Strategic Updates

Peter Cavelti’s essays have been printed and quoted in papers, magazines and newsletters internationally, including The Wall Street Journal, Barron’s, The Financial Times, the Financial Post, The Globe and Mail, Money, Personal Finance and World Link. Peter releases new commentary as inspired by current events and the desire to share information with an independent, unbiased voice.

Command and Control

Once again, predictably and on time, the U.S. Federal Reserve and the European Central Banks, have shifted gears. After talking tough for most of the past year, the world’s key monetary agencies have softened their stance.

The Narrative Changes

As I wrote three months ago, the stock market has for some time been a risky place to be. Yet, with few exceptions, financial columnists, the talking heads on television, and the major investment firms sang the same chorus—the economy, they chirped, is doing just great and a major correction is months, perhaps years, away.

Unstable World, Robust Markets

It’s ten years since Lehman Brothers collapsed and the financial world unravelled. We entered the crisis with cash reserves that seemed alarmist, but helped us weather the storm and be able to stock up on quality equities after their precipitous drop.

Events, Trends and Catalysts

For now, the prevailing narrative persists: motivated by the belief that central banks won’t allow a meaningful correction in equities and that there are few attractive places for money outside the stock market, investors feel that broad overvaluation is justified.

The Elusive Correction

How risky is the broad stock market? It depends how you look at it, but there is plenty to worry about. To begin with, valuations are high by any yardstick; in the U.S. for example, the S&P500 cyclically adjusted price-to-earnings ratio has only been higher once—in the late 1990s.

Deviations from the Norm

We examine several recent events that threaten to overthrow the social, economic and political order. As a general rule, when the unknowns starts to crowd out the predictable, it’s best to be cautious.

On America

So far, financial markets have welcomed Donald Trump’s victory with exuberance, focusing primarily on his promise of lower taxes and less regulation.

The Delta Factor

The recent suspension of all Delta Air Lines flights highlights the drastic need to overhaul our badly impaired infrastructure. The eventual cost of overhaul will be high, and other areas of governance, such as health care, education and social welfare, demand equal attention.

On Arrogance

We comment on the arrogance of the political class, the misguided and desperate actions of central bankers attempting to fix a broken system, Brexit and the future of Europe, and our conviction that investors have no choice but to resort to an approach of extreme pragmatism and flexibility.