The numbers below do not take into account Exxon restarting Baytown very soon that will take another 600,000bbl/day off the market. Q2 hedge fund letters, conference, scoops etc “Davidson” submits: US Crude Inv falls 9.5mil BBL & Gasoline Inv fall 1.5mil BBL With this report, US Crude Inv sits ~13mil BBL above [...]
“Davidson” submits: Q2 hedge fund letters, conference, scoops etc 3844328 / Pixabay Rates are like anything else in markets. They are set by market psychology. Central banks think they control rates but they do not. Rates everywhere are set by investor shifts of capital as they seek the best rates of return [...]
“Davidson” submits: Q1 hedge fund letters, conference, scoops etc Hindsight is the most valuable investment tool in the toolbox Market psychology hindsight is ignored as an investment tool. Many will argue that it is routinely incorporated in MPT. Based on prices, MPT’s mathematical analysis on data the basis of which changes with [...]
So, you’ve heard it a lot lately. “Value Investing” is dead: Q2 hedge fund letters, conference, scoops etc Is value investing dead? It might be and here’s what killed it Is Value Investing Dead? Value investing: is the age-old strategy dead? Just google it and you’ll get pages and pages of articles. You’ll repeatedly hear [...]
If your gonna compare the current market to the last two bubble we had (internet and housing), you’re gonna have to wait until the S&P 500 hits 4700 (and earnings stay flat) before we can start having that conversation. Q1 hedge fund letters, conference, scoops etc “Davidson” submits: The Dallas Fed reported [...]
“Davidson” submits: Q1 hedge fund letters, conference, scoops etc Every investment cycle becomes distorted by Momentum Investors. This cycle it is FANG-type issues, Face Book, Amazon, Netflix, Google. At some point during the cycle, those who build indices incorporate them into the key market indices. Yardeni has a piece which shows [...]
“Davidson” submits: Q1 hedge fund letters, conference, scoops etc Enhanced analysis occurs whenever one has identified an information-quality difference between data sources which lets one allocate higher reliance to one data set over another. This occurs whenever one can successfully relate data series the rest of the investment community does not. [...]
“Davidson” submits: Q1 hedge fund letters, conference, scoops etc Panic has driven the 3mo/10yr Treasury spread to -0.18% (negative 18bps). The talk is about the Fed cutting rates, when and how much. Despite this becoming the dominant topic history indicates that the Fed follows 3mo Treasury rates(T-Bill rates) by lagging shifts [...]
“Davidson” submits: Q1 hedge fund letters, conference, scoops etc Real Retail and Food Service Sales reached an new cycle high despite most believing a recession was imminent. The economic evidence indicates there is no recession in our immediate future, i.e. 12mos-24mos. This report has caused a shift in market thinking that [...]
We’ve been “in the late innings” of this economic expansion it seems for years. The last 18 months have featured almost daily recession predictions…..ALL have been wrong Q1 hedge fund letters, conference, scoops etc “Davidson” submits: The market is providing a major teaching moment. Since the introduction of Harry Markowitz’s Modern Portfolio [...]
Not a very recessionary signal... “Davidson” submits: Employment Demand posts new high..CAB reaching towards establishing a new high Employment Demand posts new high on revised data for April 2019. Revisions are typical for much of economic data as late reports are added to the trends. April 2019 1.297 is higher vs Dec [...]
We keep hearing on TV “the stock market is predicting…….”. The problem is markets go up and down every single day. In the short term, they predict nothing Q1 hedge fund letters, conference, scoops etc “Davidson” submits: This morning’s headline: Investors, Buy the Dips: Recession Worry Is Overblown for Now The economic boom looks [...]
“Davidson” submits: Q1 hedge fund letters, conference, scoops etc We could be in the same conditions as 1995 just before the Internet Bubble. The Internet Bubble began with capital flows generated by the Community Reinvestment Act 1995 leading to the subprime crisis 14yrs later. This time Dodd-Frank has constricted mtg lending [...]
Dodd/Frank has caused the distortions we see in the housing market. Q1 hedge fund letters, conference, scoops etc Home building is well below historical measures and that has caused sustained price increases that are pricing new buyers out of the market. Should it be relaxed, we would see a massive stimulus for [...]
“Davidson” submits: Q1 hedge fund letters, conference, scoops etc The Dallas Fed reported the at 12mo Trimmed Mean PCE 2.03%, SP500 a 21% premium to Value Investor Index. Thus far, tariffs the US has imposed on opposing countries to negotiate lower global tariffs has had so little impact on US prices [...]
“Davidson” submits: Q1 hedge fund letters, conference, scoops etc CVSHealth(CVS) is a portfolio suggestion. CVS recently closed its acquisition of Aetna, a healthcare benefits manager. Synergies are expected to extend CVS’s strong financial history. Investors have turned negative and repriced CVS below 10yr lows in Price/Sales and Price/Cash Flows. The last [...]
“Davidson” submits: Q1 hedge fund letters, conference, scoops etc Market continues to trade 10yr Treasury vs US Inflation expectations . This is myopic. The global story is that 10yr Treasuries offer a couple percent above collapsing currencies elsewhere. Since Jan 30, 2018, the Trade Weighted US$ has risen from 85 to 92 today [...]
“Davidson” submits: Q1 hedge fund letters, conference, scoops etc Capital has been leaving China for a while, makes for higher US$ as global safe haven. Normally periods of US$ strength have proven negative for US businesses coupled to exports and commodities priced in US$. The initial surge in the US$ in [...]
“Davidson” submits: Q1 hedge fund letters, conference, scoops etc In this update, the trend of the 12mo Trimmed Mean PCE was raised from 1.7% to 1.85% and the SP500 was projected forward to Dec 2020 at a 65% Premium to the Value Investor Index. At some point investor psychology becomes speculative [...]
“Davidson” submits: Q1 hedge fund letters, conference, scoops etc The Dallas Fed 12mo Trimmed Mean PCE reported at 1.96%..slightly revised higher past 2mos. The Natural Rate is 4.90%. This leaves the SP500 27.4% above the Value Investor Index at $2,311. As stated in prior notes, the Value Investor Index is very good [...]
“Davidson” submits: Q1 hedge fund letters, conference, scoops etc rawpixel / Pixabay Fastenal (FAST) remains a good investment at current levels and a good general market price indicator. The long term growth of FAST has been 14% with the current dividend of 2.5%. Management’s comments with today’s earnings report indicate they see [...]
“Davidson” submits: Q4 hedge fund letters, conference, scoops etc Understanding investment markets requires a historical perspective of past events. It is a combination of historical review of innovations, their associated human responses and subsequent pricing through market psychology. Once one has performed this type of analysis, it should be evident that [...]
