Hanlon Investment Management
Commentary
High Yield Market Update
The U.S. high yield bond market has grown substantially to around $1.3 trillion today. At the same time, the global high yield market has become more geographically diverse. North America’s share of the market has fallen from 87.1% in 2005 to 62.6% in 2016.
Commentary
2% GDP Growth – Get Comfortable With It
US gross domestic product (GDP) growth hasn’t been as strong as one would expect at this stage of an economic recovery, still slogging along at a measly 2% rate. But “things are not always what they seem,” and beneath the low headline growth rate lies an economy that’s more potent than GDP stats would indicate.
Commentary
Everything Is Not As It Seems
As of September 25, 2014 the NASDAQ Composite index is up 6.95% year-to-date, despite the recent downturn in the market. The darling tech stocks continue to come up with new and innovative ideas for products and services to drive their bottom lines. The NASDAQ is only down -2.86% from the high it made on September 2, 2014. One could conclude that the NASDAQ is indeed solid and that this is just another passing correction before it pushes on to higher levels.
Commentary
Everything Is Not As It Seems
As of September 25, 2014 the NASDAQ Composite index is up 6.95% year-to-date, despite the recent downturn in the market. The darling tech stocks continue to come up with new and innovative ideas for products and services to drive their bottom lines. The NASDAQ is only down -2.86% from the high it made on September 2, 2014. One could conclude that the NASDAQ is indeed solid and that this is just another passing correction before it pushes on to higher levels.
Commentary
2011 An Anomaly?
The dictionary defines anomaly as; something anomalous: something different, abnormal, peculiar, or not easily classified. Looking back at the economic, political and market activity of 2011 it could be described as an anomaly. I hesitate to label a markets action as odd, or unusual, because markets by their nature will always be independent, potentially odd and unusual. Be 2011 certainly was a rare year. A major cause for this anomalous market activity was the rarely seen occurrence of a large portion of an entire continent running the risk of sovereign debt default.
Commentary
Food, Clothing, Shelter; Shelter Part Still Not Good
In March, I shared with you a chart of the S&P 500 Index plotted against the NAHB/Wells Fargo Housing Market Index (HMI) and identified how these indices display a level of correlation. I pointed out that housing tends to lead stocks; in some instances as much as two years, and in others perhaps a couple months or quarters. The point of that Commentary, is that movements in the S&P500 Index are typically forecast by a precursory movement in the HMI. Where was the HMI forecast for a rise in the S&P500 index that started in 2009? There was none! Housing was and continues to show a flat-line.
Commentary
Follow-up - First Half of 2011 Looks Like 2007
As written on July 20th, our research uncovered potentially dangerous activity in the equity markets which could lead to a break and high volatility. Using our proprietary research methodologies, we elected to make a major Tactical move on June 17th. That move reduced all Equity and High-Yield Bond exposure, creating 50% cash or cash equivalent allocations across all portfolios. This defensive move was shown to be prudent as volatility erupted and considerable downside was experienced in equity markets in the first week of August.
Commentary
Perspective on the 2nd Quarter
At the start of the second quarter Hanlon Investment Management portfolios were positioned somewhat conservatively as our research anticipated that there was some volatility ahead. Our expectation was right-on as volatility and whipsawing markets were on display during this past quarter. We further increased our cautious stance and in June raised additional cash in client accounts as the risks warranted. The upcoming "summertime" third quarter is typically a sluggish trading quarter and we remain prepared for the prospect of continued volatility.
