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Market Outlooks
What small caps might be telling us about the economy and the market
For a big country, we sure have an affinity for little things. Think TV shows: “Tiny House Nation”; sayings: “Big things come in small packages”; and children’s books: “The Little Engine That Could” as being among the more obvious examples of our love of things little or small. It is a love of small things which brings us to the focus of this week’s Weekly Wire, US small cap stocks, and what the asset class might be telling us about the US economy and the US stock market as we approach the second half of 2020.
Market Outlooks
What history will COVID-19 write?
The COVID-19 pandemic has made history in more ways than one, including catalyzing an economic downturn that cost the US more than 20 million jobs and a policy response that saw the Federal Government pass the $2.1 trillion CARES Act, the largest ever US economic rescue package. That said, we don’t think COVID-19 is finished filling up our history books. We think the long-term consequences of the virus could prove much more meaningful than what we have seen to date.
Behavioral Finance
Focused expertise
There have been many restrictions placed on the normal rhythms of life in response to the COVID-19 pandemic. The interactions we typically take for granted such as going to restaurants, spending time with friends, working out at the gym, and traveling on vacation have all been curtailed in an effort to tame the pandemic.
Market Outlooks
The market as a leading indicator…for the market
We frequently write about the stock market as a leading indicator of the real economy. The idea being
the market will anticipate the economic environment to come, rallying in the face of awful economic news and selling off in the face of constructive economic news.
Market Outlooks
Pick a letter, any letter
If one considers that the coronavirus didn’t hit the US economy hard until mid-March, and that our economy has been shut down since, a recession is a foregone conclusion, with Q2 GDP expected to contract about 30% Q to Q
Macroeconomic & Geopolitical
Creative Destruction
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Economist Joseph Schumpeter coined the phrase “creative destruction” to describe the way innovation in the manufacturing process increases productivity while destroying the old way of doing things as a new efficient way is developed.
Market Outlooks
Weekly Wire: When it rains
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Most of the focus on COVID-19 has understandably been on its physical impact, but the psychological impact of a pandemic is also worth considering. Social interaction is a huge source of psychological wellbeing, and its loss, paired with concerns about the market, as well as the health and wellbeing of loved ones, can begin to take a psychological toll.
Market Outlooks
Weekly Wire: The Fed lowers, Biden rises…Now what?
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Market volatility continued through the last week due to ongoing concerns surrounding the spread of COVID19, the shifting Democratic presidential candidate landscape, and their combined economic impact. We’ve experienced wild daily moves in the S&P 500 Index (S&P 500), but as of Wednesday’s close, we’re just 7.5% below the all-time high reached on February 19.
Market Outlooks
Continuing concerns regarding COVID-19
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The global equity markets have continued their decline, which began on February 20, in response to fears over the COVID-19 (coronavirus) becoming a global pandemic. The S&P 500 Index fell -12.0% from February 20-27 and is on pace for another decline on February 28. International equity markets have fared better, with the MSCI EAFE and MSCI Emerging Markets indices declining -7.4% and -6.6%, respectively. The last six days has been the fastest correction (10% drawdown) on record for the S&P 500 off an all-time high, which has likely exacerbated market fears. With the drawdown, the markets are pricing in significant earnings declines as a result of the virus, and certainly weaker global economic activity.
Market Outlooks
Weekly Wire: Vlog: Quarter-end Q&A 4Q2019
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Tim Holland, CFA, asks and answers those questions we think will be top of mind for clients as they open their quarterly statements and think back on the quarter that was:
Market Outlooks
Weekly Wire: Top 10 blog posts of 2019
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From market perspectives with the weekly wire to behavioral finance and technology insights, these are our top 10 blog posts of 2019.
Behavioral Finance
Should I be worried? An investor litmus test
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As a child, I remember seeing my mother’s wooden plaque of The Serenity Prayer that she kept above our kitchen sink. For those not familiar with this popular prayer, it reads...