Market Update October 27th, 2025 The past few months have been very eventful with the Iran related market drawdown through March followed by the nearly unprecedented surge in April and May, driven by AI related enthusiasm. Equitymarket moves of the magnitude experienced over the past 10 weeks are almost exclusive to the initial rebound from a bear market low. The multitude of cross currents today include extreme valuation and concentration, momentum and enthusiasm for a new technology, unprecedented potential equity supply from 3 mega scale IPOs beginning this week, war and a potential energy crisis, foreign central bank intervention (Japan) and policy tightening, and inflation re-accelerating. Read our full report here

Market Update October 27th, 2025 The government shutdown has curtailed the flow of statistics on the economy for the past few weeks, but private sector data suggests that labor market conditions remain soft and have become the primary policy consideration for the Federal Reserve. The Fed is anticipated to cut short-term interest rates next week and signal further rate cuts in the coming months. This expectation has been a catalyst behind the decline in bond yields, the surge in precious metals and arguably has augmented speculative activity in equity markets.   Read our full report here

Market Update August 19th, 2024 The US equity market rallied relentlessly from the beginning of the year through mid-July and the rally was mostly driven by a handful of large tech companies. This market move has pushed the value of the equity market relative to the size of the economy to a historic high, matching the peak reached in late 2021, and well above previous cyclical peaks. The relationship between the value of the market and the size of the economy is known as the Buffet Indicator because Mr. Buffett views this as the best single measure of valuation for the overall market. Read our full report here

Market Update May 24th, 2024 The weaker than expected April employment report and a less bad inflation report for April revived speculative market spirits for Federal Reserve interest rate reductions, has driven US equity markets to new highs in nominal terms and back to its previous high relative to GDP at approximately 1.9 times. Read our full report here

Market Update March 14th, 2024 The advance in large cap domestic equities over the past few months has been historic in the sense that moves of this magnitude and speed are typically seen only following recessionary bear markets, or in unsustainable bubble environments. We are not in recovery mode today and by many measures the market currently aligns with the extremes that were seen in the dotcom tech bubble in 1999-2000. The AI theme over the past year along with expectations of easier monetary policy have served as the catalysts for this last leg higher. Read our full report here

Market Update February 14th, 2024 The February 13th inflation data sent equity markets sharply lower in the biggest downward move for the market so far this year. For the vast majority of stocks, the year has gotten off to a soft start. The equal weighted Russell 1000 was down by 2.56% YTD through yesterday. The Russell 2000 index of small cap stocks was down 3.02% YTD and remains more than 15% below its peak level reached in 2021. Even prior market leaders Apple (-3.76%) and Tesla (-25.95%) are not performing in today’s market. But the overall market level is up due to a narrowing number of large cap tech stocks that have seen outsized gains, with a few names tied to the AI theme going parabolic in recent weeks. Read our full report here

Market Update January 4th, 2024 As we begin 2024, we continue to see short-term yields as attractive. We have dialed back our near-term enthusiasm for longer term yields following the sharp rally during the past couple of months. The move in longer term yields since October in part reflects what are likely faulty expectations for imminent Fed rate cuts. U.S. equities are very expensive and unattractive in aggregate, with limited pockets of value. Gold should continue to act as a good hedge to governmental irresponsibility and geopolitical instability. The energy sector should be well positioned following underperformance last year, expanding domestic production, a depleted strategic reserve which should provide a price floor, and war tensions in the Middle East that have the potential to drive prices sharply higher. Read our full report here

Market Update November 15th, 2023 With yesterday’s favorable CPI report and the weaker October labor report released early this month, markets are growing convinced that the Fed has completed the rate hike cycle. Assuming the last rate hike of the current cycle occurred on July 26th, we are now 111 days past that event.  The chart below produced by Bloomberg shows the median path of the S&P 500 around the last rate hike of each cycle since 1971.  The data is segmented into cycles that produced recessions and those that did not.  The S&P 500 is currently about 1.5% below its level on July 26th when the Fed last hiked interest rates.  Before the upswing began on October 28th the S&P was down 9.8% from its level on July 26th, almost exactly in line with the median performance of the S&P 500 following the last rate hike in the cohort

Big Picture Market Thoughts September 19, 2023 Our belief is that the equity market most likely reached a cyclical peak in January 2022 due to historic levels of overvaluation, extremely bullish investor sentiment and positioning, and the acceleration in inflation that brought about the most aggressive Fed tightening cycle in the past 40 years. The rally in equity markets from October of last year through July of this year coincided with falling inflation, hopes of a timely reversal of Fed policy, and economic data that turned out to be more resilient than was generally anticipated. The rally was more powerful and longer lasting than we expected given the compelling alternative that fixed income securities provide today. If there is no economic hard landing, there is little reason for the Fed to reverse the rate increases of the past year, leaving fixed income yields quite attractive relative to the dividend and