Publicly listed U.S. corporations will start to report second quarter earnings this week, which should provide some helpful insight into potential areas of weakness in the economy. S&P 500 earnings growth year-over-year (YOY) in Q1 was negative, the first decline since Q2 2016.  Estimates for YOY growth in Q2 2019 as of July 12, 2019...Read More

In our last post, we discussed the recent decline in short-term interest rates and how different portions of the Treasury curve have performed before and after the FOMC begins to lower the Federal Funds Rate.  This week, we will expand the discussion to touch upon how various fixed income sectors perform versus the Bloomberg Barclays...Read More

A few weeks ago, we posted a blog sharing our observation that the only interest rates that were increasing were short-term Treasury rates.  Since that time, short-term rates and the future expectations for short-term rates have started to decline.  This has been driven by investors’ increased belief that the FOMC is going to be cutting...Read More

The following paragraph is a refresher on our macro analysis framework from a prior post: We divide the economy into four components: consumer, corporate, real estate, and government.  We evaluate each component along several factors including, but not limited to, liquidity, leverage, and sentiment.  Each factor is evaluated on both an absolute and trend basis...Read More

Yields on U.S. Treasuries have been declining throughout the 2019 calendar year, and that decline has recently accelerated.  This has led to a discussion about where the demand is coming from and what groups are driving that demand.  Many of these discussions have led to the conclusion that lower interest rates outside of the U.S....Read More

The FOMC started raising the Fed Funds Rate on December 16, 2015.  The FOMC did not increase the Fed Funds Rate again until December 14, 2016 but started to implement rate increases on a more regular basis going forward until December 19, 2018.  As shown in the table below, the 3-month Treasury Bill has increased...Read More

For the last few months, we have been commenting on what we see as a disconnect between the strong rally in the S&P 500 index, the lack of confirmation from other market segments, and the weakness in economic leading indicators.  Based on the most recent bout of volatility centered around trade negotiations, we believe it...Read More

In the blog post last week, we mentioned an apparent lack of confirmation of the new high in the S&P 500 compared to other parts of the equity markets.  We briefly mentioned a similar development in the high yield credit market.  High yield credit has not made a new high versus Treasuries, which peaked on...Read More

On April 26th, the S&P 500 closed above the prior all-time high set on September 21st of last year. While that is noteworthy in terms of history, it also means that the S&P 500 has returned essentially 0% over that time frame. Since the prior high on January 26, 2018, the S&P 500 is only...Read More

In 2018, municipals saw steady and strong demand across all maturities and sectors despite the heightened volatility in the taxable markets.  Even as yields moved higher, the supply/demand imbalance in the municipal market provided enough support for investment grade municipals to post positive returns for the year. In 2019, we have continued to see a...Read More