Today, we examine another type of behavioral bias: the agency problem, which looks specifically at the issues that arise when one party is expected to act on behalf of another.
Markets are caught between incoming data that point to slower global growth and forward-looking factors that suggest improvement later in the year. With the pause in U.S. Federal Reserve rate hikes, we expect modest recovery in global cycle conditions.
n today’s low-growth, low interest-rate environment, investors should be patient, and look for opportunities to use volatility to get into desirable investments at the price you’re willing to pay.
Probably the most useful exercise we can do at present is to examine where the markets and the U.S. economy are in their respective cycles - with 19 charts and detailed analysis. There’s little question that the market is long into what Rhea described as the final phase of a bull market; “the period when speculation is rampant – a period when stocks are advanced on hopes and expectations.”
Despite its name, MMT is not modern. It is the latest iteration of the idea of monetizing the debt, relying on a central bank to create demand for a country’s bonds. The Bank of Japan routinely buys all Japanese government bonds on the open market, keeping borrowing costs near zero despite a massive government debt. Japan has not imploded under this debt burden, but it has stagnated. Government intervention reduced a crisis, but did not unlock growth.
Research group Metals Focus released its Gold Focus report this week forecasting that global gold demand will climb to its highest level in four years. Plus, economist David Rosenberg shares what he thinks ballooning nonfinancial corporate debt means for investors.
Recession is coming. We can debate the timing, but the economy will turn decisively downward at some point. My own analysis, looking at the data available on April 4, says recession isn’t likely this year but unfortunately looks very probable in 2020.
Signs of a recovery in emerging markets early this year have given way to worries about China’s economic slowdown and sluggish growth in Europe and Japan. But beyond the negative headlines we think many risks that weighed on the market last year have faded and the earnings outlook is relatively strong.
Global markets enjoyed a strong start to the year, marking a steep reversal from the downdraft that maligned the fourth quarter. Weak or decelerating growth in virtually every major economy, coupled with lingering overhangs from international trade frictions, have compelled the major central banks to adopt stimulative policies for the foreseeable future.
As anticipated, the estimate of fourth quarter GDP growth was revised lower (to 2.2%, vs. +2.6% in the “initial” estimate). All major components grew a bit less than in the previous estimate. Recent figures have generally been consistent with a lackluster pace of growth in 1Q19.
The increasing presence of opposite extremes makes the investment environment far more uncertain. It also means investors will have to work harder to meet their goals.
U.S. stocks experienced their biggest quarterly gains in nearly a decade. The S&P 500 completed its best quarter since 2009, gaining 14%, while the S&P MidCap 400 and S&P SmallCap 600 gained 14% and 12%, respectively.
A few weeks ago, we were pleased to announce a partnership with Brookfield Asset Management that created an alternative investment manager with one of the broadest slates of strategies and greatest asset totals. And what question did I get? “Will there still be memos?” Well, here’s your answer.
My career started in 1994, which was a stealth bear market for stocks and an outright bear market for bonds. Fed Chair Alan Greenspan hiked rates seven times as he played catch up in response to a percolating economy that rediscovered its sea legs coming off the 1991 recession.
This has been one of the 10 best ever starts to a year; over the past 60 years, similar fast starts have consistently led to continued gains in the months ahead.
We discuss network effects as a source of a sustainable competitive advantage and discuss our analytical framework for analyzing such moats.
Life expectancy has started to decline in some of the world's most prosperous countries, and there seems to be a powerful link between that and falling real wages. Come to think of it, there is even a link between austerity and falling life expectancy as the Greeks learned in 2010-2012.
Worried about retirement but don’t know how to start building wealth? Dollar cost averaging allows you to put a long-term plan in place and let compound interest work its magic.
Recession is approaching but not just yet. Yet like the Fed, I am data-dependent and the latest data are not encouraging. Today, we’ll examine this and consider what may have changed.
We find the global economy and market at an interesting crossroad. Continuing our “noise” versus “signal” theme of the past 2-3 months, here is our take on the current environment.
Many US companies have forgotten how to raise prices because they haven’t had to for a long time. In some sectors, such as retail, pricing power has been hobbled by the giant consolidated retailers, leaving other businesses unable to adequately offset inflationary pressures.
The industry provides a range of target date glide paths—and a range of different outcomes. See the rate of return for a given savings rate and retirement income target.
Let’s review the periods just prior to the onset of the last two bear markets to see if there are any similarities to today’s environment.
Sound investing requires linking the myriad mega-trends and world events we’re experience into a tapestry of potential outcomes. Key trends today include the growth of globalization, aging demographics, the acceleration and adoption of technological change, and the effect of these factors on the world populace.Exploring possible outcomes can serve as a directional checklist as the future unfolds.
Now that the UK has avoided (at least for now) a hard Brexit as it negotiates to extend Article 50, investors might reasonably wonder whether they can relax for a moment and take stock of the bigger picture. What sort of longer-term future does the European Union (EU) have, irrespective of the UK?
Today stocks erased their weekly gains and bond yields fell. Chief among the contributors were a Treasury yield curve inversion, the first since before the financial crisis, and continued slowdown in the pace of U.S. manufacturing expansion.
It’s no secret that people are living longer. Falling fertility rates indicate that, on average, global populations are getting older. This “demographic tsunami” has already hit Japan, and continental Europe is not far behind.
What happens in China clearly does not stay in China so the outlook for China’s growth in 2019 is one of the keys to how the global economy will perform and how financial markets will respond to that level of growth.
With a light economic calendar including a lot of old data and an FOMC meeting, the choice of focus for pundits is obvious. Investors might well wonder what new information about the Fed might be available, but that won’t stop the speculation. Pundits will be asking:
We believe short-term interest rates in the U.S. are now anchored in The New Neutral, as global growth keeps synching lower.
The Federal Reserve just made their most dovish shift in outlook since the aftermath of the financial crisis. The FOMC statement, economic projections, and "dot plot" (the expected path of rate hikes) all tilted dovish. In addition, the Fed has decided to maintain a significant portion of the bloated balance sheet it gathered during and after the crisis. In other words, their stated path of "renormalization" will leave the balance sheet well above normal levels.
I hate to sound like an old advisor (I’m not even 50 yet), but I am becoming increasingly frustrated by the casual nature of the younger people we are hiring at the firm.
It is critically important to remain as theoretically sound as possible as a large majority of investors have built their portfolios on a foundation of false ideologies. The problem is when reality collides with widespread fantasy.
Through “harmonization” – the broker-dealer community, aided and abetted by the SEC, is destroying the fiduciary standard, while imposing only new “casual disclosure” obligations upon broker-dealers. At its very core, this is an effort to make RIAs/IARs and BDs/RRs look identical. Once this is accomplished, FINRA will swoop in to seek oversight over the “harmonized” broker and investment adviser communities.
A New Normal For The Fed Balance Sheet; How Tariffs Work…and Don't Work; The ECB Goes Back To The TLTRO Well
The value of negative-yielding bonds around the world has ticked up to more than $9.32 trillion. Although still below the 2016 high, this indicates that investors fear global economic growth is slowing. Is this gold’s time to shine?
Emerging market equities saw mixed performances in February, with stocks in Asia faring better than stocks in Latin America and emerging Europe, which underperformed.
How much of your portfolio is allocated to private markets? How big is the total opportunity set?
We favor Asian high yield over investment grade credits in spite of historical higher volatility since we view valuations as more attractive, particularly compared with U.S. high yield and emerging market peers.
I am about to have my first child and plan to work through the pregnancy and directly afterwards. Should I address my pregnancy with prospects and clients?
I’ve talked with too many teams seemingly under stress over the last year, and not necessarily stress created by the markets. Rather, the stress has been internally induced, often stemming from poorly executed or evolved service models.
Pemex is a state-owned company that manages all of Mexico’s oil and gas sector. The majority of its oil fields are located onshore or in shallow waters, yielding low extraction costs. Yet the company is extremely inefficient and heavily indebted. Both production and proven reserves of oil are declining and the company consistently loses money.
One of the great paradoxes of the asset management industry is that its focus is on designing products that grow assets, yet that’s often not what investors need. Investors want a to participate in the market’s upside but be protected from downside losses. I’m going to talk today with two people who are at the forefront of a revolution in ETF product design to support the growth-driven needs of investors.
Russ explains the mystery of why gold is performing surprisingly well while stocks are rallying.
It’s clear that with roboadvisors and automation, people expect more if they are paying you more. With investment management fees going to zero faster than the speed of light, financial planning is where it’s at.
December offered credit investors a taste of what a real cyclical downturn might look like in a post-GFC (global financial crisis) world. Unsurprisingly, most did not enjoy the flavor.
The market for palladium turned heads this year when it outperformed gold. China is driving this rally up, and there are no signs of it slowing down.
In this article, we show returns of portfolios comprised of high-ESG scoring companies. More importantly, we use attribution analysis to show contributions from sector, industry and stock selection within these portfolios.
Real GDP grew at a 2.6% annual rate in the fourth quarter, and while some analysts are overly occupied with this "slowdown" from the second and third quarter, we think time will prove it statistical noise.
It was impossible not to think of Hyman Minsky as I read Ray Dalio’s three-volume masterpiece, Big Debt Crises. Like Dalio, Minsky argued that the ways in which policymakers respond to crises determines whether the downturns became protracted and severe – a Minsky Crisis – or fleeting and relatively painless.
