S&P 500 Earnings Update and Trade Resolution

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Recent volatility in equity markets has been attributed to rising interest rates and concerns that U.S. equities will be unable to maintain what has been historically strong earnings growth. U.S. equities have sharply outperformed their international peers year-to-date, and much of that outperformance stems directly from strong earnings numbers, which have been bolstered by a robust U.S. economy and the effects of corporate tax cuts. At the end of the day, earnings and earnings projections … Read More

2018 Q3 Quarterly Report

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Economic Commentary The US economy continued to hum along in Q3 with very low unemployment and optimism from consumers and businesses alike. The fiscal stimulus has helped boost 2018 consumer spending fueling goldilocks US economic growth with mild inflation, halting immediate worries of an overheating economy which could have led to overzealous rate raising from the Federal Reserve (Fed). It has also led to a decoupling of US economic expectations from the rest of the … Read More

US High Yield Bonds Serving An Unusual Role

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For fixed income investors, 2018 has been a bit of a rocky road. While the S&P 500 is up 10.3% year-to-date, the fixed income landscape has had its share of difficulties. U.S. high yield has managed to quietly miss much of the pain that has hit Emerging Market Bonds, as well as higher quality U.S. corporate bonds and U.S. treasuries. U.S. high yield, as represented by the iShares iBoxx High-Yield ETF (HYG), is up +2.09% … Read More

Should Long-Term Investors Own More Emerging Market Equities?

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Should long-term investors consider allocating more of their equity allocation to emerging markets now? Yes! The iShares Core MSCI Emerging Markets ETF (IEMG) currently trades just above its recent low of $51.25 made on June 27th, the lowest point in just about a year and a potentially attractive entry point. IEMG is the 2nd largest emerging markets ETF with $46 billion in AUM, providing high liquidity, and only charging a 0.14% internal expense ratio. IEMG … Read More

2018 Q2 Quarterly Report

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Economic Commentary Unemployment has continued to decline during the 2nd Quarter (Q2) of 2018 to levels not seen since the beginning of this millennium. With the benefits of hindsight, we know how and why the music stopped on the Dot-com boom, a year after the lowest levels of unemployment since the late 1960’s. Currently, at 3.8%, we are again knocking on the door of the lower-bound limit while pondering its contribution to effects of tight … Read More

Earnings And Stock Market Valuations

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While US equity markets have struggled to maintain consistent upward momentum roughly halfway through 2018, the underlying earnings that ultimately drive equity valuations have received a boost thanks to decent GDP growth and a pro-business administration, highlighted by the recent corporate tax cut legislation. On a trailing twelve-month (TTM) basis, S&P 500 reported earnings are anticipated to rise 9% in Q2 to a forecasted $125. Analysts believe the TTM growth rate will then continue at … Read More

2018 Mid-Year Update

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Economic Backdrop The “goldilocks” scenario of economic growth with low inflation, necessary for the US Federal Reserve (Fed) to continue its moderate pace of quantitative tightening, evaporated temporarily in early February when inflation data surprised to the upside. Sudden spikes in nominal interest rates from rising inflation expectations signaled an expectation that the Fed’s hand would be forced to raise the benchmark Fed Funds rate more quickly than anticipated. It seemed that the Tax Cuts … Read More