The S&P 500 Total Return Index is now down roughly 15% year-to-date, with the Bloomberg US Aggregate Bond Index not far behind, down roughly 10%. The main causes of the dual equity and bond downturns have been the same all year: Inflation: The March Consumer Price Index (CPI) of +8.5% was the highest since 1981.1 Monetary policy tightening: The Federal Reserve is expected to raise the Fed Funds Rate from its current 0.8% to over 3.0% by March 2023.2…
Shortly after we sent out our market update yesterday, Russia invaded Ukraine with military strikes throughout the nation, clearly going well beyond the disputed Donbas region. While not yet a worst-case scenario as civilians/major cities do not appear to have been targeted, these events represent a dramatic escalation and go far beyond the fighting that occurred in Ukraine in 2014. Russia’s end goal remains unclear. At the very least, they appear to be looking to expand and strengthen control of…
The S&P 500 is now down over 10% year-to-date, with the NASDAQ and Russell 1000 Growth down over 15%. We wanted to update you on what we believe to be the primary drivers of the downturn and our thoughts, as the majority of the decline has come since our last communication on January 14. What has changed since January 14? The main update has been corporate earnings, with more large firms echoing JPMorgan (who reported January 14) and citing rising expenses due…
The global economy has bounced back from the pandemic faster and more robust than almost anyone expected, thanks in large part to tremendous fiscal and monetary stimulus from governments around the world. This year will test how economies can endure that assistance being dialed down or removed altogether, though plans vary dramatically for different countries around the world. As we look into 2022, these are a few key topics and events that are top of mind: Inflation continues to be a…
Inflation is the word of the year so far in financial markets. There seems to be a major news item daily on the subject, including this morning’s data showing the highest yearly consumer prices increase since 2008. While it is still unclear if inflation will be higher than current market expectations over the coming years, today we want to cover how we at GGS are thinking about inflation and positioning client portfolios for this possibility. First, let’s look at current…
We want to cover two things in this writing based on client questions we have been receiving: (1) Recent news flow related to short-term traders; (2) Our current market outlook. There have been nonstop headlines the past few weeks regarding the battle between the Reddit/Robinhood/millennial/day-traders vs. the short-sellers/hedge funds/Wall Streeters. What are our thoughts on this? This has not yet affected any company that GGS owns in the vast majority of client accounts. This is primarily happening in smaller companies…
On August 18, the S&P 500 Index officially closed at a new all-time high, surpassing its pre-pandemic high set February 19, 2020. The impact of the COVID-19 pandemic has been dramatic and ongoing, and the world has been subsequently divided between the winners and losers. It is a fair argument that, thanks primarily to global central banks and governments flooding the world with liquidity and vaccine-related optimism, financial asset prices (stocks in particular but also bonds) have been the winners,…
Unprecedented is the word of the day. US Q2 2020 GDP estimated to be -25% from Q1 (seasonally adjusted). The worst prior since quarterly data started in 1947 was -10% in Q1 1958.1 Trailing 4-week US unemployment claims is 22.0 million. The worst prior since data started in 1967 was 2.7 million in October 1982.2 If we’d had knowledge of these two datapoints on 1/1/20, there is no way that we would have expected the S&P 500 Total Return Index…
Today the CBOE Volatility Index (VIX), which tracks the implied volatility of options on the S&P 500 Index, closed at 82.69. This is a new all-time closing high eclipsing the prior mark set 11/20/2008 during the height of the financial crisis. Needless to say, fear, uncertainty and panic are driving the market right now. As far as what has driven the panic, nothing really has changed since our last blog post one week ago – it is clearly still COVID-19…
In addition to more negative coronavirus headlines (ex-China which continues to improve), the big financial news over the weekend was the enormous decline in crude oil prices throughout the globe, with prices tumbling over 20% in one day. Oil prices are now close to $30/barrel vs. over $60/barrel for much of 2019. The reason was the inability of OPEC/Saudi Arabia and Russia to strike a deal to limit output, and instead their decision to actually raise output. The oil market,…
