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The Aptus Blog

Market notes, charts, investment concepts, and timely market updates, directly from our investment team.

2022-12-06 · Market UpdatesEverything is Fine?A quick reminder, the formula for generating investment returns looks like this: Return = Yield + Growth +/- Valuation Change Here’s the graphic showing each of the 3 pot2022-12-05 · Market UpdatesRearview to Windshield, December 2022November 2022 Market Recap: The S&P 500 bounce in November (+5.4%) occurred as the US yield curve inverted further as the 10 year treasury yields rallied. This is the2022-11-30 · Market UpdatesThe Divergence in Energy Stocks vs. CrudeIn the last two weeks, we’ve received several inquiries regarding energy equity outperformance relative to declining oil prices. Many people reference some version of the2022-11-16 · Market UpdatesAptus Musing: Season RecapThe Cincinnati Bengals had a BYE this week, so I thought that I would do some reflecting not only on their first ten games, but over my last two musings – earnings and th2022-11-15 · Market UpdatesAptus Musing: Can That CPI Reaction Stick?I’ve been asked what we thought about the magnitude and sustainability of last week’s market reaction to Thursday’s CPI print. We love putting things into context and las2022-11-03 · Market UpdatesIs It Worth Locking in 4%?4% yields look attractive. Are they? Rate Environment We are writing this on 11/2/2022 as markets await the 1pm CST FOMC (Federal Open Market Committee) statement followe2022-11-02 · Market UpdatesRearview to Windshield, November 2022October 2022 Market Recap: The market ended the month +8.1% in October, as Q3 earnings season looks to be a complete redux of Q2 earnings season. There has been earnings 2022-10-25 · Market UpdatesAptus Musings: 2022 Midterm ElectionsIn some ways, the midterm elections have been demoted in importance as investors have been concentrating on Federal Reserve policy. It has been well-documented how market2022-10-17 · Market UpdatesAptus Musings: Q3 2022 Earnings PreviewWhen someone says, “It’s football season”, Kentuckians, in their own dialect, instantaneously translate that to “Keeneland is about to open”. Even more exciting this year2022-10-10 · Market UpdatesQ3 2022: A Market in Constant Sorrow“O Muse!, Sing in me, and through me, tell the story, Of that skilled investor, in all ways of contending, An asset allocation, searching for alpha years on end…” -Invoca2022-10-05 · Market UpdatesEverything is a DCFWe are three quarters through 2022 and it’s been a tough year. We’ve weathered this market turmoil, but I’m fully aware being down ‘less’ is not something most investors 2022-10-05 · Market UpdatesQ3 Recap and Chart BookThis is our biggie each quarter, pages of charts and the context to go with them. As always, we think the windshield view is far more relevant than the rearview. But it’s2022-10-04 · Market UpdatesRearview to Windshield, October 2022Developments Over the Past Month Can you Hear the Fed Now? September 2022 Market Recap: At the end of September, the Fed removed any remaining doubt about its commitment 2022-10-03 · Market UpdatesAssessing the DownsideWhen we think about narratives surrounding slowing economic growth, our job as investors is to translate narrative into number. In other words, if the Federal Reserve con2022-09-26 · Market UpdatesAptus Musings: Volatility Breeds VolatilityMany of y’all have heard my D + G spiel regarding the S&P 500’s P/E compressing from 21.5x (Dec ’21) to 16x currently, all while the risk premium has actually tighten2022-09-22 · Market UpdatesFOMC September 2022: Another Big HikeAs expected, the Federal Reserve opted to raise rates 75bps, taking the target range to 3.00% to 3.25%, with a total of 300bps in policy adjustments since March…the faste2022-09-19 · Market UpdatesWhy Own International?Why do we own international stocks? This is one of the most common questions we receive from advisors. Who can blame them? We are nearly 15 years into a regime in which U2022-09-07 · Market UpdatesHigh Yield: Is the Juice Worth the Squeeze?With stocks and bonds both down year-to-date (YTD), there have been very few places for investors to hide. In fact, through August, the 60/40 portfolio is having its wors2022-09-06 · Market UpdatesEmbracing Your Allocation OpportunityTwo Choices Let’s assume there’s only two potential investment options. For this exercise we’ll define risk as volatility in return stream, and exposure to large drawdown2022-09-05 · Market UpdatesRearview to Windshield, September 2022Developments Over the Past Month As the summer comes to a close, it’s worth looking back to Memorial Day for perspective. Equities have been largely flattish and extremel2022-08-18 · Market UpdatesAptus Musings: The “Non”-Inflation Reduction ActFor the first time in a while, we have something to discuss coming out of Washington D.C. On Tuesday, President Biden signed into law the Inflation Reduction Act (“IRA”),2022-08-08 · Market UpdatesAptus Musings: Thoughts Around EarningsSimply put, most market pundits were probably too pessimistic on the future earnings picture in the U.S. – at least for this quarter. I believe that corporate earnings su2022-08-03 · Market UpdatesMore Stocks. Less Bonds. Better Capture.The plan was to discuss valuations, but July created the opportunity to revisit two important concepts: Asset Allocation Upside and Downside Capture We wanted to touch on2022-08-01 · Market UpdatesAptus Musings: Think Small for Return DifferentiationA common misconception in the market is that it is difficult to invest in small-caps due to concerns regarding size and liquidity. Understandably, this could have been th2022-08-01 · Market UpdatesRearview to Windshield, August 2022Developments Over the Past Month July 2022 Market Recap: The month of July was driven by better-than-feared earnings, economic data, and falling inflation expectations. T2022-07-19 · Market UpdatesAptus Musings: Q2 2022 Earnings Preview & Stock SplitsWhat an awesome 150th British Open this past weekend at St. Andrews! For those following, it was an interesting week for the players at “The Old Course”, as this is the f2022-07-18 · Market UpdatesQ2 Recap and Chart BookThis is our biggie each quarter, pages of charts and the context to go with them. As always, we think the windshield view is far more relevant than the rearview. But it’s2022-07-12 · Market UpdatesThe “Idea in Real” MarketThe market is learning that the economic cure of last year is now quickly becoming the cause for something else. The ramifications of unprecedented fiscal and monetary re2022-07-12 · Market UpdatesWill the Fed Flip?Powell Pivot or Powell Plunge… Which is It? The Fed’s aggressive tightening over the last 3 months has been a vicious attempt to regain their credibility after insisting 2022-07-05 · Market UpdatesRearview to Windshield, July 2022Developments Over the Past Month The U.S. Officially Entered into a Bear Market: The S&P 500 has officially entered a bear market, marking the 27th bear market since 2022-06-28 · Market UpdatesSoft or Hard Landing… Which is It?A Central Bank’s place in an economy is to be the behind-the-scenes moderator of financial conditions. Here in the US, they specifically have two jobs: price stability an2022-06-16 · Market UpdatesAptus Musings: Fed Up With InflationObviously, yesterday’s news regarding the market was all about the Fed. Just a few weeks ago, it seemed very unrealistic that the market would get a 75bp hike in June. Ye2022-06-10 · Market UpdatesValuations MatterThe returns witnessed by investors over the past few years have been an outlier. Entering the year, the 3-year annualized return for the S&P 500 was ~25% with the U.S2022-06-06 · Market UpdatesConvexity is KeyLet’s talk about the last couple weeks in the market and what we are doing about it. Not to provide homework, but if you haven’t read the following links, please do. The 2022-06-06 · Market UpdatesRearview to Windshield, June 2022Developments over the Past Month: The Beatings Will Continue Until Morale Improves: Markets wrapped up a volatile month of May exactly where it began. We started May at 42022-06-03 · Market UpdatesWell, QT is Finally Upon UsWe are beginning a new regime as the Fed moves to reduce the size of its balance sheet which has grown to nearly $9 Trillion. Since March 2020, the Fed has made more than2022-06-01 · Market UpdatesOil Market Update – Products EditionIn prior posts, we have written about the continued tightness in oil markets driven by (among other things) structural underinvestment in productive supply over the past 2022-05-31 · Market UpdatesThe Strength of the ConsumerRight now, the consumer’s money in their wallet doesn’t jiggle jiggle, it folds. Everyone reading this has probably heard us continually state that the stock market is di2022-05-20 · Market UpdatesEquities in a Tightening RegimeWe continue to understand that emotions are heightened in this current market – the volatility is real. Thus, we know that a lot of y’all are focusing on how to help your2022-05-20 · Market UpdatesThe Second Leg to DropFirst, I really wanted to touch base after yesterday’s price decline across indices – it was the worst day since June 2020. I know that I have been saying for quite some 2022-05-13 · Market UpdatesThe Affordability Problem in HousingStrong demand for housing may give some flashbacks to 2007/2008, but this is not necessarily a bubble. We believe the work-from-home has shifted the demand fundamentals o2022-05-11 · Market UpdatesAptus Musings: Current Market Gyrations are Not Normal, But This Intra-Year Drawdown IsI’ll start off by reposting JD’s message from the most recent monthly note – it’s a must read on how to mentally handle the current volatility – Thinking Well. Two Parts 2022-05-03 · Market UpdatesMay 2022 Aptus Musings: How Should One Look At the Market?For today’s musing, I’m just going to throw some thoughts out there regarding the current market – so my rants may be all over the place. The end of each day feels as if 2022-05-02 · Market UpdatesRearview to Windshield, May 2022Developments Over the Last Month April showers doused bullish sentiment last week as the SPX wrapped up April with an 8.8% decline. This was the worst April return for th2022-05-02 · Market UpdatesThinking WellThinking well is a superpower. It’s not a character trait that receives much attention, but I’d argue, it’s what matters. All other qualities take a back seat to the abil2022-04-20 · Market UpdatesAptus Musings: Q1 2022 Earnings ExpectationsQ1 2022 Earnings Preview Earnings season started last week with JP Morgan (“JPM”) and a slew of other banks, and given the early tone, this earnings season could be under2022-04-13 · Market UpdatesDid We Witness Peak Inflation? Let’s Hope.U.S. consumer prices rose in March by the most since late 1981. The consumer price index increased 8.5% (2.2% of the headline number can be attributed to energy) from a y2022-04-13 · Market UpdatesQ1 Recap and Chart BookThis is our biggie each quarter, pages of charts and the context to go with them. As always, we think the windshield view is far more relevant than the rearview. But it’s2022-04-06 · Market UpdatesWhat is “Notional Protection”?Last month we focused on the Delta of an option and how that relates to our portfolios and strategies. It was a simplified explanation of answering the questions around h2022-04-04 · Market UpdatesRearview to Windshield, April 2022Developments over the Past Month Monthly Recap: March was a tale of two different periods (see below). The first quarter was one of the worst on record for the collective2022-03-31 · Market UpdatesMarket Performance After a Yield Curve InversionThis Aptus Musing will piggy-back John Luke’s take on the yield curve inversion. As we all know, it’s one thing to know what is going on in the market, but another to kno2022-03-28 · Market UpdatesAptus Musings: Stock of the Month – Copart, Inc. (CPRT)Ride Wit Me – Copart, Inc. As fundamental analysts, we need to do the work – we need to roll up our sleeves and get our hands dirty. We don’t solely rely on sell-side ana2022-03-25 · Market UpdatesETF Mechanics and Tax EfficiencyMost people hate taxes – that’s why they should love ETFs. As in past years, capital gains distributions from ETFs in 2021 were a tiny fraction of those distributed by th2022-03-23 · Market UpdatesMarch Madness, Wealth Management versionMore fun on the hardwood…Wealth Management ran a piece on guys who played major college hoops. As you may know, 6 Aptus team members played Division 1 ball, so there migh2022-03-17 · Market UpdatesFOMC March 16th, 2022And…We Have Lift Off As expected, the Fed raised the overnight target rate 25 bps to 0.25% – 0.50%. The market had priced seven hikes this year prior to the meeting, and 2022-03-15 · Market UpdatesAptus Musings: Will the FOMC Invert the Yield Curve?Let the March Madness begin! As you may know, Aptus has six (6) employees that played D-1 College Basketball at UNC Wilmington, UA-Huntsville, and Wright State. The latte2022-03-11 · Market UpdatesA Generational Inflation Print, Until Next Month…The U.S. CPI surged +0.8% m/m and 7.9% y/y in February. Core CPI, which is a measure that takes out food and energy, rose +0.5% m/m and 6.4% y/y in Feb. Given the recent 2022-03-09 · Market UpdatesAptus Musings: The “R” WordIt’s no secret that the underlying market dynamics have changed over the past month due to geopolitical forces potentially causing a slowdown in global growth. In our 2022022-03-03 · Market UpdatesBond Market Summary: March 3, 2022Current Rates & the Curve: The Ukraine-Russia War captured investors’ attention as the 10-year US Treasury traded in a ~30 bps range since last week. The yield of 2.02022-03-02 · Market UpdatesHow and When Can Hedges Be Effective?Our experience in the options market is what underpins our investment process. Options are the vehicle to inject ownership of volatility, and it’s this ownership that all

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