’Tis the season to be jolly! The scents of pine cone, mistletoe, and speculation fill the air! Wait... what's that last bit, you ask? Speculation? Yes, it's everywhere. Last month, I noted the rise in US margin debt levels and record low credit spreads. Both are indicators of strong risk appetite among investors. That appetite … Continue reading ‘Tis The Season
You wouldn't know it from watching new highs in the S&P 500, but the U.S. is in week five of the longest government shut down in its history! Whether we characterize it as complacency or optimism, it suggests many investors are throwing caution to the wind. Margin debt reflects the amount of money customers borrow … Continue reading Grains of Data and Salt
Financial markets continue charging higher as we head into Q4 2025. As of Q3 end, global equity market prices were up +18% (ACWI) and U.S. bond market prices advanced +3% (AGG) YTD. Gold remains the big outperformer, with YTD price up by +45% (GLD)! Global Markets Q3 2025 YTD MACRO VIEW Economic conditions have been … Continue reading Q4 2025 Update
Before its notoriety as an international blockbuster, "Crouching Tiger, Hidden Dragon" was an ancient Chinese proverb used to describe a person, place, or thing with remarkable but hidden qualities. The current tariffs and trade war resemble an analogous situation for the US with unseen dangers. I recently wrote about the obvious problems of an escalating … Continue reading Couching Tariff, Hidden Danger
Earlier this month, a sudden and violent sell-off in global stocks was attributed to the unwinding of the Yen carry trade, i.e. when investors borrow Yen to buy other assets, like stocks. After the Bank of Japan surprised markets with monetary policies that were more aggressive than expected, investors panicked and reversed the carry by … Continue reading The Next Carry Trade?
I wrote in March that U.S. economic and market conditions continued to improve in 2024 which was positive for risk assets. As though right on cue, the global equity markets began a month-long downturn in April. Clearly, market timing is not a forte of mine, nor has it ever been! To be fair, I also … Continue reading Bad News Good News
Last November, I wrote The Trend is Your Friend. The post summarized improvements observed in various economic and market data and also discussed the age-old market wisdom to not fight a prevailing trend. Based on what we saw, conditions supported increasing risk exposure. That move worked in our favor because markets continued their upward trend. … Continue reading Still Friends
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
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
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