201503.29
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Shifting Momentum

US stocks continued their recently more volatile ways this week giving up almost all the gains of last week. In fact, the S&P 500 is now basically flat for the last four months, making no headway since late November despite a series of nominal new highs along the way. As the Fed has backed away…

201503.27
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Cash Flow Seems To Explain Why 5% GDP Was A Myth (Among Other Discrepancies)

Coincident to the “final” release of quarterly GDP are the updated estimates for corporate profits. While the Q4 headline didn’t much alter from the preliminary version sent out a month ago, there was much in the profit section relevant to both economic cycle and structure. The BEA provides several different breakouts of business profits, but…

201503.26
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FOMC: Not Only Is There No Recovery, Don’t Ever Expect One

Taking a look back at economic projections from orthodox models (and the theories they incorporate and encompass) is more than just a review of past econometric failures. That is the most obvious component as the ability of mainstream models to forecast actual economic conditions is inarguably flawed beyond repair. That calls into question, certainly, current…

201503.22
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Macro Observations

Dollar strength may be over extended. Dollar action after the Fed announcement last week seemed to indicate that investors (speculators) were ready and willing to sell the greenback. Looking at the chart, one can see a potential peak in the Dollar Index earlier this month. And, our macro economic partner’s indicators are a short term extended…

201503.15
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US Equity Leadership is Fading

Research notes from Macro Research Board: While non-U.S. equity markets have massively underperformed the U.S. in recent years, especially in U.S. dollar terms, there are signs of a reversal in a number of key bourses. Our favored non-U.S. markets (EM commodity importers, the euro area and Japan) have recently edged higher in relative terms, even…

201503.15
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Hello Volatility

The Dow Jones Industrial Average was down a bit over 100 points last week but that hardly does justice to a week with multiple triple digit swings. Three of the last six trading days have seen a move of at least 1%, a level of volatility that must be unnerving to anyone who thought the last…

201503.13
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Business Cycles, Bubbles and Changing Valuations

The function of recession is not just some negative numbers that appear from seemingly nowhere, though that is how convention sees it of “unforeseeable” trends and “shocks. It may take the NBER years in some cases to declare, officially, a cycle peak but that doesn’t mean there aren’t warning signs much closer to the event….

201503.10
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Looking More Like Next ‘Dollar’ Problem

It is Tuesday which only means that whatever oil trading takes place today will be easily overwhelmed by whatever interpretation about inventory levels released tomorrow dominates. However, the last week has been interesting in the respect of a shift in the behavior of the futures curve for WTI. Up until then, almost all volatility was…

201503.08
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Looking for Value

Today’s world is one of historically high US equity valuations, equity buybacks but an otherwise lack of breadth in equity performance, and little to no yield for short duration fixed income. Where does one look for value? Remember that “value” is representative of things that appear on sale relative to the alternatives. This means that…

201503.05
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Economy and Stocks

It is often very easy to fixate on the S&P 500 as if it were the only current proxy of the broad universe of stocks. Like the Dow Jones Industrial Average before it, the 500 has attained synonymy with stocks as it is the most widely publicized and recognized value. But just like the DJIA,…