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 […]
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 […]
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 […]
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 […]
Sector and industry work is a key part of the Mill Street institutional product suite, and the topic of which sectors are in or out of favor comes up frequently in my media appearances. So this post is an example of some of the sector/industry work I do, and updates a much earlier post on […]
Like many market strategists, the first question I tend to get is something like “What do you think about the market? Going up or down?” Whether you are a professional investor tasked with navigating markets every day (most Mill Street clients), or an individual thinking about your own portfolio allocations, my first advice before giving […]
After a much-better-than-expected 2023, the outlook going into 2024 remains favorable, but slightly less so than this time a year ago, and for somewhat different reasons. As 2023 winds down, we see that for US investors at least, the economy (growth and inflation), corporate earnings, and the stock market did far better than most investors, […]
The Mill Street blog has been quiet for a while, but will be more active now that the new website is up and running as we head into 2024, and updates will be emailed to those who request it. In response to the recent market moves and headlines, I address one of the frequent questions […]
A few months ago, I wrote a blog post giving a brief history of the development of Mill Street’s MAER stock selection model and comparing the in-sample and out-of-sample test results now that it has been just over 10 years since the current model was originally launched.
The key metric I showed was the Information Coefficient (IC), which is the correlation between the decile ranks of the stocks and the decile rank of their subsequent 1-month returns (it can be done on other return horizons as well).
8 May 2023 “Objects in the mirror are not as bad as you thought they were” After several sub-par quarters and a period of aggressive estimate cuts, Q1 earnings reports have broadly beaten the reduced earnings forecasts. This has triggered not just higher stock prices but a broad and rapid upturn in the pattern of […]