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
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
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 leadershipBy 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
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 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
US Stocks have regained their footing as predicted in our first quarter newsletter. We believed equities would get back on track after first-quarter earnings reports and economic data that we expected to be quite positive. This is exactly what happened in the second quarter. The leadership centered on domestic equities with NASDAQ and small cap stocks at the top of the list. Foreign markets tumbled as expectations for growth in the globe receded given the current environment for trade and impending tariffs. Emerging markets and China suffered the most with Europe closely behind in the freefall. This downturn came and pushed money into the US markets as the US economy stands strong in the trade war. In anticipation of this MACM exited all of its investments in emerging markets in Europe toward the end of Q1 and repositioned the portfolio in domestic equities leveraged to consumption themes present in America.Read more
Equity Markets Delink From Economic Data And Get Distracted With Washington Policy.
Equity markets in America suffered their worst quarter in over two years as 2018 began on a soft note. The softness in equities in Q1 followed an outstanding year for equities in 2017 and was not surprising for many investors but was unwelcome for traders. The S&P 500 fell .76% in the first quarter of 2018. Mitchell Anthony Capital Management (MACM)’s clients enjoyed much better performance in Q1 with almost all strategies posting positive returns. MACM’s diversified equity portfolio advanced 4.8% , DYNAMIC GROWTH advanced 3.5% HIGHLY FOCUSED EQUITIES advanced 5.4%, ASSET ALLOCATION INCOME advanced 3%, and GROWTH advanced 4% in the quarter. MACM’s clients enjoyed 372 - 620 basis points of positive alpha in Q1 of 2018. This outperformance was attributed to the superior group of equity holdings in the portfolios managed by M ACM. Positive alpha was gained from holdings in healthcare, Internet retailing, technology, and financials. Conversely MACM had only modest holdings in areas like telecom, energy, utilities, and consumer staples (which led the equity market lower).Read more
2017 began with optimism from investors, consumers and businesses. The market’s great year began with a great first quarter followed steadily by similar gains in Q2 - Q4. Washington policy took a turn for the better despite unrest amongst the liberal socialists in our country. Trump’s first year was difficult for him and the nation as the country failed to unite; however, progress was made as Trump proved himself worthy of the job and did get one of his initiatives done! The tax cut was a great victory for business and had some modest benefits for most Americans as well. The obstruction to Trump's plans was unfortunate. It continues but shows signs of waning as liberal democrats are losing face, and possibly their will to continue, as meritless attacks failed to distract the White House agenda, but did wear on the American public’s tolerance for dishonesty from their leaders and the media.
Read more
The American Economy continues to show signs of improvement and the growth picture has improved. As a result the equity markets have moved significantly in the first half of the fourth quarter. Economic results showing the health of the consumer, industrial sector, and globe have trended higher throughout Q4. This along with strong corporate earnings announcements since the end of Q3, have provided fuel for higher equity market prices. While many thought the leadership in the market was due for a change toward value, this has not occurred, and better earnings continue to drive the growth markets higher.Read more
