The Fed is poised to join the global easing bandwagon, fueling a surge in risk asset prices. As market distortions from easy money grow, so does the importance of security selection and portfolio allocation.
The Fed is tasked with keeping prices stable, unemployment low and long-term interest rates moderate. The monetary alchemy with such unstable elements is coming under review.
Big-ticket, ultra-short notes force muni SMAs with low minimums to buy longer-term paper at rich prices, likely giving clients more heartburn than total return.
Turns out price matters for excess returns, and that what’s worked before doesn’t necessarily persist into the future. “Many factors aren’t real.”
Caveat emptor: current technical supply and demand flows favor issuers more than buyers. But diligent, disciplined investors can always find attractively priced, fundamentally sound bonds.
While investors should be cognizant of the complexities and risks around Brexit, they should be just as aware of the opportunities in select U.K.-based businesses.
Will emerging markets stocks rebound in 2019? Attractive valuations, strong forecast earnings growth, structural reforms, and an abating dollar headwind suggest they will.
It appears the “Powell Put” has been exercised as the Fed chief declares no “pre-set” course on rates and no “hesitation” to change its balance sheet runoff. But does the economy still need Fed accommodation, or do markets just want it?
The trade conflict and Fed rate policy are buffeting markets at a time China was already grappling with debt challenges at home. But the volatility may be masking good economic fundamentals globally, reform efforts in China, and attractive investment opportunities.
Conventional market wisdom two years ago didn’t look right for long, as gains in industries seen as politically favored faded while one sector expected to suffer quickly rebounded.
Positive catalysts are in place in all three countries, and across emerging markets valuations and earnings expectations make for a potential rebound in 2019.
Even before the market selloff, downtrodden value stocks were perking up as pricey growth stocks stumbled. But durable index-level shifts are harder to call than individual stock price disconnects from business fundamentals.
High-yield returns have been great lately, as technical flows, fundamental factors and good economic growth align. But tight spreads, lofty net leverage and event risk don’t make for smooth sailing ahead.
If the efficient markets hypothesis is questionable at the stock level, it’s more so at the index level. As the number of indices skyrockets, the number of companies declines, and passive flows grow, active price discovery becomes more and more valuable.
Emerging market stocks are trading near bear market territory, but that’s par for the course for longer-run, rising returns.
Risk to the euro resurfaces in an unlikely governing coalition and challenging economic agenda, but Italy’s top stocks don’t face the same perils as its government bonds.
High-quality bonds and defensive stocks are on the ropes. And U.S. blue-chips look poised to roll over, if history is any guide. But what if it isn’t?
The Fed chairman makes clear the bar for slowing monetary tightening is higher nowadays, and argues emerging markets are much better positioned to handle higher U.S. yields than they were before.
Stocks slide on rising rates and yield curve inversion concerns, but a recession doesn't look likely, judging by other economic data and the high-yield bond market.
Facebook’s margins could ebb this year, but they remain at elevated levels and profits could still grow meaningfully.
Tech and financials led the recent selloff, as headline noise and regulatory risks spooked investors. But strong corporate fundamentals, including earnings growth, should ultimately drive stock returns.
While U.S. tech giants are effective monopolies, they are so in an unconventional way, making taxing them easier than breaking them up.
China has dropped norms to allow President Xi Jinping to remain in power after his second term ends. While worrisome at first blush, the populist turn and consolidation of power likely has near-term economic and financial market benefits, and longer-term political risks. Thornburg's Lei Wang weighs in on the populist turn in China, which is among a growing contingent of populist nations.
EM ETFs suffered deviations in their market prices relative to their net asset values, with their total returns materially underperforming the broad emerging market index.
Investors worried about wage and inflation data should appreciate the underlying strength of the economy, not to mention strong corporate earnings. The market volatility is creating better entry points for longer-term investors.
The FCC’s roll-back of net-neutrality regulation sparked intense political debate about how the internet should be governed, in particular how ISPs handle and price content transmission. But the internet’s rapid evolution, the ISPs vertical integration into content, the bargaining power of the tech and media giants and anticipated 5G investment returns largely supersede regulatory shifts.
Emerging markets have benefitted from both improving fundamentals and bullish sentiment driving inflows to the asset class. Individual country risks, however, are poised to rise. Be selective.
Growth in the country's corporate debt load has finally leveled off this year as financial conditions and regulatory oversight tighten. That's good. But rebounding returns on incremental assets and common equity are even better.
Zhou Xiaochuan appeared to be talking about China, given his contextual warnings about the country’s high corporate and rising household debt loads. But the message may apply to frothy and debt-laden markets globally.
India has implemented measures that combined should generate a surge in economic growth, corporate earnings, and double-digit annualized stock returns over the next decade.
Fed’s balance sheet unwind comes amid mixed U.S. data, but the global acceleration in growth and inflation gives it cover to continue normalizing policy and reduce market distortions. The upswing might also give pause to those asserting the death of the Phillips Curve.
Future growth projections for electric vehicles vary dramatically, but all reflect real opportunities for fundamentals-focused investors surveying the links in supply and production chains.
Select short-term government bond funds offer minimal risk and some income as higher-risk assets get frothy and tail risks loom.
Geopolitics is shaking global markets, with the epicenter of the latest tremors coming from the Korean Peninsula. Fiery rhetoric out of Pyongyang is nothing new. But it is certainly novel coming from the Oval Office.
The divergence this year in the performance of the emerging markets stock index and commodities prices reflects improved earnings quality and valuations of developing country stocks, not to mention big changes at the top of the index.
Low Treasury yields and high equity prices aren’t necessarily contradictory. Both suggest expectations of continued unexciting growth, low inflation and a steady Fed. What could go wrong?
As outflows hit U.S.-focused equity mutual funds, international and emerging market stock funds are seeing massive inflows, bolstering strong share price performance of overseas markets this year. Despite the investor rush abroad, plenty of upside could remain.
MSCI has taken a cautious approach to A share inclusion that encourages China to increase foreign investor access and ultimately ability to redeem and repatriate funds in exchange for greater future index weightings. It’s a sensible plan.
Fed hikes rates again, even as inflation falls further from target and financial conditions continue to ease. Smooth sailing ahead? Beware the leverage risks building below the surface.
Investors interested in long/short equity mutual funds would be well advised to consider more than their much-more competitive fees vs. private hedge fund peers. To genuinely hedge the long components of a portfolio, look for lower net long exposures in a long/short equity allocation, and added value on the short side even in rising equity markets.
Political pressure on the chaebol is poised to rise, but corporate governance efforts already underway and end-market demand have proven tailwinds that have so far trumped politics.
In this Q&A, Thornburg’s Connor Browne doubts the Senate will pass the House’s American Health Care Act (AHCA) in its current form, and is cautious that the status quo may even prevail.
Political risk may have ratcheted lower after the first round of the French presidential election. But the latest jump in asset prices across Europe appears to have tailwinds well beyond politics.
Emerging markets have shot out of the gate in early 2017, even as the Fed is hiking rates. Renewed global growth, earnings cycle and valuations bode well.
ETFs can have significant costs that aren’t entirely evident in expense ratios. From transaction to holding costs to ETF composition, the total costs of ETFs can be a significant drag on returns, which are coming under the microscope, as are the robo-advisors that typically use them.
President Zuma's sacking of his market-friendly finance minister amid a broader cabinet reshuffle has spooked markets, creating attractive entry points for longer-term, valuation sensitive investors.
The Fed’s signals that rate increases could soon come seem to fall on deaf ears. U.S. stocks continue to climb as bond yields decline. Although recent data reflect accelerating economic growth, which is necessary to justify frothy valuations, structural challenges and unclear policy outcomes remain. Caveat emptor.
Demonetization, "Operation Clean Money," central bank surprises, and a populist budget that also exhibits fiscal consolidation? Negative foreign investor equity flows, and India's stock market is up?
Market gains since Trump’s election are starting to look fragile, undercut by friction between the U.S. president’s pro-growth reform proposals and his mercantilist and anti-immigration stances.
Oil prices jumped sharply in the wake of OPEC’s pact to cut production, but the market might wait to see implementation of the output reduction. OPEC’s quota compliance history and current market supply and demand dynamics don’t necessarily support sharp climbs in oil prices.