Market volatility does exist! After a year of all-time low volatility and booming stock and bond markets, investors received a wake-up call in February when equity indexes around the globe sold off by as much as 10% in a matter of days.
Rieder and Brownback discuss how cyclical turning points result in market friction, even with solid growth, presenting the Fed with two potential paths.
This is the fourth of a five-part series presenting 50 dividend growth stocks that I have screened for current fair value. With this article, I will be covering 10 additional dividend growth research candidates with moderate to higher yields...
In a storm, you want to be able to reach higher ground. Recent market volatility – sparked by concerns over interest rates, inflation, global trade, the tech sector and more – has many investors shifting toward more defensive portfolio positions.
There’s been a lot of discussion in the fixed income world about the end of the London Interbank Offered Rate (LIBOR) and what might replace it. But what hasn’t been as widely discussed is an important consequence for investors in this space: changes to LIBOR language in new-issue and amended credit agreements—particularly how these changes are implemented.
Nearly nine years into the current economic expansion Federal Reserve policy actions appear to be benign, as even after six increases, the federal funds rate remains less than 2%. Changes in the reserve, monetary and credit aggregates, which have always been the most important Fed levers both theoretically and empirically, indicate however that central bank policy has turned highly restrictive.
The latest Conference Board Leading Economic Index (LEI) for March increased to 109.0 from 108.7 in February. The Coincident Economic Index (CEI) came in at 103.4, up from the previous month.
When you see trade deficit data between the US and China, be aware that the numbers are vastly different depending on the source. China actually follows a more commonly used protocol to account for trade than does the US. For 2016, for example, US data shows a $375 billion trade deficit with China, whereas China shows $276 billion.
The S&P 500 has continued its bounceback as of Wednesday's close and is down 0.5% YTD and is 5.7% below its record close.
You have undoubtedly heard stories about brokers changing firms who experienced everything from a minor disruption in revenue to an all-out career catastrophe. While you cannot anticipate every event, there is one thing you can do: Plan your work, and work your plan.
The global economic expansion has already entered its 10th year. With bumpy and brittle growth having given way to a robust and globally synchronized conjuncture, an aging cycle has suddenly become much more cyclical.
Last week, we introduced this topic by discussing the Cold War. This week, we will continue our analysis with a reflection on markets, an examination of hegemony and a discussion of the expansion of globalization and the rise of meritocracy and its discontents.
Many investors who thought worrying about inflation was “so 20th century” may now be seeing reasons to reconsider: The business cycle in the U.S. is mature, output gaps have closed, trade frictions are mounting and populism is on the rise.
Investing 101 tells us that rising interest rates are bad for a bond portfolio. But if you’ve got a long investment horizon, that isn’t necessarily so. We think investors should be more concerned about the end of the credit cycle than rising rates.
Today's report on Industrial Production for March shows a 0.5% increase month-over-month, which was better than the Investing.com consensus of 0.3%. The year-over-year change is 4.33%, down fractionally from last month's YoY increase.
While a few companies in the US technology space have been in the hot seat lately, Jonathan Curtis, vice president and research analyst with Franklin Equity Group, is largely unfazed. He said temporary “blips” affecting certain stocks are par for the course as consumers get used to new technologies—and how they impact our lives.
Last night the China Shanghai CSI 300 index fell a bit more than 1.6%, taking out February lows and setting a new YTD low for the index. This is important since the global equity markets have a very high correlation to Chinese stocks.
Four of eight indexes on our world watch list have posted gains through Monday, April 16, 2018. The top performer this year is India's BSE SENSEX with a gain of 1.46%. In second is Hong Kong's Hang Seng with a gain of 1.33%. In third is our own S&P 500 with a fractional gain of 0.16%. Coming in last is London's FTSE 100 with a loss of 6.37%.
The Tax Cuts and Jobs Act as created a media frenzy and widespread confusion. With that in mind, I will provide a brief overview of the new provisions, followed by some practical ideas on how clients can reduce taxes.
David was the King of Israel and the writer of many of the Psalms. He spent his formative years as a shepherd and framed his life’s work around the key concepts from his profession. Herds were the primary form of wealth back then, while common stocks are a primary form today.
These are two of the most important paragraphs we have encountered in more than 47 years of studying markets. DO NOT read them just once. Go off to a quiet spot that invites contemplation and READ THEM SEVERAL TIMES. Then reflect on all of the mistakes you have made in trading and investing.
When the report on international trade came out earlier this month, protectionists were up in arms. Through February, the US' merchandise (goods only, not services) trade deficit with the rest of the world was the largest for any two-month period on record. "Economic nationalists" from both sides of the political aisle, think this situation is unsustainable.
The economic calendar is normal, with an emphasis on housing. Earnings season begins in earnest, with widespread, high expectations.
TIPS declined 1.1% on average in the 2018 first quarter, less than the 1.6% decline in comparable maturity straight Treasurys. The average breakeven spread widened to 222 bp from 184 bp at the end of 2017. Short-maturity TIPS delivered a positive return, as investors sought a haven from rising interest rates and inflation.
2018 began much as 2017 ended, with steadily rising equity markets, low interest rates and burgeoning market optimism. Indeed, investors were increasingly convinced that the lowest stock and bond market volatility since 1965 was set to continue in 2018. Who could blame them?
Note: With the release of March Retail Sales and Consumer Price Index, we've updated this commentary to include the latest Real Retail Sales. Month-over-month nominal sales in March increased by 0.6% (0.62% to two decimals). Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, increased by 0.54%.
This is the third of a five-part series presenting 50 dividend growth stocks that I have screened for current fair value. With this article I will be covering 10 additional dividend growth research candidates with moderate to higher yields in addition to the initial 20 that I presented...
Equities experienced heightened volatility during the first quarter of 2018, with the S&P 500 Index surging 7.55% from Dec. 31 2017, through Jan. 26, 2018, before dropping nearly 8% through quarter-end.
To address questions about the benefits of international investing and diversification, we don’t have to look too far back in time.
QE is slowly dying out and it will hopefully be remembered as a historical curiosity. In the meantime, you and your clients should take comfort in the combination of the market’s efficiency and the Federal Reserve’s deliberate approach.
Today we’re going to look at who wins and who loses under the new tax law. I think many of you will be surprised.
How much debt is too much? [Carl/The Northern Trust Economics team] digests the outlook for debt across countries and levels of government, recaps the most recent outlook for the U.S. fiscal situation, and contrasts China’s current ascendance with the historical example of Japan.
You’ve no doubt heard that everything’s bigger in Texas. That’s more than just a trite expression, and I’m not just saying that because Texas is home to U.S. Global Investors.
There have been some violent market moves recently, but it’s important for investors to keep things in perspective.
It’s easy to understand why the return of equity market volatility in the first quarter of 2018 caused some consternation for investors.
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 April? Let’s take a closer look at the numbers.
Those who own gold often argue how to best own it. I encourage anyone holding gold to assess the pros and cons of different choices of gold ownership to make an educated rather than emotional decision.
Northern Trust’s economic team recaps recent economic developments and shares our monthly outlook for economic growth, inflation, employment and interest rates in the United States.
Recent weak data emanating from the Eurozone has been weighing on German Bund yields. The significant drop in the Eurozone Citigroup Economic Surprise Index (CESI) has pressured German Bund yields lower.
This morning's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 148.2, up 0.2 from the previous week. Year-over-year the four-week moving average of the indicator is now at 2.91%, down from 3.12% last week. The WLI Growth indicator is now at 3.9, down from the previous week.
The University of Michigan Preliminary Consumer Sentiment for April came in at 97.8, down 3.6 from the March Final reading of 101.4. Investing.com had forecast 100.6.
We've updated this series to include this week's release of the Consumer Price Index as the deflator and the March monthly update. The latest hypothetical real (inflation-adjusted) annual earnings are at $37,778, down 13.0% from 45 years ago.
Media reports have been focusing on a “trade war” following President Donald Trump’s decision to impose tariffs on up to US$60 billion in Chinese imports, targeting technology products.
Northern Trust’s Economic Research team shares its quarterly perspective on the growth prospects and challenges ahead for the U.S., U.K., Eurozone, China, and Japan.
A review of last month’s market-moving events across countries and asset classes.
The Income Channel
Market Outlook: Don't Forget Your Umbrella!
Market volatility does exist! After a year of all-time low volatility and booming stock and bond markets, investors received a wake-up call in February when equity indexes around the globe sold off by as much as 10% in a matter of days.
At Cycle Turn, Fed Can Follow Two Possible Paths
Rieder and Brownback discuss how cyclical turning points result in market friction, even with solid growth, presenting the Fed with two potential paths.
10 Fairly Valued Dividend Growth Stocks for Total Return: Part 4
This is the fourth of a five-part series presenting 50 dividend growth stocks that I have screened for current fair value. With this article, I will be covering 10 additional dividend growth research candidates with moderate to higher yields...
Managing Volatility in Short‑term Markets: The Global Liquidity Ladder
In a storm, you want to be able to reach higher ground. Recent market volatility – sparked by concerns over interest rates, inflation, global trade, the tech sector and more – has many investors shifting toward more defensive portfolio positions.
Who Said the Rules of the Game Could Change Because LIBOR’s Going Away?
There’s been a lot of discussion in the fixed income world about the end of the London Interbank Offered Rate (LIBOR) and what might replace it. But what hasn’t been as widely discussed is an important consequence for investors in this space: changes to LIBOR language in new-issue and amended credit agreements—particularly how these changes are implemented.
Quarterly Review and Outlook, First Quarter 2018
Nearly nine years into the current economic expansion Federal Reserve policy actions appear to be benign, as even after six increases, the federal funds rate remains less than 2%. Changes in the reserve, monetary and credit aggregates, which have always been the most important Fed levers both theoretically and empirically, indicate however that central bank policy has turned highly restrictive.
Conference Board Leading Economic Index: Slight Increase in March
The latest Conference Board Leading Economic Index (LEI) for March increased to 109.0 from 108.7 in February. The Coincident Economic Index (CEI) came in at 103.4, up from the previous month.
Protectionists Hide in Your Wallet
When you see trade deficit data between the US and China, be aware that the numbers are vastly different depending on the source. China actually follows a more commonly used protocol to account for trade than does the US. For 2016, for example, US data shows a $375 billion trade deficit with China, whereas China shows $276 billion.
S&P 500 Snapshot: Up 0.5% YTD
The S&P 500 has continued its bounceback as of Wednesday's close and is down 0.5% YTD and is 5.7% below its record close.
Planning for a Successful Transition to a New Firm
You have undoubtedly heard stories about brokers changing firms who experienced everything from a minor disruption in revenue to an all-out career catastrophe. While you cannot anticipate every event, there is one thing you can do: Plan your work, and work your plan.
Time for Investors to Prepare for the Next Cycle
The global economic expansion has already entered its 10th year. With bumpy and brittle growth having given way to a robust and globally synchronized conjuncture, an aging cycle has suddenly become much more cyclical.
Reflections on Globalization: Part II
Last week, we introduced this topic by discussing the Cold War. This week, we will continue our analysis with a reflection on markets, an examination of hegemony and a discussion of the expansion of globalization and the rise of meritocracy and its discontents.
With Inflation Rising, Commodities May Shine
Many investors who thought worrying about inflation was “so 20th century” may now be seeing reasons to reconsider: The business cycle in the U.S. is mature, output gaps have closed, trade frictions are mounting and populism is on the rise.
Who’s Afraid of Rising Rates?
Investing 101 tells us that rising interest rates are bad for a bond portfolio. But if you’ve got a long investment horizon, that isn’t necessarily so. We think investors should be more concerned about the end of the credit cycle than rising rates.
The Big Four Economic Indicators: Industrial Production Up 0.5% in March
Today's report on Industrial Production for March shows a 0.5% increase month-over-month, which was better than the Investing.com consensus of 0.3%. The year-over-year change is 4.33%, down fractionally from last month's YoY increase.
Why Tech-Sector Volatility Doesn’t Worry Us
While a few companies in the US technology space have been in the hot seat lately, Jonathan Curtis, vice president and research analyst with Franklin Equity Group, is largely unfazed. He said temporary “blips” affecting certain stocks are par for the course as consumers get used to new technologies—and how they impact our lives.
New Lows YTD in Chinese Stocks & Highs in Latin America Stocks/Bonds
Last night the China Shanghai CSI 300 index fell a bit more than 1.6%, taking out February lows and setting a new YTD low for the index. This is important since the global equity markets have a very high correlation to Chinese stocks.
World Markets Update
Four of eight indexes on our world watch list have posted gains through Monday, April 16, 2018. The top performer this year is India's BSE SENSEX with a gain of 1.46%. In second is Hong Kong's Hang Seng with a gain of 1.33%. In third is our own S&P 500 with a fractional gain of 0.16%. Coming in last is London's FTSE 100 with a loss of 6.37%.
Five Tips for Clients on the New Tax Law
The Tax Cuts and Jobs Act as created a media frenzy and widespread confusion. With that in mind, I will provide a brief overview of the new provisions, followed by some practical ideas on how clients can reduce taxes.
The Good Shepherd Investor
David was the King of Israel and the writer of many of the Psalms. He spent his formative years as a shepherd and framed his life’s work around the key concepts from his profession. Herds were the primary form of wealth back then, while common stocks are a primary form today.
Two of the Most Important Investing Paragraphs We Have Ever Read
These are two of the most important paragraphs we have encountered in more than 47 years of studying markets. DO NOT read them just once. Go off to a quiet spot that invites contemplation and READ THEM SEVERAL TIMES. Then reflect on all of the mistakes you have made in trading and investing.
Thoughts on Trade
When the report on international trade came out earlier this month, protectionists were up in arms. Through February, the US' merchandise (goods only, not services) trade deficit with the rest of the world was the largest for any two-month period on record. "Economic nationalists" from both sides of the political aisle, think this situation is unsustainable.
Weighing the Week Ahead: Is Strong Earnings Growth Already Reflected in Stock Prices?
The economic calendar is normal, with an emphasis on housing. Earnings season begins in earnest, with widespread, high expectations.
TIPS Outperform Treasurys in 2018 First Quarter
TIPS declined 1.1% on average in the 2018 first quarter, less than the 1.6% decline in comparable maturity straight Treasurys. The average breakeven spread widened to 222 bp from 184 bp at the end of 2017. Short-maturity TIPS delivered a positive return, as investors sought a haven from rising interest rates and inflation.
First Quarter 2018 Singles and Doubles, Not Home Runs
2018 began much as 2017 ended, with steadily rising equity markets, low interest rates and burgeoning market optimism. Indeed, investors were increasingly convinced that the lowest stock and bond market volatility since 1965 was set to continue in 2018. Who could blame them?
The Big Four Economic Indicators: March Real Retail Sales
Note: With the release of March Retail Sales and Consumer Price Index, we've updated this commentary to include the latest Real Retail Sales. Month-over-month nominal sales in March increased by 0.6% (0.62% to two decimals). Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, increased by 0.54%.
The S&P 500 is Overvalued These 10 Dividend Growth Stocks Are Not: Part 3
This is the third of a five-part series presenting 50 dividend growth stocks that I have screened for current fair value. With this article I will be covering 10 additional dividend growth research candidates with moderate to higher yields in addition to the initial 20 that I presented...
How Did Factors Perform During a Roller Coaster First Quarter?
Equities experienced heightened volatility during the first quarter of 2018, with the S&P 500 Index surging 7.55% from Dec. 31 2017, through Jan. 26, 2018, before dropping nearly 8% through quarter-end.
Don’t Abandon International Diversification
To address questions about the benefits of international investing and diversification, we don’t have to look too far back in time.
Bond investors should not mourn the end of QE
QE is slowly dying out and it will hopefully be remembered as a historical curiosity. In the meantime, you and your clients should take comfort in the combination of the market’s efficiency and the Federal Reserve’s deliberate approach.
How to Get Your Tax Weekend Back
Today we’re going to look at who wins and who loses under the new tax law. I think many of you will be surprised.
Checks and Balances
How much debt is too much? [Carl/The Northern Trust Economics team] digests the outlook for debt across countries and levels of government, recaps the most recent outlook for the U.S. fiscal situation, and contrasts China’s current ascendance with the historical example of Japan.
Which Has the Bigger Economy: Texas or Russia?
You’ve no doubt heard that everything’s bigger in Texas. That’s more than just a trite expression, and I’m not just saying that because Texas is home to U.S. Global Investors.
Schwab Market Perspective: Keeping Things in Perspective
There have been some violent market moves recently, but it’s important for investors to keep things in perspective.
Symmetry Policy: How to Adapt to a More Volatile Market Environment
It’s easy to understand why the return of equity market volatility in the first quarter of 2018 caused some consternation for investors.
Monthly Market Risk Update: April 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 April? Let’s take a closer look at the numbers.
How I Own My Gold
Those who own gold often argue how to best own it. I encourage anyone holding gold to assess the pros and cons of different choices of gold ownership to make an educated rather than emotional decision.
You Break It, You Buy It
Northern Trust’s economic team recaps recent economic developments and shares our monthly outlook for economic growth, inflation, employment and interest rates in the United States.
US-German Bond Spreads & Equity Leadership
Recent weak data emanating from the Eurozone has been weighing on German Bund yields. The significant drop in the Eurozone Citigroup Economic Surprise Index (CESI) has pressured German Bund yields lower.
ECRI Weekly Leading Index Update
This morning's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 148.2, up 0.2 from the previous week. Year-over-year the four-week moving average of the indicator is now at 2.91%, down from 3.12% last week. The WLI Growth indicator is now at 3.9, down from the previous week.
Michigan Consumer Sentiment Slips in April
The University of Michigan Preliminary Consumer Sentiment for April came in at 97.8, down 3.6 from the March Final reading of 101.4. Investing.com had forecast 100.6.
Five Decades of Middle-Class Wages: March 2018 Update
We've updated this series to include this week's release of the Consumer Price Index as the deflator and the March monthly update. The latest hypothetical real (inflation-adjusted) annual earnings are at $37,778, down 13.0% from 45 years ago.
What a Trade War Means for Asian Bonds
Media reports have been focusing on a “trade war” following President Donald Trump’s decision to impose tariffs on up to US$60 billion in Chinese imports, targeting technology products.
Global Economic Outlook - April 2018
Northern Trust’s Economic Research team shares its quarterly perspective on the growth prospects and challenges ahead for the U.S., U.K., Eurozone, China, and Japan.
Trade Outlook: Stormy
A review of last month’s market-moving events across countries and asset classes.