Image Source:   The long-run expected return for the Global Market Index (GMI) remained above 7% for a third straight month in January, ticking higher vs.  The revised forecast, based on three models defined below, continues to reflect the highest return outlook in recent history for this multi-asset-class global benchmark.US equities are still the lone downside outlier for expected return relative to the market’s history and the various asset classes that comprise GMI. The average forecast for American shares is printing well below its trailing 10-year performance. The implication: US shares are expected to earn noticeably softer results in the years ahead vs. the market’s realized return over the past decade. By contrast, the rest of the  continue to post return forecasts above their trailing 10-year records. On that basis, the case for a globally diversified portfolio looks more attractive compared to the past decade.GMI represents a theoretical benchmark for the “optimal” portfolio that’s suited for the average investor with an infinite time horizon. Accordingly, GMI is useful as a starting point for customizing asset allocation and portfolio design to match an investor’s expectations, objectives, risk tolerance, etc. GMI’s history suggests that this passive benchmark’s performance is competitive with most active asset-allocation strategies, especially after adjusting for risk, trading costs and taxes.It’s likely that some, most or possibly all of the forecasts above will be wide of the mark in some degree. GMI’s projections, however, are expected to be somewhat more reliable vs. the estimates for its components. Predictions for the specific markets (US stocks, […]

AUD/USD bounces back above 0.6200 as the US Dollar surrenders its intraday gains. US Trump’s decision to delay tariffs on Canada and Mexico has resulted in a decline in USD’s risk premium. China has retaliated with tariffs on the US, which would take place from February 10.  rebounds sharply above the round-level figure of 0.6200 in Tuesday’s North American session. The Aussie pair recovers as the US Dollar (USD) gives up its intraday gains on the back of United States (US) President Donald Trump’s decision to push the order to impose 25% tariffs on Canada and Mexico on hold for 30 days. This scenario has resulted in a decline in the risk-premium of the US Dollar, given its safe-haven feature.The US  (DXY), which tracks the Greenback’s value against six major currencies, drops to near 108.50 after a short-lived recovery move to near 109.00.However, Trump’s decision to put 10% tariffs on China has come into effect, which keeps fears of a trade war intact. In retaliation, China has also announced tariffs on the US, which will be executed in February. This has negatively impacted the Australian Dollar’s (AUD) outlook, given that the currency is a proxy for China’s economic status.Investors expect that an absence of immediate execution of tariffs by China suggests that the economy is continuing to negotiate with Trump.This week, the major trigger for the US Dollar will be the US  (NFP) data for January, which will be released on Friday. Market participants expect the official employment data to influence speculation […]

Image source:   Over the weekend, President Trump announced tariffs of 25% on both Canada and Mexico, as well as a 10% tariff on China. Such was not unexpected, as contained in the Trump tariff Executive Order {. Specifically, that order stated: “[Sec 2, SubSection (h)]: Sec. 2. (a) All articles that are products of Canada as defined by the Federal Register notice described in subsection (e) of this section (Federal Register notice), and except for those products described in subsection (b) of this section, shall be, consistent with law, subject to an additional 25 percent ad valorem rate of duty. Such rate of duty shall apply with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern time on February 4, 2025, except that goods entered for consumption, or withdrawn from warehouse for consumption, after such time that were loaded onto a vessel at the port of loading or in transit on the final mode of transport prior to entry into the United States before 12:01 a.m. eastern time on February 1, 2025, shall not be subject to such additional duty, only if the importer certifies to CBP as specified in the Federal Register notice. […] (h) For avoidance of doubt, duty-free de minimis treatment under 19 U.S.C. 1321 shall not be available for the articles described in subsection (a) and subsection (b) of this section. {Sec 2, SubSection (h)}“ The announcement of tariffs set the market on its heels yesterday morning as media writers quickly pushed narratives about the […]

Image Source:   The market got some relief around the news of the US tariff delay on Canada and Mexico, which helped to inspire a recovery rally in risk assets. Looking ahead, we get US JOLTs job openings, factory orders, Fed speak, ECB speak, and the New Zealand GDT auction.Video Length: 00:01:05Markets Welcome US Tariff Delay Will The US Take The Foot Off The Gas? Markets In Disarray On Tariff Tantrum

The S&P 500 has rebounded yet again – is it forming a topping pattern?Stocks opened significantly lower on Monday, with the S&P 500 dipping below last Monday’s local low after the open. However, it rebounded and closed just 0.76% lower, retracing much of its initial decline. The index closed slightly below the 6,000 level.Today, the S&P 500 is expected to open virtually flat, likely extending its consolidation. Investors are awaiting key jobs data at 10:00 a.m. and earnings reports from GOOG, AMD, and SNAP after the close.Investor sentiment declined last week, as shown by Wednesday’s , which reported that 41.0% of individual investors are bullish, while 34.0% of them are bearish.The S&P 500 index continues its consolidation, as we can see on the .(Click on image to enlarge)Nasdaq 100 Rebounded from 21,000The Nasdaq 100 closed 0.84% lower after rebounding from a daily low of 21,004.35. Despite earnings releases, major tech stocks continue to trade sideways.This week, earnings reports include: AMD, GOOG (today), QCOM (tomorrow), and AMZN (Thursday); volatility is likely to remain elevated.Resistance is around 21,800, marked by the previous trading range, while support is at 21,000, marked by recent lows.(Click on image to enlarge)VIX: Briefly Above 20The VIX index, a measure of market volatility, advanced to the daily high of 22.51 last Monday, the highest level since December 20. However, it later retraced most of that move, falling to 14.90 on Friday. Yesterday, it briefly reached 20.42 before pulling back.Historically, a dropping VIX indicates less fear in the market, and rising VIX […]

Image Source:   Merck ( – ) came out with quarterly earnings of $1.72 per share, beating the Zacks Consensus Estimate of $1.69 per share. This compares to earnings of $0.03 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 1.78%. A quarter ago, it was expected that this pharmaceutical company would post earnings of $1.50 per share when it actually produced earnings of $1.57, delivering a surprise of 4.67%.Over the last four quarters, the company has surpassed consensus EPS estimates four times.Merck, which belongs to the Zacks Large Cap Pharmaceuticals industry, posted revenues of $15.62 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.45%. This compares to year-ago revenues of $14.63 billion. The company has topped consensus revenue estimates four times over the last four quarters.The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.Merck shares have added about 0.3% since the beginning of the year versus the S&P 500’s gain of 1.9%.  What’s Next for Merck?While Merck has underperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations […]