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Economic Decline with Market Incline  What’s happening now:  Since our last update, the Fed has continued to support the economy through a growing number of actions and promises.  At the June meeting, interest rates were left near zero as an expectation of a full-year decline in economic output to be between 4% and 10% would require such low rates.  In addition, the Fed expects unemployment will remain stubbornly high, around 9% to 10%.  Equity markets initially responded well to the Fed announcement, but shortly began to roil.  On June 11th, the S&P 500 Index fell 5.89% on renewed COVID-19 resurgence [...]

Previous Confirmations and Forward Expectations What’s going on?   When the coronavirus first caused global shutdowns, everyone knew there was historic economic damage occurring across the globe. Reports such as the US weekly initial jobless claims provided a glimpse into what was happening, as the largest number of workers reported a job loss than any other period on record. Still, the report is often revised and leaves much to be satisfied when it comes to understanding the economy. In finance speak, reports like the US weekly jobless claims are lagging indicators as they give us a way to measure the [...]

Markets Rally as the Global Economy Slows at a Dramatic PaceWhat's going on?  The global economy has quickly come to a standstill as efforts to fight the novel COVID-19 virus have continued. Unemployment numbers crushed previous records, with more than 15 million people filing jobless claims in a three-week span during March. Businesses deemed non-essential closed their doors as the demand for consumer discretionary items has disappeared. Credit markets quickly responded to investor's increased appetites for investment-grade or better fixed income securities, and their yields have indiscriminately fallen, diminishing forward expected returns in the process. Bonds with a rating below [...]

Coronavirus Fears Drive Markets While the Economy Continues to GrowWhat’s going on? Markets were rattled by reports of a coronavirus outbreak in China, which has caused tens of thousands of people around the world to be sickened by the illness, which has no vaccine. During the initial reporting, market participants made “safe haven trades” by moving from stocks to U.S. Treasuries and other high-rated fixed-income investments. Although the coronavirus has yet to be contained, markets returned to new highs by February 14th, as the appeal of growth companies continues its momentum from 2019.Why is it important? China is the second-largest [...]

2020 Continues Its Pace From 2019 What’s going on? Although the decade came to a close at the end of 2019, the economy, which began its current expansion over 10 years ago, continues to move forward with growth. U.S. consumers continue to serve as the backbone for the U.S. economy, as wages and inflation grew at a similar pace during 2019, and unemployment rates continue to fall one decimal place at a time. The most important sources of information that caused the largest swings in major markets over the last year were interest rate changes from the Federal Reserve [...]

An improving US consumer, recovering yield curve, and trade progress drive the market higher in November. What’s going on?   Following the Fed’s decision to reduce the Federal Funds Rate by 0.25% in October, U.S. markets continue to enjoy hitting new all-time highs, as economic data continues to hold steady (and in some cases improve) surrounding labor, consumption, productivity, and sentiment. Despite the cut in short-term interest rates, the yield curve is slowly returning to normal and is no longer “inverted.” This will ease the burden on the global banking system and credit markets but will likely bring rising [...]

Team Tempus is committed to keeping you well informed about what’s happening in the markets. Here are a few key topics of conversation that we feel deserve the most attention so far this month.  If you have any questions or would like to continue the conversation, let us know, we appreciate the opportunity.Improved trade negotiations ease market concerns while the Fed prepares for an additional rate cut. What’s going on? It appears that the US and China have reached a meaningful agreement on trade, with final details planned to arrive by November. The agreement states that China will buy a large [...]

What You Should Know Market:  As stock investors seeking yield changed their appetites (preferring value over growth), market volatility experienced a slight uptick throughout the month of September.  The outperformance of value stocks has been largely attributed to the demand for higher-yielding income investments and the historically wide valuation spread between growth and value.  Despite the September rebound, value stocks have underperformed growth stocks by over 25% on a three-year rolling basis.  In aggregate, US large cap stocks remain above the important psychological 200 day moving average, while their international counterparts are only slightly above the same trendline, and [...]

Team Tempus is committed to keeping you well informed about what’s happening in the markets. Here are a few key topics of conversation that we feel deserve the most attention so far this month. Interest Rates and trade dominate the economy right nowWHAT'S GOING ONOn September 18th, the Federal Reserve voted to reduce short-term rates by 0.25% to cushion the U.S. economy against a global slowdown. The Fed’s decision to reduce rates follows their rate cut in July, in which Fed Chairman Powell stated that they would “act appropriately to sustain the expansion,” words that were repeated in the most recent [...]

What You Should Know What’s important? Risk in the stock market increased during August, as the S&P 500 total return closed -1.6% amid ongoing trade disputes and changes to interest rate policy. Interestingly, value stocks underperformed growth stocks during the month, even though value stocks historically perform better during market declines. Large companies continued to outperform small companies by a margin greater than 30%, a trend ongoing since 2017. American indices also continued to outperform developed international as well as emerging markets. The 10-year Treasury Yield has now declined more in the past year than any other year of [...]

Team Tempus is committed to keeping you well informed about what’s happening in the markets. Here are a few key topics of conversation that we feel deserve the most attention so far this month. Yield Curve Inversion – The yield on the 10-year Treasury note broke below the 2-year rate, a “canary in the coal mine” scenario that has historically preceded every recessionary environment since 1978. Many experts argue “this time it’s different” because of a number of reasons, including negative interest rates elsewhere in the world and the unwinding of the U.S. balance sheet.  On average, a recession develops about [...]

What You Should Know 2019’s trajectory of positive returns in the stock market continued through the month of July, marking the second straight month of positive returns. The S&P 500 closed the month positive 1.44% on a total return basis, which tallies 2019’s YTD total return to 20.24%. Most of July’s return was attributed to a strong earnings season. 333 companies in the S&P 500 had reported their earnings by the end of July, with 78% of those companies beating their estimates. Along with the positive performance of earnings, advanced estimates of Q2 2019 U.S. GDP revealed that current expansion [...]