Happy Holidays


The often ridiculed and often re-gifted, mound of fruit of unknown age, the lowly fruitcake.  Johnny Carson was famous for joking that there is really only one fruitcake in the world, passed from family to family.  Traditional recipes use liqueurs or brandy, but in the US our cakes tend to be alcohol free.  Like a fine wine, some say fruitcake improves with age.  In fact, Wikipedia states that a fruitcake baked in 1878 was kept as an heirloom by a family in Tecumseh, Michigan, in 2003 it was sampled by Jay Leno.

The current bull market has many of the same qualities as a fruitcake.  It is often dismissed and unloved and it appears ageless (appears).  According to FactSet, with 81% of the S&P 500 reported, 74% have beaten earnings estimates and 66% have beaten revenue estimates.  One note, those companies that disappointed have been beat up by the markets.  A positive for the markets is the growth in the US and abroad.  Bloomberg Data reports that the projected US GDP for 2018 to be 2.5% which is up from 2.1% this year.  Consumers being the largest driver of GDP, have continued to spend and we have 32 days between Thanksgiving and Christmas, which is the second largest amount of time between those holidays, according to Schwab.

Speaking of consumers, Singles’ Day (11/11), which is China’s version of Black Friday has seen sales skyrocket.  The sales are reportedly four times the amount spent in America on Black Friday and Cyber Monday combined.  Many US companies participated in the sales surge.









Credit Suisse Global Wealth Report 2015 stated that “If you’ve no debts and have $10 in your pocket you have more wealth than 25% of Americans.”  That is a scary statement.  The Fed has begun unwinding their massive balance sheet.  As you can see below, as they increased their assets, the S&P 500 followed.  While the Fed starts to deleverage, many American are taking on additional debt.  Mortgage debt is the largest component, of consumer debt but it is not really growing.  The more alarming portion of the debt composition is the growing student and auto loan debt.  We believe that the grow in the student loan debt is keeping the mortgage debt at bay as many new grads are unable to afford a mortgage with an already strained balance sheet.  Housing appears to be in good shape as mortgage and home equity delinquencies are relatively low, but the student and auto delinquency rates are increasing.  Corporations has also joined in on the debt spree.  As of the end of October, new investment grade corporate debt issuance surpassed $1 trillion.

















Money, Money, Money

Speaking of printing money, it is said that there is more Monopoly game money printed annually than actual U.S. currency.  The Bureau of Engraving and Printing allots $826.7 million to print cash each year, the Monopoly people print around $50 billion each year.

Fixed Income

The short end of the yield curve continues to trend up as the Fed will most likely raise the overnight rate in December.  Long term rates are still below where they were at the beginning of the year.  The curve is starting to flatten; we do not want to see it invert (short term higher than long term).  The Fed typically raises rates when the economy is expanding.  The back side of the expansion is generally a recession; we will be watching what develops.













Morgan R. Christen, CFA, CFP®, MBA
Chief Executive Officer


* Past performance is not a guarantee of future results.  Stock is the capital raised by a corporation through the issue of shares entitling holders to an ownership interest of the corporation. Treasury securities are negotiable debt issued by the United States Department of the Treasury. They are backed by the government’s full faith and credit and are exempt from state and local taxes. Past performance is no guarantee of future results, and there is always the risk that an investor may lose money. Diversification neither assures a profit nor guarantees against loss in a declining market. The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the securities mentioned. The information contained herein, while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions expressed herein are subject to change without notice.

https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2017Q2.pdf  http://moneyversed.com/absurd-money-facts/  https://www.sovereignman.com/trends/credit-suisse-with-just-10-youre-wealthier-than-25-of-americans-18072/ Credit Suisse Global Wealth Report 2015

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