Why did stocks rise over the past month despite grim economic news? The Federal Reserve’s massive liquidity injection is one reason.
Puerto Rico’s debt attracted investors throughout the U.S. for its higher yields and because the securities are tax exempt in all 50 states. Bondholders now wonder if they will ever get repaid.
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.
The Fed has increasingly unorthodox policy options if the economy remains mired in a protracted downturn.
As expected, the Federal Reserve kept rates unchanged at 0-0.25% and said it will keep them near zero through at least 2022, in a unanimous vote.
Municipal bond defaults have been rare, making them a remarkably resilient investment over the years. The reasons range from the very services muni issuers provide to the fundamental characteristics of municipalities.
We expect the Federal Reserve will continue to conduct asset purchases at its current pace through year-end, and eventually commit to keeping interest rates on hold through 2022. This should help ensure easy financial conditions and support the economic recovery.
Since 2009, the U.S. stock market has outperformed the rest of the world by a factor of nearly three. But that “American exceptionalism” may transition to a movement to break up monopolies, according to Jeffrey Gundlach.
We have witnessed nothing short of a revolution in macroeconomic policy in recent months. Jean shares his take on what to focus on next.
I consider Oracle an attractively valued dividend growth stock with an emphasis on growth. Oracle has a long history of generating above-average growth of earnings and cash flows, and since paying its first dividend in 2009, its dividend growth has been nothing short of extraordinary.
Putting it all together, it seems likely that we are dealing with a short but sharp recession. The resultant recovery will initially look strong from a momentum point of view. That’s because the economy will quickly open up, egged on by the positive effects of record monetary, fiscal stimulus and over time with the reshoring of manufacturing jobs.
Stock market participants remained optimistic about the economy, further encouraged by a surprisingly strong employment report for May. Bond yields moved above their recent range.
Between mid-February and late March 2020, we saw a “take no prisoners” market crash. Anything with a whiff of perceived risk crashed, in direct proportion to its perceived risk. The only assets that soared—because of tumbling interest rates—were long Treasury bonds, and with them, the net present value of pension obligations.
With the recent market rally, stocks are again near their all-time highs. But we face a perilous economy, coupled with the threat of a resurgence of the coronavirus. Here’s what I tell clients who are dead-certain that the stock market is due for a significant correction.
Economic factors are motivating recent protests and changes to supply chains.
Warren Buffett “should have kept airline stocks because the airline stocks went through the roof today,” President Trump said this week. It’s a good thing that investors chose not to follow Buffett’s lead, as airline stocks are up 50% since his exit.
Bruce Bond is co-founder and CEO of Innovator Capital Management. Having cofounded PowerShares Capital Management in 2003, he is recognized as one of the pioneers of the ETF industry. I spoke with him about the explosive growth in flows to defined-outcome ETFs.
European banks’ additional Tier 1 securities should survive a short bout of the coronavirus. But even in a prolonged pandemic, the risk/reward trade-off might be better than perceived.
In 2020, many investors have shifted the focus of their fixed income portfolios from the return ON principal, to the return OF principal. Karen highlights how the desire for stability is driving investors to tap into U.S. Treasury markets with ETFs.
U.S. equity growth has been led by companies benefiting from heavy exposure to technology and an increase in remote work.
How’s China’s economic restart looking? And what does it mean for investors?
This strategy aims to help investors participate in the ongoing recovery of the global economy, offering potential for attractive yield while managing downside risks.
Today’s bond yields are extremely low, and some multi-asset investors may be struggling to rationalize exposure to interest-rate driven assets such as government bonds. But past experience suggests that they can still be effective diversifiers over the near term, even at low yield levels.
The advisory industry is unaware that the traditional asset-location rules (i.e, put bonds in tax-deferred accounts and stocks in taxable accounts) don’t work in our low interest rate environment. The exact opposite is appropriate for most retirees.
In this part 2, I want to share an additional perspective that my research on the growing levels of corporate debt uncovered.
The pandemic has intensified existing stresses on U.S. state and municipal economies – with implications for investors.
In 2013, I wrote an article discussing comments made by Russ Koesterich, CFA, regarding the Chicago Fed National Activity Index (CFNAI). Given this economic indicator just crashed by the most on record, it is worth reviewing his comments.
As troubling as these developments are, it’s important not to lose sight of the good that appears to be taking place right now. Investors that focus only on the negative tend to miss out on the opportunities.
Rick Rieder and Jacob Caplain contend that with profound uncertainties still present in the economy and markets, and the dislocations witnessed in many market segments in the past couple months, investors don’t need to resort to lower-quality assets. In fact, to achieve potentially attractive returns, higher-quality spread assets can serve quite well.
In order to sustain this population and our growing demand for resource-intensive animal-based foods, the World Resources Institute estimates that crop production will need to increase by 56% from a 2010 baseline.
The European Commission has unveiled a sweeping new €750 billion coronavirus fiscal rescue package, including the issuance of new bonds. David Zahn, our Head of European Fixed Income, calls it groundbreaking.
Investors are betting on growth stocks over value stocks by a wider spread right now than at any other time since at least 1990, including during the tech bubble.
How has the coronavirus shock changed medium-term fundamentals? And how does that change our long-term asset views?
There is a growing debate in financial circles over whether the US Federal Reserve should move to a negative interest rate policy in an effort to stimulate the economy during the coronavirus crisis. Even President Trump has said more than once in recent weeks that he favors negative interest rates and considers them a “gift.”
When the COVID-19 crisis shook markets in March, the Federal Reserve moved early and aggressively to help increase liquidity in financial markets.
COVID-19 has supplied the catalyst for a secular change in the role of central banks. Providing governments with ammunition to fight the virus is now the overriding goal, and this means keeping bond yields pinned close to zero for the foreseeable future.
Against this backdrop of anything-goes spending, the idea of having a national currency backed by a real asset like gold seems less and less crazy to some. Doing so, it’s believed, would force lawmakers to practice fiscal discipline, reign in inflation and normalize international trade.
We finished the Virtual Strategic Investment Conference yesterday. I shared some highlights in last week’s letter, will tell you more today.
On April 9, Memphis-based Southeastern Asset Management announced that it was re-opening its Longleaf Partners Small-Cap Fund (LLSCX). It had closed the fund to new investors in August 1997. I interviewed two of the fund’s managers, Staley Cates and Ross Glotzbach.
The accelerated use of debt to fund the capital needs of publicly traded companies is clearly attributed to today’s unprecedented low cost of debt. Although we have all been trained and perhaps even indoctrinated into the belief that debt is bad, these are clearly unusual circumstances.
With markets starting to make a comeback, our Multi-Asset Solutions CIO Ed Perks looks ahead to second half of the year, including the implications of the US economy opening up, the ongoing impact of the massive monetary and fiscal response, and the risk for a wave of downgrades and defaults.
Potential for a large payoff on value strategies may exist soon, if history is any guide.
Is it possible the Fed over-reacted to a natural disaster? There are two different types of “recessionary” events that occur throughout history. The first is a “business cycle” recession, which happens with some regularity as excesses build up in the economy. These cycles generally take 12-18 months to complete as those excesses are reversed.
Rick Rieder, Russ Brownback and Trevor Slaven contend that even as markets were rocked by uncertainty as the coronavirus lockdowns began, the seeds of stability were sown in the massive fiscal and monetary policy response. The key is to know how to manage through this period for the long haul.
A brief monthly update on what's happening in the municipal bond market....
Capital markets are in disarray in reaction to the coronavirus crisis and the necessity of pausing the global economy. The CBOE Volatility Index (the VIX) rose to over 80 in March and thankfully has settled down to a level of about 35, which is still over twice its trailing five-year average of about 15.
As European economies slowly start to come out of coronavirus lockdowns, it could be some time before growth returns to pre-crisis levels, according to David Zahn, our Head of European Fixed Income. He says the crisis has been another test for the European Union...
Although the major indices are well off of the lows they reached in March, there remains a high level of uncertainty about what the future holds for the market and the economy.
Wall Street will proclaim that any increase in economic activity is a good sign. But, according to Jim Bianco, even a recovery to 90% of pre-crisis levels will be terrible.
