The Retirement Channel

Budget Busting

U.S. fiscal policy has become unmoored, and it will be difficult to steer it safely back to shore.

Defined Contribution: Four Themes for 2018 and Beyond

In our view, the prospective low-return environment calls for a capital-efficient approach that pairs actively managed bonds with passive or enhanced equities in target-date, core and retirement-income allocations.

The Four Horsemen of the Retirement Apocalypse

In biblical tradition, the four horsemen of the apocalypse are a quartet of immensely powerful entities personifying the four prime concepts – war, famine, pestilence and death – that drive the apocalypse. For today’s investors, the equivalent is historically high equity valuations, historically low bond yields, increasing longevity and, as a result, the increasing need for what can be very expensive long-term care.

Weekly Unemployment Claims: Down 7K

Today's seasonally adjusted 222K new claims, down 7K from last week's revised figure, was below the forecast of 230K. From the release: "The claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal."

Inflation Fears Are Overdone (again)

Recent stock market volatility was partly blamed on fear that inflation will soon “take off.” Simple supply and demand arguments would suggest that pressure on resource markets (labor mostly, but also raw materials) would lead inflation higher.

GMO Quarterly Letter

In a new quarterly letter to GMO's institutional clients, head of asset allocation Ben Inker considers the hypothetical question posed by chief investment strategist Jeremy Grantham in his third-quarter 2017 letter, "What should you do if you are tasked with managing Stalin's pension portfolio?" ("Don't Act Like Stalin! But maybe hire portfolio managers that do?").

How to Rescue an Underfunded Retirement

Americans have under-saved and will need more than withdrawals from savings to survive retirement. An optimal withdrawal strategy and asset allocation, delaying Social Security, annuitizing, tapping home equity and possibly working longer need to be evaluated. Let’s take a typical American couple and evaluate which options improve retirement consumption.

5 Things Investors Should Know About China this New Year

Today marks the first day of the Chinese Lunar New Year, also known as the Spring Festival, China’s most important holiday. The fire rooster struts off-stage, clearing the way for the loyal earth dog. According to CLSA’s tongue-in-cheek Feng Shui Index, health care, consumer and paper products are favored to outperform early this year, followed by internet, utilities and tech leading into the summer.

Five Decades of Middle-Class Wages: January 2017 Update

We've updated this series to include this week's release of the Consumer Price Index as the deflator and the January monthly update. The latest hypothetical real (inflation-adjusted) annual earnings are at $37,531, down 13.5% from 45 years ago.

Economy Faces Slowdown as Oil/Commodity Prices Slide

Recent oil/commodity market rallies created an extra month of “apparent demand” down the major value chains, as buyers added inventory ahead of expected price increases for their own raw materials. In turn, this created the illusion of a synchronized global recovery – but reality will now intrude as the rallies end.

The Big Four Economic Indicators: Industrial Production Down 0.1% in January

Today's report on Industrial Production for January shows a 0.1% decrease month-over-month, which was worse than the consensus of 0.2%. The year-over-year change is 3.66 percent, up from last month's YoY increase.

What Inflation Means to You: Inside the Consumer Price Index

Let's do some analysis of the Consumer Price Index, the best known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.

The Big Four Economic Indicators: January Real Retail Sales

Note: With today's release of January's Retail Sales and Consumer Price Index, we've updated this commentary to include the latest Real Retail Sales. Month-over-month nominal sales in January decreased by 0.3% (0.26% to two decimals). Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, decreased by 0.80%. 

Fundamental Changes That No Muni Investor Should Ignore

We believe it’s time to take a good hard look at the municipal bond market, because what was true 10 years ago, very well may not be true today.

U.S. Housing Finance Reform: Why Fix What Isn’t Broken?

The topic of housing finance reform has come in and out of focus on Capitol Hill since Fannie Mae and Freddie Mac (the government-sponsored enterprises, or GSEs) were taken into conservatorship back in 2008.