February 2021

Interest Rates Explain Valuations…Until They Don’t

As U.S. equity prices continue to skyrocket, one of the bullish arguments we’ve heard is that high equity valuations are justified by low interest rates. Unfortunately, this seemingly simple statement is more complex than it appears. What’s lost in this statement is that from an elevated valuation level, regardless of the level of interest rates, returns are likely to be lower. For valuations and returns to be pressed even higher than where they stand today, rates would need to fall to impact that change. Static low (or high) rates do little to affect future return.

January 2021 - Market Flash

Markets got off to a mixed start in 2021, as the S&P 500 ended January with a -1.01% loss. Despite making new highs mid-month, investors saw volatility spike and markets give back all of their YTD gains in just the last few trading days of January. This was largely attributable to the irrational trading activity that occurred in a handful of consumer discretionary stocks, which included GameStop, AMC Theaters, etc. Non-U.S. developed markets fell nearly in-line with their U.S.