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The US Dollar (Again) If we sift through all the noise, the mass layoffs in big tech, the influx of mixed earnings calls, or even the endless opinions on what moves The Federal Reserve will take coming into the second quarter of the year; the one indicator that has had any real value over the past year has been the relationship between equities and the US Dollar.....

Market Watch Update- Summary: For the most part, over the last few months the market has been writing the same story it has been all year. The US Dollar is still King and risk assets have continued to struggle while it has remained strong. Energy is still the strongest sector and interest rates are still on the rise. However, alongside these overarching themes, there have been a few emerging trends that appear to be signaling the tides may be shifting.....

The US Dollar With how strong stocks have been over the past few weeks, our focus again is on the US dollar. This time, however, we are looking at how other securities reacted to its mild pullback from former highs. Historically, investors turn to bonds as a flight to safety. Since bonds have been selling off with stocks as interest rates continued to rise since the Summer of 2020, investors instead attempted to de-risked their portfolios by stockpiling their stock sales into the US dollar......

Market Watch Update - Summary: U.S. equities are now just about even with where they were back in the first week of June last year. Although not much has changed with regard to the price of the index, beneath the surface there has been a monumental shift with regards to both sector strength and sentiment. In the early summer of last year momentum stocks, most notably in the technology and communications sectors, were seemingly impenetrable...

Market Watch Update - The US Dollar: The US Dollar may be the most important asset in the world right now. It is currently attempting to breakout over the 2017 highs to a value it hasn’t reached in nearly two decades. Whether the US Dollar sustains this breakout or fails and begins to fall from here has massive implications for what is happening to other risk-assets...

Market Watch Update - The Federal Reserve Raises Rates: With all of this talk about what the Federal Reserve is going to do, it’s important to understand the implications behind their decisions. They are starting a program to hike interest rates in an attempt to lower inflation in a way that doesn’t cause a drastic reaction from the labor market. The rate increase is the sharpest we’ve seen since 2000 and they have noted that additional moves...

Market Watch Update - Summary: After a few more weeks of choppy trading, the fact that we are still in a range-bound market remains abundantly clear. The risk-on and risk-off indicators continue to oscillate aimlessly as equity indexes can’t seem to decide on a direction for more than a day or two. However, there are a few clearly defined trends that we can use to navigate an otherwise difficult market...

Market Watch Update - Summary: What is the yield curve and why is everyone suddenly talking about a recession? Was that it for the rally we saw at the end of March? Inverted Yield Curve The overwhelming majority of noise in financial markets this past week has revolved around the inverting of the yield curve. More specifically, the 2-year U.S. Treasury Note briefly rose above the 10-year U.S. Treasury Note for the first time since September 2019. Even though this has been...

Market Watch Update - The Inflation Trade: Whether we are looking at domestic stocks, bonds, commodities, or foreign markets, one thing remains clear: the inflation trade is still working. The S&P 500 made new multi-year lows against commodities on Friday while the US 10 Year Treasury rate made new multi-year highs. Everywhere we look in the market, assets that tend to do well in higher interest rate environments...

Market Watch Update - US Market Outlook: We are currently experiencing one of the worst starts of the year in history for US stocks, particularly within growth sectors. When we zoom out, however, we can see that we are really just stuck in a large trading range as there has been no upward progress in the major US indices for 9 months. This type of consolidation is consistent with this being the second year after what we believe to be a new bull market which began...