Mitchell Anthony

Coronavirus Update

  The risk of recession continues to rise and as the risk plays out equity markets fall and treasury markets rally.  Stocks generally have fallen almost 20% from their all time highs achieved just a few weeks ago.  Conversely 30 year treasuries have risen almost 15% during that same timeframe as record lows in interest rates are embraced.  The 30 year treasury is now yielding less than 1% and 10 year treasuries are yielding approximately 1/2 of 1%.  If the fear of recession turns into reality treasury yields will undoubtedly move into negative territory across the yield curve and equity prices will possibly fall another 10 to 20%.  Gold has not turned out to be much of a hedge for this recent drop in equity prices.  While gold has done well at times historically during periods of fear gold has now become a bit more of a commodity used in jewelry and hence tied to economic strength.  As recession is embraced investors are less thrilled with gold. Treasuries are a much better hedge for inflation then gold it would appear.Read more

Is the Coronavirus (COVID19) just creating Market Volatility, or is this the End of the growth phase of this Economic Cycle

The steady rally in equity markets that we have enjoyed for over 12 months may have come to an end. Our current rally began in January 2019 after our last correction that occurred in October 2018.  The S&P 500 has declined approximately 11% from its all-time high achieved just a few weeks ago.  Volatility has risen to the highest level in several years over the last two weeks.   Has the rally just paused or is this the beginning of a more significant correction as investors discount the likelihood of the growth phase of this economic cycle ending because of the impact of the coronavirus.  We highly suspect that this is not the case! However, we cannot ignore the unknowns that exist with this highly infectious virus that has not proven to be very deadly, but is a threat to people who already have respiratory distress. The last time we had a coronavirus in the globe was in 2003 with SARS. It began in China as well and mutated from animals very similar to this virus. The SARS virus caused little if any damage to the global economy or the American economy and burned itself out within six months. SARS had a much higher death rate and was also very infectious but never spread to a vast part of the globe.  We have had other viruses over the years that were deadly but have never shut down or changed course of the global economy. SARS, MERS, Swine Flu, the list goes on…Hopefully this will just be another one that is added to the list of viruses that burned himself out before they ever damaged the US economy.Read more

Markets Advance as US Economy Ebbs

The US equity markets moved counter to the economy and the bond markets in the fourth of 2019. US equity markets had their best quarter in years as the S&P 500 advanced 9% and MACM’s dynamic growth portfolio (DG) and diversified equity (DE) advanced 11.9% and 12.9% respectively.  The rally was rooted in several beliefs that grew deeper in the minds of investors as the quarter unfolded. The attacks on capitalism by liberal Democrats began to wane as Warren and Sanders retreated from their strong rhetoric of tearing apart corporate American superstars like Amazon, Facebook, Apple, Google, and Netflix.  The trade picture also improved during the quarter as a deal was struck with the Chinese that would be incorporated in two phases.  While trade has really not impacted the economy in America it has slowed the Asian economies dramatically and hurt global growth.  These manufacturing areas of the world purchase significant amounts of American industrial equipment and this part of the US economy has been soft for several quarters.  These areas of the economy came to life in the fourth quarter and we also saw Netflix and Amazon return to the top of the leaderboard.Read more

Equity Market Recovery Stalls As Global Condition Ebb

By Mitchell Anthony October 21 2019   US Economy continues to ebb and flow.  The recovery in the equity markets that began in January paused in the third quarter as investors became uneasy with weak economic data on global economic conditions, as well as a deteriorating industrial sector here in America.  The consumer side of the economy remains quite robust and as contributed to optimism that has kept the market on a plateau and gave sellers reason to pause.Read more

Q2 2019 - Markets advanced with defensive leadership

Q2 2019 - Markets advanced with defensive leadership By Mitchell Anthony The US Economy continues to ebb and flow producing steady but below trend growth for several quarters.  This trend seems likely to continue as the economic environment stays extremely stable with low inflation, friendly fed policy, and employment at all-time highs.  The Current trends in the US economy show a mixed picture but generally improving economic fundamentals are visible. Read more

Corporate American Superstars

Corporate American Superstars By: Mitchel Anthony Facebook, Amazon, Apple, Netflix, and Google (The FAANG) have been the pride of corporate America for many years and have been at the top of the list of most growth portfolios.  Their innovation has changed the world and given America reason to be proud of what capitalism can produce.  Every economic cycle has growth leaders but these great companies have set a standard that will be remembered for decades if not centuries to come.  There are always doubters and those that believe the growth leaders in our economy are somehow cheating or taking advantage of consumers of their products.  We have seen this talk in the past and undoubtedly will see it again. The political mess in Washington somehow believes that Facebook, Amazon, and Google should be broken up because they have become too big and powerful and as a result are stifling competition.  This has investors concerned and their stock prices have waned as a result.   Apple is suffering from a different type of political problem.  They are caught up in the middle of a trade war that impacts prices for their products.  As a result the growth outlook for the FAANG has clouds on the horizon.Read more

GLOBALIZATION AND THE TRADE WAR

The news flow over the last few weeks has centered on Trumps attempts to level the playing field with America’s adversaries and partners.  This would include China, Mexico, and much of Europe. The game at play involves global trade and Trumps desire to better position America as a major exporter of goods and services to the emerging middle classes in China, India, and Asia.  Investors are always worried about change and this game at play could put America back into a whole new cycle of amazing growth similar to the nifty 50s.  Thus far we have seen more pessimism rather than optimism. As a result the markets have fallen 5 to 7% on this recent news flow. Synthesizing the right decisions out of these developments is our challenge as we try to stay ahead of where investors will go over the next year as they watch Trump do what he does best - negotiate and deal. Read more

Donald Trump Grows Confident On Re-election

Donald Trump surprised the markets and investors last week when he announced decisions to continue to aggressively battle China and seek significant gains in a trade agreement as his reelection year approaches quickly. Most investors believed that Trump was more concerned about the short-term gains for the economy than the long-term potential that would be derived from a trade agreement.  As a result investors likely believed that Trump would back off the aggressive tone he had taken previously toward the Chinese and either sign a compromised agreement or allow this opportunity to pass. This obviously did not happen. Read more

Equity Markets Rebound

US equity markets rebounded at an amazing pace in the first quarter of 2019.  Historically it has almost been unheard of for equity market corrections of 15% or more to be retraced at the same or better pace than what occurred during the fall.  This is exactly what occurred in the first quarter of this year.  This obviously has us thinking deeply about what was behind the selloff that occurred in the fourth quarter and whether it was in fact a manufactured correction by hedge funds seeking to make enormous amounts of money through a big short.  We hypothesized in January of this year that the selloff in the fourth quarter was likely due to a big short put on by hedge funds and institutional investors and not likely due to fears from investors worried about a substantial change in the economic environment.  This seems to be what primarily occurred.  Now in hindsight there are some other observations that can be made and clearly more data is available about the economic conditions that were the headline news driving markets lower in Q4. Read more

Facebook – The F in the FAANG?

By Mitchell Anthony There is a reason why Facebook is the first name in the FAANG!   Facebook has become one of the most widely known companies in the world for many reasons.  It has led the evolution of social media and its tools for sharing ideas, personal views, political views, pictures, and just about everything else has been widely used by Generation X, the millennials, and now the baby boomers.   Facebook has learned how to monetize their products as their clients are highly sought after by anyone with something to sell.  Facebook’s revenue for advertising has been growing hyperbolically and the outlook remains fantastic.  Facebook has also been monetizing information they gather about what their clients do on their platform, what they share with friends, and what sites they visit.  All of this has been done legally and with authorization from the clients. However, what they are doing here has been widely misunderstood by regulatory bodies and the media and anyone seeking to make a story that will sell newspapers. Read more