In the fall of 1981, the twenty-year US bond yield peaked slightly above 15% and has been zig zagging down through each successive business cycle since. During the last one hundred and sixty-years or so, the average secular, (very long-term) trend in rates has lasted around twenty seven-years. After thirty five-years of declining rates, the current secular bear is getting long in the tooth.
As the new year begins to unfold, the environment for risk assets is still benign: the global economy is strong, monetary policy is accommodative, and volatility is low and steady. At this point, we don’t see excesses developing that could change that.
The US government should focus on combating foreign governments’ trade policies – such as technology theft, non-tariff barriers to US exports, and forced technology transfers – that hurt American firms without any offsetting benefits to American consumers.
Generating consistent returns under uncertain conditions is a challenge. Can multi-asset strategies make the job a little easier? We think so. But a lot depends on how they’re designed.
The US Congressional Budget Office has estimated that some 32 million people would lose their formal insurance coverage in the next decade under the various proposals to replace "Obamacare." But it is important to understand just what that would mean in practice, and how much it would actually affect health outcomes.
Anyone thinking that we may get a repeat of the spectacular 2001-2008 and 2009-2011 rallies in commodities may have to think again, at least that’s what’s being hinted at by many of the long-term technical indicators. You could say it depends on what the definition of the word “is” is, to quote a well-known Clintonian expression. In this case, it all depends on what the direction of the secular trend is, as we explain later.
Even if China opened its markets fully to US goods and services, the total US trade deficit would not change. But focusing on imbalances with individual countries can nonetheless lead to desirable policy changes, as the Trump administration's approach to China has shown
Stock market volatility is unusually low these days. Does that mean investors are complacent? We don’t think so. In fact, some risk indicators suggest market participants may be less relaxed than they seem.
A major anxiety amongst stock market participants revolves around two key factors that appear to be on a collision course. The first is an overvalued stock market. The second, is an emerging trend of rising interest rates.
Reducing the US trade deficit requires Americans to save more or invest less. On their own, policies that open other countries’ markets to US products, or close US markets to foreign products, will not change the overall trade balance.