Anticipating the Next Recession
In this issue, the Economics team looks at current recession risks in the U.S. and eurozone, and explores how rising oil prices will affect U.S. consumers.
Blockchain Will Completely Revolutionize How We Mine Gold and Precious Metals
This week I had the pleasure to attend Consensus 2018 in New York, the premiere gathering for the who’s who in blockchain, bitcoin and cryptocurrencies. Attendance doubled from last year to an estimated 8,500 people, all of them packed in a Hilton built for only 3,000. Ticket sales alone pulled in a whopping $17 million, while event booths—the largest of which belonged to Microsoft and IBM—generated untold millions more.
ECRI Weekly Leading Index Update
This morning's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 148.7, down 0.6 from the previous week. Year-over-year the four-week moving average of the indicator is now at 3.80%, down from 3.87% last week. The WLI Growth indicator is now at 4.3, down from the previous week.
Am I the Only One Who Thinks Fee Compression is Hogwash?
Everyone keeps saying that advisor fees are on the decline. Hogwash!
Is Investing Starting to Get Difficult Again?
In a new quarterly letter to GMO's institutional clients, head of asset allocation Ben Inker reflects on a change in the investment environment in the first quarter, characterized by a rise in volatility and a significant shift in the correlation between stock returns and bond returns ("Is Investing Starting to Get Difficult Again? I Hope So").
First Eagle: “Passive Investing Could Prove to be an Expensive Mistake”
First Eagle’s Global Fund (SGENX) is its flagship fund, with over $55 billion in assets. As of April 30, 2018, since inception (1/1/79), the Fund has returned 13.15% annually, versus 9.67% for the MSCI World Index. Over the last 15 years, it has been in the top 2% of its peer group. I spoke with its managers, Matthew B. McLennan and Kimball Brooker, Jr., on May 1.
Want Sustainable Income? Spread Your Risk Around
Investors often say they’re worried about having too much high-yield bond exposure so late in the credit cycle. But many are still chasing returns in equities and other assets with even higher risk. We’ve got a better idea.
Credit-Driven Train Crash, Part 1
I’ve been saying for some time that the next financial crisis will bring a major debt crisis. But as you’ll see today, it is a small part, maybe the opening event, of a rapidly-approaching train wreck. We’ll need several weeks to tease out all the causes and consequences, so this letter will be the first in a series.
My Conversation with Bitcoin Visionary Marco Streng
This week I had the opportunity to sit down with Marco Streng, the wunderkind bitcoin visionary behind Genesis Mining. Genesis, as many of you reading this might know, is the world’s largest cloud bitcoin mining company, with over 2 million customers worldwide. It calls Iceland home, whose cool climate and affordable green energy are ideal for mining newly minted virgin cryptocurrencies. Last year, Genesis helped connect the blockchain sector and traditional capital markets by partnering with HIVE Blockchain Technologies, the first publicly traded digital currency mining firm.
Comfort is Not Your Friend
The overall profile of market conditions continues to feature: 1) hypervaluation on the measures we find best-correlated with actual subsequent S&P 500 total returns, coupled with 2) continued deterioration in our measures of market internals, which are the most reliable tools we’ve found to gauge the psychological inclination of investors toward speculation or risk-aversion.
Unicorns Exist Only When Money Is Free
When the Fed instituted ZIRP, investors were overenthusiastic to invest in the next great Unicorn. Now that rates are rising and money is no longer free, investors are beginning to realize that rational investing and positive cash flows trump hype and speculation.
Forecasting the Next Recession: Updating Our Outlook for Recession Timing
New developments in fiscal policy, the labor market, and the neutral interest rate suggest that the expansion could extend into the latter half of our recession range.
The Characteristics of Winning Bond Funds
The U.S. bond market is one of the largest in the world, with managers controlling more than $2 trillion in assets. Given its size, an important question is identifying active bond fund managers that add value.
Gundlach – Don’t Fear the 3% Yield on the 10-Year
Fear that the multi-decade bull market in bonds will end has centered on the benchmark 10-year Treasury yield breaching 3%. But Jeffrey Gundlach said that is the wrong focus.
Energy Stocks: A Surprising Defensive Play?
With volatility rising, many equity investors are thinking proactively about downside protection. But traditional safe havens may not do the job. Defensive equity positions can be found today in surprising places—like the energy sector.