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Changes to the Aggregate Bond Index that Advisors Should Know About: Part One

February 28, 2019

In 2018, the Bloomberg Barclays Aggregate Bond Index (BBAB) eked out a whopping 0.01% return and thus preserved a rather remarkable streak of only having one negative year since 1999. What’s new in the evolving construct of the BBAB index, and do you know the risks that are creeping into the bond markets?

Fireside Charts: Q1 2019 Growth, American Farmers Struggle, and a Strong Yuan out of China

February 27, 2019


Following Jerome Powell’s congressional testimony on Monday, Treasury yields and the US dollar shot lower. If only we could write to him directly!  The current economic expansion that started in June of 2009 is approaching record-breaking duration. Will it go out with a bang or fade away? While the Chicago FED Report was disappointing, other areas of the country had more favorable outcomes. Canadian farmers have been selling more soybeans to China, and in ...

Fireside Charts: Communications Sector Performance, Policy Rate Peaks, and Money Supply Expansion

February 25, 2019

Friday’s market close, marking the longest win streak for the DOW in over two decades, only further proves our recent comments on how extreme 2019 has been thus far. The relatively new Communications sector may break out of its three year trend soon – this recently strong performer is up 11.17% YTD. A quick update on the U.S. dollar and commodities. Next, we share a chart on the historical lags between central bank rate peaks and recessions for the U.S., Europe, and United Kingdom. Finally, on the heels ...

Fireside Charts: Dovish FED report, earnings expectations still declining, China's economic slowdown beyond the trade war

February 22, 2019

We are saying "TGIF" after a momentous week for the markets. Between the Federal Reserve's Meeting Minutes indicating it will end the shrinking of its $4 trillion balance sheet and meetings between the U.S. and Chinese officials indicating the outline of a trade truce is underway, this week has put many investors on edge. S&P earnings expectations have dipped to half of what they were in last 6 months. Existing home sales tanked last month all while manufacturing continues to produce bleak reports. Are record-low temperatures contributing to these ...

An Open Letter to Jerome Powell

February 21, 2019

Dear Jerome Powell, 

I write this letter with the utmost gratitude and respect. You see, unlike your predecessors, this time you and your Committee acted quickly, decisively and appropriately to a rapidly evolving political and macro-economic world. It is hard to contemplate what Congress has charged the Federal Open Market Committee (FOMC), and you, to do. 

Fireside Charts 2.20.19

February 20, 2019

The percentage of S&P 500 above the 50-Day moving average underscores that stocks still are swinging from extreme highs to extreme lows. Are you prepared for another month of volatility? We can continue to put blame on the polar vortex and the government shutdown, but these events do not fully account for the recent poor manufacturing outcomes. Similar to what is going on in the equity markets, junk bond yields are a little more than halfway back from their year-end lows. Lastly, with the exception of the U.S., other global ...

Fireside Charts 2.15.19

February 15, 2019

On this day in 1985, the S&P 500 closed at $181.60 and the price of a movie ticket cost only $2.75. A movie ticket today costs about $14.19! Speaking of inflation... follow oil prices and you can easily predict where inflation stands as well! As of February 11th, U.S. total public debt climbed to more than $22 trillion. How much more can we handle with mounting fiscal obligations, continued ...

Fireside Charts 2.13.19

February 13, 2019

As the March 2 deadline for the U.S.-China trade deal approaches and U.S. debt hit a new high of $22 trillion, the latest earnings growth expectations for 2019 do not look encouraging. A chart on the 200-year timeline of relative U.S. sector weights provides an insightful window into the past: did you know there once was a railway stock bubble? Cash indicators support investors' cautiousness as cash holdings are the highest we have seen since January 2009. Finally, what is causing the disconnect between Emerging Market equity and currency ...

Fireside Charts 2.11.19

February 11, 2019

In today's Fireside Charts, the Oxford Economics Global Risk Survey results show that the US-China trade war is among investors’ top concerns in global economics. How will a hard landing for China bode for the global economy over the next 5 years? In behavioral finance news, investors tend to have a "home field"  bias when allocating to equity markets. In recent years, the U.S. ran substantial budget deficits without major interest rate repercussions. Is the "free lunch" over? Finally, money flows to Emerging Markets is surging.

Fireside Charts 2.8.19

February 8, 2019

Which emotion is driving the market right now? At the end of 2018, we saw extreme fear, but now investors are moving towards greed. With the U.S. oil trade deficit nearly behind us, we are poised to become a net exporter of both oil and natural gas. Service jobs in the U.S. have been driving  employment recovery since ’07-‘09 recession. Industrial margins are under severe pressure in China. Along with Australia, India has unexpectedly cut its benchmark rate. Why is this  happening in these supposedly growing ...

Fireside Charts 2.6.19

February 6, 2019

Tariff talks resume in Washington this week between the U.S. and China following the State of the Union and a few strong (and surprising!) earnings reports. With global orders declining, the export growth has also gone south as a result of the trade dispute. If the FED does in fact raise rates, it will surprise the markets. Despite the potential economic and environmental detriments of owning a truck vs. a car, truck sales have ...

Fireside Charts 2.4.19

February 4, 2019

The Patriots prevailed last night, so we begin our Monday chart blog with more good news! The ISM Manufacturing PMI report exceeded forecasts and showed U.S. manufacturing increased in January. A table on sector returns through the end of last month gives us a pulse-check on the winners (think Utilities) and losers (such as Energy) of the S&P sectors. In spite of the recent rally in equities, S&P earnings have been more modest. Crude oil is struggling compared to last year's highs. Finally, our nation's credit rating is AA with a debt of nearly $22 ...

Fireside Charts 2.1.19

February 1, 2019

Let this sink in: after the worst December in almost a century, it was the best January for U.S. stocks in 30 years. Are the markets going too far, too fast? The U.S. added jobs last month despite the record-breaking government shutdown. Our northern neighbors in Canada are seeing insolvencies rise. Italy is officially in its third recession over the past decade, and overall business and economic indicators continue to deteriorate in Europe. China's manufacturing sector contracted further, possibly alerting officials to place stimulus ...