Over the course of the equity rally this year, periodically I have noted the significant level of outflows from equity mutual funds and ETFs. Commensurate with these outflows has been the significant inflows into bond mutual funds and ETFs and money market mutual funds. The Investment Company Institute (ICI) is one organization that tracks fund and ETF flows and for the week ending November 26, 20...
There can be a number of reason for an investor wanting to have an allocation to Gold. One reason for owning Gold is it tends to serve as a safe haven asset and perform well in an environment where economic activity is slowing. On the other hand investors might look to Copper as an investment if they expect a pickup in economic activity as it tends to rise with a growing economy. As noted in a rec...
One potential consequence of an economy that is growing at a slow pace is the higher likelihood that reported economic data has a tendency to conflict with some of the other economic reports. An example of this is the report on manufacturing activity today. Both the Institute for Supply Management (ISM) and Markit reported November Purchasing Manager Index data with the ISM PMI report coming in at...
One difficulty for investors in the U.S. market at the moment is the fact it seems to be hitting new highs on what seems like a daily basis. What gets missed by investors though is a market reaching new highs is actually a bullish signal and tends to be a precursor to additional highs. Below is a chart of the S&P 500 Index provided by The Kirk Report and the red dots show instances where the marke...
One factor impacting investor sentiment at the moment may be the fact the equity market has generated strong returns to date in 2019. The impact on individual investor sentiment has been one of caution. On a price only basis the return on large cap to small cap stocks is in excess of 20% this year, with emerging market returns low double digits as seen below. The second chart shows returns for the...
My last few posts have focused on the strength of the consumer with a part of this strength a result of the strong labor market. Today's jobless claims of 213,000 beat consensus of 218,000 and beat the low end of the range of expectations which equaled 215,000. Now, after a couple more economic reports today it seems the business sector may be in an upswing as well.The Chicago Purchasing Managers'...
Yesterday's blog post focused on the strength of the consumer and the positive impact on the housing market. Also noted in that post was the consumer's improved financial position versus the end of the financial crisis and the current limited draw down of one's home equity. Then today, the U.S. Census Bureau's new home sales report for October proved to be a strong one. Sales of new single family ...
Late last week the National Association of Realtors reported existing home sales of 5.46 million units at an annual rate. This number was slightly below estimates, however, it was higher than the previous month and was 4.6% higher on a year over year basis. As the below chart shows, this rate of sales appears favorable compared to the last several decades. What is important to note is units availa...
The consumer is an important part of the economy as the consumer segment accounts for nearly 70% of GDP. As the current economic expansion continues to extend its record run in terms of length month after month, looking for excesses or bubbles is certainly warranted. However, one area that seems in decent shape is the consumer, yet some recent commentary seems to have some doubt with a focus on th...
Since late August value style equities have outperformed their growth counterparts. Except for a few brief periods over much of the last six years, the growth style has dominated the value style. In late 2015 through late 2016 value dominated growth as seen in the below chart. In a post I wrote several years ago, 2015 Was A Year For Growth Stocks And Only A Handful Were Needed, I also noted how do...