Category Archives: US Equities - 6 posts found

Equities and Margins

P/E expansion has been an important driver of US equity returns in recent years. The left chart shows the disaggregation of returns in 5 year blocks going back to 1996. As we can see, in the years 2011-2016, 55% points…


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Extreme Complacency on Russell 2000: Buy Puts

(from our Weekly of 21st February) As we have been noting, the market remains in a risk-on regime, with positive momentum, falling volatility and confirmation from various inter-market relationships such as cyclical stocks outperforming high dividend stocks, high yield outperforming…


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The Dark Side of Reflation

Higher economic growth usually translates into higher bond yields, higher stocks and rising oil prices; but, too much of a good thing is bad for stocks. Over the past few weeks, we’ve shown that our stock/bond RSI signal has triggered….


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No Margin Support for Equities

P/E expansion has been an important driver of US equity returns in recent years. The left chart shows the disaggregation of returns in 5 year blocks going back to 1996. As we can see, in the years 2011-2016, 55% points…


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Oil Goes from Tailwind to Headwind

In most economic cycles, commodities rally very late in the business cycle, and often oil doubles in price before downturns.  Our leading economic indicators are not forecasting an immediate economic downturn, but we are very definitely late cycle on a…


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US Profit Margins to Fall Further

Equity prices are rising and being driven by momentum, but profit margins are set to fall further in line with late-cycle wage pressures and tightness in the labour market.  The biggest cost to businesses is the cost of employees, and…


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