The Income Channel

Treasury Yields: A Long-Term Perspective

The last couple of years have been remarkable ones for yields. The 10-year note hit its historic closing low of 1.37% in July of 2016 and then rose 158 BPs to its interim high of 2.95% as of the June 15 close.

The Beautiful Game: Surprising Insights from the World Cup about Strategy and Teamwork

Team performance matters more than star players or a large resource base. And in a rapidly changing world, Totaalvoetbal can help teams adapt.

Debt Song: It’s Not a Pretty Tune

I spend a lot of time on the road speaking to our investors and advisors and one of the common questions I get during the Q&A sessions is, “What keeps you up at night?” Aside from having an 18-year old daughter—and being a chronic insomniac anyway—my reply usually centers around debt and the burden it has and will continue to place on our economy.

Social Security: It’s Healthier Than You Might Think!

Each year, Social Security’s Trustees report to Congress on the financial status of the program. This typically generates a number of anxiety-provoking media headlines about if/when it will run out of money. Gail Buckner, CFP, our personal retirement and financial planning strategist, takes a look at the facts. She says Social Security is actually in pretty good shape overall.

Emerging Debt in a Rising Interest Rate Environment

"A rising global interest rate environment is once again leading to volatility in the emerging debt markets,” writes GMO’s Carl Ross in a newly-published Emerging Debt Insights piece. As the US 10-year Treasury has risen to the 3% neighborhood, benchmarks of emerging country bonds, both in hard currency and local currency, have fallen.

How to Avoid a Fund Blow Up

Greg Silberman explains his take on the life cycle of private investments.

Investing Without People

This memo covers three ways in which securities markets seem to be moving toward reducing the role of people: (a) index investing and other forms of passive investing, (b) quantitative and algorithmic investing, and © artificial intelligence and machine learning.

World Markets Update

Four of eight indexes on our world watch list have posted gains through Monday, June 18, 2018. The top performer this year is India's BSE SENSEX with a gain of 5.13%. In second is our own S&P 500 with a gain of 3.75%. In third is France's CAC 40 with a gain of 2.60%. Coming in last is Shanghai's SSE with a loss of 8.63%.

 

Oil Has Rebounded but Energy Equities Have Lagged. Is It over Already?

Energy equities have underperformed the S&P 500 materially over the last five years. While spot oil prices have risen significantly over the last twelve months, longer dated oil prices have not, and energy equities have remained under pressure.

Bonds Misjudge The Future

We've always been skeptical that bond yields carry deep meaning about the future. Low Treasury bond yields in recent years were said to be a signal of slower growth, or possibly a recession, ahead. And the bond world said stocks were over-valued.

Can Small-Cap Outperformance Continue?

Small caps have materially outperformed large caps in 2018, with the S&P SmallCap 600 Index outpacing the S&P 500 Index 7.80% to 2.58% between Dec. 29, 2017, and May 25, 2018. Below, I highlight the drivers of small-cap returns this year, and why I believe the trend could continue.

I Should Have

We have used this quip from the book Why You Win or Lose: The Psychology of Speculation by Fred C. Kelly many times in our missives over the past nearly five decades because the wisdom of its message is timeless. We recalled it last week in many of our meetings in New York City when we heard certain individual investors, as well as portfolio managers (PMs), say “I should have!”

It's Time to Throw out the Old Bond-Investing Playbook

Recent posts from the diversified fixed income team have discussed how bond investors should be prepared to navigate a market that may look very different from what they've grown used to. In other words, it might be time to reassess the old bond-investing playbook.

Will Re-Defaults of Mortgage Modifications Undermine Housing Markets?

Much has been written about residential mortgage modifications, yet hardly anything has been said about the problem of re-defaults on modified mortgages. In large part, this is due to the paucity of accurate data about borrowers re-defaulting. It is time to clearly lay out how extensive this problem really is, what it means for mortgage markets and the dangers it poses for investors.

How to Avoid Taxes with Highly Appreciated Securities

Of the two certainties we face – death and taxes – only taxes can be purposefully delayed or avoided altogether. Here are some ways to do that with highly appreciated securities.