We have always warned against placing too much emphasis on seasonal adages such as, "Sell in May and go away." However, the month of September tends to be a quirky month for many assets on a seasonal basis and is worth examination.
As another earnings season comes to a close, companies have once again successfully guided analysts' expectations low enough to ensure positive results. This is a game that has been perfected over the past decade.
Speculators are betting on lower short rates to a degree rarely seen over the past decade.
An update on the 2020 election
Select charts from our recent posts
In 1951, corporations in the U.S. paid a 49.7% effective tax rate on profits. That has since fallen to 10.7%.
We don't see the flood of foreign money that Boston Fed President Eric Rosengren cites.
If U.S. rates don't fall, it puts U.S. companies at a further disadvantage as European and Japanese businesses can borrow at much lower rates.
Today's topics include Dudley's mea culpa, the trade war, the fed funds rate versus the rest of the curve, manufacturing contracts for first time in three years, corporate issuance, a look at recessions, the Fed's SOMA holdings, thinning liquidity, stocks vs. bonds and China's inclusion in the JPM bond indices.
As long as the ECB drives its rates deeper into negative territory, it forces U.S. rates lower.
U.S. Treasuries had one of their best months since 2008. While many are aware bonds have outperformed stocks in 2019, bonds have also proven to be the better investment over a 20-year horizon.