Archive | February, 2017

Q&A with Author Peter Zeihan: How Shale is Reshaping America and the World

Absent Superpower

We recently met with geopolitical strategist Peter Zeihan to discuss world events since the American election and his new book, “The Absent Superpower,” released last month. In the book, Peter credits energy and resource innovations with reshaping the global geopolitical environment. He predicts by 2019, US oil production costs could drop to $25 per barrel, […]

Why Hitting 2% Real GDP Growth Is Key For US Corporate Profits

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While the myth that stock market returns are highly correlated to a country’s GDP growth rate has largely been debunked, there remains a strong, and intuitive, relationship between corporate profits and GDP. GDP measures the output of an economy and corporate profits are simply the income to capital owners derived from that output (with some accounting adjustments made along the […]

Companies with the Lowest Dividend Yields Are Driving Performance

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In the month of January, the most important factor correlation to performance of developed market stocks has been dividend yield (DY). Interestingly, though, the best performance has been generated in those stocks that belong to the lowest decile (those that pay a smaller dividend relative to their share price) while those with the highest DY have […]

Fewer Stocks Outperforming As The Market Moves Higher

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Just 44% of developed market stocks have outperformed the MSCI World Index over the past 200 days compared to 57% outperforming on average over the past 15 years.  As the chart below illustrates, there is a fairly strong negative correlation between the percentage of stocks outperforming and the direction of the index. As stocks move higher, […]

Boom-Bust Barometer Making All-Time Highs

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The Boom-Bust Barometer (made famous by Dr. Ed Yardeni) is a simple, but effective, way of avoiding large drawdowns in the stock market. This indicator is calculated by taking the CRB Raw Industrial Price Index divided by initial unemployment claims. The theory goes that if commodity prices are rising and unemployment claims are falling (thus the […]