CJ Update – March 12th, 2020

In our Investment Outlook of this past Monday we addressed the recent return of volatility to the markets and discussed how the COVID-19 event has been the catalyst for what was, at the time, a correction in the stock market. A mere three days later, we’re now writing about the end of the record long bull market as the S&P 500 and NASDAQ joined the DOW in bear market territory this morning. In these past few days, we’ve seen the…

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When Event Risk Becomes Economic Risk

Webster defines Event Risk as the possibility that an unforeseen event will negatively affect a company, industry, or security. However, the spread of the COVID-19 virus has massively expanded the scale of that definition to now include the US and Global economies. It has become the catalyst for what is now the correction we wrote about in our January letter to clients. We didn’t see COVID-19 coming but rather expected the catalyst to be economy or market-related. Over the prior…

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Then and Now. A Tale of Two Quarters

One can’t help but look back a year ago and marvel at the contrast between the current quarter and Q4 2018. Then, the Fed was fully engaged in raising key interest rates, conditions in Europe were eroding along with the prospect for an orderly Brexit, and the U.S./China trade “conflict” was escalating to an all-out war weaponized with tariffs. The resulting market collapse not only wiped out the year’s gains, but posted losses ranging from 3% to 14% across the…

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The R Word

Recession: Defined as negative GDP Growth for two or more consecutive quarters. That’s the word being widely trafficked in the media these days. Outside the US, there’s a contraction occurring in the Rest of the World (“RoW”), raising concerns for the global economy. The trade conflict has become a war, weaponized with tariffs. The UK is looking like it will crash out of the EU. Germany, the economic engine of the EU, is teetering on the verge of its own…

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Investors Bide Their Time While Others Trade the Headlines

To say that this year, to date, has been eventful is an understatement. Following a horrendous close to 2018, the first four months of ‘19 brought us a market melt-up to a new record high (2945) for the S&P 500, courtesy of the Fed’s policy shift into neutral. Soon after, trade “friction” between China and the US devolved into warfare with escalating tariffs as the weapons of choice. That took the S&P back down again almost 7%. Meanwhile, regime change…

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The Fed Successfully Fine Tunes the Economy

As we approached the close to 2018, we witnessed something not seen often, if ever, in this modern era of monetary policy. The Do-Over, or Mulligan for you golfers out there. Typically, when the Fed speaks and the markets react, the FOMC committee Chair goes about his or her business of making the rounds of congressional committees and issuing cryptic statements subject to any number of interpretations by the financial media. The September 2018 policy statement was met by an…

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Can the US Expansion Float the Global Economy?

The period following the posting of our September 18th Outlook has been eventful, to say the least. Following an upbeat finish to the third quarter, the Fed laid an egg in early October with the release of a policy statement that left the impression among investors that it had abandoned its data-dependent approach and was on a mission to raise rates not only this month, but through all of 2019. That left a significant dent in the major averages, wiping…

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Will the Economy Drive the Market Even Higher in 2019?

In the first half of 2018, we put a long overdue correction in the rear view mirror. From there, the S&P 500 has built a nice base from which it has advanced to new record highs in the current quarter, claiming ownership of the record for what is arguably the longest bull market in history. In terms of total return, this market still trails the tech-fueled bull run of 1990-2000 by a good margin. While the talking heads constantly debate…

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It’s Time For Some Investors to be Cautious, Not Bearish

We’re awaiting the outcome of what is now a four-month long consolidation of the stock market that began on January 26th. In our latest letter to clients we pronounced that the last stage of the correction began on April 2nd. Some experts are speculating that this consolidation will be a launching pad for the next leg of this lengthy bull market while others see it as a precursor to the end of the cycle. No doubt, there will be another…

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Checking the Box on the Long-Awaited Correction

The suspense has ended. Finally after two years, the long-overdue market correction began the week of January 29th. Well, at least it did for those of us who define the “market” as the S & P 500. Here’s what you need to know if you’re keeping score: A decline of 10% or more from the market’s most recent high fits the classic description of a correction. A pullback of more than 20% defines a bear market. On February 8th, a…

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