects a 22% rise in S&P 500 earnings in 2021, and a Read more
In our view the appropriate strategy is to be optimistic, be invested, but be careful as you build your buy list. As we said two weeks ago, there are ways to approach an elevated market in an intelligent way: As stocks rise, move your stops up. Take some profits in Read more
Earnings season is underway. Earnings growth has turned positive for the first time since the last quarter of 2019, before the pandemic: Barring unforeseen developments on the vaccine front, which we can’t rule out but which seem unlikely, the 2021 playbook is going as expected so far: pandemic recovery, gradual Read more
To many experienced investors, the U.S. stock market appears dangerously high. While investor and trader enthusiasm is taking the major stock averages higher, there is also an uncomfortable level of euphoria in certain types of stocks, themes, and groups, such as: Environmental themes: Global electrification, battery storage, electric vehicles, solar Read more
Yesterday passed and saw the arrival of another new U.S. presidential administration and a new Congressional majority. Our attention remains focused on the two trends mentioned above: the beneficiaries of the new administration’s policy priorities, and the technology trends which, beyond the troubled limelight of big tech, are riding the Read more
If inflation is coming, as we described above, those investors who remember the inflation of the 1970s should know that it will not necessarily look like it did back then. The economy is radically different in sectoral composition and weighting; industries are radically different technologically; people’s appetites and needs for Read more
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