Monthly Archives: January 2016

Earnings Season

One of my favorite industry veterans is the Founder of Vanguard – Jack Bogle. Jack was on CNBC earlier this week and basically said the same thing we have been saying during this period:

“Just stay the course. Don’t do something, just stand there. This is speculation that we’re seeing out there, and you can’t respond to it,” “Each bubble, for lack of a better word, is different from the previous bubble. The dotcom bubble back in 1999 into the beginning of 2000 was a whole lot of ridiculously overpriced new companies, only probably 15 percent of which made it,” Bogle said. “The mortgage bubble was because a lot of people had mortgages, and weren’t able to pay for them.” “We are not in any bubble so do not panic.” Continue reading

Chinese Worries and Oil Prices Continue to Create Uncertainty

Global equity prices took another hit this week as concerns stemming from lower oil prices and China’s ability to stabilize their financial markets has created a “risk-off” environment thus far in 2016. The long-term implications that these events will have on global growth are nearly impossible to quantify and that unknown is what has caused all of this volatility to start off the year. Fear of the unknown has always caused markets to drop somewhat indiscriminately in the short run, but in the long run the market is priced based on fundamentals. Corporate earnings and global macroeconomic indicators will always be a better barometer for financial market performance in the long run, but unfortunately we will have to stomach these volatile swings in the market when uncertainty arises. Continue reading

Global Markets React to Chinese Turmoil

Global equity markets experienced their worst week in over 4 years to start off the year. U.S. stocks fell for the third day in a row as investors maintained their risk-off mentality while China tries to calm their volatile markets. Concerns over a contagion effect stemming from a Chinese equity meltdown were reduced today as Chinese officials set a higher yuan reference rate, suspended the controversial circuit breaker system that had halted equity trading twice in the first week it was implemented and directed state controlled funds to buy local equity shares to serve as a backdrop to their markets. Continue reading

Market Update

Well the selloff in China is not a good way to start out the year. The U.S. and other global stock markets all have sold off to start the year due to the fears regarding the Chinese market after circuit breakers were triggered and trading halted today. Keep in mind that this is very similar to the global selloff that happened in August 2015 that was also the result of China’s currency devaluation. We are watching this situation closely and we are confident that the global markets will rebound as buyers step in to take advantage of this short term selloff. U.S. earnings have started to come out for the fourth Quarter and they look very good thus far. Recent U.S. and European economic data has also shown positive signs that indicate better growth rates are possible in 2016. Low energy costs, cheap cost of capital, low labor rates and raw material costs are all helping companies produce earnings growth which should support equity markets in 2016. We will have our 2016 Market Outlook sent out to you early next week which gives a comprehensive review of the major issues that will impact the markets this year. Continue reading