Anticipation Is Worse Than Reality

We have seen this story before in the post crisis period. Bond yields start rising amid the swelling expectation that any of the following events are soon to take place: a long awaited sustained economic recovery, a sustained rise in inflationary pricing pressures, and/or a sustained rise in central bank interest rates. During each past episode, interest rate segments of capital markets struggle with the anticipation. But once the eventual reality finally sets in, these segments suddenly find themselves rallying and more than making up for any lost ground in the process. Today, investors once again find themselves experiencing the latest act in this repeated performance. And it is likely that events will play out similarly this time around too.

Please click on the link to read more of my article on Seeking Alpha.

U.S. Stocks: Oh Behave!

The U.S. stock market continues to behave remarkably well. Such persistent resilience among U.S. stocks is notable for a bull market that recently entered its seventh year of largely uninterrupted gains since the quelling of the financial crisis in early 2009. And as long as the uptrend remains intact, investors are best served to respect it until warning signals emerge to confirm that definitive change in trend may actually be taking place. With this downside risk in mind, it should be noted that headwinds continue to accumulate for this market with each passing week, so investors are equally well served to avoid becoming complacent as we continue through 2015.

Please click on the link to read more of my article on Seeking Alpha.

The Fed Trade That’s Money In The Bank

Global markets breathed a collective sigh of relief this week. On Wednesday, many investors were expecting that the U.S. Federal Reserve would emerge from their latest Open Market Committee meeting with hawkish suggestions that interest rates would be on the rise perhaps as early as June. But once the statement was released and Chair Yellen took to the podium with downward revised economic growth forecasts, investors took these more dovish tones as a signal that Fed rate hikes would be coming much later than originally expected. Market euphoria ensued from 2PM on and continued through the remainder of the week across virtually all asset classes including stocks, bonds and commodities. But not every corner of capital markets were pleased at the prospects for Fed rate restraint. And this sliver of differentiation may provide a particularly useful trade for investors once the inevitable Fed rate hikes finally get underway.

Please click on the link to read more of my article on Seeking Alpha.

Lessons From Another Tough Week & The Big Day Ahead

It was another challenging week for the market. Overall, risk assets across various market segments moved steadily lower throughout the week. And those that had been heavily punished the prior week mostly struggled to find their footing. Capital markets are notably weak heading into the main event looming in the coming week. This, of course, is the latest meeting of the U.S. Federal Reserve’s Open Market Committee, which is expected to set the table for raising interest rates in the coming months. Given the market dependence on central bank liquidity, it is a meeting this Tuesday and Wednesday that has the potential to set the tone for the markets throughout the spring and into the summer.

Please click on the link to read more of my article on Seeking Alpha.

Beware Chasing QE

Investors are rushing to the European side of the global stock market ship. In a world that seemingly values the next dollar being printed by a global central banker more than underlying fundamental growth prospects, capital markets in the eurozone have been scrambling higher in recent months following the announcement by the European Central Bank (ECB) that they too are implementing their own quantitative easing program. The case for overweighting Europe is certainly reasonable, particularly given the attractive stock valuations relative to those found in the U.S. With that said, investors should beware of pouring into European stocks simply because QE is now underway. ECB QE is not necessarily the same as Fed QE. And recent history has shown that a QE program is not necessarily a sure fire guarantee to send stock prices higher.

Please click on the link to read more of my article on Seeking Alpha.

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