Data Confirms Soft Patch, Market Shrugs

Economic data published today brought more evidence that a soft patch in the economy has arrived. Today brought the sixth straight week of initial unemployment claims above 400,000, the Conference Board’s Leading Economic Index fell more than expected with a -0.3% decline in April, existing home sales were subpar again, and the Philadelphia Fed manufacturing survey came in much less…

Another Little Sign

Is a bigger market sell-off coming? We are currently debating this question in our investment team meetings, and the answer is not entirely clear at the moment. However, there are technical signs that are starting to emerge which are unsettling to the bulls on the team. We have written before on the deterioration in the…

Sequencing

Lately I’ve been reading a lot about sequencing. The term is used in reference to how the Federal Reserve might go about communicating and then changing current monetary policy. The sequencing might go something like this: 1) The Fed ends quantitative easing as scheduled by the end of June but announces that it will continue…

The Strange Case of Two Unloved Secular Stories

I find it interesting that Pinnacle is currently underinvested in two long-term or secular themes. One is the China growth story and by extension, our investment in emerging market ETFs and funds. The second is the commodity bull market story. Notably both themes are related to the other in obvious ways since China is the…

Soft Patch Upon Us

A number of indicators have led us to believe that the economy is probably slowing at the moment. For example, regional manufacturing surveys have been trending down recently, unemployment insurance claims may have broken their previous downtrend, the Economic Cycle Research Institute recently issued a warning based on their Long Leading Index, defensive equity sectors…

Employment Gains Continue

With recent economic data turning decidedly mixed, raising concerns about the possibility of another economic slowdown similar to the one experienced last spring and summer, it was encouraging to see the monthly employment report released this morning surpass expectations.

Out With Commodities?

Commodities have certainly been on the mind of investors as price gains have been astronomical since a big correction early in 2010. Agriculture stocks were up 70% since then to their recent highs, silver was up just shy of 100%, and even broad commodity indexes were up 37%. These are amazing price moves which have…

Interest Rates & Group Think

Today I had the chance to attend a CFA luncheon in Baltimore with Carl Noble where Jim Grant was the keynote speaker. For anyone not familiar with Jim Grant, he is a very accomplished writer, historian, and value investor, and he writes an excellent newsletter called Grant’s Interest Rate Observer. Jim is also an excellent…

The Osama Bin Laden Bull Market

For many years I have punctuated many discussions about protecting against a market “melt up” by saying, “What would happen if we came in tomorrow and they captured Bin Laden?” Well, last night we found out that Bid Laden is dead. It is something of a surprise to me that as of 3:45 PM this…

A New Cyclical High

On Tuesday, the S&P 500 closed at 1,347, besting its previous bull market high of 1,343 set on February 18th (shown on the chart below). The last two days have seen the market improve upon that, with successively higher closes on Wednesday and Thursday. Stocks are trading higher again today, too, with the S&P currently…