Downturns of this magnitude are so dramatic that they inevitably produce a “new world order” with a very uneven distribution of winners and losers, he maintains.
Read Howard Marks's latest memo, in which he discusses the notion of making informed guesses regarding the future and shares his questions about re-opening the U.S. economy and the latest Federal Reserve moves to help the economy combat the coronavirus.
They will be part of what the president calls his war with the “invisible enemy” of Covid-19. The fiscal 2020 deficit that needs to be funded will be four times as large as last year’s at $3.8 trillion, or almost 19% of GDP.
It’s easy to get sidetracked by the ups and downs of the market, but before you act, now may be a good time to review why you own bonds in the first place.
While the COVID-19 crisis is far from over, we expect central bank and government policies to be key to performance in the second quarter.
In late February, our Bond Asset Allocation/Tactical Fixed Income model prompted us to sell out of high yield bonds and instead take up a defensive position. It isn’t enough to simply analyze creditworthiness of issuers or movements in credit spreads. Anyone who thought they were taking a “tactical” approach without a broader analysis was likely sorely disappointed as the latter half of the quarter unfolded.
Evidence from decades and even centuries ago, plus the unique circumstances of the current global health crisis and its economic impact, suggests we can expect a “New Neutral 2.0” of lower interest rates for longer.
The economic calendar includes several important releases, but few reflect the COVID19 effects. Everyone knows the economic news is dismal. Just how dismal does not seem to matter.
Remaining on hold and waiting to see where life takes us over the next two to three months (or perhaps longer) is prudent. Patience will prove to be a virtue in these highly uncertain times.
Global capital markets are not pricing in the growing likelihood of rising EM corporate defaults.
Rick Rieder, Russ Brownback and Trevor Slaven contend that even as markets are gripped with the trauma of wild swings, and continued uncertainties, the seeds of future investment opportunity are being sown.
Some 6.6 million additional workers filed for jobless claims this week, but it’s always darkest before the dawn. There’s ample reason to keep hope alive that conditions will be improving sooner than expected.
The $2.2 trillion coronavirus relief package that President Donald Trump signed into law on March 27 is just the beginning. The Treasury Department is now seeking some $250 billion more to replenish small business loans, and there’s hope that the president and House Democrats can agree on a “Phase Four” spending deal, one that may target infrastructure.
We analyze March’s stock market decline as pricing in the first-order effect of higher risk premiums associated with COVID-19. We produce a simple model that shows that the estimated daily growth rate of COVID-19 forecasts stock returns and discuss market implications.
Scott explains how the extraordinary outbreak-fighting policy action – and recent market turbulence – has changed our view on credit.
On March 31, the Federal Reserve announced the creation of another new liquidity facility; this one is aimed at central banks and international institutions. This new facility is a temporary repurchase agreement facility for Foreign and International Monetary Authorities (FIMA)...
Nikko Asset Management’s Global Investment Committee examines how the coronavirus pandemic has impacted global economies and where they’re finding overlooked and undervalued investment opportunities amid the volatility.
A look at recent downturns suggests that their fears are overdone.
A wager that proved a widowmaker for the legendary fund manager is finally coming good.
Once again, no one cares about the economic calendar. There are a few items with recent data – jobless claims, mortgage applications, and Michigan sentiment – but most reports are old news. Everyone is focused on the increase in coronavirus cases and deaths. There are plenty of predictions, each based on model from a reputable source. The variation is wide.
The stage is being set for what we internally call the “convertible trifecta.” The markets are uncertain right now. But when markets eventually calm, the team would expect to see the combined forces of equity upside, credit upside and convert valuation gaps closing, which can be very powerful on the way back up.
Major adjustments in capital markets around the globe have changed our long-term expected return forecasts for the 100+ assets we model. Before the corona crash we forecast long-term real returns for US equities to be only 1% a year. Now new, lower valuations suggest higher returns.
Most of the bond market sold off in March as the coronavirus crisis intensified. But as past crises have shown, indiscriminate selloffs can generate big opportunities.
The coronavirus has forced a number of behavior changes throughout societies across the globe, including how we work, shop and interact with others. Our Head of Equities Stephen Dover discusses how COVID-19 has impacted investor decisions, too.
Our baseline economic forecast is a U-shaped global recovery, but substantial unknowns remain.
Decisive measures taken today should help to keep the crisis from causing prolonged damage.
The star fund manager is famous for the power he wields in the market — and for making bets that other investors shy away from.
Matt provides a framework that he and his team use to make sense of the headlines and the price bids flashing on their monitors. His realistic, yet hopeful outlook provides a roadmap for successfully navigating this universal crisis together.
CIO Larry Adam discusses the COVID-19 outbreak and emphasizes that investors should exercise patience, not panic.
I’m going to guide you through a process to overcome the four major ways planning for female executives gets derailed.
Uncertainty continues to dominate global securities markets and heightened volatility is the result. Feifei Li, partner and head of equities, asks Rob Arnott, the founder and chairman of Research Affiliates, about the implications of increased volatility on investment strategies and where investors can find the best opportunities.
The majority of the time, when you hear someone say “I bought it for the dividend,” they are trying to rationalize an investment mistake. However, it is in the rationalization that the “mistake” is compounded over time. One of the most important rules of successful investors is to “cut losers short and let winners run.”
Michael Grant is preparing for rebound in equities and has positioned the long/short portfolio accordingly. To use a Wayne Gretzky analogy, he is skating to where the puck will be, not where it is.
On Friday, Congress approved and President Trump signed into law a $2.2 trillion emergency stimulus package, the largest in U.S. history. Most American adults will be receiving a one-time payment of $1,200 in cash.
Jon Roiter reflects on a wild ride in the high-yield credit market and whether now is the time to capitalize on attractive investments in the space.
The recent price changes in the municipal bond market have potentially created an intriguing opportunity for investors; with municipal bonds selling at relatively enticing yields, even without considering the tax benefits. However, this market is likely to be short lived as investor behavior is stabilizing.
After giving our clients a few days to digest it, we’d like to share this memo from Thursday with all of our readers. We hope you’ll find it helpful.
Sierra Mutual Funds Chief Investment Officer Terri Spath's latest market commentary discusses when might be a good time to buy, and the importance of using a time-tested process, like the one used at Sierra and Ocean Park.
There are three key areas where the allocation requirements of passive fixed-income vehicles have an impact on the market.
While the country and the stock markets reel from the impact of the Coronavirus, many economists and politicians are calling for the government to fight the pandemic as if we had to fight the Second World War all over again.
When markets get as volatile as they’ve been lately, it’s extremely difficult for investors to avoid our innate “fight or flight” response. In our states of heightened emotion (fear) our logical minds try to tell us that we are witnessing an incredible buying opportunity for long-term oriented investors.
With government spending helping to steer countries through the pandemic, it may not be easy to turn off the taps afterward.
The rally gained force after the White House and the Senate reached an agreement on a massive package of spending and tax breaks in a bid to prevent the swift shutdown of much of America’s economy from leading to a deep, prolonged recession.
Liquidity could remain challenged, but valuations may be attractive for long-term investors.
Policymakers cannot avert a big near-term economic hit. But they can build the foundations for recovery—if they take the right steps now.
By some measures, the municipal-bond market is full of screaming buys for anyone brave enough to wade in.
Mike explains why it may be prudent re-balancing your portfolio – outside the usual calendar – after the recent market turbulence.
Research Affiliates assesses the potential impact of COVID-19 on economies and investments, and what it means for the All Asset strategies.
We have spent much of the last week talking about the efforts coming out of the U.S., as the Federal Reserve and government leaders are working hard to offset the real economic damage being inflicted by the crisis.
The municipal fixed income market, like most other asset classes, is experiencing unprecedented volatility. Large mutual fund outflows are adding to the volatility as investors seek to add to cash reserves by selling what may be deemed easiest to sell.
