Credit risk-transfer securities (CRTs) have made the US mortgage market safer by shifting default risk from taxpayers to private investors. The latest attempt to overhaul the housing finance system isn’t likely to change that.
With the S&P down a 2nd week, it’s important to remember that this decline comes on the heels of a very strong 4 month rally. This is to be expected, because no rally can go up forever without making a pullback/correction along the way.
The purpose of the article is to define money and currency and discuss their differences and risks. It is with this knowledge that we can better appreciate the path that massive deficits and monetary tomfoolery are putting us on and what we can do to protect ourselves.
The CAPE 10 provides us with valuable information (as do other current metrics). However, it’s important that the information be used in the right way, as misusing it can lead to bad outcomes and the failure of plans.
The suppression of the gold price is not just a conspiracy theory. It’s a well-documented phenomenon, with real actors and real ramifications. The best people to speak to about this subject are the folks at the Gold Anti-Trust Action Committee.
I find it serendipitous that after just completing a 19-part series on how highly valued the general market is, I get the pause that refreshes. Now please don’t read more into my words than are being offered. I still believe that the market at large is fully valued.
Russ discusses why volatility has not been more severe, even though growth has softened.
Although fund managers are less bearish than they were at the start of 2019, they are far from being bullish. They are overweight cash. Their global equity allocations are almost a standard deviation below the mean. Their bond allocations are at a 7-year high.
The duration and magnitude of value’s recent underperformance has caused many to ask once again if value investing is no longer effective. While it is possible that secular shifts have helped to compress value’s premium relative to its long-term history, we believe most of the recent decline can be traced to more transitory factors.
European Banks have mostly been magnets for bad news and disappointment for their equity holders. But we believe other parts of the banks’ capital structure offer solid returns, backed by resilient balance sheets.
The economic calendar has plenty of important data. Fed speakers will be on the circuit. There is plenty of political and geopolitical news. On all of these fronts we see a stalemate.
It has been almost four weeks since the inversion of the 3-month/10-year US Treasury yield curve, and the commotion is just now finally beginning to fade.
Stocks dropped on Monday as the trade war between the United States and China escalated, with China announcing a retaliatory tariff hike on U.S. imports. The S&P 500 index closed down 2.41% and the Dow Jones Industrial Average lost 2.38%, their worst day in four months.
A collapse in the corporate bond market could rival the sub-prime debacle a decade ago, according to Jeffrey Gundlach.
Emerging-market bonds got off to a strong start after a difficult 2018. Are more gains possible? We think so, and volatility sparked by increased trade tension may provide a buying opportunity for selective investors.
Big-ticket, ultra-short notes force muni SMAs with low minimums to buy longer-term paper at rich prices, likely giving clients more heartburn than total return.
Since the beginning of 2019, the market has risen sharply. That increase was not due to rising earnings and revenues, which have weakened, but rather from multiple expansion. In other words, investors are willing to pay higher prices for weaker earnings.
Macro trends can run for a while, but they can also experience a quick end. Elections (Brexit, US Presidential Election) can cause the most powerful reversals in markets.
Technology unicorns are in the spotlight, with Uber’s high-profile IPO expected this week. As scrutiny of their business models intensifies, we think investors should also ask tough questions about publicly traded companies with high sales growth but scant cash flows.
This is part 19 and the final part of my series covering all the various sectors reported by FactSet. However, the popular idea of saving the best for last does not apply in this instance.
Risk assets have bounced back this year after a dreadful finish in 2018, with a big assist from the US central bank. But are markets overlooking the potential for problems down the road?
It’s been a tough road for value investors during the past decade or so, even leading some pundits to declare the investing style is dead.
There’s a behavioral finance model of finance that colors investors’ decisions. Read our takeaways from Roger Ibbotson’s (and et al) study — Popularity: A Bridge Between Classical and Behavioral Finance...
Equities remain near all-time highs, as the S&P 500 closed at a record high two times this week and is now up 17.1% year-to-date, the best start to a year on a price return basis since 1987.
While an inverted curve may be a reliable indicator that a recession is likely to begin, on average, within 16 months, it is not an indicator reliable enough to allow you to profitably time stock markets.
Investing is simple, but taxes aren’t. As a CPA, I make portfolios as tax-efficient as possible. I advise clients that the goal isn’t to pay the least amount of taxes, but to make the most money after taxes. With fee compression eroding advisor profitability, this is one key area you can differentiate your practice and add value for your clients.
One might view the very comparison of present stock market conditions to 1929 market peak as exaggerated and preposterous, but then, one would be wrong. The fact is that on the valuation measures we find most strongly correlated with actual subsequent long-term and full-cycle market returns across history (and even in recent decades), current market valuations match or exceed those observed at the 1929 peak.
The financial industry and the muni market has lulled a generation of muni investors into using only one approach: buy and hold to maturity. That was fine in the past, but everything’s changed post-2008 and it’s time for a better muni strategy.
Demand stimulus has been in fashion in developed countries since the 2008/2009 financial crisis. Monetary policy in particular has been popular with zero interest rate policies and Quantitative Easing (QE) forming the backbone of macroeconomic policies in the UK, Japan, Europe and the United States. This may now be changing.
Global copper capacity could be short some 41,000 tons by as early as 2021, says one commodities research firm. Meaning: We could be looking at another commodities super-cycle, with the red metal leading the way.
All of the “signals” we’ve been focusing on in the past several months remain solidly “in the green”. So why are we apprehensive? Perhaps we shouldn’t be, and simply are falling prey to our inner “Chicken Little” who always thinks the sky is falling. We’ve been guilty of that before.
What a difference three months can make! Today, the bear has run back into its cave, the Fed has turned dovish, interest rates have plummeted, and stock markets have mostly recovered.
As a rule, I have never been very fascinated by the Transportation Sector. This is especially true regarding airlines and air transport companies. Nevertheless, there are two airlines and two air freight carriers in the Transportation Sector that I felt comfortable featuring in this article.
I attended an advisor summit in Chicago this past week. On stage was a good friend from S&P Dow Jones Indices. He referenced an article S&P published last fall about poor quality in the popular “leveraged loan” segment of the corporate bond market. Dull, I know, but hang in with me for a short few paragraphs, I promise this week’s missive gets better.
On the back of 1Q19 solid earnings results and healthy economic data releases, the S&P 500 continued its remarkable move higher this week and closed at a record high (2,933) for the first time since September 2018.
In the decade since the global financial crisis, many investors have either actively steered—or ended up with—a large portion of their portfolios in investments tied to economic growth, namely stocks.
Technology Services Sector covered in this article is a sector where overvaluation is rampant. In other words, this is currently a hot sector where sound valuation has been thrown out the window in favor of what I can only describe as hype and speculation.
A near mirror image of the fourth quarter, the first quarter began with the stock market rocketing higher in a nearly straight line. In one of the strongest quarters since the current bull market began in 2009, it managed to largely erase the carnage of the prior quarter and index levels are now back at all-time highs.
The S&P 500 Index hit an all-time high on April 23, thanks to improving investor optimism. But for some equity investors, market highs signal a good time to reduce downside risk. Shifting a modest allocation into US high yield is an efficient way of doing just that—significantly lowering overall risk while only modestly curbing potential returns.
The big energy news this week is that President Donald Trump moved to end all sanction waivers for nations that import Iranian oil. In response, Brent crude oil hit $75 per barrel for the first time in six months this past week.
One thing is for sure, investing means buying and selling, and these two activities aren’t free. Regardless of how promising the strategy looks on paper, its benefits will be reduced to some degree through its implementation. A worthy goal, therefore, is to limit the toll implementation takes on a strategy’s execution.
Seizing on the success the equity market had in forcing Federal Reserve (“Fed”) chairman Powell’s hand in January 2019, the bond market decided to take its own swing at dictating Fed policy.
Retail sales fell into contraction in December. Employment in February was the lowest since 2010. November new home sales growth dropped 14%. It was an ugly winter for macro data, but that weakness now looks anomalous: the data from the past month mostly point to positive growth. A recession starting in 2019 looks unlikely.
Emerging markets, particularly in Asia, remain one of our favored regions for several reasons including...
The US yield curve dipped into inverted territory recently. But that’s not necessarily a bad omen for equities. There are several important warning signals—and lately the yield curve’s slope is the only one flashing red.
Last year’s fourth quarter selloff was largely triggered by fears that the Federal Reserve (the “Fed”) had overshot the mark with its December rate hike, and that elevated borrowing rates would cause a recession. The Fed’s subsequent pivot back to accommodation and calming suasion was very well-received by investors in the first quarter, as risk assets such as equities and high yield bonds snapped back nicely.
Q1 2019 proved to be the exact opposite of Q4 2018; it was the quarter where nearly everything worked. Virtually all asset classes produced positive returns, from U.S. and International equities of all sizes and sectors, to higher quality bonds and junk bonds, and, yes, even commodities floated with the rising tide.
After several interest rate increases, these bonds may be an attractive alternative for cash.
At the moment there are only twelve countries and the EU which have space agencies with the proven capability to send satellites to outer space, of which NASA is the clear leader. All of whom subsist on Government funds and subsidies.
Today’s government finances add to tomorrow’s problems; The strong U.S. dollar is a mixed blessing; Prisons are expensive for both taxpayers and inmates
