From the Desk of Willie Delwiche.

Firms are still hiring but with average weekly hours being curtailed, aggregate hours worked appear to have peaked in Q4.

This is the video recording of the January 19th, 2023, Weekly Town Hall w/ Willie Delwiche.

1/19/23 2:00 PM ET

From the desk of Willie Delwiche.

Dynamic Portfolio Update: With new highs outpacing new lows every day so far this year, our net new high A/D line has turned higher and moved our "Fear or Strength" tactical model into its bullish zone. We are following the model and increasing risk exposure in the Tactical Opportunity portfolio.

From the desk of Willie Delwiche.

The Investors Intelligence measure of advisory services sentiment shows Bulls rising to their highest level in over a year. Bears have not (yet) undercut their summer lows and the Bull-Bear spread is still just below its August peak.    

The shorter-term risk indicators have teased the possibility in recent weeks, but now for the first time in a year, our longer-term Risk Indicator has moved into Risk On territory.

More Context: This risk indicator is made up of 20 (intermarket and intramarket) ratios that pair various risk on and risk off assets. It ebbed and flowed over the course of 2022 but remained in Risk Off territory all of last year. Paired with the turn higher in our net new high advance/decline line, this is evidence of an improving backdrop for risk assets. These are not discrete signals (like so many breadth and momentum thrusts) but are continuous indicators of the environment in which we, as investors, are operating. 

From the Desk of Willie Delwiche.

Money supply is unchanged over the past year and has fallen at a never-before-seen 5% annualized rat over the past 3 months.

Why It Matters: Money supply growth peaked (on a year over year basis) at 27% in February 2021 as policymakers responded to the COVID crisis by flooding the financial system with liquidity. That growth has now dissipated and over shorter time periods money supply is actually contracting (it was down for the fourth month in a row in November). Collapsing money supply growth helps take the edge off of inflationary pressures in the economy (there is less money chasing all the goods & services). But liquidity is also the lifeblood of the financial markets. As with seedlings in the garden, when the spigot is turned off, green shoots turn brown and asset prices could struggle to flourish.    

This is the video recording of the January 12th, 2023, Weekly Town Hall w/ Willie Delwiche.

1/12/23 2:00 PM ET

From the desk of Willie Delwiche.

Over the course of 2022, the two-year (8-quarter) return for the aggregate household portfolio dropped from one of the highest levels in over 40 years to underwater for the first time in over a decade.     

Why It Matters: Sentiment soured in 2022 but investors largely stuck with their equity exposure. They choose not to meaningfully increase their exposure to bonds or cash (and commodity funds actually experienced outflows last year). Now investors are reviewing portfolios that didn’t just experience a bad year, but are actually down over the past two years. This is unfamiliar territory for a generation of investors who are not used to sustained weakness and who see US large-cap equities as the only game in town. 

From the desk of Willie Delwiche.

Dynamic Portfolio Update: Our portfolios held up well in 2022. Now we are making some changes to remain well-positioned for the trends that are intact as we begin a new year. We've re-allocated equity exposure away from the US and toward areas around the world (both regions and countries) that are showing leadership while also making room in the portfolios to take advantage of the strength coming from precious metals.

New highs exceeded new lows last week for the first time since August (and only the third time since November 2021). That is a positive development but there is more work to be done before concluding that a new bull market has been reborn.

From the desk of Willie Delwiche.

The new year can bring the hope of a better market environment. While it can be tempting to draw conclusions about all of 2023 from how December closed and January has begun, we would counsel patience. One lesson from 2022 is that normally reliable indicators of strength can be distorted in elevated volatility environments. The evidence has not improved and caution remains warranted. The liquidity environment remains poor, last year’s pattern of lower lows and lower highs is intact and the trend in the net new high data has not improved. Across asset classes, and both in the US and around the world, uptrends are hard to find. Gold, though, is starting to shine.

Our Weight of the Evidence Dashboard fills in the details and includes a few charts that have our attention heading into 2023.

This is the video recording of the December 22nd, 2022, Weekly Town Hall w/ Willie Delwiche.

12/22/22 2:00 PM ET