Recently, our email box has been filled up with questions like this one from one particularly bright Raymond James financial advisor, namely, Michael McCormick of the venerable Chicago-based money management firm of McCormick Retirement Group, who wrote, and we responded...
The chief goal of society should be to maximize wealth, according to Tyler Cowen. Pursuing that goal has delivered everything from nutritious and abundant food, to air conditioning and smartphones in the developed world, and those benefits are spreading rapidly to the developing world. The challenge is how societies can embrace and implement that goal. If those challenges are overcome, the benefits to globally diversified equity investors will be substantial.
Bob Browne is an executive vice president and chief investment officer for Northern Trust, which had $1.1 trillion in assets under management as of September 30, 2018. In this interview, he discusses his firm’s capital market outlook and the six themes that will drive investment returns over the next five years.
Wheaton Precious Metals announced that it reached a settlement with the Canadian Revenue Agency (CRA), the equivalent of the IRS. “We expect the stock to react positively to the news given the tax dispute was an overhang,” Credit Suisse analysts shared in a note to investors today.
Everybody is suddenly talking about the inverted yield curve. They’re right to do so, too, but alarm bells may be premature. Inversion is a historically reliable but early recession indicator. The yield curve isn’t saying recession is imminent, even if it were fully inverted, which it is not.
The yield curve has appeared in quite a few news headlines recently. Why is this technical-sounding tidbit of financial jargon suddenly getting so much attention? The short answer is that the yield curve has a reputation for predicting recessions, and some market watchers are worried recent changes to the curve’s shape are sending a warning signal about the economy.
The trade conflict and Fed rate policy are buffeting markets at a time China was already grappling with debt challenges at home. But the volatility may be masking good economic fundamentals globally, reform efforts in China, and attractive investment opportunities.
A collection of insights our Portfolio Solutions team gathered from working with thousands of advisors on close to ten thousand investment models in the past twelve months.
Investing in municipal bonds is riskier than many investors may perceive, with last year’s $74 billion default by Puerto Rico providing a reminder.
We see a synchronized global slowdown in 2019. We position cautiously but anticipate opportunities ahead.
The balanced approach to income generation for fixed income has certainly been under challenge. If we look at five-year yields—early September, 180 basis points; today they’re at about 2.8%. So, 100 basis points higher means you’re going to put price pressure on a balanced approach to generating income.
Looking around, we don’t see many people who used to be in this business. Maybe they just couldn’t take being wrong. Or, maybe their clients couldn’t take their claiming they were always right. Or, maybe they got tired of issuing lots of predictions while, at the same time, watching the stock market going nowhere this year.
It has been a year where virtually every asset class has suffered negative returns. But emerging market equities have outperformed global indices and, according to Jeffrey Gundlach, that’s where investors should put their money “over the next seven and certainly the next 20 years.”
As we get ready to move into 2019, the macro backdrop points to a less favorable mix of growth and inflation at a time when central bank balance sheets are starting to shrink. Even if growth is simply returning to trend, the year ahead is likely to be more challenging—with populism and China looming as key downside risks.
Last Friday, the 10-year Treasury Note closed at a yield of 2.85%. That's up from 2.41% at the end of 2017, but down from the peak of 3.24% on November 8th, and well below where fundamentals suggest yields should be.
Does ESG/SRI investing lead to higher, lower or about-the-same risk-adjusted returns? Abundant academic literature on the topic has emerged in the last eight years, but there’s still no consensus about whether responsible investing is a good bet for your clients.
An inverted U.S. Treasury yield curve has historically been a telltale sign of a looming recession for the U.S. Does the recent curve flattening spell trouble for the U.S. economy?
The macro economic story is starting to change. The data from the past month continues to mostly point to positive growth, but there is a very important exception: weakness in housing is apparent. If this persists and other measures, especially employment, start to also weaken, a recession in 2019 is possible.
Now, I am not talking about a 20% correction type bear market. I am talking about a devastating, blood-letting, retirement crushing, “I am never investing again,” type decline of 40%, 50%, or more.
Disruption from trade disputes, rising interest rates, uneven signals from housing and automotive markets, nascent inflation from a tight labor market, concerns about “peak” employment and lapping tax reform (at some point) next year have all served to create fear that the U.S. economic growth will slow and possibly enter recession perhaps in late 2019 or early 2020.
Stocks plunged this week on concerns that trade negotiations between the U.S. and China are not running as smoothly as initially thought. Adding to the uncertainty was news of the arrest of Meng Wanzhou, CFO of Chinese tech giant Huawei, the world’s second-largest smartphone manufacturer.
The end of 2018 will likely morph into more of the same in 2019—higher volatility within a relatively wide equity range, including ongoing corrective phases or even a continuation of what has been a “stealth” bear market this year (rolling bear markets across and within asset classes).
Private, public and international pension plans are all due for a reckoning.
Our senior investment leaders see plenty of reasons to be optimistic about the year ahead, but recognize investment opportunities may be more divergent.
The media and some market participants can get pretty worked up over the flattening Treasury curve. But the question is: Is it warranted?
We think populism is here to stay and that it will be a persistent part of the investment backdrop for many years to come.
In this issue, Research Affiliates discusses the market impact of the U.S. midterm elections and its view of what differentiates All Asset’s positioning from its peers.
Conventional wisdom is always right—until it isn't. The question is: When is it right to disagree? The investment herd is thinking: Trade wars, tight money, fractious politics and a falling stock market in the U.S. Banking systems in distress in Europe and the splitting of the EU.
What drove down US stocks this week? The answer may be the US bond market and what the shape of the yield curve is—or isn’t—telling us about the state of the economy.
There are few signs of a recession, but slowing growth is having an impact. Russ explains why and what steps to take.
One of the most reliable indicators of an economic slowdown just flashed a warning sign this week. On Monday, the yield curve between the five-year Treasury yield and three-year Treasury yield inverted, or turned negative, for the first time since 2007.
Can markets grind higher in 2019 before the clock runs out on the current cycle? See what our strategists’ views are for the year ahead.
Q3 performance shows that different factors outperform in different market environments.
Municipal bond yields moved higher in 2018 and seem likely to continue moving up in 2019 if market expectations for further interest-rate increases play out.
First, the bad news: high-income investors should saddle up for another bumpy ride in 2019. Now the good: with challenges come opportunities—and we see plenty on the horizon for investors who take the long view.
Making the case for US REIT preferred stock in flexible real estate portfolios.
For years we have quoted Benjamin Graham’s book The Intelligent Investor, which Warren Buffet has said is the best book ever written on investing. The operative quote from said book is “The essence of portfolio management is the management of risks, not the management of returns.” He closes that thought by saying, “All good portfolio management begins, and ends, with this premise.”
Of all the delusions that have infected the minds of economists, central bankers, and the investing public in recent years, perhaps none is as short-sighted and pernicious as the idea that aggressively low interest rates are “good” for the economy and the financial markets.
Rates are low globally. But yield isn’t the only component to consider when investing. Active US-based investors can take advantage of differences between the US dollar and other currencies to pick up a decided edge by investing in international bond markets.
A brief monthly update on what's happening in the municipal bond market.
Years ago we studied the tactics of Jesse Livermore, along with a number of other stock market operators, and have found many of those strategies to be just as valid today as they were decades ago.
Like cranberry growers, many bitcoin miners are choosing to limit supply as current prices are lower than operating costs. Bitcoin fell below $5,000 on Monday and was trading around $4,250 on Friday. The average of mining a single bitcoin, meanwhile, is estimated to be between $6,000 and $7,000, meaning miners are operating at a loss.
Stock prices around the world are in a tailspin which may get worse before it gets better. As of the end of last week, 11 out of 23 major global stock markets were down the requisite 20% or more from their highs to qualify as bear markets. This is very troubling.
As we approach the holiday season, most investors are beginning to think about escaping to somewhere far and exotic or spending time with family and friends. Unfortunately, while our social calendars are working overtime, markets don’t always take a break during the festive season.
The Leonid meteor shower hit its zenith over the weekend, and you didn’t even need a telescope to see it. You did need a warm blanket, but all you had to do was lay down on your back to enjoy a great show.
Volatility returned and pulled markets across the globe into the red. Slowing growth momentum outside the U.S. further weighed on sentiment. Political developments from Latin America to Europe were a source of both uncertainty and assurance for markets.
Natural gas storage in the lower 48 states was below the five-year average as of October 31, according to the EIA. This, combined with a stronger-than-expected start to winter, prompted traders to push prices to a four-year high of $4.84 per MBtu. Meanwhile, natural gas futures trading hit an all-time daily volume record of 1.2 million contracts.
Fund managers are still overweight global equities, especially US equities. But in most other respects, managers are very bearish, having multi-year low profit and economic growth expectations. A third believe the S&P has already peaked. Their cash allocations are high.
UK Prime Minister Theresa May has cleared the first hurdle in her bid to secure a soft Brexit. Her Cabinet has backed the withdrawal deal UK and European Union negotiators have agreed to. But David Zahn, Franklin Templeton’s head of European Fixed Income, warns her most difficult challenge lies ahead.
We expect volatility as the process moves forward, along with a potential rise in UK sovereign yields and strengthening of the pound, though some Brexit-related risk premium is likely to remain.
