Commentaries

Timely market commentaries from leading investment firms

Short Interest on NYSE Fell by 20% in 2016

As of the end of December, short interest–the number of shares investors have sold short on the NYSE–dropped to its lowest level since early 2014, even as stock market indices hovered at new highs.

Trump and Asia: Now the Good News

With Donald Trump about to be sworn in as US president, markets in Asia are nervous about some of his policies, especially on trade. Investors who are alert to these policies’ likely limitations could find attractive opportunities.

The Great Rotation

By now, you have likely heard something, either directly or indirectly, about “The Great Rotation” from bonds into stocks.

Asset Allocation is Not for the Faint of Heart (Long Live Diversification)

I’m starting to feel like a rancorous curmudgeon, but I am frustrated by some of the misguided commentary on asset allocation and how diversification is a myth.

The Trump Deficit

It is a post-financial-crisis myth that austerity-minded conservative governments always favor fiscal prudence while redistribution-oriented progressives view large deficits as the world’s biggest free lunch. This simplistic perspective badly misses the true underlying political economy of deficits.

Media Headlines Will Lead You To Ruin

Since investors are mostly individuals that have a “day job,” the majority of their “research” comes from a daily dose of media headlines. Therefore, since the media tends to “focus” their attention on “market moving headlines,” either bullish or bearish, investors tend to “react” accordingly.

Don’t Drink the Cool Aid that Bonds will Under-perform

Don’t get too far ahead of yourself and drink the cool aid that bonds will underperform. Investor fears of higher interest rates have caused volatility, which we believe presents opportunities in the fixed income markets. Global central banks continue to intervene in the markets in such a way that natural market mechanisms cannot function properly.

Will Q4 Earnings Confirm Recent Economic Strength?

My scorecard for earnings season will look for the following company characteristics: Confidence. I expect most to have a murky outlook, with no reason to set the future bar very high. Important trade relationships – imports or exports. Comments on these fears may create some buying opportunities. Concern about a stronger dollar. Everyone is teed up to watch for this, and we should as well.

Forecasting with Friends

I gave you my own thoughts last week (see “Skeptically Optimistic”). Today we’ll review several other forecasts from people who deserve your attention. Of necessity, I must leave out some good ones, but I think the ones I cover will give you plenty of useful information.

Cassandra's Song

One of the attempted barbs tossed my way at various points in the past 20 years is “Cassandra.” Frankly, I kind of like it.

A Perfect Mix?

U.S. stocks have been consolidating gains seen in the aftermath of the November presidential election, a healthy process following such strong gains. Further appreciation should be supported by improving U.S. and global economic and earnings growth. Disappointments are likely on the U.S. policy front but we would view those as buying opportunities for now.

Playing Chess With China

China suffered the twin indignities of a currency correction and an equity correction on the first trading day of last year. Fortunately, order was restored and investor attention turned to other global developments.

American Small Businesses Party Like It’s 2004

Look at what President-elect Donald Trump’s pledge to lower taxes and slash regulations is doing to business optimism here in the U.S. Last month, the Index of Small Business Optimism soared a phenomenal 7.4 points to 105.8, its highest reading since 2004. The National Federation of Independent Business (NFIB), which conducts the survey, reported that attitudes toward capital spending and job creation in particular surprised to the upside. Research firm Evercore ISI called it a “blowout report,” and I have to agree.

Form 5500 Gets a Makeover: What Does This Mean for Plan Sponsors?

On July 21, 2016, the Department of Labor (DOL) issued proposed amendments to the 5500 series forms in a “Notice of Proposed Forms Revisions,” prepared jointly by three agencies: the DOL, the Internal Revenue Service and the Pension Benefit Guaranty Corporation, collectively referred to as “the agencies.”

Monthly Market Risk Update: January 2017

ust as I do with the economy, I review the market each month for warning signs of trouble in the near future. Although valuations are now high—a noted risk factor in past bear markets—markets can stay expensive (or get much more expensive) for years and years, which doesn’t give us much to go on timing-wise.