Advisor Perspectives has announced its Venerated Voices™ awards for commentaries published in Q2 2018.
Fed Chairman Jerome Powell will deliver his semi-annual monetary policy testimony to Congress on Tuesday and Wednesday, but he’s not expected to cover any new ground.
A review of last month’s market-moving events across countries and asset classes.
As Russ explains the key to asset returns in the first half of 2018 was the dollar, not interest rates.
The Northern Trust economics team explores agriculture markets globally and in the United States.
Of the 14 major commodities we track at U.S. Global Investors, oil was the standout performer, gaining roughly 23 percent, followed by nickel (up 16.76 percent) and wheat (16.51 percent).
The S&P 500 started lower on Monday and had four days of gains, ending the week up 1.5% from last week. The index is up 3.91% YTD (based on Jan. 1) and is 2.94% below its record close.
This morning's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 148.5, up 1.1 from the previous week. Year-over-year the four-week moving average of the indicator is now at 3.41%, down from 3.57% last week. The WLI Growth indicator is now at 1.5, also down from the previous week.
The second quarter was marked with market volatility from geopolitical tensions, the president’s tweets, and “America first” rhetoric.
Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for July? Let’s take a closer look at the numbers.
We are coming to the mid-year point for 2018, and the past six months have felt like six years. Markets have experienced a significant uptick in volatility, yet equity investors may not have much to show for all their troubles.
The US shale boom has led to a surge in the production of crude oil, and much of this production has been exported in recent years. In the chart below, I plot the gross exports of crude oil from the US. Beginning with almost nothing several years ago (in part because crude exports were banned until December 2015), US daily crude exports have eclipsed two million barrels per day.
Given that we are in the later stages of this economic cycle, with factors such as increased trade tensions and geopolitical uncertainty at play, we do expect greater volatility may be ahead. But it’s important to remember that experiencing these ups and downs is a normal aspect of our market environment.
The Bureau of Labor Statistics released the June Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.87%, up from 2.80% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.26%, up from the previous month's 2.24% and above the Fed's 2% PCE target.
In the 1960’s, the slogan “Make Love, Not War” became a rally cry for anti-war protestors, but also typified their free love expression. They used the slogan to explain the harshness of the situation in Vietnam and to be countercultural to the capitalist and traditional way of life they saw in American society.
This article focuses on chapter 15 in Jeremy Siegel’s book, Stocks for the Long Run. I show the importance of implementing a recession-based strategy to avoid the most severe market declines.
In this issue, Research Affiliates discusses positioning for a potential inflation shock and offers insight into its collaboration with PIMCO to bring forth innovative solutions for investors.
The economic calendar is a light one, and many regular participants are on vacation. The most important data include PPI, CPI, and JOLTS, the best read on a tightening labor market.
The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for June came in at 107.2, down 0.6 from the previous month. The index is at the 99th percentile in this series. Today's number came in above the Investing.com forecast of 105.6.
It's time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). The price of Regular and Premium were up one and two pennies each, respectively, from last week. According to GasBuddy.com, Hawaii has the highest average price for Regular at $3.71 and San Francisco, CA is the most expensive city, averaging $3.78. South Carolina has the cheapest at $2.51. The WTIC end of day spot price closed at 73.85, a 0.1% decrease from this time last week.
Alternative investments (alts) were first embraced by institutions, and some people still view them as a complex solution for complex needs. However, a growing number of alternative strategies are now available via mutual funds.
Emerging market stocks are trading near bear market territory, but that’s par for the course for longer-run, rising returns.
Byron Wien discusses what people don’t recognize about Donald Trump, the future of Italy and the E.U. and whether federal deficits will be inflationary.
Templeton Global Macro makes a compelling case that finding attractive opportunities in emerging markets lies in distinguishing the more resilient countries from the rest.
This week I had the privilege of meeting a young tech superstar in Palo Alto, California—Gabe Leydon, cofounder and now-former CEO of mobile game producer MZ. Previously known as Machine Zone, the Sunnyvale-based company is responsible for developing some of the highest-grossing mobile games of all time, including Game of War: Fire Age and Mobile Strike, both of which profited from high-dollar marketing campaigns worthy of some Hollywood films. You might have seen Game of War’s Super Bowl commercial featuring swimsuit model Kate Upton, or Mobile Strike’s, starring Arnold Schwarzenegger.
This commentary has been updated to include this morning's release of Nonfarm Employment. June's 213K increase in total nonfarm payrolls was accompanied by upward revisions of 37K. The unemployment rate increased to 4.0%. The Investing.com consensus was for 200K new jobs and the unemployment rate to remain at 3.8%.
The macro data from the past month continues to mostly point to positive growth. On balance, the evidence suggests the imminent onset of a recession is unlikely. The largest risk to the economy is the escalation in trade war rhetoric.
Investors appear to remain oblivious to how high inflation already is in the US relative to inflation rates around the world. With Washington DC policy overtly pro-inflation, investors need to be positioned for the overheating ahead.
Beginning in 2010, central banks around the world turned from being net sellers of gold to net buyers of gold. Last year official sector activity rose 36 percent to 366 tonnes – a substantial increase from 2016.
Emerging market stocks have taken it on the chin so far in 2018, down 9% and unperperforming the MSCI World Index by about 8%. There are of course plenty of excuses for such bad performance, from trade related issues to the breakdown of the synchronized global growth story.
The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 199 and details U.S. exports and imports of goods and services. Today's headline number of -43.10B was better than the Investing.com forecast of -43.70.00B.
The Chinese Yuan has fallen precipitously in the last 10 weeks raising concerns of whether China was using the currency as a weapon to preemptively mitigate looming tariffs.
The Northern Trust Economics team shares its outlook for growth, employment, inflation, and interest rates in the U.S., U.K., E.U., Japan and China.
In response to a standing request, here is updated comparison of four major secular bear markets. The numbers are through the Friday, June 29 close.
Summer is just beginning, but emerging-market (EM) bonds and currencies have been on a roller-coaster ride for months now. In markets, though, volatility breeds opportunity—and we still see plenty of that among EM issuers.
The economic calendar is loaded with the most important reports. The four trading days are divided by a Wednesday holiday, meaning some extra days off for most. Normally the data would dominate the discussion.
Personally, I start with a base position of actively managed mutual funds, but not just any fund. The funds I want to own are the ones where I know the portfolio manager.
The days are long and people’s thoughts naturally move to the mountains, lakes, and beaches. But these coming summer days may not be so “dog-like” as we normally anticipate.
Today the Institute for Supply Management published its monthly Manufacturing Report for June. The latest headline Purchasing Managers Index (PMI) was 60.2 percent, an increase of 1.5 percent from 58.7 the previous month. Today's headline number was above the Investing.com forecast of 58.4 percent.
The June US Manufacturing Purchasing Managers' Index conducted by Markit came in at 55.4, down from the 56.4 final May figure. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
Stop buying Iranian oil or face the music. That’s the message the U.S. government shared with the world this week, giving importers until November 4 to cut their consumption of Iran’s crude to zero—or expect sanctions. The threat comes a month after President Donald Trump withdrew the U.S. from the Obama-era nuclear deal.
The latest Chicago Purchasing Manager's Index, or the Chicago Business Barometer, rose in June to a value of 64.1 from 62.7 in May, which was above the Investing.com forecast of 60.0. Values above 50.0 indicate expanding manufacturing activity.
Personal Income (excluding Transfer Receipts) in May rose 0.39% and is up 4.1% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was at 0.18%. The real number is up 1.8% year-over-year. Revisions were made to figures for January through April.
We’re about nine years into the economic recovery following the Great Recession. It’s been an extraordinarily profitable period for the stock market—one of the best in U.S. history—and I hope you’ve participated.
The Commodities Channel
Venerated Voices™ Q2 2018 Rankings
Advisor Perspectives has announced its Venerated Voices™ awards for commentaries published in Q2 2018.
Powell’s Testimony
Fed Chairman Jerome Powell will deliver his semi-annual monetary policy testimony to Congress on Tuesday and Wednesday, but he’s not expected to cover any new ground.
When Push Comes to Shove
A review of last month’s market-moving events across countries and asset classes.
Why the Dollar Was Key to the 1st Half
As Russ explains the key to asset returns in the first half of 2018 was the dollar, not interest rates.
Agriculture Around the World
The Northern Trust economics team explores agriculture markets globally and in the United States.
Oil Takes Center Stage: Commodities Halftime Report 2018
Of the 14 major commodities we track at U.S. Global Investors, oil was the standout performer, gaining roughly 23 percent, followed by nickel (up 16.76 percent) and wheat (16.51 percent).
S&P 500 Snapshot: Up 1.5% WoW, 3.9% YTD
The S&P 500 started lower on Monday and had four days of gains, ending the week up 1.5% from last week. The index is up 3.91% YTD (based on Jan. 1) and is 2.94% below its record close.
ECRI Weekly Leading Index Update
This morning's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 148.5, up 1.1 from the previous week. Year-over-year the four-week moving average of the indicator is now at 3.41%, down from 3.57% last week. The WLI Growth indicator is now at 1.5, also down from the previous week.
Tariffs and the End of Stimulus
The second quarter was marked with market volatility from geopolitical tensions, the president’s tweets, and “America first” rhetoric.
Monthly Market Risk Update: July 2018
Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for July? Let’s take a closer look at the numbers.
Q3 Market Outlook: What’s in Store for Markets in the Second Half?
We are coming to the mid-year point for 2018, and the past six months have felt like six years. Markets have experienced a significant uptick in volatility, yet equity investors may not have much to show for all their troubles.
Project Independence: Possible this Year if US Petroleum Production Continues to Ramp
The US shale boom has led to a surge in the production of crude oil, and much of this production has been exported in recent years. In the chart below, I plot the gross exports of crude oil from the US. Beginning with almost nothing several years ago (in part because crude exports were banned until December 2015), US daily crude exports have eclipsed two million barrels per day.
Midyear Outlook 2018: The Plot Thickens
Given that we are in the later stages of this economic cycle, with factors such as increased trade tensions and geopolitical uncertainty at play, we do expect greater volatility may be ahead. But it’s important to remember that experiencing these ups and downs is a normal aspect of our market environment.
Consumer Price Index: June Headline at 2.87%
The Bureau of Labor Statistics released the June Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.87%, up from 2.80% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.26%, up from the previous month's 2.24% and above the Fed's 2% PCE target.
Global Dominance via Stocks, Not War
In the 1960’s, the slogan “Make Love, Not War” became a rally cry for anti-war protestors, but also typified their free love expression. They used the slogan to explain the harshness of the situation in Vietnam and to be countercultural to the capitalist and traditional way of life they saw in American society.
Looking Back at Jeremy Siegel on the Business Cycle and the Markets
This article focuses on chapter 15 in Jeremy Siegel’s book, Stocks for the Long Run. I show the importance of implementing a recession-based strategy to avoid the most severe market declines.
All Asset All Access, July 2018
In this issue, Research Affiliates discusses positioning for a potential inflation shock and offers insight into its collaboration with PIMCO to bring forth innovative solutions for investors.
Weighing the Week Ahead: Inflation on the Horizon?
The economic calendar is a light one, and many regular participants are on vacation. The most important data include PPI, CPI, and JOLTS, the best read on a tightening labor market.
NFIB Small Business Survey: "Small Business Optimism Remains Historically High..."
The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for June came in at 107.2, down 0.6 from the previous month. The index is at the 99th percentile in this series. Today's number came in above the Investing.com forecast of 105.6.
Weekly Gasoline Price Update: Regular and Premium Mostly Unchanged
It's time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). The price of Regular and Premium were up one and two pennies each, respectively, from last week. According to GasBuddy.com, Hawaii has the highest average price for Regular at $3.71 and San Francisco, CA is the most expensive city, averaging $3.78. South Carolina has the cheapest at $2.51. The WTIC end of day spot price closed at 73.85, a 0.1% decrease from this time last week.
Why Should Investors Consider Alternatives?
Alternative investments (alts) were first embraced by institutions, and some people still view them as a complex solution for complex needs. However, a growing number of alternative strategies are now available via mutual funds.
Emerging Markets Rise, Fall, Repeat
Emerging market stocks are trading near bear market territory, but that’s par for the course for longer-run, rising returns.
Byron Wien on Trump, Trade, Deficits and Thucydides
Byron Wien discusses what people don’t recognize about Donald Trump, the future of Italy and the E.U. and whether federal deficits will be inflationary.
Michael Hasenstab: An Update on our Global Markets Resilience Scores
Templeton Global Macro makes a compelling case that finding attractive opportunities in emerging markets lies in distinguishing the more resilient countries from the rest.
From Mobile Games to Smart Cities: A.I. Leads Innovation
This week I had the privilege of meeting a young tech superstar in Palo Alto, California—Gabe Leydon, cofounder and now-former CEO of mobile game producer MZ. Previously known as Machine Zone, the Sunnyvale-based company is responsible for developing some of the highest-grossing mobile games of all time, including Game of War: Fire Age and Mobile Strike, both of which profited from high-dollar marketing campaigns worthy of some Hollywood films. You might have seen Game of War’s Super Bowl commercial featuring swimsuit model Kate Upton, or Mobile Strike’s, starring Arnold Schwarzenegger.
The Big Four Economic Indicators: June Nonfarm Employment
This commentary has been updated to include this morning's release of Nonfarm Employment. June's 213K increase in total nonfarm payrolls was accompanied by upward revisions of 37K. The unemployment rate increased to 4.0%. The Investing.com consensus was for 200K new jobs and the unemployment rate to remain at 3.8%.
The Economy Is Fine. Trade War Rhetoric Is The Main Risk
The macro data from the past month continues to mostly point to positive growth. On balance, the evidence suggests the imminent onset of a recession is unlikely. The largest risk to the economy is the escalation in trade war rhetoric.
Overheating Ahead
Investors appear to remain oblivious to how high inflation already is in the US relative to inflation rates around the world. With Washington DC policy overtly pro-inflation, investors need to be positioned for the overheating ahead.
Top 10 Countries with Largest Gold Reserves
Beginning in 2010, central banks around the world turned from being net sellers of gold to net buyers of gold. Last year official sector activity rose 36 percent to 366 tonnes – a substantial increase from 2016.
5 Indicators That Suggest The Selloff In EMs Has Gone Too Far
Emerging market stocks have taken it on the chin so far in 2018, down 9% and unperperforming the MSCI World Index by about 8%. There are of course plenty of excuses for such bad performance, from trade related issues to the breakdown of the synchronized global growth story.
May Trade Deficit at $43.10B, Better Than Forecast
The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 199 and details U.S. exports and imports of goods and services. Today's headline number of -43.10B was better than the Investing.com forecast of -43.70.00B.
CNY Devaluation: Is It Different This Time?
The Chinese Yuan has fallen precipitously in the last 10 weeks raising concerns of whether China was using the currency as a weapon to preemptively mitigate looming tariffs.
Global Economic Outlook - July 2018
The Northern Trust Economics team shares its outlook for growth, employment, inflation, and interest rates in the U.S., U.K., E.U., Japan and China.
The Four Totally Bad Bear Recoveries: Where Is Today's Market?
In response to a standing request, here is updated comparison of four major secular bear markets. The numbers are through the Friday, June 29 close.
Emerging-Market Debt: Expect Volatility—and Opportunity
Summer is just beginning, but emerging-market (EM) bonds and currencies have been on a roller-coaster ride for months now. In markets, though, volatility breeds opportunity—and we still see plenty of that among EM issuers.
Weighing the Week Ahead: Is it Time to Worry About 2020?
The economic calendar is loaded with the most important reports. The four trading days are divided by a Wednesday holiday, meaning some extra days off for most. Normally the data would dominate the discussion.
Investment Models
Personally, I start with a base position of actively managed mutual funds, but not just any fund. The funds I want to own are the ones where I know the portfolio manager.
June 2018 Market Commentary
The days are long and people’s thoughts naturally move to the mountains, lakes, and beaches. But these coming summer days may not be so “dog-like” as we normally anticipate.
ISM Manufacturing Index: Expansion in June
Today the Institute for Supply Management published its monthly Manufacturing Report for June. The latest headline Purchasing Managers Index (PMI) was 60.2 percent, an increase of 1.5 percent from 58.7 the previous month. Today's headline number was above the Investing.com forecast of 58.4 percent.
Markit Manufacturing PMI: Growth Remains Strong in June
The June US Manufacturing Purchasing Managers' Index conducted by Markit came in at 55.4, down from the 56.4 final May figure. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
What’s in Store for Markets in the Second Half?
We are coming to the mid-year point for 2018, and the past six months have felt like six years. Markets have experienced a significant uptick in volatility, yet equity investors may not have much to show for all their troubles.
A Massive Windfall for China’s Fast-Growing Tech Giants
Stop buying Iranian oil or face the music. That’s the message the U.S. government shared with the world this week, giving importers until November 4 to cut their consumption of Iran’s crude to zero—or expect sanctions. The threat comes a month after President Donald Trump withdrew the U.S. from the Obama-era nuclear deal.
Chicago PMI Expanded Faster in June
The latest Chicago Purchasing Manager's Index, or the Chicago Business Barometer, rose in June to a value of 64.1 from 62.7 in May, which was above the Investing.com forecast of 60.0. Values above 50.0 indicate expanding manufacturing activity.
The Big Four Economic Indicators: Real Personal Income in May
Personal Income (excluding Transfer Receipts) in May rose 0.39% and is up 4.1% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was at 0.18%. The real number is up 1.8% year-over-year. Revisions were made to figures for January through April.
How to Face the Next Bear Market with Confidence
We’re about nine years into the economic recovery following the Great Recession. It’s been an extraordinarily profitable period for the stock market—one of the best in U.S. history—and I hope you’ve participated.