“Davidson” submits: Q4 hedge fund letters, conference, scoops etc geralt / Pixabay History from 1953 indicates that when the T-Bill/10yr Treas Rate Spread falls to 0.20% or lower a recession occurs, but not this time. The daily T-Bill/10yr Treas Rate Spread data from Jan 2012 provides insight when coupled to other economic [...]
“Davidson’ submits: Q4 hedge fund letters, conference, scoops etc geralt / Pixabay The best investment opportunities occur when market psychology leans far from the economic facts. The current period is one of these. Recession fear still dominates the media while economic trends in place since the beginnings of the current cycle in [...]
“Davidson” submits; Q4 hedge fund letters, conference, scoops etc geralt / Pixabay Recession talk abounds. The media feeds fears that current conditions are leading to the next Great Depression. While some of this talk has abated, predictions of imminent recession continue to fly about at a fast and furious pace. Fundamental Investors [...]
“Davidson” submits: Q4 hedge fund letters, conference, scoops etc Pexels / Pixabay The Value Investor Index for the SP500 shifted a little higher with the drop in recent 12mo Trimmed Mean PCE readings. The Value Investor Index is calculated with inflation in the denominator, lower inflation justifies a higher SP500. The drop in the [...]
The Oct 2018 GDP reveals a nice bump above the longer term Trailing Twelve Month(ttm) trend. GDP includes Government Exp&Inv. The Private GDP excludes Government Exp&Inv to remove the influence from discretionary government spending which skews the true economic picture. Q4 hedge fund letters, conference, scoops etc geralt / Pixabay Real GDP: [...]
Something interesting is happening in oil markets. Goldman is saying $75 in 2019 and inventories took an unexpected fall this week with a draw of 8.6M barrels vs the expected 2.8M gain. Q4 hedge fund letters, conference, scoops etc jplenio / Pixabay This also comes at a time when XOM has shuttered a [...]
“Davidson” submits: Q4 hedge fund letters, conference, scoops etc The Chemical Activity Barometer(CAB) has turned higher. The last 3mos of data have been revised higher. One should have expected this knowing that this index includes chemical company stock data. The market panic of Oct-Dec 2018 drove some chemical company shares lower by [...]
“Davidson” submits: Q4 hedge fund letters, conference, scoops etc Free-Photos / Pixabay Real Retail and Food Service Sales report, delayed due to the government shutdown, was lower than trader expectations. The media hyped this as the “biggest drop since 2009” as if this report was economically significant. It was not! The timing [...]
“Davidson” submits: Q4 hedge fund letters, conference, scoops etc jplenio / Pixabay Momentum Investor algorithms connect oil prices to SP500 much more today than in past. The weekly SP500 vs. $WTI (West Texas Intermediate Oil Price) from July 2009 reflects some correlation 10yrs ago having evolved into an exaggerated correlation today. The [...]
Davidson” submits: Q4 hedge fund letters, conference, scoops etc Job Openings, a leading economic indicator, posts another record high. The economic context is sound. Why have markets not responded? Any single investment recommendation has 2 important components, 1) price vs. future financial surprises and 2) the broad economic context. Being positive at [...]
“Davidson” submits: Q4 hedge fund letters, conference, scoops etc The monthly employment reports always trigger market responses with traders seeking insight to significant turns in existing trends. The Establishment Survey reported a rise of 304,000 with a 90,000 downward revision for Dec 2018. Revisions for previous Establishment Survey reports are routine [...]
“Davidson” submits: Q4 hedge fund letters, conference, scoops etc US Oil Production at 11.9mil BBL/Day is a record high, but so are crude exports while imports are declining. The market focus on single metrics misses the global expansion which drives global energy demand. The US Oil situation chart(click and drag corner [...]
“Davidson” submits: Q4 hedge fund letters, conference, scoops etc High Household Debt levels relative to Disposable Personal Income are the glass houses which collapse when stress hits financial system. Current levels of Household Debt Svc are the lowest since inception of this series in 1980. It is shocking to hear so [...]
“Davidson ” submits: Q4 hedge fund letters, conference, scoops etc Are the growth companies the F.A.N.G. type issues which occur every investment cycle or simply well managed but typically over-looked basic year-over-year improvers of our standards of living? The answer lies in the story of Danaher(DHR), which most of Wall Street [...]
“Davidson” submits: Q3 hedge fund letters, conference, scoops etc As you can see, one always needs to interpret what any data actually is telling us. Being locked in to any single indicator or pattern requires confirmation in other indicators. More than this, one also needs to be aware of the many [...]
“Davidson” submits: The contrast between market psychology and the current economic trend is what produces investment opportunity. Kansas City Southern(KSU) report this morning is one of many which define the current pace of economic activity. In particular, KSU’s business activity represents the US Heartland manufacturing and global export through Gulf [...]
“Davidson” submits: Q3 hedge fund letters, conference, scoops etc The 5yr mov avg of US Inventories vs. market pricing behavior is one of the relationships I track for my investors. Crude pricing correlates closely to capital spendng in your industry even if economic activity is steady elsewhere. The street is focused on [...]
“Davidson” submits: Q3 hedge fund letters, conference, scoops etc Market predictions! Everyone has one. So many predictions that the media will always find someone to tout at any point in time they can label as ‘correct’. For investors seeking guidance the question should be how good were their previous predictions, but [...]
“Davidson” submits: Global markets are in panic, but economics, insiders, valuation measures indicate buying opportunity. To underscore the strong current economic trends, employment continues to rise and vehicle sales remain at decent levels. The recent pessimism is global and in my opinion is connected to price trends reinforced by the [...]
“Davidson” submits: Q3 hedge fund letters, conference, scoops etc There are several indicators which provide an early indication of economic peaks. None of them are signaling a peak is at hand. Their history suggests the current market pessimism is a significant ‘Head-Fake’ by those who 1) believe that price trends reveal [...]
“Davidson” submits: Q3 hedge fund letters, conference, scoops etc Just as the recent bout of excessive pessimism can have an unusual discount pricing impact, what occurs near the end of the market cycle is often excessively optimistic. Using the Investor Value Index as a guide vs the last 2 market tops, [...]
Ben getting a ton of questions on this so here are more explanations. Q3 hedge fund letters, conference, scoops etc “Davidson” submits: Here is a chart of the 4 quarter moving avg Real Private GDP. The BLACK DOTTED LINE is the trend line. This trend is based on quarterly data and a [...]
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