Category: Blog

Sell in May and Go Away? Just keep in mind that 2013, 2014, 2015, 2016, 2017 and 2018 were positive in May. Image: Hedgeye Risk Management LLC

Why the Fed Can’t Raise Interest Rates Above Inflation Rate, Today? The Federal Reserve can’t raise the Fed funds rate above the inflation rate because the US productivity growth is too weak.Net Domestic Investment to GDP is in a long-term downtrend and reduces productivity.This makes it difficult to see the Fed funds rate exceed the…

Has Apple’s Intrinsic Value Really Changed Since December Lows? Not really! but Apple is up nearly 50% since the December lows. Is there a method to the market’s madness? Yes, see our advanced stock market forecasting models. Image: Hedgeye Risk Management LLC

Why the US Banking System Is Divided in Two Groups? The delinquency rate on credit-card loans at all commercial banks is very low, whereas the delinquency rate on credit-card loans is high only at commercial banks other than the 100 largest banks. The US banking system is divided in two groups: small banks accept high…

Where Does Inflation Come From? Mainly inflation comes from excess money supply growth. There is too much money in the system chasing too few goods and services. Over the long term, Nominal GDP = Money Supply x Velocity of Money = Inflation + Real Economic Growth “Inflation is always and everywhere a monetary phenomenon.” –Milton Friedman. You…

Sell in May and Go Away? Maybe Not this Year Because the third-year of a president’s term is positive (91% of the time since 1925) and in six of the past seven years the US stock market has performed very well. Image: MarketWatch

Why Is Core Inflation So Low Compared To Previous Business Cycles? The Consumer Price Index Less Food & Energy (Core CPI) is very low compared to previous business cycles in the US, for several reasons: – not fast-rising money supply – globalization: inflation is a global phenomenon – lack of wage acceleration – increase in…

S&P 500 Dividend Yield Since 1871 Since 1871, the long-term average dividend yield for the US stock market is 4.34%. The current yield of the S&P500 is 1.87% Is there an anomaly in the past 20 years? Image: multpl.com

Yield Curve vs. Real Fed Funds Rate In modern history, every recession was preceded by an inverted yield curve and high real interest rates. When an inverted yield curve occurs, short-term interest rates exceed long-term rates. It suggests that the long-term economic outlook is poor and that the yields offered by long-term fixed income securities will…

The Short Interest in the S&P 500 ETF (SPY) to Lowest Since Late 2017 Is it a contrarian indicator? Only time will tell… The market is strong and historically, the 3rd year of a president’s term is positive (91% of the time since 1925). Source: Hedgopia

The S&P 500 Hits All-Time High Bulls make money and are happy again… Yes, but until when? Keep in mind that the US stock market is currently overvalued by 9%. Image: Hedgeye Risk Management LLC