Market Commentary: Rhymes

HJ Sims Logo

History doesn’t always repeat itself but, as Mark Twain reportedly once said, it often rhymes. Looking across the investment landscape, we find ourselves facing events and conditions that have been experienced before but are hardly worthy subjects for song or poetry: a debt limit standoff reminiscent of 2011 and 2013, interest rates not experienced in 16 years, inflation rates not seen in 40 years, levels of U.S. debt as a percentage of GDP that now exceed the 1945 peak, a 100-year pandemic, the 25th instance in 123 years of divided party control in Washington, a 1,000-year rainfall, and now a possible repeat of the 2020 presidential contest.

Continue reading

Market Commentary: Dangerous Words

HJ Sims Logo

Things are different than they were at the start of the new year. Several banks have failed, with SVB and Signature now listed among the top four U.S. largest bank failures of all time when measured by total assets. The Federal Reserve launched yet another new rescue program and Pew Research reported that 56% of Americans say banks and other financial institutions have a negative effect on the way things are going in the country these days.

Continue reading

Market Commentary: Pick and Roll

HJ Sims Logo

It was with a pen, not a buzzer, a 21-gun salute, a balloon drop, fireworks, or confetti parade, that the President signed congressional resolution H. J. Res. 7, ending the COVID national emergency on Monday. He signed the bill behind closed doors without ceremony, bringing no new attention to the execrable pandemic that disrupted and devastated virtually every life on the planet over the course of the last three years.

Continue reading

Market Commentary: Calling the Shots

HJ Sims Logo

It was fifty years ago on April 3, 1973, when Dr. Marty Cooper made the first public cell phone call from his clunky, personal, handheld, portable prototype as he stood on a busy New York City sidewalk. The 44-year-old Motorola engineer thought it would be amusing to make that first call to his company’s chief competitor at Bell Labs, Dr. Joel Engel. He punched in his rival’s number on a DynaT-A-C device that was roughly the size of a brick.

Continue reading

Market Commentary: Sense-Making

HJ Sims Logo

The Cynefin framework was created as a tool to be used in “sense-making”, a term broadly incorporating common sense into decision-making, something that we and all of our policymakers in Washington should certainly do more often. Fifteen years ago, David Snowden and a team at IBM came up with this new framework for looking at problems and assessing situations accurately so as to arrive at solutions and respond appropriately. They began by identifying four types of problems: simple, complicated, complex and chaotic, and moved on from there.

Continue reading

Market Commentary: Consistency

HJ Sims Logo

Edgerton “Ketchie” Welch, a lifelong resident of Chillicothe, Missouri began his career at his family’s Edge-Mar Dairy but later came to run the local Citizens Bank & Trust Co., serving for a total of 55 years. At various points in his role as CEO, he reported an investment performance that beat the nation’s biggest banks and insurance companies. When interviewed by Forbes on his exceptional success, he admitted that he was not smart enough to play the stock market and never even heard of modern portfolio theory.

Continue reading

Market Commentary: Banking On It

HJ Sims Logo

Recency bias is a term used in behavioral economics that describes the tendency of people to believe that recent events will occur again soon, that the current state of being will continue indefinitely, that headlines which feel ominous and immediate necessitate urgent action. Lacking the wider-angle lenses of history and mathematical probability, this type of bias affects trading and other short-term decisions that people make — panic selling, bubble buying – fueled by fear or greed in volatile moments.

Continue reading

Market Commentary: Where Everyone Knows Your Name

HJ Sims Logo

The Goosebumps books are written at a third to seventh grade reading level, unlike the minutes of the Federal Open Market Committee which cater to the ivory tower crowd. They feature no violence or death, unlike the trade press which has been reporting on the past year’s devastating market losses in brutal detail, and the mainstream media which has documented pandemic casualties for the past three years. A common theme in Stine’s writing is the use of wit and imagination to escape horrendous situations. This is an approach that we all cling to in this second decade of the third millennium as we wrestle with all our grown-up fears.

Continue reading

HJ Sims Market Commentary: Goosebumps

HJ Sims Logo

The Goosebumps books are written at a third to seventh grade reading level, unlike the minutes of the Federal Open Market Committee which cater to the ivory tower crowd. They feature no violence or death, unlike the trade press which has been reporting on the past year’s devastating market losses in brutal detail, and the mainstream media which has documented pandemic casualties for the past three years. A common theme in Stine’s writing is the use of wit and imagination to escape horrendous situations. This is an approach that we all cling to in this second decade of the third millennium as we wrestle with all our grown-up fears.

Continue reading

HJ Sims Market Commentary: Measures of Wealth

HJ Sims Logo

Wealth today is generally defined as the value of all assets of worth owned by a person, community, country or country. Back in the heyday of the pantheon of the Greek gods, wealth was largely measured in agricultural terms. Today, respondents in the latest annual Schwab modern wealth survey concluded that having a net worth of $1.9 million qualifies a person as wealthy. However, the top 1% of households by income lost almost 16% of their overall wealth from the fourth quarter of 2021 to the third quarter of 2022.

Continue reading

HJ Sims Market Commentary: Super Roles

HJ Sims Logo

In January 1969, the inflation rate was 4.4% and the unemployment rate fell to 3.4%. In the decades since, inflation has frequently fallen below 4%. Federal Reserve Chair Ben Bernanke in his key role made 2% the official target in 2012. But we have not seen unemployment in the range of 3.4% in the last 54 years. Last Friday, the Bureau of Labor Statistics reported that the economy added a reported 517,000 jobs and that the number of jobless Americans as a percentage of the population fell to 3.4%.

Continue reading

HJ Sims Market Commentary: Groundhogs and Canaries

HJ Sims Logo

The first month of the New Year is already behind us and how fantastic it would be if we could keep the rally going at this pace for the rest of the year. Heading into Groundhog Day, we would welcome six more weeks, six more months of this performance with low volatility and strong returns. It certainly does not feel like we are about to enter into the recession that economists have threatened for more than a year.

Continue reading

HJ Sims Market Commentary: Year of the Rabbit, Year of the Bond

HJ Sims Logo

Some Asian markets are closed all this week for the Lunar New Year holiday. Sunday marked the first day of the Year of the Rabbit, said to be a symbol of happiness, prosperity, abundance, peace, elegance, and longevity. Our colleagues at MacKay Shields have also dubbed 2023 as “The Year of the Bond”, and it has indeed begun with rallies across corporate, government, and municipal markets.

Continue reading

HJ Sims Market Commentary: Floors and Ceilings

HJ Sims Logo

Markets around the world were stunned when the gold standard credit rating of the United States of America was downgraded by Standard & Poor’s from triple-A to AA+ after the close on Friday, August 5, 2011. S&P had issued a negative outlook in July after warning that failure to reach a sufficient compromise on slashing the deficit would risk this action. They boldly told the world that “the effectiveness, stability and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges”.

Continue reading

HJ Sims Market Commentary: Adjusting the Sails

HJ Sims Logo

This new year with its winds of change requires quite a bit of adjustment but, as with every new beginning, it brings a jolt of excitement, a yearning for change, for betterment. There may be worry but there is hope and underlying it all is our unquenchable American can-do spirit and drive. There are problems to solve and we will find the ways. We not only carry on, we prevail in new and challenging conditions.

Continue reading

HJ Sims Market Commentary: Fireworks Greet 2023

HJ Sims Logo

The New Year begins with fireworks on Capitol Hill as Members of the Senate celebrate their swearings-in to the 118th Congress while Members of the House, not yet sworn in, are still voting to select their new Speaker. At this writing, horses are being traded but the outcome remains something less than certain. Historians have dusted off record books dating back to the 34th Congress which saw the longest and perhaps most divisive contest for the Speaker’s gavel. It lasted from December 3, 1855 to February 2, 1856 and involved 21 candidates and 133 ballots.

Continue reading

HJ Sims Market Commentary: All is Calm, All is Bright?

HJ Sims Logo

Treasury Secretary Janet Yellen appeared on 60 Minutes this past Sunday to present her views on the state of the U.S. economy, the risk of recession and the widespread costs of Russia’s war against Ukraine. Ending that war, she contended, would be the single best thing we can do for the global economy but, until then, the U.S. will continue to fund Ukraine for “as long as it takes”. As for America, the nation’s 78th Secretary presented a rather rosy outlook for the coming year, one in which, absent an unanticipated shock, inflation will be “much lower”.

Continue reading

HJ Sims Market Commentary: Georgia On My Mind

HJ Sims Logo

On Rolling Stone’s list of the greatest songs of all times, the Ray Charles version of “Georgia on My Mind” ranks as number 44. The soul singer known as Brother Ray was in fact a native of Georgia, born in 1930, the same year that Hoagy Carmichael and Stuart Gorrell penned the lyrics. He recorded the classic tune thirty years later on his album The Genius Hits the Road and, in 1979, his rendition became the official state song of Georgia. The Peach State was the last of the original thirteen American colonies to be founded, the fourth state to enter the Union in 1788, the fifth to secede in 1861, and the last to be readmitted in 1870. This week, it is on the mind of millions of people around the world — not for its role as host of the Masters Tournament, or as the birthplace of the civil rights movement, the home of former president Jimmy Carter and baseball legend Ty Cobb — but in the political battle for a U.S. Senate seat and momentum going into the next cycle.

Continue reading

HJ Sims Market Commentary: Kickoff

HJ Sims Logo

The global population climbed to 8 billion people on Tuesday, November 15, according to the United Nations, up from 5.3 billion in 1990. More than half of us — an estimated 5 billion — from every nation, ethnicity, faith, age range, income level and occupation will watch some or most of the FIFA World Cup games during the 29 days of competition underway in Qatar. Not billions but millions of people around the world also tune in to the monthly press conferences held by Jerome Powell, the head of the U.S. central bank. These events are shorter in duration and much less exciting than the World Cup games but produce just as much if not more wagering.

Continue reading

HJ Sims Market Commentary: Red, White, Black and Blue Confetti

HJ Sims Logo

The 2024 presidential campaign season is off to a start already with Tuesday’s announcement by former president Donald J. Trump. The launch of his third bid for the Oval Office came just one week after the mid-term elections flipped the U.S. House to Republican rule by a slim margin but left the Senate under Democratic control, likely reliant once again upon Vice President Harris to cast tie-breaking votes depending on the outcome of the December 6 runoff in Georgia.

Continue reading