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May 05, 2016 | Post by: Roman Chuyan, CFA Comments Off on Central Banks Have No Cure

Central Banks Have No Cure

Roman Chuyan, CFA May 5, 2016 “If many remedies are prescribed for an illness, you may be certain that the illness has no cure.” ~ Anton Chekhov, The Cherry Orchard Most observers agree (at least, those whose experience spans a complete market cycle) that the equity market is overextended. Market

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Apr 29, 2016 | Post by: Roman Chuyan, CFA Comments Off on When Will Stocks Plunge?

When Will Stocks Plunge?

Roman Chuyan, CFA April 29, 2016 “There is some limit beyond which it becomes totally unreasonable to divorce highly elevated asset prices from sluggish fundamentals.” ~ Mohamed El-Erian, The Only Game In Town Introduction The current bull market in equities has been nothing short of spectacular. It lasted for over

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Apr 20, 2016 | Post by: Roman Chuyan, CFA Comments Off on U.S. Economy Is Now In Stagnation – What’s Next?

U.S. Economy Is Now In Stagnation – What’s Next?

Q1 GDP growth reached stalling speed, at 0.3%. Inventory-to-sales ratio, at 15-year high, will be a headwind to economic growth. Contrary to positive ISM survey, manufacturing dropped by 0.3% last month. Investors couldn’t care less, but I think an inflection point is approaching. The International Monetary Fund cut its 2016

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Apr 11, 2016 | Post by: Roman Chuyan, CFA Comments Off on Are The S&P 500 Earnings $125, $118 Or $99?

Are The S&P 500 Earnings $125, $118 Or $99?

Earnings are reported on Net, Operating, or Adjusted basis. Forward 2016 EPS estimates of $125 or $118 are likely overstated, especially given that earnings are declining. TTM earnings are $100.5, to decline to around $99.4 when Q1 is reported. Given very high valuation, it’s hard to imagine how stock averages

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Mar 31, 2016 | Post by: Roman Chuyan, CFA Comments Off on Economic Downshift – Are We Even Moving?

Economic Downshift – Are We Even Moving?

Summary Economic numbers for February point to a downshift in in activity. The Fed’s GDPnow model estimates Q1-2016 annualized growth to slip to 0.6%. Investment implications include reduced USD outlook and positive view on TIPS and gold. February Data The latest U.S. economic numbers for February point to a downshift

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Mar 29, 2016 | Post by: Roman Chuyan, CFA Comments Off on What The Fed Has Wrought

What The Fed Has Wrought

How The Fed’s Policies Misallocate Business Investment Roman Chuyan, CFA Model Capital Management LLC The Federal Reserve provided unprecedented monetary stimulus in response to the US financial crisis. It dropped its short-term Fed Funds target rate to zero, and provided unprecedented liquidity as part of quantitative easing (QE) programs starting in September

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Mar 16, 2016 | Post by: Roman Chuyan, CFA Comments Off on In Fed We Trust?

In Fed We Trust?

There is some limit beyond which it becomes totally unreasonable to divorce highly elevated asset prices from sluggish fundamentals. ~ Mohamed El-Erian, The Only Game In Town The Federal Reserve’s meeting results will be in focus today. According to consensus expectations, there’s no chance of the Fed raising the interest

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Mar 04, 2016 | Post by: Roman Chuyan, CFA Comments Off on Will The ECB Awe Or Disappoint?

Will The ECB Awe Or Disappoint?

Investors will be watching the European Central Bank’s monetary policy meeting on Mar 10th. The ECB’s fight against deflation using negative ECB deposit interest rate (now at -0.3%) and a 1.5 trillion-euro bond-buying plan has made little visible progress: economic growth and inflation remain absent from the Eurozone. Finance authorities

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Feb 22, 2016 | Post by: Roman Chuyan, CFA Comments Off on Real Economy Unaffected by Market Turmoil –

Real Economy Unaffected by Market Turmoil –

After a 10% US equity market correction this year, the important question was whether it would affect the real economy. It hasn’t. Economic activity by consumers and businesses (other than commodity-driven sectors) isn’t affected (at least, not yet) by the turmoil. The latest economic statistics show continued strength in the U.S. domestic

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Feb 04, 2016 | Post by: Roman Chuyan, CFA Comments Off on Extreme Investor Fear Is Positive For The Market

Extreme Investor Fear Is Positive For The Market

Investor sentiment reached extreme levels of fear amid the January market debacle, according to the American Association of Individual Investors (AAII). The ratio of bearish to bullish investors exceeded 200% (two bearish investors for every one bullish) in January, and still stood at 187% at month-end. This is a level of

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