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Commentary

Covid-19 Recovery Stocks Still Attractive, Despite What You Might Hear...

September 2020 | Patrick Mullin, CFA Insights
Okay, we all need to take a very deep breath. No doubt you have heard the news that Covid-19 cases have increased over the past week, both domestically and internationally. Given what we have been through over the past 6 months this instinctively brings unpleasant memories of economic “lockdowns” and stay at home orders. Let’s look beneath the surface of these numbers to help you understand why we do not think that will be the case this time around.
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Investment Implications of a Post-Covid Economy

September 2020 | Patrick Mullin, CFA Insights
We reiterate our belief from our last blog that the Covid-19 pandemic is on the wane in the U.S. based on the decline in national and state Covid-19 hospitalization figures that we continue to monitor. As a reminder, we focus on hospitalizations as a leading indicator of future deaths associated with Covid-19. Hospitalization rates across the U.S. continue to decline and totals in the three “hot” states of California, Florida and Texas are no exception. Given that these three states account for ~ 50% of the daily U.S. deaths over the past few weeks this is important. With fewer deaths at the state and national level, we believe that elected officials will gain more latitude to further open local and state economies. In turn, this could lead to a rotation in the U.S. equity market to “reopening” stocks from the “work from home” stocks.
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Covid-19 - "Second Wave" Dynamics

We all may be tired of hearing about Covid-19 but it remains important to monitor as we believe it continues to drive the direction of incremental dollars in the marketplace, specifically the ongoing appetite for “work from home” stocks in lieu of the more cyclically oriented “reopening” stocks. We decided to take a deeper dive into the Covid-19 situation and how the “second wave” in several states (TX, CA, FL) is now playing out. Our conclusion is encouraging given that the three states appear to be experiencing drastically lower hospitalization rates in their respective “hot spots” which should eventually result in lower mortality numbers for the U.S. overall. In turn, this could provide the opportunity for beleaguered sectors to return to more normal levels of economic activity.
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What Now for Bond Investors?

October 2019 | David Cleary, CFA Insights
Although equities and equity markets tend to get the bulk of the average investor’s attention, the most remarkable thing that has transpired across the economic spectrum over the past ten years has been the sharp decline in government bond interest rates to levels never seen before in the history of capitalism.  Whether driven by persistently low inflation, central bank policy, aging demographics or general economic weakness and risk aversion, interest rates have fallen across the world to the point where negative yields are a somewhat common phenomenon.
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The Federal Reserve: What Me Worry?

December 2018 | David Cleary, CFA Insights
So, it’s safe to say, the market was very disappointed by the Fed’s 25 basis points tightening yesterday as well as the guidance provided for future hikes in 2019.  Reading the FOMC minutes from November and listening to Fed Chairmen Powell’s remarks at his speech at the Economic Club of New York a few weeks ago, where he said, “We will be paying close attention to what incoming economic and financial data are telling us” many market participants were led to believe that the Fed’s next actions would be more dovish.  That did not prove to be the case.
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Elections, Policy, Trade and Markets

November 2018 | David Cleary, CFA Insights
Now that mid-term elections are behind us, economic and investment decision makers can get back to business.  We will know soon how much of the October swoon was related to interest rate fears and how much was election related.  Given the market’s strong initial reaction to the election, it looks like the risk of an unexpected election outcome was indeed weighing on investor concerns. 
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History Doesn't Always Repeat Itself but Sometimes it Rhymes

October 2018 | David Cleary, CFA Insights
Way back in the spring of 2013, then Federal Reserve Chairman Ben Bernanke announced that the Fed bond buying program would come to an end. A global bond market panic ensued, interest rates moved sharply higher and ALL investment asset classes fell. There was no place to hide - stocks, bonds, commodities, real estate etc. were all marked down sharply over a one-month period. . .
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