Market Sense
Market Sense is HB Wealth’s recurring economic and market research, authored by Gina Martin Adams, Michael Casper, and Matthew Sanders. These insights offer perspective on current market conditions, economic trends, and investment risks across short- and long-term horizons.
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Abstract: Adding nondomestic stocks to an equity portfolio has clear diversification benefits, and both emerging and developed markets stocks are discounted to domestic peers. Strong earnings forecasts for the former hint the gap in multiples could close if consensus is correct, while resolution of turmoil in the Middle East may…
Abstract: One of the largest, risk-tolerance-setting industries in the S&P 500 – semiconductors – has jumped more than 50% from March low to last week’s high as earnings continue to blow past consensus. Technicals may already be in the process of correcting but remain only part of the concern. Valuations…
The correlation between U.S. equity prices and bond yields is signaling another risk-off period may be lurking. The asset classes move in regimes – the correlation between stock prices and bond yields was largely positive from 2000-2022 as equities tended to move in the direction of yields as inflation mostly…
Abstract:Hyperscalers’ plans to spend more than $700 billion in 2026 and another $1 trillion in 2027 building AI infrastructure implies inflation risks may remain, even if supply constraints in the Middle East are resolved. While the financial markets appear to believe inflation is somewhat temporary and due to a supply…
Abstract: AI Disruption Has Growth Leading Quality, but It is Likely Short Term Though tech and fast-growing stocks have blurred the lines between quality and growth factors, the two show different performance over time – most especially during downdrafts. Growth factors usually comprise some form of fundamentals, measuring EPS or…
Abstract:2026 could be the best year for IPOs on record based on already completed deals and the expected size of SpaceX, OpenAI and Anthropic offerings. Due to its low float shares outstanding, SpaceX’s effect on the S&P 500 could be limited to start. If OpenAI and Anthropic follow a similar…
Emerging Market equities are on pace for a second consecutive year of outperforming U.S. stocks, the first back-to-back annual outperformance since 2010. So far this year, the group has outperformed U.S. large caps by more than 2X, up nearly 20% versus the S&P 500’s gain of 7%. Notably, emerging…
Abstract:The Magnificent Seven has managed to recover its year-to-date loss with April’s rally, though most stock prices in the group remain below former peaks as the market continues to work through likely outcomes of the group’s tremendous investment in AI. Pairwise correlations are likewise dropping, demonstrating the breakup of the…
Abstract: Monetary Policy Faces Three Big Changes with New Fed Chair With a new Chair calling for “regime change” on deck and the FOMC already on a relatively uncertain hold pending impacts from the war in the Middle East, monetary policy may be set to keep markets somewhat on edge…