Posts tagged ‘Trump’
Fed Ripping Off the Inflation Band-Aid
Inflation rates have been running near 40-year highs, and as a result, the Federal Reserve is doing everything in its power to rip off the Band-Aid of insidious high price levels in a swift manner. The Fed’s goal is to inflict quick, near-term pain on the economy in exchange for long-term price stability and future economic gains. How quickly has the Fed been hiking interest rates? The short answer is the rate of increases has been the fastest in decades (see chart below). Essentially, the Federal Reserve has pushed the targeted benchmark Federal Funds target rate from 0% at the beginning of this year to 3.25% today. Going forward, the goal is to lift rates to 4.4% by year-end, and then to 4.6% by next year (see Fed’s “dot plot” chart).
How should one interpret all of this? Well, if the Fed is right about their interest rate forecasts, the Band-Aid is being ripped off very quickly, and 95% of the pain should be felt by December. In other words, there should be a light at the end of the tunnel, soon.
The Good News on Inflation
When it comes to inflation, the good news is that it appears to be peaking (see chart below), and many economists see the declining inflation trend continuing in the coming months. Why do pundits see inflation peaking? For starters, a broad list of commodity prices have declined significantly in recent months, including gasoline, crude oil, steel, copper, and gold, among many others.
Outside of commodities, investors have seen prices drop in other areas of the economy as well, including housing prices, which recently experienced the fastest monthly price drop in 11 years, and rent prices as well (see chart below).
Anybody who was shopping for a car during the pandemic knows what happened to pricing – it exploded higher. But even in this area, we are seeing prices coming down (see chart below), and CarMax Inc. (KMX), the national used car retail chain confirmed the softening price trend last week.
Pain Spread Broadly
When interest rates increase at the fastest pace in 40 years, pain is felt across almost all asset classes. It’s not just U.S. stocks, which declined -9.3% last month (S&P 500), but it’s also housing -8.5% (XHB), real estate investment trusts -13.8% (VNQ), bonds -4.4% (BND), Bitcoin -3.1%, European stocks -10.1% (VGK), Chinese stocks -14.4% (FXI), and Agriculture -3.0% (DBA). The +17% increase in the value of the U.S. dollar this year against a basket of foreign currencies is substantially pressuring cross-border business for larger multi-national companies too – Microsoft Corp. (MSFT), for example, blamed U.S. dollar strength as the primary reason to cut earnings several months ago. Like Hurricane Ian, large interest rate increases have caused significant damage across a wide swath of areas.
But for those following the communication of Federal Reserve Chairman, Jerome Powell, in recent months, they should not be surprised. Chairman Powell has signaled on numerous occasions, including last month at a key economic conference in Jackson Hole, Wyoming, that the Fed’s war path to curb inflation by increasing interest rates will inflict wide-ranging “pain” on Americans. Some of that pain can be seen in mortgage rates, which have more than doubled in 2022 and last week eclipsed 7.0% (see chart below), the highest level in 20 years.
Now is Not the Time to Panic
There is a lot of uncertainty out in the world currently (i.e., inflation, the Fed, Russia-Ukraine, strong dollar, elections, recession fears, etc.), but that is always the case. There is never a period when there is nothing to be concerned about. With the S&P 500 down more than -25% from its peak (and the NASDAQ down approximately -35%), now is not the right time to panic. Knee-jerk emotional decisions during stressful times are very rarely the right response. With these kind of drops, a mild-to-moderate recession is already baked into the cake, even though the economy is expected to grow for the next four quarters and for all of 2023 (see GDP forecasts below). Stated differently, it’s quite possible that even if the economy deteriorates into a recession, stock prices could rebound smartly higher because any potential future bad news has already been anticipated in the current price drops.
Worth noting, as I have pointed out previously, numerous data points are indicating inflation is peaking, if not already coming down. Inflation expectations have already dropped to about 2%, if you consider the spread between the yield on the 5-Year Note (4%) and the yield on the 5-Year TIP-Treasury Inflation Protected Note (2%). If the economy continues to slow down, and inflation has stabilized or declined, the Federal Reserve will likely pivot to decreasing interest rates, which should act like a tailwind for financial markets, unlike the headwind of rising rates this year.
Ripping off the Band-Aid can be painful in the short-run, but the long-term gains achieved during the healing process can be much more pleasurable.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions in MSFT, BND and certain exchange traded funds (ETFs), but at the time of publishing had no direct position in KMX, XHB, VNQ, VGK, FXI, DBA or any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.
New Year’s Resolutions and Vaccine Distributions
Many people were ready to flush 2020 down the toilet after the novel coronavirus (COVID-19) global pandemic dominated the daily headlines, but panic eventually turned into optimism. With last year and a new year celebration now behind us, the annual tradition of creating a New Year’s resolution to better one’s life will be a challenge for many in 2021. Why? Well, from a financial perspective, the stock market, as measured by the S&P 500 index, finished the year at another mind-boggling, all-time record high (+16% for the year), making 2020 a tough act to follow.
One area of the stock market performed exceptionally well. With millions of employees, students, and bored Americans locked down for much of the year, demand for computers, mobile phones, and internet-connected televisions swelled. Due to a flood of sales into devices, gadgets, equipment, and software, technology stocks became huge beneficiaries in 2020. The performance of this sector can be gauged by the results of the tech-heavy NASDAQ index, which skyrocketed an astounding +44%.
Countering the Confusion
Given this unexpected surge in stock prices, many casual observers are asking how is it possible the Dow Jones Industrial Average capped off a year above the 30,000 level (best ever) after a year when 80 million people contracted COVID-19 and almost 2 million humans died from the virus?
This month, we will try to answer this confusing question. We shall explore the factors behind the unprecedented collapse early in the year and the subsequent recovery in stock prices surrounding this perplexing virus.
We’ve experienced a lot over the last year: death, destruction, an emotionally divisive presidential election, social distancing, face-coverings, Amazon deliveries, Netflix binging, DoorDash food deliveries, hand-sanitizer stocking, toilet-paper runs, and endless pants-less Zoom video sessions. After all this insanity, here are some reasons for why your and my investment accounts and 401(k) balances still managed to appreciate significantly last year:
- A COVID Cure: Although roughly only 4 million doses of the COVID-19 vaccine have been administered to date (after a 20 million goal), the government has contracted for the delivery of 400 million vaccine doses from Pfizer Inc. (PFE) and Moderna Inc. (MRNA) by summertime. With these two FDA (Food and Drug Administration) approvals alone, these doses should be enough to vaccinate all but about 60 million of the roughly 260 million adult Americans who are eligible to be inoculated. Even better, each of these cures appear to be over 90% effective. What’s more, in the not-too-distant future, additional relief is on its way in the form of further vaccine approvals by the likes of Johnson & Johnson (JNJ), Novavax Inc. (NVAX), AstraZeneca (AZN), and the Sanofi (SNY) / GlaxoSmithKline (GSK).
- Fed Firemen to the Rescue: As the COVID flames are blazing with record numbers of cases, hospitalizations, and deaths, the Federal Reserve firemen have come to an economic rescue by providing accommodative monetary policies. By effectively setting the benchmark Fed Funds Rate to 0% (see chart below), our central bank is not only stimulating loan activity for businesses, but also lowering the cost of mortgages and credit cards for consumers. In addition, the Fed has been providing support to financial markets and invigorating the economy through its asset purchases. More specifically, the Fed outlined its activities in its most recent December statement:
“The Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.“
- Economic Recovery is Well on its Way: In addition to the unmatched monetary policy stimulus from the Federal Reserve, we have also experienced an unparalleled $4 trillion in fiscal stimulus to trigger a sharp rebound in economic activity (see red line in chart below). There have been multiple rounds of PPP (Paycheck Protection Program) loans given to small businesses, millions of direct checks distributed to unemployed individuals, along with a host of other programs covering the healthcare, education, and infrastructure industries. As a result of these measures, coupled with the vaccines unleashing massive amounts of pent-up demand, pundits are forecasting above-trendline economic GDP growth in 2021 approximately 4% – 5% (e.g., Merrill Lynch +4.6%, Goldman Sachs +5.9%, and the Federal Reserve +3.7% to +5.0%).
As part of the recovery, the banner year in stocks has also helped catapult consumer household balance sheets to over $120 trillion dollars, while simultaneously reducing debt (leverage) ratios (see chart below).
Flies in the Ointment
It’s worth noting that not all is well in COVID-land. Unemployment rates remain at elevated recessionary levels and industries such as travel, leisure, and restaurants persist in devastation by the pandemic. Politically, the hotly contested 2020 presidential election has largely been resolved, but a Georgia runoff vote this week for two Senate seats could swing full control of Congress to the Democrats. With the stock market at fresh new highs, a Democrat sweep in Georgia would likely be interpreted as a mandate for President-elect Biden to increase taxes for many people and businesses. Under this scenario, a temporary downdraft in the market should come as no surprise to any investor. However, any potential tax hikes on corporations and the wealthy should be accompanied with more infrastructure spending and fiscal spending, which could offset the drag of taxes to varying degrees.
Although Sidoxia Capital Management is still finding plenty of opportunities in the stock market while considering these record low interest rates (yield on 10-year Treasury Note of only 0.92%), areas of vulnerability still exist in recent high-flying, money-losing IPOs (Initial Public Offerings) such as Snowflake Inc. (SNOW), Airbnb Inc (ABNB), and DoorDash Inc (DASH).
Other cautionary areas of excess speculation include the hundreds of SPAC (Special Purpose Acquisition Company) deals totaling more than $70 billion in 2020, and the reemergence of Bitcoin froth (up greater than +300% this year). The recent rush into Bitcoin has been fierce, but industry veterans with memory greater than a gnat recall that Bitcoin plummeted more than -80% from its peak to trough in 2018. Suffice it to say, Bitcoin is not for the faint of heart and buyers should beware.While there was a lot of pain and suffering experienced by millions due to the COVID-19 global pandemic, there was a lot to be thankful for as well, including vaccines to cure the global pandemic. Even though we had another record year at Sidoxia Capital Management, there is always room for improvement. At Sidoxia our New Year’s resolution is always the same: Provide superior investment management and financial planning services, as we build sustaining, long-term relationships with our clients.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
This article is an excerpt from a previously released Sidoxia Capital Management complimentary newsletter (January 4, 2021). Subscribe on the right side of the page for the complete text.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions in AMZN, NFLX, MRNA, ZM, PFE, NVAX, and certain exchange traded funds (ETFs), but at the time of publishing had no direct position in DASH, JNJ, AZN, SNY, GSK, SNOW, ABNB, or any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.
Election End + Vaccine Victory = Dow 30,000
There are many variables that affect the direction of the stock market, but there were two factors that pushed the stock market to a record high of 30,000 on the Dow Jones Industrial Average. The mathematical equation solved last month was the following: (Election End + Positive Vaccine Data) = Dow 30,000.
Election Clouds of Uncertainty Lifted
Former Vice President Joe Biden secured 81.1 million popular votes and 302 electoral votes, while incumbent President Donald Trump earned 73.9 million popular votes and 232 electoral votes. President Trump has filed numerous lawsuits in various states challenging the validity of the election results and he has claimed voter fraud in numerous states. However, if the Electoral College certifies the results on December 14th, reversing the election outcome by President Trump will become even more challenging. With President Trump getting 47% of the total versus 51% for President-elect Biden, the country largely remains divided, but investors have gained significant confidence now that the clouds of election uncertainty have lifted.
Vaccine Optimism
Investor optimism was further buoyed by 95%-effective vaccine data released by pharmaceutical companies, Pfizer, Inc. (PFE), BioNTech (BNTX), and Moderna Inc. (MRNA), which helped the stock market surge last month to an all-time record high of 30,000 in the Dow Jones Industrial average (see chart below) before slightly dipping at the end of the month to 29,638 . More specifically, the Dow soared +12% (3,137 points) for the month; the S&P 500 index 11%, and the NASDAQ +12%. For the year, the Dow, S&P, and NASDAQ have climbed +4%, +12%, and +36%, respectively.
Rotating Growth for Value and Large for Small
Given a new president variable with President-elect Biden, stock market investors have reassessed which economic factors and new legislative policies will affect future stock market returns. As I have been discussing with Sidoxia Capital Management clients and Investing Caffeine readers for years, the level of outperformance of “Growth” stocks over “Value” stocks, and “Large-cap” stocks over “Small-cap” stocks has been staggering. If you consider the Russell 1000 Growth index (IWF) has outperformed the Russell 1000 Value index (IWD) by 102% (120% vs. 18%, respectively) since 2016, and the S&P 100 index (Large-cap) outpaced the Russell 2000 (Small-cap) by 33% (67% vs. 34%), you can appreciate the benefit investors have enjoyed by investing with the Large-cap Growth formula in the stock market. But as I have previously pointed out, this level of outperformance is not sustainable forever, historically. Last month, we saw this gap narrow as Small-cap stocks advanced +18% (IWM – Russell 2000) and Value stocks +13% (Russell 1000 Value). Embedded within the Value segment, the energy sector (XLE) skyrocketed +28% for the month and financials (XLF) by +17%.
What Now? Politics Focus on Georgia
Another significant contributing factor to the recent rally has been the election gridlock outcome in Congress. Leading up to the elections, political polls incorrectly predicted a “Blue Wave” of Democratic victories in the House of Representatives and Senate. Under that scenario, Democrats would have had a blank check mandate to push a broad liberal agenda across America. That did not happen. Republicans actually gained more seats than Democrats in the House, and Republicans only lost one seat in the Senate.
All eyes are now on the Georgia Senate runoff election in January. As things stand currently, we effectively have a stalemate in Congress, meaning Democrats will have to fight tooth and nail to pass any new legislation and/or institute higher taxes. If both Democrat candidates win in the Georgia runoff, President-elect Biden and the Democrats will have a narrow majority in Congress, which could lead to more progressive measures, including tax hikes on the wealthy.
Economic Rebound Intact
Despite the uptick in COVID-19 cases and hospitalizations, the economic rebound keeps moving forward. In fact, recent Gross Domestic Product (GDP) forecasts for the fourth quarter of 2020 are expected to exceed an average of +6%. As you can see in the chart below, corporate profits have bounced back to record high and remain relatively high to the slower recovery in GDP.
The economic resurgence experienced has not been limited to the United States. The global expansion, especially in China, has shown up in the upturn of World Trade Volume (see chart below).
Between the Dow hitting 30,000, the millions of votes counted in the elections, and the vaccine effectiveness rates, there have been many numbers to contemplate last month. Suffice it to say, however, the mathematics of these figures show that investors are using this formula to earn all-time record results in the stock market.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
This article is an excerpt from a previously released Sidoxia Capital Management complimentary newsletter (December 1, 2020). Subscribe on the right side of the page for the complete text.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions in certain exchange traded funds (ETFS), but at the time of publishing had no direct position in any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.
Politics & COVID Tricks
Thanks to a global epidemic, trillions of dollars instantly disappeared during the first quarter of this year, and then, abracadabra…the losses turned into gains and magically reappeared in the subsequent two quarters. After a stabilization in the spread of the COVID-19 virus earlier this year, the stock market rebounded for five consecutive months, at one point rebounding +64% (from late March to early September) – see chart below. However, things became a little bit trickier for the recent full month as concerns heightened over the outcome of upcoming elections; uncertainty over a potential coronavirus-related stimulus package agreement; and fears over a fall resurgence in COVID-19 cases. Although the S&P 500 stock index fell -3.9% and the Dow Jones Industrial Average slipped -2.3% during September, the same indexes levitated +8.5% and +7.6% for the third quarter, respectively.
Source: Investors.com
Washington Worries
Anxiety over politics is nothing new, and as I’ve written extensively in my Investing Caffeine blog, history teaches us that politics have little to do with the long-term performance of the overall stock market (e.g., see Politics & Your Money). Nobody knows with certainty how the elections will impact the financial markets and economy (myself included). But what I do know is that many so-called experts said the stock market would decline if Barack Obama won the presidential election…in reality the stock market soared. I also know the so-called experts said the stock market would decline if Donald Trump won the presidential election… in reality the stock market soared. So, suffice it to say, I don’t place a lot of faith into what any of the so-called political experts say about the outcome of upcoming elections (see the chart below).
COVID Coming Back?
One of the reasons stock prices have risen more than 50%+ is due to a stabilization in COVID-19 virus trends. As you can see from the charts below, new tests, hospitalizations, and death rates are generally on good trajectories, according to the COVID Tracking Project. However, new COVID cases have bumped higher in recent weeks. This recent, troubling trend has raised the question of whether another wave of cases is building in front of a dangerous, seasonally-cooler fall flu season. Traditionally, it’s during this fall period in which contagious viruses normally spread faster.
Source: The COVID Tracking Project
Regardless of the trendline in new cases, there is plenty of other promising COVID developments to help fight this pandemic, such as the pending approvals of numerous vaccines, along with improved therapies and treatments, such as therapeutics, steroids, blood thinners, ventilators, and monoclonal antibodies.
Business Bounce
From the 10,000-foot level, despite worries over various political outcomes, the economy is recovering relatively vigorously. As you can see from the chart below, the rebound in employment has been fairly swift. After peaking in April at 14.7%, the most recent unemployment rate has declined to 8.4%, and a closely tracked ADP National Employment Report was released yesterday showing a higher than expected increase in new private-sector monthly jobs (749,000 vs. 649,000 median estimate).
Source: U.S. Bureau of Labor Statistics
From a housing perspective, house sales have been on fire. Record-low interest rates, mortgage rates, and refinancing rates have been driving higher home purchases and rising prices. Urban flight to the suburbs has also been a big housing tailwind due to the desire for more socially distanced room, additional home office space, and expansive backyards. Adding fuel to the housing fire has been record low supply (i.e., home inventories). The robust demand is evident by the record Case-Shiller home prices (see chart below).
Source: Calculated Risk
There are plenty of industries hurting, including airlines, cruise lines, hotels, retailers, and restaurants but the economic rebound along with government stimulus (i.e., direct government checks and unemployment relief payments) have led to record retail sales (see chart below). Spending could cool if an additional coronavirus-related stimulus package agreement is not reached, but until the government checks stop flowing, consumers will keep spending.
Source: Calculated Risk
Besides trillions of dollars in fiscal relief injected into the economy, the Federal Reserve has also provided trillions in unprecedented relief (see chart below) through its government and corporate bond buying programs, in addition to its Main Street Lending Program.
Source:The Financial Times
There has been a lot of political hocus pocus and COVID smoke & mirrors that have much of the population worried about their investments. In every presidential election, you have about half the population satisfied with the winner, and half the population disappointed in the winner…this election will be no different. The illusion of fear and chaos is bound to create some short-term financial market volatility over the next month, but behind the curtains there are numerous positive, contributing factors that are powering the economy and stock market forward. Do yourself a favor by focusing on your long-term financial future and don’t succumb to politics and COVID tricks.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
This article is an excerpt from a previously released Sidoxia Capital Management complimentary newsletter (October 1, 2020). Subscribe on the right side of the page for the complete text.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions in certain exchange traded funds (ETFS), but at the time of publishing had no direct position in any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.
The COVID Comeback
Rocky Balboa (“The Italian Stallion”) the underdog boxer from the movie, Rocky, was down and out until he was given the opportunity to fight World Heavyweight Champion, Apollo Creed. Like the stock market during early 2020, Rocky was up against the ropes and got knocked down, but eventually he picked himself up and rebounded to victory in his rematch with Creed.
The stock market comeback also persisted last month as the COVID-19 pandemic health situation continued to stabilize and the broader economy accelerated business re-openings. For the month, the Dow Jones Industrial Average increased +4.3% (+1,037 points to 25,383), while the S&P 500 index bounced+5.3%, and the NASDAQ catapulted the most by +6.8%.
How can the stock market (i.e., the Dow) rebound +39%, or more than 7,100 points, from the March 2020 lows? The large move is even more surprising once you consider 41 million people have lost their jobs since the epidemic hit American soil (see chart below), and COVID-19 related deaths have climbed to over 100,000 people.
Getting Back to Fighting Shape
By the time we reached Rocky VI, Rocky Balboa was retired and recovered from brain damage. But Rocky is no quitter, and he trained himself into championship fighting condition and got back into the boxing ring. With unemployment rates approaching Great Depression levels, the U.S. economy has been experiencing challenging circumstances as well – a self-induced coma (shutdown). Fortunately, our country has been slowly recovering day-by-day, and week-by-week. The economy may not be back to peak fighting shape, but activity is slowly and consistently getting better.
There are many different perspectives in looking at this extremely complex, unprecedented coronavirus pandemic. The speed and pace of selling stocks during February and March reached radically-high panic levels, as measured by objective indicators like the Volatility Index (i.e., the VIX – or Fear Gauge). However, like a coiled spring, the stock market sprung back up during April and May as stay-at-home orders and quarantine measures around the world significantly bent the curve of COVID-19 infections and deaths (see chart below). As you can see, with the exception of a few countries globally (e.g., Brazil and Russia), the number of daily confirmed deaths has been broadly declining for many weeks.
Estimated infections have been coming down as well, according to the Institute for Health Metrics and Evaluation (IMHE). IMHE estimates also show the number of daily infections has consistently been coming down over the last couple months.
In addition to the stay-at-home orders and social distancing protocols, what has also contributed to the declines in COVID-19 deaths and infections? Two words…”increased testing.” Although, arguably COVID-19 testing got off to a rough start, as seen in the chart below, nevertheless daily tests have risen dramatically over the last couple months from about 100,000 per day to roughly 500,000 per day (see chart below). Increased testing capacity has and will continue to help better control the spread (or lack thereof) of the virus.
Not only has the spread of the coronavirus been substantially mitigated, but the fighting economy has also received an adrenaline shot in the form of trillions of dollars of fiscal and monetary support as I described in my previous article ( see also Recovering from the Coma).
Investors Need to Keep Guard Up
Like Rocky Balboa, the U.S. is a strong, respected fighter but even though strength is being regained, the economy and stock market is susceptible to a surprise upper-cut punch or hook. What could potentially hurt the financial comeback?
- Flare Ups & Second Wave: As cities, counties, and states carry on with expanded business openings, we could experience “flare ups” of COVID-19 infections or a “second wave.” But the good news is, we should be in much better shape to handle these scenarios thanks to expanded stockpiles of ventilators; larger supplies of PPE (Personal Protective Equipment) for frontline workers; increased production of therapeutic drugs like remdesivir from Gilead Sciences Inc. (GILD); and improved contact tracing from the magnified number of tests. And this analysis doesn’t even contemplate the more than 100 vaccines being developed (i.e., a potential cure) for COVID-19, which could be available in limited quantities as early as the end of this year.
- Social Unrest: The death of George Floyd, an African-American man who died after a Minneapolis police officer forcefully restrained George by keeping his knee on his neck, which triggered lethal complications to the victim. As a result, nationwide racial injustice protests and disruptive violence have erupted, thereby forcing government intervention with the hope of limiting violence and damage caused by non-peaceful protesters.
- Strained Relations with China Due to Actions in Hong Kong: Recent political actions mandated by the Chinese government to strip autonomy from Hong Kong has strained relations with the United States, and progress made with the previous U.S. – China trade deal could erode.
- Inflation: Despite no near-term evidence of rising prices, the unparalleled increase of trillions of dollars in fiscal debt and deficits has the credible long-term potential of creating incendiary inflation that could burn through consumers’ buying power.
Rocky Balboa faced many formidable foes in the boxing ring, including Clubber Lang (Mr. T) and Russian Ivan Drago, but Rocky survived and persevered. The stock market is bound to face future punches from unforeseen challengers in the form of impending known and unknown threats, but the alarmist calls for a COVID knockout appear to be overstated.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
This article is an excerpt from a previously released Sidoxia Capital Management complimentary newsletter (June 1, 2020). Subscribe on the right side of the page for the complete text.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions in GILD and certain exchange traded funds (ETFS), but at the time of publishing had no direct position in any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.
Missing the Financial Forest for the Political Trees
In the never-ending, 24/7, polarizing political news cycle, headlines of Ukraine phone calls, China trade negotiations, impeachment hearings, presidential elections, Federal Reserve monetary policy, and other Washington based stories have traders and news junkies glued to their phones, Twitter feeds, news accounts, blog subscriptions, and Facebook stories. However, through the incessant, deafening noise, many investors are missing the overall financial forest as they get lost in the irrelevant D.C. details.
Meanwhile, as many investors fall prey to the mesmerizing, but inconsequential headlines, financial markets have not fallen asleep or gotten distracted. The S&P 500 stock market index rose another +1.7% last month, and for the year, the index has registered a +18.7% return. As we enter the volatile fourth quarter, many stock market participants remain shell-shocked from last year’s roughly -20% temporary collapse, even though the S&P 500 subsequently rallied +29% from the 2018 trough to the 2019 peak.
Why are many people missing the financial forest? A big key to the significant rally in 2019 stock prices can be attributed to two words…interest rates. Unlike last year’s fourth quarter, when the Federal Reserve was increasing interest rates (i.e., tapping the economic brakes), this year the Fed is cutting rates (i.e., hitting the economic accelerator). Interest rates are a key leg to Sidoxia’s financial four-legged stool (see Don’t Be a Fool, Follow the Stool). Interest rates are at or near generational lows, depending where on the geographic map you reside. For example, interest rates on 10-year German government bonds are -0.55%. Yes, it’s true. If you were to invest $10,000 in a negative yielding -0.55% German bond for 10-years starting in 2019, if you held the bond until maturity (2029), the investor would get back less than the original $10,000 invested. In other words, many bond investors are choosing to pay bond issuers for the privilege of giving the issuers money for the unpalatable right of receiving less money in the future.
The unprecedented negative-yielding bond market is reaching epic proportions, having eclipsed $17 trillion globally (see chart below). This gargantuan and growing dollar figure of negative-yielding bonds defies common sense and feels very reminiscent of the panic buying of technology stocks in the late 1990s.
Source: Bloomberg
At Sidoxia Capital Management, we are implementing proprietary fixed income strategies to navigate this negative interest rate environment. However, the plummeting interest rates and skyrocketing bond prices only make our bond investing job tougher. On the other hand, declining rates, all else equal, also make my stock-picking job easier. Nevertheless, many market participants have gotten lost in the financial trees. More specifically, investors are losing sight of the key tenet that money goes where it is treated best (go where yields are highest and valuations lowest). With many bonds yielding low or negative interest rates, bond investors are being treated like criminals forced to serve jail time and pay large fines because future returns will become much tougher to accrue. In my Investing Caffeine blog, I have been writing about how the stock market’s earnings yield (current approximating +5.5%) and the S&P dividend yield of about +1.9% are handily outstripping the +1.7% yield on the 10-Year Treasury Note (see Going Shopping: Chicken vs. Beef ).
Unless our economy falls into a prolonged recession, interest rates spike substantially higher, or stock prices catapult appreciably, then any decline in stock prices will likely be temporary. Fortunately, the economy appears to be chugging along, albeit at a slower rate. For instance, 3rd quarter GDP (Gross Domestic Product) estimates are hovering around +2.0%.
Low Rates Aid Housing Market
Thanks to low interest rates, the housing markets remain strong. As you can see from the chart below, new home sales continue to ratchet higher over the last eight years, and lower mortgage rates are only helping this cause.
Source: Calafia Beach Pundit
The same tailwind of lower interest rates can be seen below with rising home prices.
Source: Calculated Risk
Consumer Flexes Muscles
At 3.7%, the unemployment rate remains low and the number of workers collecting unemployment is near multi-decade lows (see chart below).
Source: Calafia Beach Pundit
It should come as no surprise that the more employed workers there are collecting paychecks, the more consumer confidence will rise (see chart below). As you can see, consumer confidence is near multi-decade record highs.
Source: Calafia Beach Pundit
Although politics continue to dominate headlines and grab attention, many investors are missing the financial forest because the political noise is distracting the irrefutable, positive effect that low interest rates is contributing to the positive direction of the stock market and the economy. Do your best to not miss the forest – you don’t want your portfolio to suffer by you getting lost in the trees.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
This article is an excerpt from a previously released Sidoxia Capital Management complimentary newsletter (October 1, 2019). Subscribe on the right side of the page for the complete text.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions and certain exchange traded funds (ETFs), but at the time of publishing had no direct position in any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.
The Rollercoaster December to Remember
Last month turned out to be a memorable one for stock market investors, but unforgettable for many of the wrong reasons. Santa Claus left more dark coal than shiny gifts, judging by the -9.2% correction last month in the S&P 500 index, making it the worst December since 1931. Overall, the damage for the year was much more palatable, down -6.2% for the 12-month period. This result contrasts with the +9.5% gain in 2016, +19.4% gain in 2018, and +276.0% gain achieved since the March 2009-low.
If I were to compare 2017 and 2018 to an amusement park, 2017 was more like a calm train ride (slow, smooth, and steady), while 2018 was more like a rollercoaster (fast, and rocky with lots of ups and downs). Stock market history tells us that on average stock prices should fall -5% three times per year and -10% one-time per year. Well, 2017 was like a walk in the park if you consider there were no -5% or -10% dips during the year, whereas in 2018, we had -12% and -20% corrections, before bouncing somewhat during the last week of the year. Rollercoaster rides can be fun, but if the bumpy ride lasts too long, park visitors will likely need a sick sack.
The heightened level of volatility can be seen in the Fear Gauge or the Volatility Index – VIX (see chart above), which has been bouncing around like a spiking cardiogram in response to the following news headlines:
- Government Shutdown
- Global Trade (China)
- Federal Reserve Interest Rate Policy
- Mueller Investigation
- New Balance of Power in Congress
- Brexit Deal Uncertainty
- Recession Fears
While there have been some signs of slowing growth in key areas like automobile and home sales, the overall economy has been doing quite well on the back of consumer spending, which accounts for upwards of 70% of our country’s economic activity (see GDP chart below). In fact, recently released Mastercard consumer retail holiday spending data grew +5.1% to a record level exceeding $850 billion.
Corporations, which are also helping propel continued growth in our $20 trillion economy, are producing record profits, as you can see from the chart below. This in turn has led to an amazingly low unemployment rate of 3.7%, the lowest jobless figure posted in 49 years.
Source: Calafia Beach Pundit
Overall, economic fundamentals may remain strong, but in the face of the positive data points, fears of an impending recession overpowered the good news last month, resulting in stock prices that are much more attractively valued right now. For example, if you are shopping at a department store, it’s much more advantageous for the buyer to purchase items on sale versus paying full price. Or as the most successful investor of all-time, Warren Buffett, famously notes, “Be fearful when others are greedy and greedy only when others are fearful.” And recently, investors have been very fearful. As you can see from the chart below, prices as measured by the Price-Earnings ratio (P/E) are below the long-term, multi-decade average. This fact is even more relevant in light of the historically low inflation and interest rates (10-Year Treasury Note at 2.69%). Unsurprisingly, during the 1970s and early 1980s, double digit interest rates and inflation were relatively high leading to low, single digit P/E stock ratios over many years.
Source: Calafia Beach Pundit
Just because stock prices went down last month, does not mean they cannot go even lower. However, the rollercoaster ride experienced in recent months, coupled with the fresh turn of the calendar year, provide investors a perfect opportunity to revisit their asset allocation and potentially rebalance your portfolios to meet your long-term objectives and constraints. More attractive equity prices improves the timing of this exercise. Regardless, the adrenaline-filled ups and downs may be feel scary now, but the ride will be more enjoyable if you buckle up don’t lose sight of your long-term goals.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
This article is an excerpt from a previously released Sidoxia Capital Management complimentary newsletter (January 4, 2018). Subscribe on the right side of the page for the complete text.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions and certain exchange traded funds (ETFs), but at the time of publishing had no direct position in any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.
Will Santa Leave a Lump of Coal?
As we enter the last month of the year, the holiday season is kicking into full gear, decorations are popping up everywhere, and the burning question arises, “Will Santa Claus bring gifts for stock market investors, or will he leave a lump of coal in their stockings?”
It was a bumpy sleigh ride last month, but we ultimately entered December in a festive mood with joyful monthly gains of +1.7% in the Dow Jones Industrial Average, and +1.8% in the S&P 500. There have been some naughty and nice factors leading to some turbulent but modest gains in 2018. For the first 11 months of the year, the Dow has rejoiced with a +3.3% advance, and the S&P 500 has celebrated a rise of +3.2% – and these results exclude additional dividends of approximately 2%.
Despite the monthly gains, not everything has been sugar plums. President Trump has been repeatedly sparring with the Federal Reserve Chairman, Jerome Powell, treating him more like the Grinch due to his stingy interest rate increases than Santa. As stockholders have contemplated the future path of interest rates, the major stock indexes temporarily slipped into negative territory for the year, until Mr. Powell gave stock and bond investors an early Christmas present last week by signaling interest rates are “just below” the nebulous neutral target. The dovish comment implied we are closer to the end of the economy-slowing rate-hike cycle than we are to the beginning.
Trade has also contributed to the recent spike in stock market volatility, despite the fresh establishment of the trade agreement reached between the U.S., Mexico, and Canada (USMCA – U.S.-Mexico-Canada Agreement), a.k.a., NAFTA 2.0. Despite the positive progress with our Mexican and Canadian neighbors, uncertainty surrounding our country’s trade relations with China has been challenging due to multiple factors including, Chinese theft of American intellectual property, cyber-attacks, forced technology transfer, agricultural trade, and other crucial issues. Fortunately, optimism for a substantive agreement between the world’s two super-powers advanced this weekend at the summit of the Group of 20 nations in Argentina, when a truce was reached to delay an additional $200 billion in tariffs for 90 days, while the two countries further negotiate in an attempt to finalize a comprehensive trade pact.
Source: Financial Times
Economic Tailwinds
Besides positive developments on the interest rate and trade fronts, the economy has benefited from tailwinds in some other important areas, such as the following:
Low Unemployment: The economy keeps adding jobs at a healthy clip with the unemployment rate reaching a 48-year low of 3.7%.
Source: Calculated Risk
Rising Consumer Confidence: Although there was a slight downtick in the November Consumer Confidence reading, you can see the rising long-term, 10-year trend has been on a clear upward trajectory.
Source: Chad Moutray
Solid Economic Growth: As the chart below indicates, the last two quarters of economic growth, measured by GDP (Gross Domestic Product), have been running at multi-year highs. Forecasts for the 4th quarter currently stand at a respectable mid-2% range.
Source: BEA
Uncertain Weather Forecast
Although the majority of economic data may have observers presently singing “Joy to the World,” the uncertain political weather forecast could require Rudolph’s red-nose assistance to navigate the foggy climate. The mid-term elections have created a split Congress with the Republicans holding a majority in the Senate, and the Democrats gaining control of the House of Representatives. As we learned in the last presidential term, gridlock is not necessarily a bad thing (see also, Who Said Gridlock is Bad?). For instance, a lack of government control can place more power in the hands of the private sector. Political ambiguity also surrounds the timing and outcome of Robert Mueller’s Special Counsel investigation into potential Russian interference and collusion, however as I have continually reminded followers, there are more important factors than politics as it relates to the performance of the stock market (see also, Markets Fly as Media Noise Goes By).
From an economic standpoint, some speculative areas have been pricked – for example the decline in FAANG stocks or the burst of the Bitcoin bubble as the price has declined from roughly $19,000 from its peak to roughly $4000 today (see chart below).
Source: Coindesk
On the housing front, unit sales of new and existing homes have not been immune to the rising interest rate policies of the Federal Reserve. Nevertheless, as you can witness below, housing prices remain at all-time record high prices, according to the recent Case-Shiller data.
Source: Calculated Risk
I like to point out to my investors there is never a shortage of things to worry about. Even when the economy is Jingle Bell Rocking, the issues of inflation and Fed policy inevitably begin to creep into investor psyches. While prognosticators and talking heads will continue trying to forecast whether Santa Claus will place presents or coal into investors’ stockings this season, at Sidoxia we understand predictions are a fool’s errand. Regardless of Santa’s generosity (or lack thereof), we continue to find attractive opportunities for our investors, as we look to balance the risk and rewards presented to us during both stable and volatile periods.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
This article is an excerpt from a previously released Sidoxia Capital Management complimentary newsletter (December 3, 2018). Subscribe on the right side of the page for the complete text.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions and certain exchange traded funds (ETFs), but at the time of publishing had no direct position in any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.
Arm Wrestling the Economy & Tariffs
Financial markets have been battling back and forth like a championship arm-wrestling match as economic and political forces continue to collide. Despite these clashing dynamics, capitalism won the arm wrestling match this month as investors saw the winning results of the Dow Jones Industrial Average adding +4.7% and the S&P 500 index advancing +3.6%.
Fueling the strength this month was U.S. economic activity, which registered robust 2nd quarter growth of +4.1% – the highest rate of growth achieved in four years (see below).
The job market is on fire too with U.S. jobless claims hitting their lowest level in 48 years (see chart below). This chart shows the lowest number of people in a generation are waiting in line to collect unemployment checks.
Source: Dr. Ed’s Blog
If that isn’t enough, so far, the record corporate profits being reported for Q2 are up a jaw-dropping +23.5% from a year ago. What can possibly be wrong?
Excess Supply of Concern
While the economic backdrop is largely positive, there is never a shortage of things to worry about – even during decade-long bull market of appreciation. More specifically, investors have witnessed the S&P 500 index more than quadruple from a March 2009 low of 666 to 2,816 today (+322%). Despite the massive gains achieved over the last decade, there have been plenty of volatility and geopolitics to worry about. Have you already forgotten about the Flash Crash, Arab Spring, Occupy Wall Street, Government Shutdowns, Sequestration, Taper Tantrum, Ebola, Iranian nuclear threat, plunging oil prices, skyrocketing oil prices, Brexit, China scares, Elections, and now tariffs, trade, and the Federal Reserve monetary policy?
Today, tariffs, trade, Federal Reserve monetary policy, and inflation are top-of-mind investor concerns, but history insures there will be new issues to worry about tomorrow. Ever since the bull market began a decade ago, there have been numerous perma-bears incorrectly calling for a deathly market collapse, and I have written a substantial amount about these prognosticators’ foggy crystal balls (see Emperor Schiff Has No Clothes [2009] & Clashing Views with Dr. Roubin [2009]. While these doomsdayers get a lot less attention today, similar bears like John Hussman, who like a broken record, has erroneously called for a market crash every year for the last seven years (click chart link).
Although many investment accounts are up over the last 10 years, many people quickly forget it has not been all rainbows and unicorns. While the stock market has more than quadrupled in value since 2009, we have lived through about a dozen alarming corrections, including the worrisome -12% pullback we experienced in February. If we encounter another -5 -10% correction this year, this is perfectly healthy, normal, and should not be surprising. More often than not, these temporary drops provide opportunistic openings to scoop up valued bargains.
Longtime readers and followers of Sidoxia’s investment philosophy and Investing Caffeine understand the majority of these economic predictions and political headlines are useless noise. Social media, addiction to smart phones, and the 24/7 news cycle create imaginary, scary mountains out of harmless molehills. As I have preached for years, the stock market does not care about politics and opinions – the stock market cares about 1) corporate profits (at record levels) – see chart below; 2) interest rates (rising, but still near historically low levels); 3) the price of the stock market/valuation (which is getting cheaper as profits soar from tax cuts); and 4) sentiment (a favorable contrarian indicator until euphoria kicks in).
Source: Dr. Ed’s Blog
Famed investor manager, Peter Lynch, who earned +29% annually from 1977-1990 also urged investors to ignore attempts of predicting the direction of the economy. Lynch stated, “I’ve always said if you spend 13 minutes a year on economics, you’ve wasted 10 minutes.”
I pay more attention to successful long-term investors, like Warren Buffett (the greatest investor of all-time), who remains optimistic about the stock market. As I’ve noted before, although we remain constructive on the markets over the intermediate to long-term periods, nobody has been able to consistently prophesize about the short-term direction of financial markets.
At Sidoxia, rather than hopelessly try to predict every twist and turn in the market, or react to every meaningless molehill, we objectively analyze the available data without getting emotional, and then take advantage of the opportunities presented to us in the marketplace. Certain asset classes, stocks, and bonds, will constantly move in and out of favor, which allows us to continually find new opportunities. A contentious arm wrestling struggle between uncertain tariffs/rising interest rates and stimulative tax cuts/strong economy is presently transpiring. As always, we will continually monitor the evolving data, but for the time being, the economy is flexing its muscle and winning the battle.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
This article is an excerpt from a previously released Sidoxia Capital Management complimentary newsletter (August 1, 2018). Subscribe on the right side of the page for the complete text.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions in certain exchange traded funds (ETFs), but at the time of publishing had no direct position in any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.
Trade War Bark: Hold Tight or Nasty Bite?
In recent weeks, President Trump has come out viciously barking about potential trade wars, not only with China, but also with other allies, including key trade collaborators in Europe, Canada, and Mexico. What does this all mean? Should you brace for a nasty financial bite in your portfolio, or should you remain calm and hold tight?
Let’s take a closer look. Recent talks of trade wars and tit-for-tat retaliations have produced mixed results for the stock market. For the month, the S&P 500 index advanced +0.5% (+1.7% year-to-date), while the Dow Jones Industrial Average modestly retreated -0.6% (-1.8% YTD). Despite trade war concerns and anxiety over a responsibly cautious Federal Reserve increasing interest rates, the economy remains strong. Not only is unemployment at an impressively low level of 3.8% (tying the lowest rate seen since 1969), but corporate profits are at record levels, thanks to a healthy economy and stimulative tax cuts. Consumers are feeling quite well regarding their financial situation too. For instance, household net worth has surpassed $100 trillion dollars, while debt ratios are declining (see chart below).
Source: Scott Grannis
Although trade is presently top-of-mind among many investors, a lot of the fiery rhetoric emanating from Washington should come as no surprise. The president heavily campaigned on the idea of reducing uniform unfair Chinese trade policies and leveling the trade playing field. It took about a year and a half before the president actually pulled out the tariff guns. The first $50 billion tariff salvo has been launched by the Trump administration against China, and an additional $200 billion in tariffs have been threatened. So far, Trump has enacted tariffs on imported steel, aluminum, solar panels, washing machines and other Chinese imports.
It’s important to understand, we are in the very early innings of tariff implementation and trade negotiations. Therefore, the scale and potential impact from tariffs and trade wars should be placed in the proper context relative to our $20 trillion U.S. economy (annual Gross Domestic Product) and the $16 trillion in annual global trade.
Stated differently, even if the president’s proposed $50 billion in Chinese tariffs quadruples in value to $200 billion, the impact on the overall economy will be minimal – less than 1% of the total. Even if you go further and consider our country’s $375 billion trade deficit with China for physical goods (see chart below), significant reductions in the Chinese trade deficit will still not dramatically change the trajectory of economic growth.
Source: BBC
The Tax Foundation adds support to the idea that current tariffs should have minimal influence:
“The tariffs enacted so far by the Trump administration would reduce long-run GDP by 0.06 percent ($15 billion) and wages by 0.04 percent and eliminate 48,585 full-time equivalent jobs.”
Of course, if the China trade skirmish explodes into an all-out global trade war into key regions like Europe, Mexico, Canada, and Japan, then all bets are off. Not only would inflationary pressures be a drag on the economy, but consumer and business confidence would dive and they would drastically cut back on spending and negatively pressure the economy.
Most investors, economists, and consumers recognize the significant benefits accrued from free trade in the form of lower-prices and a broadened selection. In the case of China, cheaper Chinese imports allow the American masses to buy bargain toys from Wal-Mart, big-screen televisions from Best Buy, and/or leading-edge iPhones from the Apple Store. Most reasonable people also understand these previously mentioned consumer benefits can be somewhat offset by the costs of intellectual property/trade secret theft and unfair business practices levied on current and future American businesses doing business in China.
Trump Playing Chicken
Right now, Trump is playing a game of chicken with our global trading partners, including our largest partner, China. If his threats of imposing stiffer tariffs and trade restrictions result in new and better bilateral trade agreements (see South Korean trade deal), then his tactics could prove beneficial. However, if the threat and imposition of new tariffs merely leads to retaliatory tariffs, higher prices (i.e., inflation), and no new deals, then this mutually destructive outcome will likely leave our economy worse off.
Critics of Trump’s tariff strategy point to the high profile announcement by Harley-Davidson to move manufacturing production from the United States to overseas plants. Harley made the decision because the tariffs are estimated to cost the company up to $100 million to move production overseas. As part of this strategy, Harley has also been forced to consider motorcycle price hikes of $2,200 each. On the other hand, proponents of Trump’s trade and economic policies (i.e., tariffs, reduced regulations, lower taxes) point to the recent announcement by Foxconn, China’s largest private employer. Foxconn works with technology companies like Apple, Amazon, and HP to help manufacture a wide array of products. Due to tax incentives, Foxconn is planning to build a $10 billion plant in Wisconsin that will create 13,000 – 15,000 high-paying jobs. Wherever you stand on the political or economic philosophy spectrum, ultimately Americans will vote for the candidates and policies that benefit their personal wallets/purses. So, if retaliatory measures by foreign countries introduces inflation and slowly grinds trade to a halt, voter backlash will likely result in politicians being voted out of office due to failed trade policies.
Source: Dr. Ed’s Blog
Time will tell whether the current trade policies and actions implemented by the current administration will lead to higher costs or greater benefits. Talk about China tariffs, NAFTA (North American Free Trade Agreement), TPP (Trans Pacific Partnership), and other reciprocal trade negotiations will persist, but these trading relationships are extremely complex and will take a long time to resolve. While I am explicitly against tariff policies in general, I am not an alarmist or doomsayer, at this point. Currently, the trade war bark is worse than the bite. If the situation worsens, the history of politics proves nothing is permanent. Circumstances and opinions are continually changing, which highlights why politics has a way of improving or changing policies through the power of the vote. While many news stories paint a picture of imminent, critical tariff pain, I believe it is way too early to come to that conclusion. The economy remains strong, corporate profits are at record levels (see chart above), interest rates remain low historically, and consumers overall are feeling better about their financial situation. It is by no means a certainty, but if improved trade agreements can be established with our key trading partners, fears of an undisciplined barking and biting trade dog could turn into a tame smooching puppy that loves trade.
Wade W. Slome, CFA, CFP®
Plan. Invest. Prosper.
This article is an excerpt from a previously released Sidoxia Capital Management complimentary newsletter (July 3, 2018). Subscribe on the right side of the page for the complete text.
DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions in AAPL, AMZN, and certain exchange traded funds (ETFs), but at the time of publishing had no direct position in WMT, HOG, HPQ, or any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.
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