One of the greatest quarterbacks of all time, Drew Brees, recently announced his retirement from the NFL. Brees is retiring with one Superbowl win, nearly a dozen passing records and a red carpet to the Hall of Fame. But 20 years ago, forecasts for his success were mixed at best. A pre-draft scouting report said Brees “would not come anywhere...
This week, $400 billion in direct stimulus payments began flowing into the bank accounts of US households, courtesy of the American Rescue Plan. The Treasury says $262 billion has already been dispersed with the remainder scheduled to go out in the coming weeks. Any investor must wonder: where will this money go next? “Stimulus checks could accelerate the large inflows...
March 13, 2021 The S&P 500 rose 2.7% this week while bonds continued to selloff. The 10-year treasury yield climbed past 1.6%, breaking above a key technical resistance level. The biggest news this week was President Biden signing the $1.9 trillion American Rescue Plan, which was passed along party lines. All told, the government has spent nearly $5 trillion in...
March 6, 2021 The S&P 500 rose +0.8% this week while the bond market selloff continued. The yield on the 10-year U.S. Treasury bond rose to 1.56% from 1.45%. As in previous weeks, rising treasury yields triggered selling pressure in pockets of the equity market, particularly weighing on the highest valuation names. It’s not that the market is worried about...
“Take nothing on its looks, take everything on evidence. There is no better rule.” - Charles Dickens, Great Expectations In March 2018, I wrote an article for RCM about why I thought the Trump Administration’s steel tariffs would eventually backfire. My argument struck some readers as odd, but it was based on empiricism. Trade wars, tariffs, or any other policy...
February 20, 2021 February's equity rally cooled off a bit with the S&P 500 shedding 0.7% this week. The index remains up 5.3% month-to-date though, and energy and bank shares extended their best monthly gains since November. Interest rates jumped as bonds sold off, which we discuss more below. The breakneck rally in copper shows no sign of abating. The...
If energy stocks are heavily shorted, does that spell opportunity? So far in 2021, WTI crude oil is up 22% and the Energy Sector SPDR ETF (XLE) has gained 18%—both outpacing the S&P 500’s 4.9% return. However, investor positioning shows most investors are not capitalizing on energy’s recent outperformance. Short Bias Toward Energy Stocks According to JPMorgan quant guru, Marko...
February 13, 2021 The S&P 500 rose 1.3% this week as treasury yields dipped slightly. It was a relatively quiet week on Wall Street. A closer look, however, reveals a trading frenzy showing few signs of abating. An average of 15.8 billion shares have traded daily over the past three weeks, which is just shy of the 16.1 billion daily...
February 7, 2021 The S&P 500 index rose over 4% this week, gaining the most since November. U.S. employers opened the new year by adding 49,000 jobs in January, a welcomed improvement following sharp declines in December. The U.S. economy is still 9.9 million jobs shy of where it was in February 2020. Many jobs will return with mass immunization...
January 31, 2021 The S&P 500 declined 3.3% this week as positive earnings beats were overshadowed by a mob of day traders who used the power of the internet to spark a 400% rally in the video game retailer, GameStop. “Tuning out the noise” seems to be getting harder by the day. We’re just a single month into the new...
Zoom and Tesla are two hot stocks minting millionaires at a feverish pace. In 2020, Zoom shares rose 396%. The catalyst was a worldwide pandemic that fueled an unprecedented work-from-home revolution, which became so powerful it made the company’s name a verb. In 2020, Tesla shares soared 743%. The catalyst was a worldwide pandemic that fueled an unprecedented day-trading revolution...
Three years ago, I introduced Forbes readers to a stock strategy called the Dobermans of the Dow. This is my annual strategy update. The Dobermans of the Dow is a simple stock screening system with two steps: 1) Rank Dow constituents by Return on Equity (ROE), keep the top 20. 2) Rank remaining names by Free Cash Flow Yield, keep...