Delta Insights A Weekly Commentary on Investing

Let Inflation (and the Stock Market) Run

September 4, 2020

Chairman Powell of the Federal Reserve says the Fed would like to see inflation average at about 2% rather than be capped at 2%. To the ears of investors, this statement translates into low rates for even longer. Inflation is running well below the Fed’s 2% average target.

Crossing the Karman Line

August 28, 2020

Occasionally, markets rocket higher. In 1998, between July 21 and October 8, the NASDAQ lost about 33% of its value. The NASDAQ then appreciated by 278% from about 1,357 to 5,132 on March 10, 2000. The fuel was investor enthusiasm for the endless growth possibilities of the Internet.

Getting Ahead of COVID-19

August 21, 2020

China and much of Western Europe seems to be well ahead of the United States in managing the prevalence of COVID-19 and in re-opening economically. In China, mall traffic is back to about 85% of pre-COVID levels and China domestic air travel is fully recovered.

Interest versus Dividend

August 14, 2020

When is the best time to plant a tree? Many years ago. When is the second-best time to plant a tree? Now. The same goes for investing. The best time to invest was a long time ago. Given the best option may no longer be available, the second-best time is now. Like a tree, investments generally grow over time.

Adding Up the Numbers

August 7, 2020

The total civilian labor force of the U.S. is roughly 160 million persons. The labor force includes all people “16 years of age and older residing in the 50 states and the District of Columbia who are not inmates of institutions (e.g., penal and mental facilities, homes for the aged), and who are not on active duty in the Armed Forces.”


Google This: “Next July”

July 31, 2020

Google (Alphabet) is a California headquartered company. California is mostly shut-down. San Mateo is the only coastal county still open from Mendocino all the way to the Mexican border.

Small-Cap Catch-Up

July 24, 2020

The COVID-19 pandemic has created significant uncertainty. For the most part, the stock market has held up surprisingly well with the S&P 500 now having a small positive gain for the year. The key bullish drivers have been tremendous monetary/fiscal stimulus and an acceleration to on-line commerce which is benefiting the very large capitalization companies in the market..

Commodity Prices Signal Global Recovery

July 17, 2020

Copper prices are largely influenced by the health of the global economy. Copper is used in power generation and transmission, construction, factory equipment and electronics. Copper prices are used as a leading indicator by some economists. Lumber, oil and silver are similar to copper as their prices measure global supply and demand. Many commodity prices are trading at 52-week highs.

The COVID-19 Defensive Trade Lifts Markets

July 10, 2020

COVID-19 is a major driver of trading activity since February. At the start of the crisis, the obvious projection was to say an economic shut-down would severely curtail economic activity and the equity market would suffer. For the first month, this is what happened. The S&P 500 declined by about 35% from late February into March.

Hyper Speed Creates Uncertainty

July 3, 2020

J.P. Morgan Asset Management calculates the recession that began in March ended in May. The pace of change in the markets and the economy is moving at record speed. The pace of change is creating apparent dichotomies that make the investment landscape confusing. The Covid-19 headline news is persistently negative. Corporate earnings are forecast to fall by about 44% in the second quarter. Yet, the NASDAQ is at record highs and the S&P 500 is close to breakeven after enjoying its best quarterly performance in the past 22 years.

An Expected Rise

June 26, 2020

Two months ago, the U.S. reached a single-day record of 34,203 new Covid-19 infections. This week on Wednesday, we set a new daily high of 38,115. A rise in Covid cases should not come as a surprise given social distancing requirements are being relaxed, testing has increased and there were mass protests over the past several weeks. Several states are contemplating plans to slow down the reopening process.

Surprising Strength

June 19, 2020

You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time” - Abraham Lincoln.

Low Inflation, Cheap Oil – Multi-Year Investment Implications

June 12, 2020

Predicting the future price of oil may be one of the most difficult assignments for a financial analyst. In the past twelve years, crude oil prices moved in a range of $150/barrel to $20/barrel. At one point this year, crude oil futures prices were negative $40/barrel. In the past month and a half, the price of crude oil has doubled.

Pandemic, Riots, Presidential Election, War: A Good Year for Investing

June 5, 2020

Pandemic, riots, presidential election and war sounds a lot like 2020. What these words best describe, however, is 1968.
• The H3N2 pandemic (avian influenza A virus originating in China) killed an estimated one to four million people worldwide and about 100,000 in the U.S.

Technically Even Stronger

May 29, 2020

Last week, the Delta Insights newsletter highlighted the building technical strength of the stock market. The S&P 500 gained strength this week and is now above its 200-day moving average. Momentum usually has persistence and a crossover above the 200-day moving average is a widely used positive momentum indicator.

Technically Strong, Fundamentally Rich

May 22, 2020

When is the best time to plant a tree? Many years ago. When is the second-best time to plant a tree? Now. The same goes for investing. The best time to invest was a long time ago. Given the best option may no longer be available, the second-best time is now. Like a tree, investments generally grow over time.

COVID-19 Phase Shift Change

May 15, 2020

COVID-19 is accelerating change in a way that Influenza, Ebola, Rabies, Polio, SARS, Smallpox, HIV and Dengue did not. COVID-19 shut down most of the major economies of the world. Some of the immediate consequences of the shut-down are extraordinary unemployment and all-time high Federal debt levels. Hopefully, these changes will not be permanent. .

Time of Exposure

May 8, 2020

You can pass your hand quickly through flame and feel virtually no pain. If your hand is held to the flame, it will burn. How long the COVID-19 crisis lasts will greatly determine how much economic pain will be felt.

Green Shoots in a Hot Market

May 1, 2020

Expansion, recession, collapse and recovery…all at once. In February, the first quarter GDP growth was expected to be about 3% (expansion). First quarter GDP (advance estimate) was reported this week at -4.8%. It is almost certain that 2Q GDP growth will be substantially more negative. Two sequential quarters of negative GDP growth is the definition of recession.

Groundhog Day

April 24, 2020

COVID-19 has much of America caught in a loop when every day seems the same. Businesses are closed and we wait to see what happens next. Repeat.

COVID-19 Winners and Losers

April 17, 2020

By March 23, the S&P 500 had declined roughly 35% from its all-time high on February 19. It was the fastest transition from bull to bear market in the past 120 years.

Peak in Sight

April 9, 2020

According to the Institute of Health Metrics and Evaluation (IHME), the peak usage in the United States for total hospital beds, intensive care beds and ventilators is April 11, 2020. The peak in deaths per day is projected to be April 12. Total U.S. deaths are projected to reach 60,415 by August 4. 60,415 deaths are a greatly reduced estimate from the roughly 100,000-240,000 projected a couple of weeks ago..

Taking the Temperature of the Market

April 3, 2020

COVID-19 causes some people, including healthy young people, to require intensive care and ventilation. In advance, we do not know who will suddenly require intensive care. Most people who get COVID-19 suffer minor symptoms and will recover at home.

Bear Market Signposts

March 27, 2020

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 35.4%.


March 20, 2020

We have collectively pressed “Pause” on the economy. Having the economy come to a stand‑still is unlike anything we have experienced in our lifetimes. Typically, recessions are part of a cycle…

Bear Shock

March 13, 2020

The stock market sell-off from the high on February 19th (down 20%) is the fastest on record, 15 trading days…

A Whole New (Fixed Income) World

March 6, 2020

A week ago, the Fed Funds futures were pricing in a 100% chance that the Fed would cut the Fed Funds rate by the March 18th meeting…

What If?

February 28, 2020

What if the current outbreak of coronavirus spreads significantly more than expected? This is the question the market is attempting to discount into stock prices…

Whoomp! There It Is

February 21, 2020

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.

LovE Is Prevalent

February 14, 2020

When we say LovE, we are referring to Leverage and Equity. Goldman Sachs prime brokerage (custodian for a significant number of hedge funds) reports they saw the largest net buying of Equities by hedge funds in nearly five months. Net Leverage increased as well.

Signs of Life

February 7, 2020

1. Manufacturing

In the fourth quarter of 2019, GM reopened 30 factories after a month-and-a-half strike. On January 15, the U.S. and China signed a Phase One trade deal. This week, China announced it will reduce tariffs by 50% next Friday on $75 billion worth of imported goods from the U.S.

Getting Behind the Numbers, Time to Panic?

January 31, 2020

Delta uses the Leading Economic Index (LEI) as a predictive indicator of recession. Four of the past five months have shown negative month-over-month readings. On a stand-alone basis, this is not bullish.

New Home Sales vs. Leading Economic Index?

January 24, 2020

Niners vs. Chiefs? Ali vs. Frazier? Monitor vs. Merrimack? Some questions are just really tough to answer in advance. Two well matched forces with only one possible winner.

Finally Time to Go Abroad?

January 17, 2020

The U.S. stock market (S&P 500) has dramatically outperformed both international developed and emerging markets since the start of 2009.

Stock Market Lessons of War

January 10, 2020

For the past thirty years, the United States military has been highly active in the Middle East. Some of the activity has been initiated by the United States including the events listed below. In three out of four cases, the stock market was up over the next twelve months.

Looking into the New Year

January 3, 2020

A New Year and new decade is underway. On the first trading day of last year, the S&P 500 opened at 2,476.96 which was 15x the forward twelve-month earnings. 2020 began with the S&P 500 at 3,244.67 and 18.2x the expected forward twelve-month earnings. From a valuation perspective, one might conclude the S&P 500 is less attractive today than it was twelve months ago. In the next several weeks, we will see important data points that should provide more clarity on the attractiveness of stocks.