Zombie Companies
What do you get when you combine dirt-cheap funding with a preference to invest in companies heavy on intangible assets? Two words: zombie companies. According to a new research paper by the University of Minnesota, the percentage of U.S. public firms with zero...
Return on Equity, With a Twist
Corporate profits matter for the stock market. In fact, corporate profitability is one of the key long-term drivers of stock market performance. So, as investors, it’s important that we accurately measure corporate profits. A commonly used measure of corporate...
Another Failed Rally?
OVERVIEW After a big rally the week before, the U.S. stock market took a step backward last week. The S&P 500 fell 1.2%, the Dow lost 0.94%, and the Nasdaq declined 0.98%. Implied volatility remains elevated, with the VIX index hovering around the 25 range....
Sitting Idle
There’s a saying in economics that the cure for high prices is… high prices. In other words, as the price of a commodity increases, it incentivizes producers to produce more of that commodity, but the increased supply then leads to lower prices. That’s the...
Hitting the Slopes
For this week’s Indicator Insights, we highlight a price-based indicator that measures the intermediate-term trend of the stock market. Specifically, it measures the 126-day (6-month) moving average of the S&P 500 stock market index, shown as the orange...
Slowing Down
OVERVIEW The U.S. stock market surged higher last week, notching its best week of the year and snapping a multi-week losing streak. A handful of earnings results and economic data helped boost investor sentiment, and all three major stock indexes jumped at...
Losing Streak
The U.S. stock market has had a rough couple of weeks. Well, more than just a couple. Our Chart of the Week above shows the weekly returns for the S&P 500 this year. The index has now closed lower for its seventh week in a row. You would have to go all the...
More Lending, Less Liquidity
When a bank makes a loan, it provides money for commerce and greases the gears of our economic machine. But this increased liquidity for the economy does not necessarily translate into increased liquidity for the stock market. Why? Because banks typically do...
Losing Gains
OVERVIEW The S&P 500 index of large U.S. stocks fell 3.05%, its seventh straight week of declines. That’s the index’s longest losing streak since the dot-com bubble burst in 2001. The Dow Jones Industrial Average fell 2.9%, its eighth-straight weekly...
Not Finishing
You’ve heard the saying: Don’t start something you can’t finish. Well, it appears that U.S. homebuilders are not heeding that advice. As our featured chart of the week above shows, the gap between the number of new home constructions started and the number of...
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