Two Things In Favor of Counter-Cyclicals


We divide all stocks into two baskets: 1) cyclicals, which includes consumer discretionary, industrials, materials, technology and financials; 2) counter cyclicals, which includes health care, consumer staples, telecom and utilities.  Generally the cyclical basket performs best when economic data comes in on the strong side of expectations and stocks have been in a statistical slump.

KDDI Gets Clobbered as Nikkei Plunges 2.75%


The Nikkei had the pre-FOMC jitters last night finishing down 2.75% to close at the medium-term rising trendine. KDDI took it on the chin as the worst performing stock on the day, finishing down 5.3% on bets it will loose market share to NTT DoCoMo as the latter ramps up incentives to gain users.

German Ifo Business Climate Survey


Today’s disappointing Ifo Business Climate Survey was lead by a general drop in the assessment of the Services Sector and, in particular, a sharp fall in the expectations component:The overall moderation does not, however, appear to bode poorly for the upcoming release of economic output in the third quarter:

Microsoft and CA Inc both beat 3Q expectations


In our quarterly call yesterday, ”Investing in a Post QE World” (here is a link to a video of the presentation), we highlighted the systems software industry as one where value is still compelling and many of the companies in that industry are very shareholder friendly. In particular, we highlighted Microsoft and CA Inc.

European Economic Policy Uncertainty


With headlines like ’Plans for Political Union Unravel’ (WSJ) and ’Draghi’s Blunt Warning on Bank Stress Test’ (FT), policy (or, rather, lack of a coordinated one) appears poised to exert its influence on European equities once again:Combined with somewhat weaker economic and sentiment-related data releases, as well as overbought and extended technical patterns, can European

A Not So Random Walk in 2013


Everyone that’s read Burton Malkiel’s A Random Walk Down Wall Street learns the idea that the movement of stocks is random–they can rise or fall on any given day.  Like a hitter in baseball or a shooter in basketball, players can go on ”runs” that temporarily give the appearance of non-randomness.

Rally Like It’s 2009


We perform a variety of calculations to understand the often imperceptible changes in the underlying structure of the stock market.  One calculation we make is to measure the percent of stocks making a new 200-day high.  Historically this metric gets the most extended during the first move off a major low–like in September 2009.