We’re no strangers to contrarian analysis. When the overwhelming weight of sentiment goes in one direction, we ask ourselves what potential pitfalls the consensus might be missing. Often that puts us in the position of identifying weaknesses and potential problems that others have glossed over — sometimes because of a Read more…
Surveying the Risk Landscape: Our Philosophy At the end of every letter we write, we sign off by saying “We welcome your calls and questions.” Market turmoil and political events in 2018 have led to a number of questions from our readers and investment management clients. As we answer these Read more…
After further trade-war saber-rattling, U.S. markets have again regained a semblance of calm. Further unexpected developments and accompanying volatility undoubtedly lie ahead, but thus far, markets have greeted the potential of escalating trade conflicts without panic. The financial, economic, and sentiment backdrop in the United States remains strong. Investor and Read more…
A volatile year to date seems to be resolving itself into a cautiously positive market backdrop, presenting the possibility of a better-than-usual summer for stocks. The underlying causes of volatility are still present — primarily the tug-of-war we have described several times, between rising interest rates (which are challenging for Read more…
Let’s start with a review of U.S. and global economic, trade, finance, and banking outlooks. • The U.S.: Bullish economics, very strong. Trade negotiations not a lasting problem. • Europe: Neutral. Avoid. • Asia: Growth companies are attractive. The U.S. dollar is strong; this is neutral for Asian commodity exporters. If and when the Read more…
Executive Summary Recession outlook: an update. The U.S. market remains locked in a tug-of-war between rising interest rates and rising earnings. The market is about unchanged this year after a great deal of fluctuation. After several recent prominent earnings reports from major companies which had positive comments about continued growth, Read more…
The Global Reform Wave Rolls On: Former Leaders Jailed in Brazil and South Korea Almost two years ago, we wrote about the rise of populist and anti-corruption movements around the world, and told you that we believed these movements would expand, intensify, and disrupt global politics and economics, possibly for decades. Read more…
Among many investors and analysts, there’s a growing sense that rising growth, inflation, and interest rates are bringing and end to the long “Goldilocks” phase of the bull market that began nine years ago this month. That doesn’t mean that stocks have no more gains to deliver — far from Read more…
Trade Wars and Media Fears It was a disappointing February. After a seemingly relentless and exuberant rally during January, the market stumbled in February and ultimately gave back most of its gains year-to-date, although at this writing it is slightly in the green. However, our big-picture analysis continues to suggest Read more…
Leveraged Loans Are a Secret Sauce For Banks, U.S. Corporates, and Pension Funds Modern bull markets are fundamentally credit-driven. They are also credit-ended, when the spread between long-term and short-term rates goes negative and chokes off the supply of credit. This is why watching that spread — the “yield curve” Read more…
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