This is a stock market blog about portfolio management,foreign stocks, exchange traded funds and the occasional musing about my firefighting experiences. The point here is to share process

Hang In There, The Election Will Be Over Soon

Earnings season is now well under way with the big US banks generally delivering strong results. The financial sector has been the center of attention lately for scandals, potentially large fines to be paid, a spinning out of REITs into its own sector and the promise of higher rates from the Federal Reserve which is generally accepted as a catalyst for better profitability. Hated though the banks may be, they still are essential to the economy’s ability to function.


Markets seem to be paying more attention now to the election with it just a few weeks away. We will keep this report politically

neutral but note that the popularity of both major party candidates is quite low with distasteful stories about both coming on an almost daily basis. In terms of market implications, In a conference call last week, Chris Kelleher, a portfolio manager at Newfleet suggest that while markets are pricing in a Fed rate hike in December, a GOP win could reduce that likelihood.


Whether it was election fatigue or something else, domestic equities rolled over into another week of modest declines. The Dow Jones Industrial Average fell 0.55%, the S&P 500 was down 0.95% the NASDAQ dropped 1.46% and the Russell 2000 slid 1.94%. During the month of September, the NASDAQ and Russell 2000 led the Dow and SPX which can be taken as a sign of confidence or that risk is on. October thus far has reversed that trend indicating risk, for the time being, is off.


Foreign markets were a mixed bag last week. On the positive side, the DAX was up 0.85%, the CAC gained 0.50% and the Shanghai Composite jumped 1.92%. On the downside the FTSE 100 fell 0.44%, the KOSPI dropped 1.52%, the Nikkei 225 gave up 43 basis points and the Hang Seng had a 2.34% set back.


Although not evident in market returns last week, economic data from China was, as Bespoke Investment Group described it, grim. Both imports and exports have dropped considerably including, as Bespoke notes, large declines to countries who rely on oil to (awful pun alert) fuel their economies. Better news came on Friday when PPI had its first positive report since 2013. China has the world’s second largest economy and has long offered the promise of tremendous growth but it has also long been a confusing market to understand.


The yield on the Ten Year US Treasury Note grinded its way higher to 1.80% with a little more we really mean it talk from Janet Yellen. The German bund yield inched higher to 0.05%, the French OAT moved up to 0.33%, the UK gilt continued its swift gain in yield, taking back 1% to 1.09%, the Swiss ten year has also been working higher but at -0.46% it is in no danger of going positive anytime soon.


Gold drifted lower in the week to the tune of 0.64% while crude oil was up just over 1%, maintaining the $50 level.

We are in Southern Utah visiting the National Parks and a couple of other things. These pictures are from Bryce Canyon National Park taken at sunrise on Sunday.

Managing Obvious Risks

My latest post at Alpha Baskets looks at the obvious threat of interest rate risk. Being an obvious threat does not have to mean there will be a consequence from that threat, in this case rising rates, but it makes sense to mitigate risks that are obvious.

From the post;

This message is harder to absorb in the middle (or end) of a bull market but managing the downside is more important than managing the upside. After a 35-year bull market for bonds, it will become more important to manage the downside in the fixed income portfolio than to squeeze out the maximum yield possible from the entire portfolio.

Please click through to read the entire post.

Next week we are going to be visiting the National Parks in Utah and hope to have some interesting pictures to share.

A 1920’s era Ahrens Fox


A 1935 American LaFrance


Goldilocks & A Flash Crash!

The weekly Market Update is posted at Alpha Baskets and includes the following;

First, Goldilocks which is how some have described the September jobs report which came in with 156,000 jobs created versus an expectation of 172,000. The headline unemployment rate ticked up to 5.0% as more people entered the labor force while the participation rate printed at 62.9%. Wages increased by 0.2% and the broader U6 measure of unemployment was steady at 9.7%. The report seemed to reinforce the idea that a hike is coming in December as the CME’s Countdown To The FOMC page showed a 64% probability of a hike in December. If you’re curious, there is only an 8% probability of a hike in November yet Chair Yellen claims the FOMC is not influenced at all by political considerations.

Please click through to read the entire update.

From the Bethesda Chevy Chase Rescue Squad. This is one of two fire departments in Bethesda but they don’t have fire suppression apparatus but do respond with the county department to fires in a mutual aid or automatic aid type of response.


I had a chance to stop by the Arizona Hall of Flame Museum in Phoenix last week. I took a lot of pictures including several of this 1938 American LaFrance.




Can You Rationally Process Market Events?

My latest post for Alpha Baskets includes the following;

This likely leads to hindsight bias well of course the market recovered but in real time many people thought it was the end of the financial world. Whenever the next crisis comes, people will again think it is different and make poor decisions because of it.

As the article implies, this concept is magnified during large declines as an advisor must be the voice of calm. Declines are inevitable, a normal part of the stock market cycle. The circumstances will be different but the market manifestation is always the same; a large decline that scares a lot of people, a bottoming after some amount of time and then a recovery (Japan as the exception to prove the rule). Saying it now and remembering it then are two different things but that is point.

Please click through to read the entire post.

Had to go back east for a couple of days and was able to get a lot of fire truck pictures.






What The FARC?

This week’s Market Update is posted and includes the following;

By now you know that a peace deal that would have ended decades of civil war in Colombia failed a general election after polls indicating the measure would pass easily. We mention it for two reasons, there are a couple of ETFs that track Colombia as well as several ADRs and because this is at least the second very surprising election result in the last few months.

With one month to go before the Presidential election we are mercifully close to this political cycle ending. Up until last week’s debate the markets seemed to be ignoring the entire sordid affair until Tuesday when there was a huge drop in the US dollar against the Mexican peso which was widely interpreted as a win for Clinton given Trump’s comments regarding immigration. For the week USDMXN was down 2.21%.

Please click through to read the entire post.

A herd of buffalo in Lamar Valley in Yellowstone National Park.


A view of Flathead Lake in Montana.


Whitefish, MT Engine 231.