Better Safe Than Sorry
The technology sector peaked on September 2nd and declined in September. Buffett and Shiller indicators show today’s market valuations are extreme. Trump’s COVID-19 diagnosis and the election are adding to market risk. The ratio of growth equities to value equities is at a cyclical turning point. Sell FAANG stocks, QQQ, and the S&P 500 (SPY). Last […]
Two Generational Trends Reverse: Fed Inflation Policy and the Bursting Technology Bubble
39 years ago, the 10-year US Treasury yield peaked at 15.312% and interest rates began declining. On August 27th, Federal Reserve Chairman Jerome Powell presented the Fed’s new policy that “will likely aim to achieve inflation moderately above 2 percent for some time.” This marks a profound shift in a four-decade policy – the inflation fighting posture […]
COVID-19 Vaccine Prospects and Curve Flattening Compel Cyclical Rotation
Sell gold and precious metals like GLD, GDX and SLV. Sell Big Tech like AMZN, AAPL, FB, GOOGL and MSFT. Pivot investments for an economic rebound and pandemic ending. COVID-19 case rate is flattening. 6 COVID-19 vaccines could be ready by year end. Massive Fed balance sheet expansion has created bubble price actions. The COVID-19 […]
COVID-19’s Final Act and Epilogue
The COVID-19 tragedy is entering its final stages. The rate of coronavirus spread and death have slowed. Social distancing policies and stay-at-home orders have mitigated worst case death projections like the estimate of 2,200,000 and 510,000 deaths in the United States and United Kingdom, respectively, by Imperial College of London’s renowned Neil Ferguson. Death projections […]
The Coronavirus OPEC+ Double Black Swan
In response to the COVID-19 epidemic and the March 9th OPEC+ oil collapse–two Black Swans–the S&P 500 declined 35% between February 20th and March 23rd. With effective behavioral and medical mitigation COVID-19 case rates began to slow, weakening the first Black Swan and decelerating the stock market plunge. The second Black Swan began to mend […]
A Rare Opportunity for Income and Growth
MLPs have historically compelling valuations with unusually high yields. MLPs experienced multiple black swan events creating extreme bargains. Relative to Treasuries, MLP prices are three standard deviations below average. Kayne Anderson closed-end funds MLP (KNY) and Midstream Energy (KMF) are bargains. KYN yields 31% with a 17% discount to NAV KMF yields 22% with a […]
A Rare Opportunity for Income and Growth
MLPs are at historically low prices and historically high yields. MLP cashflows are stable with single digit downside Relative to Treasuries, MLP prices are three standard deviations below average. Kayne Anderson closed end funds MLP (KNY) and Midstream Energy (KMF) are bargains KYN yields 39% with a 17% discount to NAV KMF yields 29% with […]
Irrational Pessimism
The Fed Model is a screaming buy–highest levels in three decades. • High yielding investments with good underlying cashflows like KYN and KMF are compelling. • Deep value opportunities exist in MLPs, mortgages and corporate bonds. These asset class experienced intense margin related selling creating unusual oversold conditions and opportunities. • Therapeutic treatments, vaccine development […]
Coronavirus and OPEC Black Swans Create Rare 1987-like Opportunity in MLPs
Market decline of 33% on par with 1987. • MLP Treasury spreads at historic levels. • MLPs have stable cash flows. • KYN looks especially attractive with 41% yield and 21% discount to NAV. The continued worsening news due to COVID-19 and Oil prices have led to generational declines in the stock and oil markets. […]
Coronavirus and OPEC Black Swans Crash Stock Market like 1987
Market decline of 30% over with massive breadth and volume readings VIX, Fed Model and MLP Treasury spreads at historic levels. MLPs have stable cash flows. KYN looks especially attractive with 25% yield and 9% discount to NAV. Stock and oil prices were declining due to the China-centric coronavirus demand shock, when on March 9th, […]