The Income Channel

Are FANG Investors Playing the Role of Greater Fools?

Introduction The greater fool theory is an investing metaphor that suggests that if you pay more for a stock than it is worth (intrinsic value indicates) that you are only doing this on the basis that a fool greater than you will come along and willingly pay you more.

Inverted US Yield Curve? Recession? Not So Fast

Many investors have started to scrutinize the shape of the US Treasury yield curve, worried that a potential yield-curve inversion would mean imminent recession. In our view, things aren’t that simple.

Of Currencies, Trade and Other Clouds

Emerging markets have struggled in the first half of this year amid a storm of uncertainties. Franklin Templeton Emerging Markets Equity’s Chetan Sehgal examines issues that have acted as clouds on the asset class—including a stronger US dollar and trade skirmishes...

De-FANGed Trade?

A review of last month’s market-moving events across countries and asset classes.

Iran Sanctions and Potential Responses: Part I

Trump withdrew from the nuclear deal with Iran in May. Although the rest of the signatories remain committed to the original agreement, the U.S. plans to implement sanctions on Iran in two phases.

The Big Four Economic Indicators: Industrial Production Up 0.1% in July

Today's report on Industrial Production for July shows a 0.1% increase month-over-month, which was worse than the consensus of 0.3%. The year-over-year change is 4.23%, up from last month's YoY increase. Revisions were made to the previous five months.

NAHB Housing Market Index: "Builder Confidence Remains Firm in August"

The National Association of Home Builders (NAHB) Housing Market Index (HMI) is a gauge of builder opinion on the relative level of current and future single-family home sales. It is a diffusion index, which means that a reading above 50 indicates a favorable outlook on home sales; below 50 indicates a negative outlook. The latest reading of 67 is down slightly from last month's 68. had a forecast of 67.

Using Dr. Copper to Check the Pulse of the Global Economy

Holy cow! This economy is on fire; witness the second quarter U.S. GDP growth rate of 4.1%. Is it sustainable or a just a temporary spurt? It’s often said that the Copper price has a PHD in economics, because of its widespread use in many diverse industries. That use ranges from homes, factories, and electronics, to power generation and transmission and much more.

The Global Bond Paradox: How Hedging Can Enhance Low Local Yields

Japanese government bonds yield virtually zero. Yields on German bunds remain stuck below 50 basis points (bps). U.K. gilts yield only about 125 bps. Do non-U.S. bonds such as these hold any value to dollar-based investors?

Under Siege: How Trade Wars Affect the World’s Major Automakers

From steel to engines to whole cars, tariffs are shifting the playing field for automakers. Our credit analysis suggests there are no winners in this war: consumers should expect higher sticker prices, companies lower earnings and investors more volatility.

July 2018 Market Commentary

Stocks hit the ground running to start the second half of 2018.

NFIB Small Business Survey: "Small Business Optimism Index Nears Survey High in July"

The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for July came in at 107.9, up 0.7 from the previous month and its second highest of all time. The index is at the 100th percentile in this series. Today's number came in above the forecast of 106.9.

World Markets Update

Three of eight indexes on our world watch list have posted gains through Monday, August 13, 2018. The top performer this year is India's BSE SENSEX with a gain of 11.33%. In second is our own S&P 500 with a gain of 5.55%. In third is France's CAC 40 with a gain of 1.88%. Coming in last is Shanghai's SSE with a loss of 15.76%.


Investing in Small-Cap-Growth Companies with a Long-Term View

John Barr manages the Needham Aggressive Growth Fund (NEAGX), which had an annualized return of 10.51% over the prior 15 years, versus 9.42% for the S&P 500, for an outperformance of 109 basis points. In this interview, he discusses the outlook for his fund.

The Case for Leveraged U.S. Treasury Bonds

For three important reasons, leveraged U.S. Treasury bonds make sense as an ordinary investment.