India has implemented measures that combined should generate a surge in economic growth, corporate earnings, and double-digit annualized stock returns over the next decade.
As we transition from Q3 to Q4, the global economy and markets seem much like that third bowl of porridge in the Goldilocks story – everything is just right.
I offer a probability-based framework that captures the true nature of investment reward and risk.
CEOs and boards are focusing on the wrong metrics. But if they change their ways, the opportunity could be great.
Current market valuations are consistent with negative expected returns for the S&P 500 over the coming 10-12 years, with a likely market loss of more than -60% in the interim. The proposition that “lower interest rates justify higher valuations” has become a rather dangerous slogan, and is a distressingly incomplete statement that ignores the other half of the sentence: “provided that the stream of expected cash flows is held constant.”
Yet this is not the mood in which bull markets typically end. Central banks around the world have purchased approximately $15 trillion of financial assets since the great crisis. Outside of the U.S., the BOJ and ECB are still buying.
This week we are going to take a hard look at the unfunded liabilities and debt of the US government. And even though the federal unfunded pension liabilities dwarf those of state and local pensions, I want to make it clear that I believe the state and local problems will be far more intractable.
All cultures have the challenge of balancing the past and the present. But nowhere is the contrast between the two more apparent than in the Middle East.
I don’t think for a second that cryptocurrencies will ever replace gold, for a number of reasons. For one, cryptos are strictly forms of currency, whereas gold has many other time-tested applications, from jewelry to dentistry to electronics.
The macro data from the past month continues to mostly point to positive growth. On balance, the evidence suggests the imminent onset of a recession is unlikely.
The third quarter of 2017 closely resembled the first half of the year – global markets continued to grow steadily, resulting in positive returns for many strategic domestic and global equity investors.
On October 18th, the Communist Party of China (CPC) will meet for the 19th Party Congress. China’s leadership for the next five years will be determined at this meeting. In this report, we offer a background on China’s government, focusing on the difference between de jure (what is the official structure of China’s governance) and de facto(how it really works).
Global equities advanced in the third quarter, as steady macroeconomic growth supported solid earnings reports. In the evolving market environment, we believe that individual company performance will make a bigger difference to stock returns.
Chautauqua Capital Management is a long-term, quality-growth global equity investor with a generally optimistic view. However, we are less so today. Risks have increased, and the global financial markets appear to be at a heightened risk of a sell-off. Our concerns are around several factors, including the unwinding of extraordinary central bank policy, high valuations, investor compliancy, and heightened geopolitical risk.
An analysis of default rates and government intervention since the financial crisis.
Russia has been front-and-center of the news this summer. Yet Western sanctions over Crimea, fallout from the investigation into meddling in the U.S. presidential election and last month’s bailout of the nation’s largest privately held bank have failed to thwart Russia’s emergence from stagflation.
The world is running out of freshwater, and much needs to be done unless we want a crisis to turn into a catastrophe. Desalination will fix the problem, they say, but desalination is not an option open to all countries. A dramatic change in consumer habits and attitudes must also take place, and that takes time.
I’d like to take you to two places today. One is life and the pursuit of dreams. “I was born with a silver spoon in my mouth,” legendary Coach Lou Holtz begins. “You have to have something to hope for and something to dream about.” It is a six-minute happy pill. I watched it with my kids and they loved it. You’ll love it too, I promise.
Readers outside the US might have felt smug and safe reading those stories. There go those Americans again, spending wildly beyond their means. You are correct that, generally speaking, we are not exactly the thriftiest people on Earth. However, if you live outside the US, your country may be more like ours than you think. Today we’ll look at some data that will show you what I mean. This week the spotlight will be on Europe.
The major US indices traded at new all-time highs (ATH) again this week, led by surging small cap stocks. SPX is now higher 6 months in a row and 10 of the past 11 months; that level of momentum has never marked a bull market high. Short-term optimism has reached an extreme that has resulted in a lower weekly close within the next 6 weeks every time over the past 5 years. The fundamental narrative for the current rally is that the Trump administration's tax plan will boost earnings by an estimated 6%. If investors expect the tax plan to also cause economic growth to accelerate, they are very likely to be disappointed.
We see three risks to the outlook for steady economic growth. Yet we also see opportunities for investors to target above-benchmark returns while emphasizing defense at a time of low volatility and full valuations.
Versatile, relative-value analysis of securities across sub-sectors and hybrid asset classes can help fixed income teams negotiate a challenging, expansive, potentially rewarding terrain.
In my conversations with institutional investors I find a surprising lack of optimism about the outlook for equities. The capitalization-weighted Standard & Poor’s 500 was up over 11% year-to-date, excluding dividends, on September 18. Some would argue that only a few stocks are accounting for the rise, but the equal-weighted S&P 500 was up over 8% year-to-date as well.
In a move that was little noticed outside of the financial world, China announced the creation of an oil futures contract (open to international traders) that will be denominated in Yuan and convertible into gold. This move provides the first official linkage of oil to gold, and more importantly a linkage between the Chinese currency and gold.
The final installment of our 2017 global market outlook is here. See our strategists’ views on global investment markets and economies.
After working with clients for over 20 years, I believe I have insights and information I could share more broadly and am considering writing a book.
Last year’s "multi-crisis" in the EU – including Brexit, refugees, “illiberal democracy” in Hungary and Poland, and the still-unresolved euro crisis – has produced a convergence of opportunities. With Germany's election over, European leaders no longer have an excuse for inaction while they wait for voters’ next rebuff.
European markets have been under pressure in recent years, however, the tide is turning for Europe and European equities. Jeff Donlon, CFA®, Managing Director of Manning & Napier’s Global Strategies Group, answers a few questions to help investors better understand our outlook on Europe.
Broad-based support for Europe among Germany’s key political parties vying for seats in the Bundestag’s 19th legislative period meant Sunday’s election was unlikely to be disruptive for financial markets. And the muted reaction in financial markets Monday morning confirmed this was the case.
Last week, at her press conference, Federal Reserve Chair, Janet Yellen said continued low inflation was a "mystery."
I’ll discuss the risks of investing in cryptocurrencies, an update on the current state of the crypto markets and how to invest.
Part 1 of this series focused on the failure of the random walk to depict the Dow Jones Industrial Average. In this article, I expand the study to include six diverse asset classes including large-caps (the S&P500), small-caps (the Russell 2000), emerging markets, gold, the dollar and the 10-year Treasury bond.
The major US indices all traded at new all-time highs (ATH) this week. Even the lagging small caps index closed at a new ATH on Friday, and transports are very near a new ATH. Persistent strength like that seen throughout 2017 has almost always continued into year-end. However, like last week, a few studies suggest short-term upside will likely be limited. The third quarter ends on Friday.
Oil prices continue to remain low, however, thanks in large part to the ingenuity of Texas fracking companies. As I told Liz, this has served as a multibillion-dollar “peace dividend” that has mostly helped net importing markets, including “Chindia”—China and India combined, where 40 percent of the world’s population lives—Japan and the European Union.
Here, Franklin Equity Group's Steve Land digs deeper into industry fundamentals that he thinks make for an attractive longer-term investment case for gold or gold stocks
Rick Rieder and Russ Brownback, from the BlackRock Fundamental Fixed Income Team, look to the investment lessons that can be derived from Super Bowl 51 odds making, and particularly that when judged appropriately, prices can contain more valuable information than does “the news.”
The issues that have dominated news cycles in recent weeks should not obscure the robust underlying fundamentals of the US economy, in our view. Though some short-term weather-related disruption is possible, the economy seems to be maintaining its path of moderately strong growth, aided by healthy contributions from consumer spending and business investment.
The U.S. high yield bond market has grown substantially to around $1.3 trillion today. At the same time, the global high yield market has become more geographically diverse. North America’s share of the market has fallen from 87.1% in 2005 to 62.6% in 2016.
History shows, and investment strategists tout, that small cap stocks are the best performing asset class. While small caps outperformed the runner-up, large cap stocks, over the last nearly 100 years, research has shown that the outperformance hasn’t persisted over all multi-year time periods and that the outperformance is concentrated in microcap stocks.
Future growth projections for electric vehicles vary dramatically, but all reflect real opportunities for fundamentals-focused investors surveying the links in supply and production chains.
Value investing is very similar to farming. A farmer needs fertile ground, well-planted seeds, unshakable patience, loads of sunshine, watering and weeding, as well as a great deal of courage and faith to succeed in the long run. Today, we believe that investors need to reexamine the benefits of a value investing approach toward the end of an era which has rewarded growth stock investing.
What might the German election mean for markets?
We touch on several bases in today’s letter that are not entirely related. We begin with the 800-pound gorilla in the room – the fact that the US national debt topped $20 trillion last week.
We have a light calendar for economic data. The week’s focus will be the FOMC policy announcement on Wednesday. Given the resilience of the market rally in the face of various natural and human threats, the punditry will turn to a favored topic. Expect people to be asking: Will the Fed be the catalyst for a market correction?
Value stocks have underperformed most other styles of investing, as well as the broad market, by a wide margin since the beginning of 2015. We see several reasons why, which point to the catalysts for a potential recovery; we do not think Value is past its prime.
Invesco Fixed Income shares its views on rates around the world.
This is part one of a comprehensive primer on cryptocurrencies and blockchains.
Stock market performance has not been driven by the improving health of the global economy. Just as negative interest rates are not a positive for the continued health of the economy, current stock market performance does not augur rosy future returns for stocks. In fact, the opposite is true.
With its ability to validate all transactions in an immutable electronic ledger, the blockchain has the potential to be as disruptive as Amazon was in the late 1990s. When the company went public in 1997, there were serious doubts whether people would willingly give up their credit card information just to buy a book. Since then, Amazon stock is up 8,000 percent, and founder Jeff Bezos briefly overtook Bill Gates in July to become the world’s wealthiest person.
Elected officials at all levels have promised workers they will receive pension benefits without taking the hard steps necessary to deliver on those promises. This situation will end badly and hurt many people. Unfortunately, massive snafus like this rarely hurt the politicians who made those overly optimistic promises, often years ago.
