Why are Investors leaving Risk Assets!
October 12, 2023
Why are Investors leaving Risk Assets! October 10, 2023 By Mitchell Anthony Investors left stocks, bonds, REITs, and bitcoin in the third quarter as the uncertainty for inflation caused investors to hit the pause button for BUYS and contrarily build cash positions. Inflation is still above the Fed speeding limit and higher rates will prevail until inflation buckles. The rush out of risk assets hit treasuries the hardest with the intermediate treasury fund (TLT) down 13% from its July 31 highs dealing a blow to prudent investors who thought treasuries & bonds were a safe place to be. Stocks likewise declined with the S&P 500 down 5% and deeply cyclical value stocks as measured by the Russell 1000 Value (IWD) down over 7%. REITs declined 9% or more with office building REITs down over 15% (BXP) and residential property (REZ) faring a bit better at -7%. MACM’s Dynamic Growth portfolio performed better with a modest decline of 1.9%. Read moreEquities Rock Again – Are New Highs Ahead?
July 4, 2023
Equities Rock Again - Are New Highs Ahead? July 3, 2023 By Mitchell Anthony Investors have returned to risk assets as recent economic data shows a Goldilocks like scenario unfolding yet again. A year ago it was unthinkable that the economy could slow enough to cause inflation to hit a wall without economic growth hitting a wall as well. Somehow the unthinkable is playing out and this Goldilocks like scenario has caused investors to embrace risk assets and give up safe returns of 5% or more in ultra-short treasuries. The S&P 500 rose 8.7% in the second quarter, MACM’s dynamic growth portfolio rose 11.3%, and NASDAQ triple Q’s rose 15.3%. While all of these indexes are still 5 to 10% below all-time highs there has been a substantial bounce in equity markets over the last six months, making an assault on new highs entirely possible. Value stocks were abandoned in favor of sexier growth stocks with the Russell 1000 growth Index advancing 12.8% compared to the Russell 1000 value index returning only 4.1%. The allure of fixed income was lost and treasuries for the most part were down 2 to 4% in the quarter. The stability of the economy combined with much lower inflation drove the performance in the markets! Read moreMarkets Rally Big in Q1! Can it Continue and with What Leadership?
April 11, 2023
Markets Rally Big in Q1! Can it Continue and with What Leadership? April 10, 2023 By Mitchell Anthony The first quarter of 2023 was volatile for both the economy and the financial markets. Expectations for economic growth and expectations for inflation mostly fell during the quarter but optimism for the soft landing ultimately prevailed. Inflation has been a tremendous burden on the US economy for the last two years and consumers are close to the end of their discretionary savings and they have been spending more and getting less for quite a while now. Consumers have yet to show frustration or walk away from the higher prices but it would seem that this sort of mentality is near. The financial markets mostly performed poorly in 2022 as inflation ran out of control and the Fed looked terribly behind in his job fighting inflation. Stocks, Bonds REITS, and Crypto all fell hard. However optimism has started to prevail in 2023 as many of the leading economic indicators showed clear signs of a significant slowdown that will curtail if not end the inflation cycle that we have endured. At this point it is unclear what lies ahead for economic growth but inflation seems set to re-anchor near the 3 to 3 ½% level by the end of 2023.Read moreFirst Major Banking Collapse Since 2009 – What Does it Mean?
March 12, 2023
First Major Banking Collapse Since 2009 – What Does it Mean? March 11, 2023 By Mitchell Anthony Silicon Valley Bank (SVB) collapsed yesterday as depositors withdrew cash! This is the first major banking collapse since the great financial crisis of 2008. While the crisis and details of this takeover are still unfolding the early visibility we have reveals that this failure is not part of a systemic problem within the US economy and we are unlikely to see other banks fail in a similar manner. The problems and circumstances that led to the default seem unique to this highly specialized regional bank that worked almost exclusively with the start-up tech industry in Silicon Valley. At first blush it would appear that the majority of major banks are sound and not subject to the unique circumstances that brought down this highly specialized bank. The problem that we have is the fact that banks are not required to disclose or mark to market their bond portfolios that are being held to maturity or they hope to hold to maturity. There could be significant unrealized losses on these portfolios. This crisis may force banks to reveal their bond portfolio status and it could certainly require them to start paying higher returns on cash deposits. Investors are obviously bracing for the worst and the stock prices for almost all banks plunged by as much as 20 to 30% over the last few days as the crisis unfolded. We believe the crisis and the plunge in bank stock prices likely represents a value opportunity. We have been underweight banks in our portfolio since the pandemic began for reasons such as this!Read moreCan Markets Move Higher with Inflation Finally Heading Lower?
December 23, 2022
Can Markets Move Higher with Inflation Finally Heading Lower? By Mitchell Anthony December 23, 2022 Financial markets have been extremely volatile throughout most of 2022 as high inflation shocked the economy and central banks around the world reacted with significantly higher interest rates. The inflation battle has taken significant time to even dent inflation and the path out of the crisis is still unclear. As a result stocks, bonds, and commodities have all been volatile as inflation and the cost of money is critical to the success of an economic cycle. Inflation peaked in October and has begun to tilt lower but the path back to the feds target of 2% inflation is still very uncertain. Fixed-income securities have declined in value substantially throughout most of the year as the fed pushed rates higher although the decline has paused over the last few months. Equities have followed a similar path but a modest rally has begun several times that is now again struggling. Yields on treasuries have quadrupled this year reaching as high as 4.5% but falling back to 3.7% today. The equity market has ebbed and flowed since the June bottom and three rebounds have occurred. While the first two failed, the third has been quite strong narrowing the S&P 500 loss to -18% YTD.Read more