A closer look at the global Tech sector

A key part of Mill Street’s work is tracking US and global equity sector and industry trends using a mix of bottom-up (aggregated company data) and top-down (macro data) inputs. The Technology sector naturally gets a lot of attention from investors, and we have shifted our view on it recently in response to changes in […]

Combining macro and micro the Mill Street way

One of the distinguishing features of Mill Street’s research process is that it can give both “top down” views on the macroeconomic and asset allocation outlook, or “bottom up” quantitative stock selection based on our long-standing tools like the MAER ranking model. But it is often most interesting and compelling when we do both: start […]

Small-caps struggling despite strong economy

The US economy keeps surprising to the upside, forcing economists and the Fed to catch up. Commentary from Fed officials has shifted to favoring rate cuts later rather than sooner, meaning policy rates will stay at current high levels a while longer. And while major stock indices have been sensitive to movements in bond yields […]

It’s not ALL about the Fed

On a day-to-day basis, one could be forgiven for thinking that all that matters to stock and bond investors is the precise path of future Federal Reserve rate policy. The Fed gets a HUGE amount of attention in financial markets, and bond investors certainly have a reason to follow the Fed closely. After all, the […]

Where in the world?

A key differentiating element of Mill Street’s research is the intersection of “top-down” and “bottom-up” inputs to asset allocation decisions. That is, a lot of strategists and researchers focus mostly on top-down indicators like GDP, inflation, retail sales, employment and other macroeconomic data to drive their views on which countries or regions to invest in, […]

What is the market pricing in?

One of the big questions every investor has to wrestle with in some way or another is whether their own expectations differ meaningfully from what the “market” (investors in aggregate) expect. Only when results differ from consensus do markets make significant moves. But how do we really know what the “consensus” is? What the market […]

A little mythbusting

Based on commentary I hear and read, and questions I get asked, I thought it might be helpful to address two common “myths”, i.e., stylized assumptions or worries about the current US market and economy (with plans for more in the future).   1) The US market is excessively “narrow” – it’s just the “Magnificent […]

Trend (and FOMO) is strong but sentiment is getting stretched

Staying in line with the trend in markets has long been shown to be useful for allocation and risk control, which is why we include trend-oriented indicators in the Global Equity Risk Model we use as the anchor for our 1-6 month stock/bond (and general “risk on/risk off”) allocation views. Perhaps even more important is […]

Do higher interest rates really slow the economy?

A key baseline assumption of many economists and central bankers is that higher interest rates slow the economy while lower interest rates stimulate it.  Another widely held assumption is that inflation is mostly caused by “excess demand” (spending that exceeds the economy’s productive capacity), and the two combine to create the view that the way […]

A soft landing is here, and it’s been a while

If you were wondering what a “soft landing” looks like, current US economic data is about as close as you are likely to see. The big jump in inflation in 2021-22 was primarily driven by massive supply disruptions caused by COVID and then the Russian invasion of Ukraine. Those supply disruptions have largely been mitigated […]