HORAN Capital Advisors

Strength In Employment Not Indicative Of Near Term Recession

 November 1 2019     David Templeton
Today's October employment situation report goes a long way in discarding recent recession chatter. October nonfarm payrolls were reported at 128,000 versus consensus expectations of 90,000. The  previously reported September payroll number was revised higher to 180,000 nonfarm payrolls from 136,000. October's manufacturing employment declined 36,000; however, motor vehicles and parts fell 42,000,...

Elevated Asset Level In Money Market Funds

 October 29 2019     David Templeton
I have noted in recent blog articles the fact investment flows into ETFs and equity mutual funds has been strongly negative, i.e., outflows. Some of the equity outflows have found their way into fixed income ETFs and mutual funds. Another large beneficiary though has been money market funds. The below chart shows assets in money market mutual funds as reported by ICI as of mid week last week. Mone...

Investor Pessimism Is Generally Bullish For Stocks

 October 20 2019     David Templeton
As recent weeks pass it seems the investor sentiment measures are increasingly indicating an investor that is becoming more bearish even as the market continues to trend higher this year. The current investment environment seems like one where the market is climbing the proverbial "wall of worry." A case in point is the spike on Friday in the CBOE Equity Put/Call ratio to .99. This is the highest ...

A China Trade Deal: Reset Higher In Market And Economic Expectations

 October 13 2019     David Templeton
The equity market ended this past week on an upbeat note, reacting positively to a China/U.S. trade deal. In looking at the Dow Jones Industrial Average Index, it gapped higher by 197 points at the open on Friday and was up as much as 517 points until late in the day. The below chart shows the S&P 500 Index and a similar gap higher open occurred Friday.This year the S&P 500 Index is up 18.49% on a...

Fall 2019 Investor Letter: Soft Versus Hard Economic Data

 October 10 2019     David Templeton
In the third quarter many factors contributed to heightened market volatility that tested the patience of investors. If one simply read the headlines this year, they might have adopted a pessimistic market outlook and completely missed the 20% gain in U.S. stocks through the first nine months of the year. A few factors contributing to the volatility are listed below.The trade and tariff issue rec...

Bullish Investor Sentiment Nearing Washout Level

 October 10 2019     David Templeton
Individual investors continue to express a lack of bullishness on stocks. According to the recent release of AAII's Sentiment Survey, bullish investor sentiment fell to 20.31%. This is the lowest level since reaching near the same level in May 2016, at a time the S&P 500 Index was trading at 2,064. Since that time the S&P 500 Index is up nearly 900 points.In addition to the one percentage point de...

Stocks Responding To Improved Earnings Expectations

 October 9 2019     David Templeton
Earnings growth expectations for S&P 500 companies continue to improve with the 12-month forward earnings growth estimate equaling 9.18%. This improving trend has been in place since February and is one tailwind supporting higher stock prices so far this year.Although expected earnings growth estimates experience revisions up to the actual earnings report date, a favorable trend is in place. Looki...

Small Business Optimism Remains Elevated But Down From Earlier Highs

 October 8 2019     David Templeton
The NFIB Small Business Optimism Index fell 1.3 points to 101.8 for the month of September. Although this is the second decline in as many months, the Index remains at a high level. The NFIB report notes, "The survey shows no sign of a recession and indicated continued job creation, capital spending, and inventory investment, all consistent with solid, but slower growth."The single most import pro...

Individual Investors Far From Overly Bullish

 September 26 2019     David Templeton
If readers glean one item from today's release of the American Association of Individual Investors'  Sentiment Survey release, investors are far from bullish. With sentiment measures being contrarian ones, all else being equal, this is a positive for the equity market. This week's survey saw the bullishness reading declined a little over four percentage points to 29.4% with most of this difference...

The Unknowns Can Derail Past Conclusions

 September 21 2019     David Templeton
An important factor associated with writing blog content is it serves as a written record of one's thinking at certain points in time. It is often beneficial to go back and review one's thoughts and conclusions at these various points in time. If the conclusions that are drawn from one's writings turn out to be different than what was expected, understanding why is important going forward.I was cu...
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