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Matt's Market Insights

Latest Articles

Conditions Are Stabilizing

By Matthew Kerkhoff

 

With each passing day it looks increasingly likely that the February swoon was simply a run-of-the-mill correction, as opposed to the beginning of a full-fledged bear market. But that doesn’t mean we’re out of the woods just yet. Major averages may be reluctant to set new lows, but they’re also in no hurry to get back to new highs.

 

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As Good As It Gets?

By Matthew Kerkhoff

 

It’s really quite amazing how one comment, from one individual, can set the market’s tone for months to come. Normally, this power is reserved for people like the president, or the chairman of the Federal Reserve, who have the power to make decisions that will affect the entire economy.

 

But at the start of this earnings season, the CFO of Caterpillar, Bradley Halverson, made a statement that changed the narrative of this market.

 

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Profits, Breadth, Confidence, LEI’s and Inflation

By Matthew Kerkhoff

 

We have a number of topics to cover today so we’re going to move quickly and may hop around a bit. The first item on our agenda is profits.

 

As of last Friday, just over half of the S&P 500 (53%) had reported earnings. Nearly 80% of those companies have posted positive earnings surprises, which leaves the blended earnings growth for the S&P 500 at 23.2%. If this is the final figure when all is said and done, it would represent the strongest earnings growth since Q3 2010.

 

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What if the World Stopped Growing?

By Matthew Kerkhoff

 

Your mission, should you choose to accept it, is to predict the future. As always, should you or any member of your team be caught or killed, the Secretary will disavow any knowledge of your actions. This message will self-destruct in five seconds …

 

Actually, you don’t get to choose whether or not to accept this mission. You’re an investor. And an investor’s job is – quite simply - to predict the future.

 

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What Happens When the Fed Closes the Term Spread?

By Matthew Kerkhoff

 

If you were to compile a list of the most effective recession predictors, the term spread, or difference between short and long-term interest rates, would likely be at the top of that list.

 

This is because the term spread (also known as the slope of the yield curve) has an uncanny ability to predict economic slowdowns. Over the past 60 years, every recession we’ve experienced has been preceded by an inverted yield curve. Not only that, a negative term spread has ALWAYS been followed by an economic slowdown – even if it did not result in an official recession.

 

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Taking a Step Back

By Matthew Kerkhoff

 

In the stock market, we’re always making bets. Sure, you can call it “investing” to make yourself feel better, but at the end of day when most investors commit capital to the market, they’re doing so with less awareness of the odds than in a typical casino game.

 

What’s interesting, however, is that even those who don’t invest in the stock market are making bets. Their bet is simply that the stock market will produce returns below that of available alternatives, whether that be cash, bonds, gold or anything else.

 

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