The Magnificent Severn tumbled over 3% as disappointing outlooks from giants MSFT and META fueled concerns that the AI frenzy that has powered this cohort has gone too far. As noted several times, the mega sized techs have been priced to perfection and anything short of such—either in the current or in future—would be met … Read more
Rising interest rates are expected to negatively impact valuations, especially shares that are viewed as trading at “lofty valuations.” As widely discussed, yields across the spectrum have increased around 50 to 60 bps since the Federal Reserve lowered interest rates about 5 weeks ago. Because it is/was expected that the central bank would continue lowering … Read more
Treasuries are on track for their worst month in more than two years. The selloff has lifted yields over 60 bps for the month, a rise that many thought was unfathomable five weeks ago following the aggressive 50 bps reduction in the overnight rate and the expectations that another 75 to 100 bps of easing … Read more
The Treasury auctioned $70 billion five-year notes today with a yield of 4.138%, slightly higher than the pre-auction expected yield of 4.12%. This compares to a 3.519% rate at the September sale and is the first auction with a 4% “handle” since July. In theory the yield should not be higher than September’s auction given … Read more
At the time of this writing, betting markets are predicting a 55% chance of a Republican Sweep. As stated many times, regardless as to who wins, the federal deficit must be addressed. However, an argument can be made until the markets experience severe volatility, the issue may not be addressed, and fiscal responsibility may remain … Read more
Even though the Magnificent Seven made a three-month high on heels of TSLA’s 22% surge, the NASDAQ ended up 0.80% and the S & P 500 up 0.21%. Bloomberg commented about today’s massive concentration. The Newswire remarked that the concentration is at highest levels since the 1960’s “Nifty Fifty” era—with the top seven companies accounted … Read more
Equites were again nervous yesterday as the mega tech dragged down the indices. The market is concerned that many of these tech issues are priced to perfection, the Federal Reserve may not be as aggressive as once believed and an economy that at one moment may be too hot and the next to cold. Swap … Read more
Treasuries are on the verge of going negative for the year. The last time Treasuries sold off this much since the Fed started cutting interest rates was 1995. Bloomberg writes the Greenspan Fed lowered rates by 75 bps in the first six months of 1995 and yields on the 10-year and 2-year Treasury then rose … Read more
This week approximately 20% of the S & P 500 post profits. Earnings are expected to beat dumbed down expectations. As written last week, third quarter profit forecasts have been reduced by over 50% since July to a growth rate of about 3% according to Bloomberg. Projected third quarter economic growth however has been increased … Read more
The NASDAQ outperformed Friday as NFLX surged on its earnings report. Third quarter profit reports have generally exceeded expectations. The obvious question should they not given that estimates have been reduced almost by 50% since mid-July and the economy is expanding at over a 3.0% growth rate? Treasuries were nominally higher in price but are … Read more
