It is safe to say that expectations are low as the bottom up consensus for the S&P 500 calls for a year over year earnings decline of about 45% in the 2Q. This would be the largest year over year decline since 2008. But that is well understood at this point.
More managers are questioning whether the traditional asset mix can produce the same returns going forward.
Saying that extreme stock market valuations are “justified” by low interest rates is like saying that poking yourself in the eye is “justified” by smashing your thumb with a hammer.
Precious metals were the big winners for the first six months of 2020. Spot gold took the first place position, rising over 17 percent, followed in second place by silver, up nearly 2 percent. Palladium rounded out the top three, essentially flat at negative 10 basis points.
The first half of 2020 was dominated by the COVID-19 pandemic, which hit the municipal bond market hard. State and local governments experienced a sharp and sudden drop in revenue, and an increase in expenses, amid stay-at-home orders and business shutdowns.
Low yields plus rising defaults seemingly leave little ground for bond investors seeking safety or income—or both. But for investors who remain flexible, those objectives aren’t as distant as many think.
In a new white paper, the GMO Emerging Markets Equity Team argues that Emerging Markets in aggregate are more resilient today than in prior periods, an important consideration as investors evaluate the rebound the asset class has experienced since late March.
It’s hard to recall a more confusing quarter for investors. While economic data plumbed depression-level depths for most of the past three months, equity markets rallied heavily. This odd juxtaposition led many to opine that markets had disconnected entirely from the economy. We disagree.
We believe the risk that preferred-stock dividends will be suspended is low despite the recent announcement by the Federal Reserve that it is requiring banks to cap their common stock dividends.
A key lesson of 2020 is the importance of staying invested even during times of high volatility. We believe that an appropriately risk-targeted, globally diversified portfolio is as important as ever. Maintaining an optimally risk-controlled portfolio is most desirable.
Even with today’s low yields, credit barbell strategies can still meet their objectives of downside protection, upside participation and efficient income.
The pandemic has created an extraordinary risk/return trade-off for the shares of high quality U.S. banks. We believe there is the potential for decent returns for bank investors without improvement in the current environment, and the potential for enormous returns if the rate of change in the economy remains positive.
The P/E for the S&P 500 is about 25, near historic highs. Credit spreads in both developed and emerging markets are tight. Real government bonds yields are negative. Companies have repurchased own shares at record levels for almost 10 years, reducing outstanding stock of marketable securities. Asset price volatility has been extraordinary. Contrast that with market fundamentals: the U.S. economy entered recession in February; total hours worked in May were 12.5% below Q1 average; total wages paid were down 8.5%; and governments have provided cash transfers and guaranteed loans to support incomes.
While the “annuity puzzle” is well-documented in the academic literature, there is no “mutual fund puzzle.”
I read The Black Swan shortly after it came out. The financial crisis and Great Recession were brewing, and I was already beginning to predict a recession. We sensed something big was coming but didn’t know the details. Rereading my September 2007 review of Taleb’s book is an eerie glimpse into the past. It’s also a good reminder that more big events lie ahead.
The protracted low-yield environment has left many investors with insufficient returns to meet their goals: how can credit help? Here we highlight where we see 5 credit opportunities.
As states ease their COVID-19 lockdown measures, rising case numbers have put pressure on equity markets.
Economic fallout from the coronavirus crisis was especially hard on real estate, mostly from misperceptions that the asset class is dominated by hotels, malls and office parks. But a look inside shows a diverse group of sectors that are more pandemic resilient than investors may think.
After a decade of steady growth and rising asset prices, economies and financial markets were rocked by the COVID-19 pandemic. The global health crisis forced most governments to lock down their communities, halting economic activity almost overnight and causing financial markets to reprice lower at an unprecedented speed.
Markets have rallied on hopes for an economic recovery as coronavirus-imposed lockdowns are eased across the globe. The rebound has been helped by oversold investor sentiment, but with sentiment back to neutral, so too is our strategists’ market outlook.
He argues stretched corporate balance sheets and overly rosy economic projections make it too early to dive back in.
Historically low bond yields threaten the diversification value of bonds in the traditional 60/40 allocation.
Chief Investment Officer Terri Spath’s latest commentary.
A “perfect storm” of surging government debt levels, plunging real bond yields, rising coronavirus cases and deteriorating economic forecasts pushed the price of gold to an eight-year high this week, and some analysts now project the metal to top its all-time high within the next 12 months.
For most US governors, June typically brings political fireworks when state legislatures hammer out final budgets for the next fiscal year.
The health crisis creates opportunities to unite historically disparate investor groups to help build economic and market sustainability and resiliency.
A simple mix of stocks and short to medium-term bonds is probably a better bet than investments widely peddled as inflation protection.
Regular readers of our content know that we have been building the case for several years now on why gold deserves a place in diversified portfolios.
While technicals for the asset class remain a headwind in the near-term, bank loans may provide an attractive opportunity and relative value.
Investors should consider these various investments—cautiously. Given the challenging economic outlook and high level of uncertainty, we believe bouts of volatility are possible, albeit not to the level witnessed in February and March.
Rick Rieder, Russ Brownback and Trevor Slaven contend that in the tug-of-war between the considerable economic damage stemming from the coronavirus and subsequent lockdowns, and the fiscal and monetary policy responses put in place, the latter factor is being underestimated by markets. Further, the instruments used by investors in previous years won’t be what’s required for the time ahead.
The new normal—working from home and curtailed travel—is painful for extroverts. Conducting virtual meetings using videoconferencing makes people seem less real, and extroverts crave the physical presence of others. While you may prefer to be face-to-face with your clients, this blog may convince you of the benefits of virtual meetings.
In this latest survey, 68 leading bond and currency managers considered valuations, expectations and outlooks for the coming months.
U.S. stocks have managed a remarkable advance in the past several weeks as optimism outweighed concerns about the economic recovery and worsening Covid-19 cases. Has this been appropriate or irrational? Howard Marks shares his thoughts on the recent rally in asset prices in his latest memo.
Coronavirus cases and hospitalizations are spiking again in several countries, including the U.S. California had its biggest one-day jump in infections. Arizona, Florida and Texas are also turning into new hotspots.
Given fears of a COVID-19 resurgence and US election uncertainties looming, many investors are wondering what comes next for policymakers in terms of supporting the economy. Our Fixed Income CIO Sonal Desai weighs in on the possibility of negative US interest rates or other measures.
Economies and markets whipsawed in the first half of 2020. Here’s what we expect for the rest of the year.
Municipal bonds—especially higher-quality issues—bounced back after a rough March. But not all munis have rallied. We see potential among overlooked mid-grade issues.
Returns for most fixed income asset classes are positive so far this year, but the numbers mask the rocky road markets have traveled since January.
Looking to generate income from your nest egg? Make sure you don’t get it all from just one basket. Karen explains two funds designed to provide income that aren’t over reliant on any one source.
A brief monthly update on what's happening in the municipal bond market.
Read Harold Evensky's latest NewsLetter.
COVID-19 is triggering a new era of central banking. We believe this will play out just as powerfully in the euro area as elsewhere.
Over the last several years, we have recognized what has been going on with negative or near negative interest rates in Japan, and is now bleeding into parts of Europe. We never imagined that those troubles from afar would be any more than banter amongst economists and financial doomsdayers. The reality of those environments have now made it to the shores of the good ol’ USA.
Investors often think of municipal bonds, which are sold by local and state governments to fund public projects like building new schools and repairing city sewer systems, as being totally tax-free—but that’s not always the case.
Pimco usually gets credit for the phrase; the firm’s CIO says it may be time to stop using it.
The appearance of a record-long economic expansion was fueled by expanding levels of debt and corporate share buybacks. The façade of recovery, a soaring stock market, convinced most people that it was real.
The Fed gave its updated economic outlook this week, but not the additional policy support markets were looking for. We think this was a misstep...but one we hope will be corrected if the outlook doesn’t improve.
Rob Amodeo, Head of Municipals at Western Asset Management, digs into the state of the muni-bond market, his outlook moving forward and what investors have to look for to find winners in the sector.
With so much monetary stimulus sloshing about, governments even have an eye on getting ahead of next year’s budget plans as well.
