An excerpt from my latest article at seekingalpha.com. After a challenging 2022, global financial markets have gotten off to a strong start in 2023. That has many investors hoping, calling, and fishing for a bottom to the bear market in stocks. Anything is possible in the near term, but whether 2023 marks the start of … Continue reading Bottom Fishing
OVERVIEW The third quarter began with a broad rebound in risk assets. The global equity market regained +13% from its June lows by mid-August. However, sentiment turned again and markets have been volatile since. Year-to-date the global stock market is down near-26%. Emerging markets fared worse, down close to -28%. The losses are broad even … Continue reading Q4 2022 Update
The bear market of 2022 feels more painful than usual because of how broad the selloff has been. From stocks to bonds, to real estate, to cryptocurrency, it seems like there's nowhere to hide. We're all hoping for a bottom in stocks, but hope itself will not help us find one. Fortunately, there are indicators … Continue reading How to Know if The Bear Market is Ending
Equity markets bounced in June, reinvigorated by strong employment data, "no recession" calls from key policymakers, and hopes the Fed would "pivot" away from aggressive rate hikes. Some believed June marked the bottom and we were starting a new bull market. I wasn't convinced by policymakers and wrote markets may want to hold the champagne … Continue reading Not Yet Broken
Today, Chairman Powell reiterated the US is not in recession and will continue to grow in the second half of 2022. Other public officials agree, US Treasury secretary Yellen and US President Biden recently affirmed their own "no recession" opinions. The argument emphasizes a strong labor market and an unemployment rate that hovers near the … Continue reading A Familiar Song & Confetti
MARKET OVERVIEW The global sell-off in financial markets accelerated during Q2. Global equities officially entered a bear market, breaching the technical definition of a -20% decline. US stocks were down most, but all major equity regions were down double digits year-to-date. Even the US bond market was off by -10% for the year. Figure 1: … Continue reading Q3 2022 Update
I've been paying close attention to the US Treasury yield curve since last year because it is, historically, a reliable bellwether for economic conditions. After threatening an inversion for months, the 2-10 year curve finally did so in late March. The inversion was short-lived, however, lasting only days. Figure 1: 2-10 Year Treasury Curve It … Continue reading Splitting Straws on Recession
QUARTER IN REVIEW Q1 was a bumpy ride for investors. Global equity market prices (MSCI ACWI) swung from being down almost -13% to only down about -6% for the quarter. However, the negative returns were broad. All major equity regions and even the US bond market were down YTD. Figure 1: Global Markets YTD MACRO … Continue reading Q2 2022 Update
In January, I wrote BCM was entering 2022 with a reduction in our tactical risk allocation, moving to neutral weight from last year's overweight position. That was a fortunate and timely call given the weak start to this year for risk assets. The rationale was the tailwinds that supported equity markets in 2020 and 2021 … Continue reading Are We There Yet?
The latest inflation numbers came in at 6.8% year-over-year (headline CPI). That's the highest since the 1980s. What's more, the Federal Reserve capitulated from its "transitory" position and has signaled an acceleration of taper and interest rate hikes. Figure 1: US Inflation Unfortunately, this is the scenario I did not want to see but have … Continue reading Potentially Potential
In October, the US printed weaker than expected GDP growth. The first reading was 2% year-over-year versus a consensus forecast of 2.7%, which itself was already well below Q2's 6.7%. This corroborates the "moderating growth" narrative of the past two quarters. That doesn't mean we're on the cusp of a double-dip recession. Actually, some economic … Continue reading The Show Must Go On
NOTE ON UPDATES Starting with Q1 2021, BCM is consolidating its various update notes into a single "Quarter Update," labelled as "Quarter Update" under Categories. This reduces redundancy and makes updates easier to follow. QUARTER REVIEW Q1 started with a rally in risk assets, but equity markets are still off their all-time-highs notched in February. … Continue reading Q2 2021 Update
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