The Amazon juggernaut continues to crush brick and mortar retailers. On Thursday morning, former retail giant Macy’s, announced that was preparing to fire 5,000 job cuts, including closure of seven previously unidentified stores and other cuts at remaining locations, as it seeks stability in a tumultuous climate for “physical retail.” The retailer’s cost reductions come as it announced that its comparable holiday sales rose a modest 1.1% for the Nov/Dec period relative to 2016. Although the company described its holiday sales as “solid,” the performance trailed fellow department-store chain J.C. Penney, whi...
The jobless claims report released this morning shows a labor market that is supportive of continued growth. Combined with a much better than expected 250,000 increase in private payrolls in the ADP report, the claims data give us every reason to be optimistic about tomorrows jobs report. The seasonally-adjusted 250,000 figure for people filing an initial claim for unemployment insurance brought the 4-week average down to 241,750, which is at the very lower end of historical numbers over the last 4 decades. However, because qualification for a claim has changed over the years, I tend to discount the actual level and look more at the change in...
Yesterday, the minutes of the FOMC December meeting were released. What do they say about the Fed’s stance and what do they mean for the gold market? The Fed Is Divided over Number of Hikes in 2018 At the December meeting, the U.S. central bank increased the federal funds rate by a quarter percentage point to a range 1.25-1.50 percent. The move was widely expected by investors, but there was no unanimity at the meeting as two FOMC members dissented. The Fed officials were also divided over the forecast of three rate hikes in 2018. The hawks noted that more hikes would be appropriate as financial conditions had not tightened since the...
The fourth quarter was dominated by tax reform and its effects on the supply and pricing of municipal bonds. The prospect that one of President Trump’s major initiatives would finally be passed by year-end buoyed the stock market. For a recap of the tax law changes and effects on the municipal market, please see John Mousseau’s commentary “The Muni Take on the Tax Bill (Round Two)”. As we move on from tax reform, many are hopeful that an infrastructure plan will be addressed this year. The ability of municipalities to continue to issue private activity bonds had been threatened in the tax reform process. These bonds help fund traditi...
One of the most intriguing aspects of Ayn Rand’s Atlas Shrugged is that the novel’s protagonists actually have great wealth and thus, the power to really change the world. It was precisely this wealth born of value creation that allowed Rand’s heroes to leave behind their booming industries and establish Galt’s Gulch. And by doing so, our heroes instigated the formation of a new society, one that valued individualism, entrepreneurship, and decentralization. There is something deeply significant about this newfound Bitcoin wealth. While Atlas Shrugged may be a work of fiction, the rise of cryptocurrency has presented a new opportunit...
My Swing Trading Approach With the market gapping up, I will be increasing my stops, but I am less inclined to add new positions at this juncture of the rally. Indicators VIX – Dropped down to 9.15 and even spent some time below 9. This is the area we tend to see some bounces in the indicator and even diverge from market strength. T2108 (% of stocks trading below their 40-day moving average): I am surprised we haven’t seen more out of this indicator over the last two days. Only moved up 0.8% yesterday to 65%. This is somewhat concerninghere. Moving averages (SPX): Currently trading above all the major moving averages. ...
A few weeks ago, we did a deep dive into the factors versus characteristics debate. One of the reasons we’ve brought up this debate is due to the fact that “factor” loadings (from regressions) are arguably not as helpful as portfolio characteristics. In other words, knowing a portfolio P/E ratio is more informative for forecasting expected returns than knowing the HML factor loading is .6. This sentiment is reflected in the paper at hand (“The Cross-Section of Expected Stock Returns” by Jonathon Lewellen. The paper can be found here.): My paper also relates to Fama and French (1997), Simin (2008), and Levi and Welch (2014), who sh...
Written by Preqin Number of deals keeps track with recent years, while total value rises from 2016. In 2017, private equity-backed buyout deals remained on par with 2016’s deal activity, with 4,191 deals worth a total of 347bn. Preqin expects these figures to rise by about 5% as more information becomes available, putting the year broadly level with the 4,271 deals completed in 2016 for a combined $340bn. While deals of less than $100mn accounted for the largest proportion of the number of deals, deals of $1bn or more accounted for almost 70% of all deal value in 2017. North America attracted the most capital through the year, with 2,28...
This update is in response to a standing request for real (inflation-adjusted) charts of the S&P 500, Dow 30, and Nasdaq Composite. It includes the latest monthly close data. Here are two overlays — one with the nominal price, excluding dividends, and the other with the price adjusted for inflation based on the Consumer Price Index for Urban Consumers (which is usually just referred to as the CPI). The charts require little explanation. So far the 21st Century has not been especially kind to equity investors. Yes, markets do bounce back, but often in time frames that defy optimistic expectations. Performance of the SPY ETF The chart...