Commentary

Just Give Me 5%

Money markets paid nothing. The dividend yield for the S&P 500 Index was 2%, and the 10-Year Treasury yield was stuck between 2%-3%.

Commentary

“Are We There Yet?” Positioning Bond Portfolios for Peak Rates

The post-Covid era seems ripe for a Yogi-ism since economists and policymakers have been so wrong about the path of the economy and inflation. Yes, inflation is finally on a downward trend, but it has proven far stickier than the Federal Reserve and most economists predicted and remains above the Fed’s 2% target.

Commentary

“The Fear Index” and “A Gentleman in Moscow”

During his spring break, Johnson Financial Group Portfolio Manager Brian Schaefer had the time to read “A Gentleman in Moscow,” which got him thinking about the how the current market moves could impact the American experiment. In this investment commentary, Schaefer discusses the MOVE and VIX indexes and what they might say about the markets.

Commentary

Complementary Asset Classes: Why Now?

Given that (1) investors have benefitted from a market environment that reliably produced a source of positive returns from a 60/40 mix, and (2) we’ve just completed the best period for that mix in nearly 70 years of tracking, why would an investor want to consider a change?

Commentary

Q2 Equity Outlook: Equities Continue on Recovery Rally

Just over a year since the COVID-19 virus began spreading around the globe and significant portions of our economy shut down, today the U.S. is solidly on the road to recovery. 

Commentary

First Quarter 2021 Economic & Market Outlook: Looking Beyond the Traditional

In a year that offered a pandemic and an election as reasons for investors to bail on risky assets, 2020 turned out to be a great year for those that stayed the course. A 60/40 portfolio of diversified stocks and bonds increased by a double-digit percentage, exceeding expectations.

Commentary

Double Fault

We believe that bond investors should use the benefits of a stable rate environment to buy yield on the short to intermediate part of the yield curve. Stock investors have a more complicated task in 2019, albeit less so now that the Fed has indicated it is not hiking interest rates and will end the reduction in its balance sheet assets by October.

Commentary

Is Good News Bad or Good?

With unemployment below 4% (considered full employment by the Fed) and wage inflation pressure still positive, the Fed will want to continue to remove the stimulus from its policy. This means continuing to hike interest rates, albeit it at a reduced pace from the last two years.

Commentary

Rate Reset?

Bond investors are feeling a little shell-shocked after the rise in interest rates in November.

Commentary

Too Much Capacity

Last week, the Federal Reserve released some information about the U.S. economy’s capacity utilization and industrial production (these numbers are released together).

Commentary

The Debate

Monday night we had an opportunity to see the two presidential candidates face off, which heightens the debate over who will ultimately be elected in November.
Commentary

Bright Spot

In the midst of convention turmoil and concerns about the economy’s growth rate, it is nice to find a bright spot in all the data we track. Recently, we received information about the current state of the housing market and the news was good. While housing usually represents 3-5% of the overall economy, one could argue there is no better measure of consumer sentiment. And, the National Association of Home Builders (NAHB) suggests that when you consider all the jobs that are needed to produce the materials to build a home, the economic contribution is much higher.
Commentary

More of the Same is Not So Bad

Today we received an important report on the health of consumer spending. The report showed a May increase of .3% and a revised April increase of .8%. With these numbers it looks like second quarter spending could come in at 4%, supporting the idea that overall economic growth will be 3 to 4 times greater than the first quarter.
Commentary

Split Second Timing

This weekend, my son and I had an opportunity to enjoy the Dairyland Classic at Road America, a spectacle of motorcycle racing at one of the best road courses in the United States. One of the things you learn if you follow these racers, who travel at speeds up to 180 mph around the 4 mile track, is that every move they make, each second, has a meaningful impact on the outcome of their race. One bit of hesitation, turning a few feet too early or late, and the racer’s place is at stake. It is safe to say that the Federal Reserve has a lot more time to determine their next move than these motorcycle racers.
Commentary

Let’s Talk Politics

Last week we met with a number of customers and prospective customers to discuss markets and the economy. During the Q&A session a question was asked regarding the presidential election and its impact on markets. A great question, especially during such an interesting election cycle!