As investors continue to climb the wall of worry, we believe that the bar is set low for an upside surprise in the markets later this year. Stocks advanced last week as investor confidence in the economic and corporate outlook improved. Lower-than-expected CPI (Inflation) and PPI (Producer Price Index) numbers, combined with last week’s report of modest wage growth, eased inflationary concerns. And, first quarter earnings season continued to outpace analysts’ estimates (more on this be… View More
Looking back on the last four months, to many of us it feels like the stock and bond markets have been run through the ringer. However, it really hasn’t been nearly as bad as it feels. We have certainly seen some big intra-day moves, but they have been both positive and negative. As of April 30th, the Dow Jones Industrial Average is down 1.6%, the S&P is down 0.4%, and the Nasdaq composite is up 2.7% for the year. In the bond market, the Barclay’s Aggregate Bond Index is down 2.4%, the S… View More
Stocks were mixed last week; the Nasdaq and Russell 2000® Index of small companies posted gains for the week while the Dow Jones Industrial Average, S&P 500® Index, and Russell Midcap® Index declined slightly. Earnings continued to dominate headlines (more on this below) although impressive corporate results have not yet led to broad-based gains. Still, the relative outperformance of small cap stocks may indicate a growing preference for riskier assets; historically, this area has ra… View More
Our call, going a little against the grain, is that we may be closer to the middle of the economic cycle than the end and that the effects of the tax cut and fiscal stimulus will extend the cycle further than most think possible. The ability to fully deduct capital expenditures for the next 5 years and the shift to a territorial tax system that frees up trillions of dollars in unrepatriated profits, provides major incentives for companies to invest in their own businesses. As a result, this… View More
1Q earnings are in full swing and growth expectations heading into the reporting period increased from 12.2% on December 31st to 18.5% currently. Normally, expectations get whittled down during the quarter and then earnings post a modest surprise off depressed expectations. With the earnings preannouncement ratio exceptionally low, stocks may be priced for perfection. However, earnings growth is expected to accelerate even further in the coming quarters as companies report better top-line grow… View More