Not surprisingly, the higher the valuation at the bull market peak, the longer the subsequent period of disappointing returns, in several instances extending more than a decade, though not without intermittent failure-prone bull market rallies to add excitement. This is what I often call ‘going nowhere in an interesting way.’
The balance of the macro data remains positive. A recession starting in 2019 is unlikely, but, for the first time, a recession in 2020 is a rising possibility.
The Northern Trust Economics team shares its growth outlook for the U.S., U.K., Eurozone, Japan and China.
Rick Rieder highlights the economic policy state-of-play today, and where it may lead to should economic growth falter, productivity not materialize, and populism continue to thrive.
Ben Inker highlights the multiple benefits large U.S. companies enjoy when compared with smaller ones, and examines whether the conditions that have caused this situation will remain in place.
There is an old tongue-in-cheek market adage that says that portfolio managers are “never wrong, but sometimes they are early.” Well, in our case, that expression was flipped -- We were exactly right, but late.
As European investors and market practitioners return from their summer vacations and prepare for the final third of 2019, our Head of European Fixed Income David Zahn highlights the issues he thinks will drive markets in the coming months.
There are a number of lessons investors can learn from the sensation that is the Popeyes chicken sandwich. One of those lessons is that people often put a premium on scarcity.
Liquidity risk grabbed headlines this summer on the heels of several high-profile fund implosions. The hunt is now on to find ways to manage market liquidity risk and to protect portfolios against liquidity crunches. We’ve pinpointed three essential practices.
Market volatility remains elevated, reflecting trade tensions and continued concern around the yield curve.
Two decades after inception, the eurozone countries’ arranged marriage-type of union looks shaky at best, and now it is even more challenged by ongoing, global disruptive forces.
We believe money always goes where it gets treated the best. A recent article detailing the most attractive places in the U.S. for millennials to buy a house included the following cities, and that has implications for investing, not just nesting.
For years, economists have disagreed whether ageing is inflationary or dis-inflationary. Ever since IMF published a controversial paper in 2015, the debate has raged, but I have finally concluded that ageing is most definitely dis-inflationary (and perhaps even outright deflationary), and here is why.
Desperately Seeking Susan is a 1985 American comedy-drama film. We recalled the movie, and its title, while talking to a 70-year-old contemporary who told us that in this low interest rate environment he is, “Desperately seeking savings.”
Investors recognize that emerging markets are at the core of the global economy and belong in a fixed-income allocation. Still, many investors are underexposed to emerging-market corporate bonds. We think that’s a mistake.
Is “invest” the right word to describe an asset that when held to maturity guarantees a loss of capital?
If you invested in stocks whenever there was a Democratic president and bonds when there was a Republican one, since 1949, your return would be 20 times greater than the opposite strategy.
I think the last few weeks marked a turning point in the economic narrative. It’s more than the trade war. A sense of vulnerability is replacing the previous confidence—and with good reason. We are vulnerable, and we’ll be lucky to get through the 2020s without major damage.
Risks to the market are growing but the American consumer continues to look strong. Some preparation for a potential storm are prudent, but no drastic actions are suggested.
Global trade tensions are taking their toll, leaving Europe struggling for solutions.
In some parts of the world, bonds are yielding less than zero. Karen explains how that can happen, what it means for your portfolio and moves to consider.
Events of the last several weeks have not changed our long-term outlook, but we have become a bit more cautious in the short term.
It doesn’t appear that the U.S. has entered a recession yet, or even that one is imminent—although start dates to recessions typically aren’t known until we’re looking in the rear-view mirror.
Read our key takeaways from our 2019 Asset Allocation Midyear Update, including how we are positioning multi-asset portfolios in light of our outlooks for the global economy and markets.
Read the latest Weekly Headings by CIO Larry Adam.
The Financial Crisis consumed what was in many ways an overgrown and brittle economic system within the world’s developed countries. The conflagration destroyed many traditional politicians identified with the highly globalized economy and encouraged disruptive, populist leaders to begin reaching for their place in the sun.
Unrest in Hong Kong and limitations of monetary policy have no easy solutions.
It’s been 20 years since a Chinese bank failed. But recent bailouts of three regional lenders have raised concerns about systemic problems in China’s financial sector. While risks have grown for China’s smaller banks, we believe that the Chinese banking system remains robust.
Every summer for the past several decades I have organized a series of Friday lunches in eastern Long Island for serious investors. More than 100 people attend the four sessions, with 25–30 at each one. The participants include hedge fund, private equity and real estate billionaires, venture capitalists, an academic and some corporate leaders.
We see several areas of opportunity for muni investors in the second half of 2019.
How much longer could America's record-setting economic expansion continue?
We believe the macro environment is supportive of stocks that are growing their dividend payments.
The economic calendar is very light with reports on only three days. Existing and new home sales reports could be interesting and there are many fans of the leading economic indicators. The combination of empty airtime and some Fed news is like an aphrodisiac to the pundits, all of whom are self-affirmed experts on the Fed.
According to John Sheehan, accommodative Fed policy and favorable market technicals drove the investment grade credit market’s strong start to 2019.
The link between an inverted yield curve and a recession has so dominated recent financial news that for some investors it's no longer a matter of whether we get a recession, but how long until it starts.
The risk of recession has risen, but it’s not a foregone conclusion.
The bull market in U.S. Treasury bonds is in full swing and there is plenty more return to be made.
Last week on CNBC I stated that maybe what we have is a new toolbox; but nobody knows what new tool to use for analyzing the economy, stock market, bond market, etc. Our friend, CNBC’s uber-smart Steve Liesman, hinted at this point in our interview, but I do not think many folks picked up on it, and it is a very important point.
Stock markets have become more volatile as trade tensions have worsened and weakness in the manufacturing side of the economy has caused increasing concern. Swift resolutions to these issues seem unlikely and a dovish Fed may not be the elixir to what ails the economy. With the likelihood of persistent volatility in the coming months, we recommend investors stay broadly diversified and focused on the long term. From a tactical perspective, we remain neutral to U.S. and global equities; with a bias within the U.S. market toward large cap stocks relative to small caps. Investors should not attempt to trade around short-term moves in the equity markets; but instead remain disciplined, diversified, and use rebalancing as necessary.
More than a year after the start of the U.S.-China trade war, we’re finally starting to see consumer prices increase. Core inflation, which excludes food and energy, rose to a six-month high of 2.2 percent year-over-year in July.
How in the heck can the 30 year Treasury bond yield be trading at just 1.97%, an all-time low, when just 10 months ago it was up at 3.46% and “breaking out” to the upside?
This is the longest U.S. economic expansion ever. And while expansions don’t die of old age, it’s prudent for investors and central bankers to think now about the potential consequences of the next global recession.
The most closely watched part of the US yield curve inverted this week for this first time since 2007, suggesting that a recession may be around the corner. We’re not convinced that’s true.
The inversion of the Treasury yield curve has recently gotten a lot of attention in the financial press as being a harbinger of economic malaise ahead. Our Fixed Income CIO Sonal Desai says these conclusions are misguided.
The transition from LIBOR to SOFR has been slow. We present some key reasons for the delay in SOFR’s broader integration into markets. Important bottlenecks include lags in the evolution of SOFR-based swaps and derivatives markets and in the development of a term SOFR structure.
A closely watched point on the Treasury yield curve has fallen negative for the first time in this economic cycle.
In light of the Federal Reserve’s recent interest-rate cut, our Fixed Income CIO Sonal Desai takes a look at how US central bank thinking seems to have changed, and whether there’s a risk of having interest rates too close to zero.
Investors who have watched the U.S. stock market over the last decade might be wondering whether the appeal of value stocks has been whittled away by a long run of underperformance.
The economic calendar is normal, featuring housing starts, retail sales, and Michigan sentiment. The CPI will be important someday, but only when it breaks the recent path of gentle increases. With summer vacations in full swing (even Congress is on a five-week recess) the punditry turns to tried and true topics...
