Tuesday , September 28 2021
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Michael Lebowitz and Lance Roberts



Articles by Michael Lebowitz and Lance Roberts

The Correction Is Over As Market Rises. Time To Buy Stocks?

2 days ago

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The correction is now officially over as the market regained its 50-day moving average leading us to buy stocks. With the market finishing in the green on Friday after a large gap down to open the week such confirmed the bullish trend is still intact. This week, chock full of economic data and Fed speakers, will be important to fully determine whether the key support will hold.

What To Watch Today

Economy

8:30 a.m. ET: Durable goods orders, August preliminary (0.6% expected, -0.1% in July)8:30 a.m. ET: Durable goods excluding transportation, August preliminary (0.5% expected, 0.8% in July)8:30 a.m. ET: Non-defense capital goods orders excluding aircraft, August preliminary (0.3% expected, 0.1% in July)8:30 a.m. ET: Non-defense capital goods orders

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Bulls Remain in Charge As Rebound Continues

4 days ago

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Futures are slightly lower this morning after two strong days of gains as bulls remain in charge but the rebound continues. Treasury bonds and the dollar sold off as the risk-on sentiment took hold. The S&P 500 gained 1.2% to close above its 50-day moving average for the first time since last Friday. The 10-Year Treasury yield rose by roughly 7 bps to 1.41%, and the dollar lost 0.46%. Based solely on the sharp rise in bond yields, it appears the initial reaction to the FOMC meeting is signaling that the Fed may be too late to curb inflationary pressures.

Index futures are pointing slightly down this morning, while the longer end of the yield curve is flat to slightly higher. Cryptocurrencies and crypto-related stocks are struggling in response to a new policy out of the

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Stocks Rally As Fed Teases Taper

6 days ago

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Stocks rally nearly 1% higher yesterday despite a surprisingly hawkish tone from Fed Chair Jerome Powell teasing taper. Next on the horizon for the bulls is the 50-day moving average at 4435. With taper looming on the horizon will the moving average act as resistance?

If overnight trading is any indication we may answer that question this morning. The NASDAQ is leading the way, up .75% this morning with the S&P and Dow closely behind. S&P 500 futures are less than ten points below the key moving average. The dollar is weaker this morning as the currency markets appear to be taking Powell’s word that the Fed remains on course to start tapering in November and finish in mid-2022.

What To Watch Today

Economy

8:30 a.m. ET: Chicago Fed National Activity

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The Market is Deeply Oversold And Looking For A “Dovish” Fed

7 days ago

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As we will discuss, the market is deeply oversold and looking for a “dovish” Fed to spark buying. Traders and investors will be laser-focused on the Fed meeting adjourning at 2 pm ET. Of importance, the decision on taper and their characterization of the economic recovery and inflation. If they do elect to announce a taper schedule, the pace of tapering and any caveats that may delay tapering will be of utmost importance.

Like yesterday markets are opening up a half to one percent higher. Will they hold onto the gains, unlike yesterday? The answer likely lies with the Fed at 2 pm.

What To Watch Today

Economy

7:00 a.m. ET: MBA Mortgage Applications, week ended September 17 (0.3% during prior week)10:00 a.m. ET: Existing home sales, month-over-month, August

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Stocks Bounce Off Hard Off The Lows Reclaiming Losses.

8 days ago

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Yesterday, stocks bounced hard off the lows reclaiming a chunk of earlier losses. But, as we will discuss, the 100-dma held firm as the stocks look to be trying to replay the March sell-off. This morning, futures are pointing sharply higher, suggesting the bulls are still roaming.

The benefit of the doubt remains with the bulls, which have repeatedly saved the market after minor losses. Will they come to the rescue again, or do we have to sweat out the 200dma (4105)? Unfortunately, answering the question is a little more complicated than it has been.

The Fed meets on Wednesday and will likely announce their plans to taper QE in November. Given the Evergrande situation and its effect on domestic and global markets, they may delay announcing “taper” or make it

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Markets Set To Drop As Fed “Taper” Approaches

9 days ago

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Markets are set to drop this morning as the Fed “taper” announcement approaches. Market bulls spent the better part of Friday trying to hold 50-dma but failed. At the time of this writing, futures are down sharply point to steep losses at the open.

The sell off isn’t a surprise, as we have noted previously, given the more extreme length of time without a correction of 5% of more. September is historically a weak month, and there has been a steady drumbeat of corporate earnings warnings. While the retail sales numbers were strong, they were primarily a function of “back to school” shopping. Consumer sentiment remains soft, and market internals have been very weak.

The one thing that has remained incredibly strong has been the flow of money into equities this year

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A Financial Crisis Is Brewing in China. Will It Spread?

12 days ago

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Evergrande, a Chinese company with over $300 billion in debt, is failing. Will it get bailed out, and if so how? While investors focus on the nuts and bolts of Evergrande, we sense a financial crisis of sorts is brewing in China. Given China is the world’s second-largest economy and driver of global growth, our focus turns to the possibility their financial crisis spreads beyond the Great Wall.

Trading might be volatile today due to quadruple witching in the options and futures markets. That said equities, bonds, and the U.S. dollar are trading relatively flat in pre-market trading this morning. The primary focus today and early next week will be on the Fed’s FOMC policy meeting on Tuesday and Wednesday. It is widely expected they will announce a taper timeline starting

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Investors Show Up To “BTFD.” Will It Stick?

12 days ago

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As we suspected investors showed up to BTFD but will it stick?

At a mere 10 points above the 50 dma animal spirits were ignited yesterday. Does yesterday’s bounce signal record highs are straight ahead or is it fools gold? At yesterday’s close, the S&P was only 70 points below the recent all-time high of 4550. The 50 dma sits below at 4430.

Unlike prior BTFD’s in the last few months, equity markets are opening slightly lower, and foreign markets are not jumping on the BTFD bandwagon. Further pressuring confidence, China’s largest real estate developer, Evergrande, is suspending trading in its bonds today. They have over $300 billion in debt outstanding. It is unclear whether the Chinese government will bail out shareholders.

What To Watch Today

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Time To “Buy The Dip” & Bitcoin’s “Golden Cross”

15 days ago

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Is it time to “Buy The Dip?” The S&P 500 broke its five-day losing streak, as it rose .25% on Monday to 4470, 1.00% above its 50-day moving average. As we graph in the commentary below, the 50-day moving average has supported the S&P 500 on nine separate occasions in the last year. We have no reason to doubt the power of the trading algorithms this time around, but we must consider a meaningful break of the moving average could put the 200-day moving average in play at 4086.

Markets are opening slightly higher this morning while bonds are giving up some of yesterday’s gains. At 8:30 am ET, CPI provides an update on inflation. Expectations are for the headline monthly number to decline 0.1% from last month’s 0.5%.

What To Watch Today

Economy

6:00 a.m.

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Are Labor Shortages Stoking Inflation Fears At The Fed?

19 days ago

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The Fed’s Beige Book, on the heels of a new record number of job openings, seems to be stoking inflation concerns at the Fed. Interestingly, the warnings we quote below from every Fed district are being ignored by the bond markets, as yields decline in recent days.

Pre-market trading is reversing yesterday’s price action. Bonds are opening weaker while most stock indexes have recouped yesterday’s declines. PPI will be released at 8:30 this morning. Investors will keep a close eye on the data as it can serve as a proxy for future profit margins. Higher than expected producer prices along with rising wages will prove troublesome, especially for the manufacturing sector.

What To Watch Today

Economy

8:30 a.m. ET: Producer Price Index, month-over-month,

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Why the Insatiable Demand For U.S. Treasury Notes?

20 days ago

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Utilities ran away with first place yesterday rising over 1% despite the S&P being slightly lower. Is the recent bout of strong demand for longer-term Treasury auctions and flight to utilities a message from Mr. Market? The dynamic bears watching closely, given the poor breadth, extreme valuations, and the degree to which markets are extended from moving averages,

Markets are opening weak this morning despite Fed member Raphael Bostic’s dovish comments about tapering. While he thinks taper is in the works, like Powell, he wants the Fed to delay taking action to ensure the recovery remains robust. Dallas Fed President, on the other hand, is not as patient and ready to taper ASAP.

What To Watch Today

Economy

8:30 a.m. ET: Initial jobless claims, week

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Bitcoin Crashes & The S&P 500 Could Snapback To Its Trend

21 days ago

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Ready for the S&P 500 to snapback to its trend? The S&P 500 has gone 213 days without touching its 200-day ema. The last stretch of time above its ema was in the 1950s.

What To Watch Today

Economy

7:00 a.m. ET: MBA Mortgage Applications, week ended September 3 (-2.4% during prior week)10:00 a.m. ET: JOLTS Job Openings, July (10.049 million expected, 10.073 million in June)2:00 p.m. ET: Federal Reserve’s Beige Book3:00 p.m. ET Consumer Credit, July ($25.000 billion in July, $37.690 billion in June)Earnings

Post-market

GameStop (GME) is expected to report an adjusted loss of 67 cents on revenue of $1.123 billionLululemon (LULU) is expected to report adjusted earnings of $1.19 per share on revenue of $1.334 billionRH (RH) is expected to report adjusted

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Markets Go Nowhere On Weak Employment Data

22 days ago

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Equities are opening flat this morning despite volatility in other markets. U.S. bond yields are 4bps higher, crude oil $1 lower, and gold about $20 weaker. Other than some strengthening in the dollar, there is not much news to attribute to the moves.

What To Watch Today

Economy

No notable reports scheduled for releaseEarnings

Coupa Software (COUP) is expected to report adjusted loss of 6 cents per share on revenue of $163.24 million Politics

President Biden is set to travel to both New Jersey and New York today to inspect damage from Hurricane Ida. Last week, he visited Louisiana and told residents there “I know you’re hurting.”On Capitol Hill, the full U.S. House of Representatives and Senate only have pro forma sessions until next week but some

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Slow Trading Expected Into The Holiday Weekend

26 days ago

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The late afternoon squeeze in the final minutes of trading on Thursday continues this morning with equity markets up slightly. The big news this morning will be the employment report due out at 8:30 am ET. Given the long weekend, and the likelihood of low volume, we suspect trading in the first hour or two will set the tone for the day. Good luck and have a great Labor Day.

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What You Need To Know

Economy

8:30 a.m. ET: Change in non-farm payrolls, August (725,000 expected, 943,000 in July)8:30 a.m. ET: Unemployment rate, August (5.2% expected, 5.4% in July)8:30 a.m. ET: Average hourly earnings, month-over-month, August (0.3% expected, 0.4% in July)8:30 a.m. ET: Average hourly

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Was ADP A Precursor To Friday’s Employment Report?

27 days ago

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Markets were little changed yesterday and overnight despite the weaker than expected ADP employment. As many traders take time off this week, we suspect volatility and prices will remain muted with the possible exception of tomorrow morning’s post-employment report trading.

Click HERE to receive our daily market commentary in your email every morning.

What To Watch Today

Economy

7:30 a.m. ET: Challenger Job Cuts, year-over-year, August (-92.8% in July)8:30 a.m. ET: Initial jobless claims, week ended August 28 (345,000 expected, 353,000 during prior week)8:30 a.m. ET: Continuing claims, week ended August 21 (2.808 expected, 2.862 million during prior week)8:30 a.m. ET: Unit labor costs, 2Q final (0.9% expected, 1.0% in prior print)8:30 a.m. ET: Trade

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Confidence is Plunging as Inflation Expectations Soar

28 days ago

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Despite more weak economic data from China, U.S. stocks are set to recover yesterday’s losses and more. ADP will be released at 8 am ET. The current consensus expectation is for the formation of 638k net new jobs. The range of estimates is wide at 400-700k.

Click HERE to receive our daily market commentary in your email every morning.

What To Watch Today

Economy

7:00 a.m. ET: MBA Mortgage Applications, week ended August 27 (1.6% during prior week)8:15 a.m. ET: ADP employment change, August (638,000 expected, 330,000 in July)9:45 a.m. ET: Markit U.S. Manufacturing PMI, August final (61.2 expected, 61.2 in prior print)10:00 a.m. ET: Construction spending, month-over-month (0.2% expected, 0.1% in June)10:00 a.m. ET: ISM Manufacturing index, August (58.5

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Apple Leads the Charge Higher

29 days ago

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On Monday, shares of Apple surged on a report Google could pay Apple roughly $15 billion this year to retain its place as the default search option on iOS, according to Bernstein analyst Toni Sacconaghi. That’s up from an estimated $10 billion in 2020. 

Sacconaghi posits that the deal with Google will boost Apple’s services revenue growth by 8.5 percentage points — and account for as much as 9% of the iPhone maker’s gross profits in fiscal 2021.  

Of course, it is hard to suggest such isn’t already priced into the shares. Yesterday, Apple’s valuation surpassed $2.5 Trillion. To put this into context, Apple’s valuation is now roughly 10% of the entire U.S. economy.

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What To Watch

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The Markets Plow Ahead With Taper on the Horizon

August 30, 2021

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A quiet start to the morning in the aftermath of hurricanes Ida and Powell. Prices of Crude oil and natural gas rose on the open last night with over 90% of Gulf of Mexico production shut-in. This morning both energy products are set to open flat. Equities and bonds are also looking to open unchanged in the aftermath of Powell’s dovish speech.

Click HERE to receive our daily market commentary in your email every morning.

What To Watch Today

Economy

10:00 a.m. ET: Pending home sales, month-over-month, July (0.3% expected, -1.9% in June)10:30 a.m. ET: Dallas Fed Manufacturing Activity index, August (23.0 expected, 27.3 in July)Earnings

4:05 p.m. ET: Zoom Video Communications (ZM) expects to report adjusted earnings of $1.16 per share on revenue of $990.24

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Will The Fed Fade The Delta Variant?

August 26, 2021

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Most equity markets are opening flat this morning, appearing unfazed with Chairman Powell’s important speech tomorrow. On the contrary, the VIX volatility index is showing some concern, up 4%, and worth keeping an eye on today. Click HERE to receive our daily market commentary in your email every morning and keep up to date on the coming Jackson Hole Conference.

What To Watch Today

Economy

8:30 a.m. ET:Initial jobless claims, week ended August 21 (350,000 expected, 348,000 during prior week)8:30 a.m. ET: Continuing claims, week ended August 14 (2.772 million expected, 2.820 million during prior week)8:30 a.m. ET: GDP annualized quarter-over-quarter, Q2 second estimate (6.7% expected, 6.5% in prior print)8:30 a.m. ET: Personal consumption, Q2 second estimate

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S&P 5000 – Here We Come

August 25, 2021

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Markets are opening mixed this morning as investors await the Fed’s Jackson Hole Conference. Markets may be lifeless today and tomorrow as they await Powell’s speech on Friday and his stance on tapering QE. Subscribe and we will keep you up to date on changes to the Fed’s stance as it comes. Some investors have mentioned the Fed might delay tapering due to the delta variant. While a possibility, there is potentially some good news on that horizon. Florida and other hard-hit states are starting to see the number of cases decline or at least stabilize.

S&P 5000

In the rush to be the first person to put a S&P 5000 target price out, analysts are pushing 2022 price targets markedly higher despite slowing economic growth rates and high valuations.

“Wells Fargo’s Chris

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Markets Believe Powell Will Pass On Taper

August 24, 2021

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More signs of weakening economic growth coupled with rising Delta variant cases, oh and a 2% market decline, seems to be enough in the market’s infinite wisdom to call off the taper dogs. Judged by the market’s exuberant behavior heading into Jackson Hole, it is now believed by many investors Powell will pass on a September/October timeframe to begin tapering QE. Most equity markets are near or back to record highs and showing signs of strength again this morning. Sign up here to receive this daily commentary via email every morning.

It’s The 4th Longest Stretch Ever

It’s been a really long time without a decent correction.

Technically Speaking – Pet Rocks & Other Signs Of A Rich Market

“Pet Rocks” first appeared in the mid-70s as a novelty item. Just recently,

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Bonds Flashing a Death Cross

August 20, 2021

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Equity futures are opening weaker again this morning. The NASDAQ is faring better than the S&P and Dow futures, which are both down about .35%. This pattern follows yesterday in which the NASDAQ outperformed the S&P and Dow by over 50 bps. All three indexes recovered nicely from nearly 1% early declines. Crude oil continues to offer caution about slowing global economic activity. It is down another 50 cents this morning to $63 a barrel.

The graph below shows 30-year UST yields with its 50 and 200 dma’s. The vertical lines highlight the last five times, 30 year yields have witnessed its 50 dma falling below its 200 dma, also known technically as a “death cross.”  In 3 of the last 4 death cross instances yields fell appreciably and reached record lows. The only time they

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Bonds Flashing a Death Cross

August 19, 2021

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Equity futures are opening weaker again this morning. The NASDAQ is faring better than S&P and Dow futures which are both down about .35%. This pattern follows yesterday in which the NASDAQ was up half a percent, S&P up slightly, and the dow closed lower. All three recovered nicely from nearly 1% early declines. Crude oil continues to offer caution about the slowing global economic activity. It is down another 50 cents this morning to $63 a barrel.

The graph below shows 30-year UST yields with its 50 and 200 dma’s. The vertical lines highlight the last five times, 30 year yields have witnessed its 50 dma falling below its 200 dma, also known technically as a “death cross.”  In 3 of the last 4 death cross instances yields fell appreciably and reached record lows. The only

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The Fed Speaks

August 19, 2021

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S&P 500 futures are currently down 25 points in the overnight session and crude oil is over 3% lower at $63. 10-year UST yields are about 4bps lower at 1.23%. Other than the Fed minutes from yesterday there is little new news to blame for the sharp moves last night.

The Fed shed little new light in the July FOMC minutes in regards to the schedule and pace of Fed taper. While some Fed members seem eager to start tapering as soon as September, others voiced concern about downward inflation pressure and how the market may perceive tapering. We look to the Jackson Hole Fed conference late next week for more guidance.

Highlights from the Fed minutes from the July 28th FOMC meeting:

“Most participants noted that, provided that the economy were to evolve broadly as they

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#MacroView: Value Is Dead. Long Live Value Investing

July 17, 2020

Value (investing) is dead. Long live value investing. Such certainly seems to be the mantra as investors continue to pile into growth stocks while rationalizing valuations using methodologies which historically have not worked well.
However, as with all things when it comes to investing, be careful when declaring any asset or investment strategy dead. Such was a point made recently by Research Affiliates. The media has a long history of declaring sectors, markets, or strategies “dead” based on past performance. From August 1979 — when Business Week declared the “death of equities” — to July 2019, when the Financial Times questioned whether emerging markets investments make sense anymore.
In most cases, those were pivotal periods when what was believed to be “dead,” came roaring back to

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MacroView: 2020 Market & Investment Outlook

January 17, 2020

On Tuesday, Michael Lebowitz and I held private events with our high net worth clients to review our investment strategy and outlook for the rest of the year. The purpose of these events was to provide clarity on portfolio allocation, weightings,  and the risks that could potentially lead to large losses of capital.
As we noted in last weekend’s newsletter, we recently took profits in our various portfolio strategies to raise cash slightly, and reduce excess portfolio risk. Given our portfolios are already hedged with early exposures to value positioning, gold, and short-duration Treasuries, there currently isn’t a need to become overly defensive given the ongoing, liquidity fueled, momentum of the markets. 
Currently, the bullish exuberance, extreme complacency, and technical deviations

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MMT Sounds Great In Theory…But

February 7, 2019

If you haven’t heard about Modern Monetary Theory, or “MMT” for short, by now, you will soon. It is highly likely that MMT will be increasingly touted by economists and politicians from both sides of the aisle, as the economic prescription, even panacea, to cure our economic ills. Regardless of your view, MMT will have large effects on all asset classes, so we urge you to read this article, and others, describing this economic theory.
Kevin Muir recently penned an article “Everything You Wanted To Know About MMT” which delves into what MMT proposes to be. To wit:
“Modern Monetary Theory is a macroeconomic theory that contends that a country that operates with a sovereign currency has a degree of freedom in their fiscal and monetary policy which means government spending is never revenue

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