As indicated in our September 7, 2017 article a major bear market would be underway with a successful breakdown of major circular support. Such activity would be seen as a repeat of the breakdown that occurred on April 2002. Here’s the 2002 time period for comparison: Also note the bottom and top formations at concentric circles 1¾ and 2¼ (brown dashed) respectively. They identify the finality of this large correction to the apparently prevailing major downtrend. Now compare this April 2002 breakdown of circular support to the updated chart below showing a new breakdown: Here is a close-up, featuring the markets’ specific interactions...
As I read the third quarter earnings release for Consolidated Communications (Nasdaq: CNSL), I wondered why SafetyNet Pro gave the company a low rating. After all, the telecom services provider has paid the same quarterly dividend since 2006 and claimed a reasonable payout ratio of 69% over the past nine months. This is where it’s helpful to understand how to read financial statements. If you don’t, no worries. I’ll do it for you. Consolidated Communications claims a 69% payout ratio by dividing dividends paid, which was $67 million, by something it calls “cash available to pay dividends,” which totaled $97 million. However, I have ...
Construction spending rose more than expected in November. Revisions add to the gains. Here are some highlights from the Census Bureau’s Monthly Construction Spending Report for November 2017. Total Construction Construction spending during November 2017 was estimated at a seasonally adjusted annual rate of $1,257.0 billion, 0.8 percent above the revised October estimate of $1,247.1 billion. The November figure is 2.4 percent above the November 2016 estimate of $1,227.0 billion. During the first eleven months of this year, construction spending amounted to $1,138.3 billion, 4.2 percent above the $1,091.9 billion for the same period in...
The start of a new year always brings a deluge of tips from Wall Street analysts trying to pick the winners for the year ahead. Bank of America’s team of quant strategists, led by Savita Subramanian believe that the best strategy, based on past results, is to avoid the most crowded stocks and increase exposure to underweight equities. According to a recent report on the topic, since 2009 the ten most overweight stocks have lagged the ten most underweight stocks on average by 57 basis points and 117 bps during the first 15 and 30 calendar days of the year, respectively. Short Crowded Stocks To Generate Alpha Towards the end of last year, t...
As we discussed a few weeks ago, being a pension investor these days has absolutely nothing to do with “investing” in the traditional sense of the word and everything to do with gaming discount rates to make their insolvent ponzi schemes look more stable than they actually are.Here was our recent take on CalPERS’ decision to hike their equity allocation to 50%: CalPERS’ decision to hike their equity allocation had absolutely nothing to do with their opinion of relative value between assets classes and nothing to do with traditional valuation metrics that a rational investor might like to see before buying a stake...
When we talk about winners and losers in Euroland as I did in yesterday’s post, the natural question is, “how can you make everybody a winner?”. And I think this is important while Euroland goes through a cyclical upswing since that’s when reforms can actually be the least painful. And there’s a whole body of work that was devoted to this during the European sovereign debt crisis. What I want to remind you though is that what Emmanuel Macron — now seen as the driving reform agent in Europe — is looking to do is essentially re-create the German model on a European-wide scale. What Macron represents is an olive branch to the...
Note: The charts in this commentary have been updated to include the latest monthly data. Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns. In a “normal” market environment — one with conventional business cycles, Federal Reserve policy, interest rates and inflation — current valuation levels would be a serious concern. But these are different times. The economic cycle shaped by the Financial Crisis that began emerging in 2007 shortly after the Bear Stearns hedge funds collapsed. The Fed b...
While we all know that U.S. interest rates have, by and large, been in a downward trend since the early 1980s, over the past few years market participants have begun to think about positioning portfolios for rising interest rates. As the markets prepare for a transition period in which the U.S. Federal Reserve (Fed) starts to reduce its balance sheet, talk of global accommodation from the European Central Bank (ECB) starts to wane and the U.S. government increases its deficit, we think it is helpful to consider strategies that are tied to interest rate sensitivity, as they can help investors align their equity portfolios with their inter...