Current Topics

Expanded 2016 US Election Commentary

Topic: US, 11/9/2016

The voters have spoken and Donald Trump will be America’s next President. The Republicans will keep both houses of Congress, losing only a handful of seats. S&P 500 futures plunged in overnight trading, but short-term volatility is normal and US markets have since stabilized, closing the day after elections in positive territory. Markets move most on the gap between reality and expectations. People fear Trump’s campaign pledges, but politicians’ promises rarely become reality.

The Stock Buyback Myth

Topic: US, 6/15/2015

Some feel that firms are returning too much cash to shareholders and not investing enough in the future--particularly in research and development (R&D). Those who share this opinion believe that without R&D, there is less innovation, and we risk falling into "secular stagnation." Despite concerns, stock buybacks have not detracted from investment, which is higher than most suggest.

Retail Recession Label Does Not Fit

Topic: US, 5/26/2016

In the Q1 2016 earnings season, some department stores reported weaker-than-expected results with news of declining sales and profits. Media was quick to dramatize the reports with cries of a US “retail recession” and assertions that the consumer is tapped out —all bad signs for US growth looking forward. However, in this piece, we would humbly suggest that is incorrect.

An Unfavorable Climate For Energy Stocks

Topic: US, 8/17/2015

After rebounding in June, West Texas Crude (WTI) began decreasing and in August reached a six-year low. Energy firms are depleting cash reserves. Their earnings and revenues are declining, and a few struggling firms are beginning to sell assets or enter bankruptcy. Despite contrary assertions, it is too early to bottom fish in Energy.

Assessing Puerto Rico's Debt

Topic: US, 6/15/2015

Greece's debt issues have dominated media lately, however Puerto Rico has its own financial crisis coming into the spotlight. Some call its fiscal situation worse than Detroit. Others see Puerto Rico as "America's Greece," an economy plagued by structural issues, too much debt and in need of deep reform. We believe Puerto Rico-Greece comparisons are apt from this perspective: Greece is mostly a political issue at this point, lacking size and surprise power to cause broad economic or market issues; the same can be said of Puerto Rico.