Rich Insights

Airlines face a challenging future and are down roughly 50% YTD. Is it time to try to “catch the falling knife?”

Small caps significantly outperformed Large caps last week (3.6% vs. 1.2%). Should we expect this outperformance to continue?

When I think about structural shifts in U.S. consumer behavior, here's what is interesting to me: 1.) Within the Consumer Discretionary sector, retailing is the most interesting; 2.) within retailing, e-commerce is the most interesting; 3.) within e-commerce, on-line grocery shopping is very interesting. On-line groceries are interesting if the virus re-surges or not. Listen to this episode and see why.

Are the credit markets sending a warning sign? The credit markets are saying a lot, by not saying anything. Listen to this episode and figure out why!

In today's Rich Insights video we look at the fundamental source of today's excessive risk taking...Yes, there is a fundamental basis for all of the craziness we are witnessing.

In episode we cover: China's recent outperformance Whether it is time to rotate out of the U.S. Whether it is time to rotate out of Growth Whether it is time to rotate into small caps

The mindset in Europe is changing. The Recovery Fund and other recent measures suggest the Europeans are ready to provide meaningful stimulus and ignore their concern over “spending more than they make” (i.e., start “living beyond their means” like the U.S.). This structural shift in mindset & policies will likely generate Euro strength / U.S. dollar weakness.

In today's daily Rich Insights, we review examples of excessive risk taking and what it means for #markets.

In today's daily Rich Insights video we review (i) the construction and interpretation of LEIs and (ii) interpret the meaning of the current LEI levels for the U.S. and the world.

By several metrics, it appears the depths of the slowdown occurred in April, not May. The month-to-month bounce in May's macroeconomic data is encouraging, no questioning. Yet, the first 20% improvement is much easier than the last 20%. In addition, we may be too focused on the April to May comparison, as seasonal effects normally result in an improvement in May.

The 60/40 portfolio (60% S&P 500 / 40% Bonds) is up nearly 2% year-to-date, while the S&P 500 is down more than 3%. The passive 60/40 investment strategy is effective this year, just like it has been for most of the last the 20 years. Why does the 60/40 #assetallocation work so well? The 40% bond allocation is large enough to serve as a buffer, during dislocations, to preserve wealth. The 60% equity allocation is large enough to build wealth, during economic expansions. Performance, however, isn't the whole story. The 60/40 has had roughly 40% less risk than the all-equity #portfolio !!! In other words, it is effective and a much smoother road to building wealth…maybe it is sexy.

The importance of retail traders has unquestionably increased during this era of social distancing. In today's daily Rich Insights, we provide a guide through Sherwood forest. We explore/ponder whether this is a structural shift in investor positioning or transitory.

The #US continues to operate with twin deficits (fiscal/budget and #trade) and that has historically resulted in a #currency collapse. In the short run, however, the U.S. maintains its safe-haven status. For now, the effects of the enormous #stimuluspackage will likely outweigh the fact that U.S. debt is growing at a staggering speed.

Will the equity pullback from last week continue? We review the technical conditions, the valuations, and the positioning information to determine the most likely next move.

Does Post Crisis = Craziness? As of last Friday (Jun-05-2020), the Nasdaq and S&P 500 have each rallied over 43% from the March lows. Yet, there has been a change of leadership in the last two weeks. Nasdaq and S&P 500 have re-attained their pre-crisis levels. Can we expect this pattern to continue, for the new leadership categories?

The non-farm payroll report for May SIGNIFICANTLY surprised to the upside. Why was the consensus so wrong? What are the other labor market indicators saying? Today's daily Rich Insights, Dr. Don Rich attempts to answer these questions, and more importantly, assess the overall state of the U.S. labor market.

The markets are challenging the central banks' attempts to repress interest rates. Yield curves in the U.S. and Europe are steepening. The 2s-10s yield curve slope for the U.S. is the steepest in three years. This could be due to one of three reasons: 1.) Improved growth prospects, 2.) Increased inflation risk, 3.) Increased credit/default risk. Today's episode investigates these three possible explanations, to determine the primary driver and its implications.

The ECB just announced a large expansion of its bond buying program. In effect, the ECB just refilled the liquidity “punch bowl”. The significance of this liquidity infusion is explored in today's daily Rich Insights episode!

Brazil is dealing with political and structural issues. These have not gone away. Yet, Brazilian equities have bounced up over 30% in the last 2-3 weeks, in U.S. dollar terms. Why? Technicals: Prices arguably overshot to the downside. Global Beta: Brazilian equities are rising alongside all other global equities. Commodities: Investors are benefiting from the recovery in oil prices. Currencies: U.S. based foreign investors are benefiting from the broad based U.S. dollar weakness My gut tells me this is a dead cat bounce, but what do the numbers say? Can this trend continue? Are there any other BRICs that might follow suit?

In today's Rich Insights video we examine earnings from a number of different equity markets, size and style markets, and sectors. Some areas have positive trending earnings, many are negative.

Correlations across equity asset classes are at their highest level in 20 years. Why? Diversification today is at the mercy of the tech mega caps. The large U.S. technology firms dominate the S&P 500, Nasdaq and the MSCI World. If the tech names go up, all of these indices tend to go up; the non-tech names have far less influence than they did in the past. Are things going to change anytime soon? Doubtful. The tech mega caps are unlikely to go away, especially as we continue to migrate more and more to a digital economy. We have to get used to this paradigm shift. Portfolio construction should be adjusted to reflect the likely diminished diversification benefits going forward. Let's get connected on my channels: https://www.linkedin.com/in/don-rich-... https://twitter.com/InsightsRich