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Michael Lebowitz

Articles by Michael Lebowitz

The Lifeline of Markets – Liquidity Defined

June 30, 2021

The Lifeline of Markets- Liquidity Defined
We recently read an analogy in which the author compares the current state of asset prices to an airplane flying at 50,000 feet. Unfortunately, we cannot find the article and provide a link. The gist is market valuations are flying at an abnormally high altitude. While our market plane cannot sustain such heights in the long run, there is little reason to suspect it will fall from the sky either.
Many investors are writing on the current state of extreme equity and bond valuations. Surprisingly, there is little research focusing on what keeps valuations at such levels. Liquidity is our asset bubble’s lift and worth closely examining to better assess the markets’ potential flight path.
Market Liquidity
In the investment

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Taper Is Coming: Got Bonds?

May 26, 2021

Taper Is Coming: Got Bonds?
The solid economic recovery and easing of COVID restrictions lead us to believe a tapering of QE may not be far off. Further supporting our opinion, inflation has fully recovered to pre-pandemic levels, and employment is improving rapidly. On top of that are whispers from within the Fed questioning financial stability given extreme asset valuations driven to some degree by excessive QE.
Most importantly, various Fed members are starting to talk the taper talk.
The eventual tapering of QE will foster a change in investor behaviors. This article focuses on bond yields and a few interest-rate-sensitive equity sectors to provide forward guidance on how fixed income and interest-rate-sensitive assets may perform in a tapering environment.

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The Battle Royale: Stocks vs. Bonds (Which Is Right?)

April 28, 2021

The Battle Royale: Stocks vs. Bonds.
The S&P 500 is at valuations higher than those in 1929 and rival those of 1999. Despite a recession, the index is 25% above where it was trading before the pandemic. The equity stampede is undoubtedly bullish about corporate earnings prospects and, by default, economic growth.
As the stock bulls party, bond investors are glum about future economic prospects. Bond yields are below where they were before the pandemic started. Current yields warn of paltry economic growth and little inflation in the future.
Who has it right? (My colleague Lance Roberts touched on this issue in this past weekend’s newsletter.)
Flipping Valuations
Traditional equity valuation analysis frequently involves the comparison of a fundamental metric to

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