Zolio Market Commentary

Another VIX Spike on Cheap Oil, Tight Credit

Another VIX Spike on Cheap Oil, Tight Credit

| December 12, 2014

Wall Street’s favorite mean reverting indicator has fallen far from the mean. The S&P 500 Volatility Index, or VIX, rose to over 19 on Thursday after falling below 12 earlier in December. Complacency about a bullish December for U.S. stocks on improving economic indicators evaporated, with concerns offsetting a number of bullish economic reports. The […]

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Understanding Oil

Understanding Oil

| December 10, 2014

An unexpected and largely unpredicted fall in commodity prices has hit energy stocks, causing at least one hedge fund to close its energy fund completely. Allocations to the industry did not lighten before oil began falling this summer, and the futures market showed no signs of distress. Now, however, headlines are calling for even $40 […]

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GDP Gains and Volatility Drops Bring End-of-Year Optimism

GDP Gains and Volatility Drops Bring End-of-Year Optimism

| November 25, 2014

A number of macroeconomic events are bringing equities to a strong year-end close. The most important is American GDP growth, which was expected to rise by 3.3% in the third quarter. This number was revised upwards on Tuesday as the BEA saw “positive contributions from PCE, nonresidential fixed investment, federal government spending, exports, residential fixed […]

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How to Value Target Now

How to Value Target Now

| November 20, 2014

Target (TGT) is one of the largest retail specialists, although it is by no means the biggest (WMT has a market cap 6 times bigger than Target’s). Its TTM P/E ratio remained in the teens for most of the last few years, rising steadily in 2014 until it spiked over 20 in the middle of […]

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Japan’s Recession and Equities

Japan’s Recession and Equities

| November 18, 2014

Japan stunned investors with news that its GDP fell in the third quarter, the second quarter of contraction in a row that some say is the beginning of a recession. Annualized growth for the country is at -1.6% for now, and many economists believe that rising prices is not getting Japanese consumers to spend money. […]

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Three Strong Macro Tailwinds

Three Strong Macro Tailwinds

| November 14, 2014

Fundamental investors cannot ignore macroeconomic conditions, although macro trends cannot always guarantee the generation of alpha. Knowing the macro context can help portfolio allocations and prepare investments for systemic risks, which is why the larger economic news is something that all portfolio managers spend some time examining. These macro trends have been generally positive, but […]

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Mean Reversion and the VIX: Understanding Pullbacks and Panics

Mean Reversion and the VIX: Understanding Pullbacks and Panics

| November 13, 2014

The S&P 500 (SPY) had a sharp pullback in the middle of October mostly on market fears that the end of the Federal Reserve’s quantitative easing program would dry up liquidity and cause stocks to fall. There was good reason to fear this; SPY has fallen at the end of every previous QE program, and […]

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