The economic effects from COVID-19 will be devastating. Stock and asset prices will fall dramatically and will take years to recover. U.S. Treasury yields will turn negative. Sell “risk-on” assets, increase cash, and buy Treasury bonds.
For those who believe that capital markets should be free from undue government interference, the Fed’s adoption of expansive programs raises the question of whether it has gone too far.
The bitcoin halving that occurred this past Monday is only the third such event in the cryptocurrency’s 11-year history. In the months following the first and second halvings, bitcoin prices surged as it became abundantly clear that at some point in the near future, new bitcoin issuances will come to a halt.
I knew this letter’s topic months ago. It was going to be a review of the Strategic Investment Conference, which would have just concluded fabulously in sunny Scottsdale.
Why did stocks rise over the past month despite grim economic news? The Federal Reserve’s massive liquidity injection is one reason.
In a new white paper, GMO Credit Opportunities Strategy co-PM Jeff Friedman looks at the Federal Reserve’s unprecedented actions in the corporate credit market amid the COVID-19 pandemic and highlights an area of the market where investors might capture attractive opportunities.
The Fama–French value factor, and value investing in general, has suffered an extraordinarily long 13.3 years of underperformance relative to the growth investing style. The current drawdown has been by far the longest as well as the largest since July 1963. Arnott, Harvey, Kalesnik, and Linnainmaa examine the potential causes of value’s underperformance and provide estimates of value’s performance relative to growth’s performance under different revaluation scenarios over the next decade.
The conventional wisdom is that U.S. stocks are overvalued and the only uncertainty is the timing of the inevitable correction. But Robert Shiller says his CAPE ratio, when considered alongside low bond yields, is not giving “much of a sell signal” for U.S. stocks.
An economic recovery should start next year, but there will be trouble later in the decade, says the well-known economist Anatole Kaletsky. In the short term, investors should gird for disappointing equity returns.
David Rogal and Bob Miller contend that the TIPS market dislocations witnessed in recent months have resulted in opportunities that investors would be remiss to ignore.
In terms of the long-term effect on economic outcomes, the disease is likely to be anything but an equalizer.
A month is all it took to wipe out a decade of jobs growth. With so many people out of work as we head into the second quarter, the next earnings season for S&P 500 companies is undoubtedly going to be one for the history books.
David Rosenberg bluntly told attendees Monday at John Mauldin’s Virtual Strategic Investment Conference 2020 that the stock rallies in recent weeks ignore reality and don’t recognize that the United States is likely entering a depression, facing double-digit unemployment for at least three years, secular changes in consumer spending and saving, and deflation followed by stagflation.
Some speculate they’re just starting the worst slump in years, spelling trouble for anyone late to the private-asset party.
The economic calendar is a normal one and is beginning to include data from after the start of the crisis. This week includes small business and consumer sentiment surveys, as well as April data for retail sales and industrial production. I will also be watching jobless claims, both new and continuing.
The First Eagle Overseas fund (SGOVX) has an exceptional 27-year history. Since its inception, it has returned 9.15% versus 4.03% for the MSCI EAFE index. It was originally managed by the legendary Jean-Marie Eveillard. I spoke with its current management team about how the fund has performed during the coronavirus crisis and why financial professionals should look to diversify outside the U.S. markets.
The support to corporate America during this economic shutdown risks the creation of a new moral obligation for the U.S. government.
With lower expected returns on the horizon, endowment managers are questioning whether standard annual spending rates will be sustainable and whether certain spending formulas are better suited for the muted environment investors face.
Globally, there are two fundamental shifts happening in the current environment that are increasing the need for income-producing products. First, as baby boomers continue to retire from their work lives, the demand for investment income is likely to grow.
For more than a couple of months now, I’ve said that gold mining companies will have a strong first (and second) quarter thanks to higher metal prices. Stock prices, as you know, are largely driven by revenues and free cash flow (FCF).
Will inflation soar? Will monetary policies work as intended, and what precedent are they setting?
COVID-19 and turbulence in the oil market have been reshaping daily life, economic fundamentals and market activity for weeks. Emerging markets, like the rest of the world, have been along for the ride.
Research Affiliates discusses how the All Asset portfolios seek to capitalize on opportunities amid pandemic-related market volatility and a strengthening U.S. dollar.
As of 27 April 2020, eighteen times more people have died from coronavirus per million of the population in developed countries (DMs) than in Emerging Markets (EM). This is partly due to measurement problems, but there may also be genuine structural reasons for expecting slower spread, less overall incidence, and lower mortality rates in EM countries than in DMs.
With the breathtaking uncertainty created by the Covid-19 pandemic, simple formulas no longer work. Here's what helps now to value investments.
Vivek explains why we see a need and opportunity to adjust strategic portfolios in the wake of the pandemic.
Weak technicals are creating an opportunity in long-duration municipal bonds.
In response to the COVID-19 pandemic governments imposed shelter in place rules for their citizens and issued orders to close all but essential business in their country. The collective impact resulted in an unprecedented global plunge in economic activity that threatens the existence of many small and medium size businesses...
All three major U.S. equity indices saw double-digit recovery in April, though most levels are still far from pre-coronavirus highs.
Coronavirus-led economic uncertainty is forcing downgrades, defaults and fallen angels. Could this spell opportunity for credit investors?
Money managers are reviving one of the most profitable credit trades of 2009, thanks to the Federal Reserve.
The coronavirus has exposed the European Union’s (EU’s) fault lines. For now, European Central Bank (ECB) bond purchases should hold things together. But ultimately, national governments will need to take some tough decisions to secure the EU’s future.
See how the coronavirus pandemic is impacting manager viewpoints across key geographic and equity regions.
There is no shortage of negative economic and financial news that has been announced over the last week that I could continue to write about today. But the truth is, I’m tired of being all negative all the time. So today, I want to shift gears and tackle a topic that most Americans probably haven’t thought about, but one that I think we should.
The economic calendar is packed with important reports. In normal times we would all be very interested, but the times are far from normal. Several of the reports emphasize April data, the first full impacts of the pandemic and shutdowns.
We need the assistance and guidance from the U.S. government. It is now time to abandon ideology, get practical and think “BIG!
Physical gold continued to catch a bid this week, trading above $1,760 an ounce, on a host of head-spinning economic news, from millions more Americans filing jobless claims to record money-printing to negative oil prices.
When times of turmoil hit, most investors become risk-averse, seeking safety over opportunity for higher returns. The coronavirus-driven crisis is no different in that regard. However, John Beck, our director of fixed income, London, sees some striking differences between this and other crises, and offers some thoughts on where he thinks taking some risk today might make sense.
There is a strong case to be made that such dividends in such an inherently volatile business as oil is asking for trouble.
Of all the disruption inflicted on the capital markets, negative interest rates cause the most head scratching. Why would anyone invest with the certainty of a loss? New research explains the perverse behavior induced by negative rates – and offers a stern warning for investors.
Scott explains why we have downgraded emerging market local debt to neutral even as its valuation has cheapened.
Higher taxes could be in our future, as a mechanism to “pay” for the government expenditures relating to COVID-19. This article examines two sophisticated custom-tailored wealth management strategies that seek to maximize tax efficiencies for high income and wealthy clients.
Albert Edwards’ “ice age,” during which U.S. bonds outperformed stocks, is ending. But before a new regime sets in, U.S. capital markets are heading for a final meltdown that will leave equity investors much poorer.
A brief monthly update on what's happening in the municipal bond market.
The COVID-19 pandemic has severely affected the U.S. economy, with containment efforts leading to widespread business closings and surging unemployment—and stock market volatility. The key questions now are when can the economy reopen, and what happens when it does?
President Donald Trump unveiled guidelines for “Opening Up America Again,” a three-phase approach to be executed by state and local officials. Some governors have already expressed interest in easing restrictions sooner rather than later.
As Russ explains, bonds may not be providing significant income, but still offer a hedge against equity risk.
Weak data revived investor concerns about the economic impact.
Closed-end funds are currently trading at a discount as equity markets have dropped. Here’s where to spot opportunities.
