The mandated economic shutdown and corresponding collapse in asset values (stocks and bonds) as a result of COVID-19 seems unprecedented.  In about a month, the economy transitioned from economic expansion to severe contraction and bear market.  From the February 19 high in the S&P 500 to the low on March 23, the market was down…

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The Leading Economic Index (LEI) is an important indicator of recession risk.  When the six-month moving average of the percent change month/month turns negative, recession risk is elevated.  For the past three months, this has been the case. The January LEI, reported this week, enjoyed a significant positive reversal.  A strong pickup in the LEI…

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The decade ending December 31, 2019 is the only decade in U.S. history without a recession. The decade is a few weeks away from officially ending.  If it were to end today, the average annual return of the S&P 500 during this decade is about 13.2% (including dividends).  On December 31, 2009, the S&P 500…

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Delta’s long-term market indicators which measure the probability of recession in the next six to twelve months are bullish – no recession.  Specifically, the U.S. treasury yield curve (10y-2y) and the Leading Economic Index (LEI) remain positive. The Delta Market Sentiment Indicator (MSI) published in Barron’s and shown at the end of this newsletter weekly…

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Most of the time market indicators are not at extreme levels.  For example, the forward 12-month price/earnings ratio (P/E) of the S&P 500 is almost never below 10x or above 25x.  The Delta Market Sentiment Index (MSI) is rarely less than 10% or greater than 90%.  Investor confidence is normally somewhat balanced between bullish, bearish…

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Stocks just won’t seem to go down lately.  Through Thursday of this week, there have been 12 S&P 500 record high closings month-to-date.  The all-time record for S&P 500 record closing highs was set in June, 1955 at 16.  On the four days the S&P 500 has traded down in 2018, the cumulative decline was…

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