Today wasn’t the best day for US economic releases. The 2nd revision of 1Q GDP was (unsurprisingly) revised down from 0.2% to -0.7%. The release that caught our eye, however, was the initial release of corporate profits in the US for the first quarter. After-tax corporate profits did rise by 2.7% year-over-year in the first […]
TIPS derived breakeven inflation expectations have started to fall once again in May. For a little context, starting in last June, breakeven inflation started a steady march lower that lasted until January of this year. Since that time, we have seen a rebound in inflation expectations. For example, five-year TIPS derived breakeven inflation fell from […]
In our white paper “The Knowledge Effect: Excess Returns Of Highly Innovative Companies”, we identified a stock market pricing anomaly in highly innovative companies. The tendency of stocks of highly innovative companies to experience excess returns can be traced back to two main factors: A surge in the pace of knowledge produced catalyzed by the […]
The 1,000 or so participants in Sentix’s monthly survey of whether or not a country will leave the euro collectively decided that the risk has subsided (slightly): The decline to 41% (from nearly 50% in April) was mostly attributable to risks related to Greece’s membership in the common currency (black line): Cyprus (in grey) was […]
The latest (March) Case-Shiller Home Price Index was released this morning and there were several noteworthy data points in the report. First, our 3-month diffusion index that measures the number of cities where prices are higher now than they were three months ago increased by six cities in March to a six-month high of 18. […]
Unlike the majority of this six year old bull market, European and Asian stocks are outperforming North American stocks in 2015 (yes even measured in USD). Asian stocks are nearly 12% higher, European stocks are nearly 10% higher and North America stocks are just about 3%. This surge in Asia and European are starting to […]
Remember back in April when we noted how equity trends had completely flip-flopped during the first several weeks of the second quarter and we wondered aloud whether this was a trend change or simply a counter-trend rally? Well, so far in May the market is signalling that equity trends observed in April may have just […]
Commercial traders (AKA the smart money) has massively flip flopped their positioning since the end of last year with respect to the long bond. In aggregate, commercial traders have moved from a net short position (benefiting when rates rise) of about 50K derivative contracts to a net long position (benefiting when rates fall) of 22K […]
When the ECB announced plans for its own asset purchase program back in January, we commented on the big difference in the relationship between those purchases and equity performance when comparing the U.S. and Europe. As the MSCI Europe Index hovers near decade highs (and asset purchases appear poised to expand at an accelerated pace over the […]
Health care stocks have been the leadership sector in the MSCI World, and many (such as biotech) have reached some pretty elevated valuations. Most stocks in the sector have been in multi-year bull markets trends, outperforming the MSCI All Country World Index significantly. In our relative strength point and figure charts we take the daily […]