Displaying items by tag: bear market

(New York)

The end of the bull market could be near, and with that in mind (and really any time), it is a good idea to have a preparation plan in mind. Markets have risen sharply this year, and are back near their peak from 2018, explaining why hedging activity is growing. So how to hedge? Defensive sectors and bond markets are popular, but what about things like options and the VIX? Well, that latter has been diminishing in popularity recently, as the CBOE’s VIX did not respond to Q4’s volatility the way many expected. This has led to claims the market is fixed, and in any case, it has not performed well as an S&P 500 hedge. That leaves S&P 500 hedges themselves, such as 30-day SPX put options.


FINSUM: If you understand and are comfortable with options, use them. If you don’t, stay away and stick to sector and asset class-based hedging.

Published in Eq: Total Market
Friday, 05 April 2019 13:29

US Economy Showing Positive Signs

(Washington)

Is the US economy breaking out of its short-term data tailspin? Maybe. This week has seen some improved news, none more so than new hiring data released this morning. US hiring in March was much better, with the economy creating 196,000 jobs, significantly higher than forecasted and up hugely from February’s barely positive numbers. Wage growth decreased slightly in pace, but was solid at 3.2%. The unemployment rate remained steady at 3.8%.


FINSUM: This could mean the weak data recently was just a blip and things are still on course. The data is lining up to show this might have been a big bond market overreaction…

Published in Eq: Total Market
Thursday, 04 April 2019 13:45

Recession Watch: Positive Data!

(New York)

The whole market has been on recession watch mode lately. The Fed has gone seriously dovish and weak economic data seems to be emerging by the day. However, some good news, at last: US jobless data just clocked in at the lowest level in 50 years, showing that the labor market is still tight. The numbers were in contrast to economists’ estimates for higher claims. Claims have fallen this far recently, but been revised higher later.


FINSUM: This is good news but it may not be indicative of much as this data could be slightly behind the hiring numbers, which have been weak recently.

Published in Eq: Total Market
Wednesday, 03 April 2019 12:28

Recession Watch: More Bad Hiring Data

(New York)

The economic picture is growing increasingly gloomy for the US. While there has been sporadically good data, the general trend is downward across many areas. Today, more information on the labor market is signaling a further deterioration. ADP hiring data has been released and it shows that sector hiring has fallen to an 18-month low. The private sector hired 129,000 new workers, missing expectations. “The job market is weakening”, says Moody’s Analytics, bluntly.


FINSUM: The job market seems like a good leading indicator right now. Company’s may be tightening purse strings, which could be a sign that everything is slowing.

Published in Eq: Total Market
Friday, 29 March 2019 11:35

US Growth is Worse Than It Looks

(New York)

Headline fourth quarter growth got downgraded this week to just 2.2% (from 2.6%). That may not seem like a devastating fall, but if you take a closer look at the figures, they are worse than at first glance. In particular, it becomes clear that growth was actually weakening all throughout 2018 (versus 2017). While the fourth quarter especially showed weakness, it was really only two one-time quirks that kept growth as high as it was for the year: increased military spending and higher spending by non-profits. Neither of those factors are very tied to the underlying economy and consumers.


FINSUM: This is pretty eye-opening and does sap our confidence a bit. Consumer spending also barely rose in January, which is another negative sign.

Published in Eq: Total Market
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