What Is the Recession Probability In the Next 12 Months? The New York Fed’s recession probability model suggests that there is a 27% chance of a recession in the next 12 months. Image: Deutsche Bank Global Research
Why Are U.S. Banks Healthier Than Ever? U.S. banks are much stronger than ever. They have more capital and should withstand the next recession. See Fed’s annual stress test (Dodd-Frank Act Stress Tests): “The capital levels of the firms after the hypothetical severe global recession are higher than the actual capital levels of large banks…
How Average Americans Spend their Money? The average American household – $53,708 in spending. That’s 73% of total income. Image: Visual Capitalist
6-Month Returns for the S&P 500 Index from 1950 to 2018 The next 6 months have been the worst on average. Here is the 6-Month returns for the S&P 500 Index from 1950 to 2018. Our previous two articles: “Sell in May and Go Away?” and “Sell in May and Go Away? Maybe Not this…
Oil Is Really a Curse for Venezuela The irony is that the proven oil reserves in Venezuela are recognized as the largest in the world! Picture Source: Bloomberg
How Does President Trump’s Twitter Use Impact the US Stock Market? Trump’s tweets exacerbate short-term volatility and can create unpredictable short-term market fluctuations. That’s the reason why Warren Buffett stays focused rightly on the long term. Image: Bloomberg
Why Trade Tensions Are Not Driving the U.S. Stock Market? Because many Unicorns are going public in the United States this year. Secondly, U.S. banks are healthier than ever and liquidity conditions are quite good in the U.S.. So all in all, that’s far more important than trade tensions. Image: Bloomberg
Tariffs Are a Hidden Tax on American Consumers and Companies Tariff man is back! Keep in mind that trade war costs to consumers and companies. Tariffs are a hidden tax on American consumers and US firms. Trump’s trade war hurts the U.S. economy and stocks.
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…
Only 11% of Asset Classes Have Posted Negative Total Returns in 2019 The rally is back, but for how long? According to Deutsche Bank AG, 90% of 70 financial asset classes posted positive total returns. Data for 2019 are through April. Picture Source: The Wall Street Journal
What if Companies Paid Dividends Instead of Buybacks? The S&P 500 Total Return (dividends reinvested) would have been 10% lower if buybacks subbed with dividends. But, are stock buybacks a good thing for shareholders? Yes, if done at a price below the intrinsic value of the company. Buybacks are a good substitute for dividends, because…