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Mar 05, 2015 | Post by: modelcap Comments Off

Fundamentals Drive Equities

The S&P 500 finished 2014 for a 13.7% total return, and continues to gain this year. U.S. stocks were the best-performing asset class in the world in 2014. What keeps driving the gains? At Model Capital, we believe that fundamentals drive markets, not geopolitics or technical indicators. Fundamental indicators that are

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Mar 05, 2015 | Post by: modelcap Comments Off

How Strong Is U.S. Employment -

Initial jobless claims reported today rose by 7,000 to 320,000. On a 4-week-average basis, claims increased to 305,000, just above the 300,000 mark below which they had stayed for six months – the first time this happened since 1999-2000 (see chart). Employment generally remains as strong as it has only been

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Mar 04, 2015 | Post by: modelcap Comments Off

Earnings Slowed in Q4, Expected To Fall in Q1

Q4-2014 S&P 500 earnings growth was sluggish at 3.7% YoY – a significant slowdown from around 8% growth in Q2 and Q3. The Energy sector was primarily responsible for lower earnings due to the drop in oil price. Earnings grew by 5% for the full year 2014.        

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Mar 01, 2015 | Post by: modelcap Comments Off

What’s Tactical Management?

Tactical Management continues to be a broad and ambiguous term that includes a variety of active investment strategies. In my recent interview on Harvest, I tried to provide some clarity: I like to define Tactical Management as being synonymous with Tactical Asset Allocation or TAA: focusing a portfolio on asset

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Mar 01, 2015 | Post by: modelcap Comments Off

The Good, The Bad Economic Indicators -

Employment continues to be among “the good,” showing continued strength this year. Employers added a better-than-expected 257,000 jobs to payrolls in January after a very strong December (see chart below). Initial jobless claims remain below 300,000 on a 4-week average basis for over 4 months now – the best stretch since

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Dec 17, 2014 | Post by: modelcap Comments Off

Don’t Fret the Fed: Policy Changes Are Priced-In

At the latest meeting on Nov 16-17, the Federal Reserve replaced its commitment to keep short-term interest rate target near zero for a “considerable time” with language that it will be “patient” in removing stimulus. It means that it’s on track to raise short-term target rate in the middle of 2015. The

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Dec 16, 2014 | Post by: modelcap Comments Off

2014: the year of the United States –

What kind of year was 2014? In financial markets, 2014 should go down as the year of the United States. The Year of U.S. Markets: S&P 500 (IVV), Japan (EWJ), Europe (IEV), Emerging Markets (IEMG) In a remarkable decoupling from the rest of the world, U.S. equities by far outperformed international

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Dec 02, 2014 | Post by: modelcap Comments Off

What Oil Crash Means for U.S. Equities –

Crude #oil sank below $60 per barrel of the WTI contract. This confirms that the fundamental supply-demand situation was very negative, as I highlighted in recent posts. So, the continued fall in oil prices was to be expected. However, the speed of the crash was a bit of a surprise and created some anxiety

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Nov 26, 2014 | Post by: modelcap Comments Off

Back to “Old Normal” Economy

November labor figures were very strong, showing that U.S. employers added 321,000 jobs, the most since Jan-2012 and better than the most optimistic projection by economists. Previously, Q3-2014 U.S. GDP growth was revised to 3.9% annualized growth rate. Combined with Q2 growth of 4.6%, the U.S. economy has now experienced

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Nov 17, 2014 | Post by: modelcap Comments Off

Why U.S. Stocks Are The Best Performers –

When looking at U.S. equities, it appears that the brief October selloff is all but forgotten. The S&P 500 (ETFs: IVV, SPY) continues to reach new all-time highs, gaining 2.4% in both October and November – for a 13% YTD gain as of Dec 19th. Not so for global markets that

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