How is the Relationship Between the Fed and the Stock Market? The stock market influences the real economy of goods and services through the wealth effect. And the Fed responds to stock price movements only to the extent justified by their impact on the macro economy. A picture is worth a thousand words, and Hedgeye shows…
Unicorn IPOs, Are They Good Investments? Keep in mind that most IPOs lose money for investors after 5 years. Images: CNBC, Hedgeye Risk Management LLC
SELECT A STOCK MARKET FORECASTING MODEL STOCK MARKET VALUATION STOCK MARKET SHORT-TERM FORECAST STOCK MARKET EQUITY RISK PREMIUM STOCK MARKET EQUITY RISK PREMIUM STOCK MARKET BULL AND BEAR INDICATOR STOCK MARKET FORECASTING MODELS VS. US STOCK MARKET 95% CORRELATION, R² = 0.90 SINCE 1970 RECESSION INDICATORS LEADING INDICATORS
Why Lower Bond Yields Influence the S&P 500? Because lower interest rates push stock market multiples higher. If interest rates are lower, then the value of future cash flows increases, because future cash flows are discounted back at a lower interest rate. So, lower U.S. 10-year yields influence the stock market equity risk premium. On the other…
U.S. Unemployment Rate at 3.6% in April 2019 This is the lowest level since 1969! Is this a sign of a booming economy? In any case, the U.S. economy does appear to be gaining momentum and that’s good news. See how the U.S. productivity has increased under Trump. Image: Hedgeye Risk Management LLC
Has the United States Ever Imported a Recession from a Single Foreign Country? The biggest U.S. trade partners are: China, Canada, Mexico, Japan, Germany, South Korea, United Kingdom and France. So far, the US has never imported a recession from a single foreign country. A Chinese recession would be bad for the U.S. and the…
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
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…
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