A wave of euphoria has hit the markets, but fundamentals could be key in the year ahead.
Each year I make a practice of reviewing The Ten Surprises of the year that has passed. Last year’s list was on its way to being one of my best and then Donald Trump won the presidential election and everything changed.
The rise of the consulting industry, armed with cheap computing power and an abundance of stock-specific data, has harmed the industry, because according to them, a “value” investor is one who holds statistically cheap stocks and a “growth” investor is one who holds statistically expensive stocks. The truth is somewhere … well, actually it’s a lot more complex, and the consulting industry’s crude segmentations don’t capture it.
Why do so many pundits and politicians, including the future director of the Office of Management and Budget, beat the debt drum so loudly and so often? It’s one of the most effective, and most abused, wedge issues in American politics.
Instead of trying to answer questions about the future, I’ll try to list those we should be asking as 2017 opens. These are the things that I sit and meditate about when I consider the future of economics, markets, and investing. Today’s economy is something like an old-fashioned Swiss watch. It’s a thing of beauty when all those delicate little gears mesh just right. If you ever take the time to actually study the inner workings of the marvelous manifestations of human ingenuity that keep us all alive, it is difficult not to come away awestruck by the ability of the human mind to craft such complexity. But if any of the gears get just a little out of whack, the entire contraption can grind to a halt.
This article is presented as an update to an article I published on Flowers Foods (FLO) on September 22, 2016. Later in this article I will provide a direct link to the original.
The ECB’s decision in early December to reduce the monthly pace of its asset purchase program came as a surprise. But investors should draw considerable comfort from its commitment to maintain a “sustained presence” in euro-area markets.
As we enter 2017, we expect the current economic rebound to continue suggesting GDP growth will likely move toward the 3% level by the end of the year based on less monetary stimulus, more fiscal stimulus, a reduction in the corporate tax rate, and deregulation.
The volatility of the domestic and global market creates an opportunity for investors to diversify portfolios. With the uncertainty of the new administration’s effect on trade, looking to global funds can help reduce overall risk in a portfolio. However, investors need to understand the political impacts on certain industries and currencies. Investors should also look at the potential risks associated with actively managed global funds to create a long-term growth plan.
Included in this week’s On My Radar: -Pension Fund Red Ink – Check Out Your State (Chart) -Foreigners are Dumping Treasury Bonds at Record Rate -The Year in Review -Trade Signals – Strong Dollar, Weak Gold, Equity Trend Up, Bond Trend Down, Sentiment Remains Far Too Optimistic
As we head into the New Year, I want to share with you the six most popular Frank Talk posts of 2016. Before I do that, however, I think it’s important to note one recurring theme I write about that continues to help our investment team and shareholders better understand the movement in commodities and energy: the purchasing managers’ index (PMI).
Earlier this year, we saw a transition from an old-style currency war (openly fought with negative interest rates and quantitative easing) to the “Shanghai co-op” – an implicit agreement, or truce, among major central banks that excessive dollar strength was bad for the global economy.
During his campaign, Trump took a restrictive trade stance that could hurt export-reliant countries in Asia—particularly China. But with continued rebalancing and a regional focus, Stefan Scheurer, economist with Allianz Global Investors, says China's influence in Asia could grow even bigger.
If you get to know Gen X investors more closely, you’ll see their generational role in their personal lives presents a roadblock to their retirement plans. While Gen Xers want to help family members ranging from grown children to aging parents, these family ties are costly. Here are five factors Generation X investors may want to keep in mind.
The optimism that has followed the election of Donald Trump has pushed the Dow Jones Industrial Average to the threshold of 20,000, a level that will be both a nominal record and a symbolic milestone.
Volatility in the market can make profitable investing a tricky task. It is important to understand the different investment options and the associated risks. With new research challenging traditional investing fundamentals, it is more important than ever to look at which strategies are available and how they can help create a diverse, flexible portfolio.
An investment landscape of increasingly binary outcomes requires fundamentally different involvement by investors. Importantly, those taking their cues primarily from the US economy are likely to be woefully unprepared.
Still casting about for a New Year’s resolution? If you’re an income-conscious investor, try this: expect that something unexpected will happen next year and act now to cushion your portfolio.
President Obama is spending his last days in office trying to shore-up his “legacy.” He emphasizes that he inherited the worst economy since the Great Depression and most analysts would agree that is true for the most part.
John Pattullo, Co-Head of Strategic Fixed Income at Henderson Global Investors, discusses how the markets were affected by major political events in 2016 and the lessons learned.
When we made our predictions in January, a key theme was that 2016 would be a year that would frustrate both the bulls and the bears.
Risk appetite has returned to European equity markets. Is there a way to capture the rally of value stocks while mitigating risks across an unsettled region? Focusing on cash flows can make the difference.
I’ve previously written articles about two separate techniques for improving retirement outcomes: the use of SPIAs and smoothing of year-to-year withdrawals. In this article I investigate ways to combine SPIAs and smoothing to produce even better outcomes. I’ll then broaden the discussion and briefly explain how SPIAs and smoothing fit into the wider context of ways to improve retirement outcomes.
John Hathaway is chairman of Tocqueville Management Corporation, the general partner of Tocqueville Management L.P. He co-manages the Tocqueville Gold Fund (TGLDX). I spoke with John on December 9
I’ve fielded a large number of investor questions recently around tax cuts and earnings. The idea is that tax cuts, for both corporations and individuals, will significantly improve corporate earnings and thus propel the market higher.
In the fight for American jobs, we could be “risking” a trade war with China right on our southern doorstep. Though the stakes might not be as high as total global domination, they come pretty close. With rates moving up and the world resetting to less quantitative easing, inflation might accelerate. To avoid a global recession, Trump will need to make streamlining regulations a top priority.
The holidays are upon us again, and many grandparents are looking forward to one of their favorite moments of the season – the delighted smiles of grandkids opening a present they’ve been dreaming of all year. Give it a few weeks, though, and last year’s trendiest toy often becomes this year’s latest giveaway.
We assess three global economic scenarios for 2017.
In their latest piece, Rob Arnott and Brandon Kunz of Research Affiliates take a look at how the rare combination of exceptional valuation levels, depressed currencies, and powerful price and economic momentum should encourage long-term investors to “throw their hats” into the emerging markets rink.
Bond yields usually rise as the FOMC raises rates. This is one of the mostly strongly held consensus views in the market right now. A year ago, investors also thought yields were set to rise; instead they fell over the next half year. Might investors be wrong now once again?
Over the past year, central banks, commercial bankers and prominent economists have expressed the view that digital money and transfers should replace large denomination cash and cash transactions.
Rick Rieder makes the case for a policy that is bolder than what the ECB had announced last week.
Fun fact of the day: the ECB’s decision to extend its asset purchase program to the end of 2017, albeit at a slightly slower pace than the current €80B per month, puts it on track to surpass the Fed’s current $4.4B level of assets sometime around next August.
When the market starts buzzing about rising rates, high-yield bank loans’ popularity grows. Although the bank loan bandwagon may look tempting, we’ve found reasons why high-yield bonds shouldn’t be so easily dismissed.
What can advisors learn about attracting clients from one of the world’s most admired companies?
“If you’re not getting better, you’re getting worse.” – Walter Bahr
The cruelest month? Muni investors would probably say November. But the sell-off that began when Donald Trump won the US election already appears to be running out of steam. Investors who sell now may soon regret it.
Nearly all of the variation in GDP growth over time is explained by the sum of employment growth plus productivity growth.
Today we’ll look at stock valuation several different ways, see what history tells us about the future, and then think about how to react. There are good reasons to think that the Trump rally could morph into the stereotypical and expected Santa Claus rally. Toward the end of the letter, I will comment on why. It’s actually kind of a rational process. And then what?
Donald Trump took the world by surprise in winning the U.S. presidential election.; While the Trump triumph and ensuing policy conjecture held the spotlight, a flurry of positive economic releases globally signaled solid fundamentals.; Risk sentiment built, particularly in the U.S.
It's not unusual for a new year to bring changes. But 2017 may be particularly noteworthy. Topping the list is a new U.S. president and Republican-controlled Congress, bringing the prospect of a new direction for many policies, regulations and legislative priorities. Elections and leadership changes also are on the calendar in several major countries, including France, Germany and China. What may not change next year are the geopolitical tensions that continue to pressure several regions around the globe.
Inflation can be understood as the destruction of a currency’s purchasing power. To combat this, investors, central banks and families have historically stored a portion of their wealth in gold. I call this the Fear Trade.
I remember when the Dow Jones Industrial Average hit 10,000, both going up and going down. It was a lot more fun going up, especially the first time. The index is now approaching double that level—Dow 20,000. If we get there, it should be exciting.
November turned out to be an excellent month for the major U.S. stock indexes, with all three, plus the Russell 2000 index of small caps, hitting record highs.
Invesco Fixed Income utilizes a framework based on the idea that changes in growth, inflation and financial conditions drive much of market beta performance, and that understanding these “macro factors” can help us understand market conditions and price action.
At its 8 December Governing Council meeting, the European Central Bank (ECB) extended its asset purchase program by nine months to the end of December 2017, but at a rate of €60 billion per month – a decrease from €80 billion currently.
Earlier I shared with you that when it comes to President-elect Donald Trump, the media takes him literally but not seriously. His supporters, on the other hand, take him seriously but not always literally.
Donald Trump’s electoral win was in part the result of very shrewd analysis and tactics. As his campaign manager, Kellyanne Conway was responsible for Trump’s campaign strategy and its execution. Yesterday, she offered candid insights into the key decisions that led to Trump’s victory.
