Nov
02
We are entering the final stretch of Q3 earnings reporting season. As of yesterday, 310 companies representing roughly 66% of the market capitalization of the S&P 500 index have already reported results. Another 121 companies are scheduled to report before the end of next week, at which point the season...
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Oct
31
We here at CWM practice and preach “cycle investing” – a time honored tradition that reflects our belief that markets and economies have defined “cycles” and that those cycles are highly influenced by monetary policy. The available and cost of credit drives investment, earnings, job growth and the like. Lack...
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Oct
25
Composite PMI readings come out each month and represent a monthly snapshot on the health of the manufacturing and service economies. A reading above 50 is considered good and the underlying economy is experiencing growth. A <50 reading is noting a shrinking economy as measured by output, activity, and prices.A...
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Oct
20
The Federal Reserve controls the front end of the US Treasury (UST) yield curve. The market controls the long end, and the market over the last few months has been worried about supply demand imbalances; rightfully so. My Apologies, you are about to see a lot of charts.The demand side...
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Oct
19
We are one week into the 3Q23 the earnings reporting season. 64 companies have reported so far, 13% of the SP500 and 30% of those reporting to date have been financials/banks. The “beat ratio” – the percentage of companies reporting better than expected earnings – is running at 75%. Granted...
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Oct
18
If the Fed doesn’t hike again, we likely have a mild recession (“soft landing”). If they do hike again, the probability grows significantly/exponentially that the landing is a lot less soft = more likely hard. If the latter occurs, I think the Fed needs to CUT rates sooner rather than...
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Oct
11
Q3 earnings season is about to rev up with the big US banks reporting on Friday and major Tech companies later this month. Over the past three quarters, S&P 500 earnings have contracted on a YOY basis, and current expectations for the overall index are for another marginal decline of...
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Oct
10
In the past three months, the yield on long-dated UST has increased by about +100bps. The front end of the yield curve has barely budged but yields on 10y-30y UST debt are up and up sharply. The Fed controls the front end of the yield curve, but the market controls...
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Oct
05
As we enter Q4, the economy continues to have significant momentum behind it. A consensus of economist estimates the economy should have grown by 3% in Q3. Meanwhile, the Atlanta Fed GDPNow model’s current reading of 4.9% suggests there may be upside risk to that forecast. However, even against such...
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Oct
03
Impossible to ignore the material move higher in 10y UST yields. 4.73% on the 10y UST is its highest level since late 2007. Three take-ways from me on this: The Fed doesn’t have to hike rates – the market is doing it for them for free. Higher yields and a...
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