I have argued in recent months that a trade deficit is not necessarily a bad thing and certainly not as troubling as President Trump would have us believe.
In a sharp departure from this time last year, the global economy is now being buffeted by growing concerns over US President Donald Trump's trade war, fragile emerging markets, a slowdown in Europe, and other risks. It is safe to say that the period of low volatility and synchronized global growth is behind us.
The current level of the federal funds rate is 1.92%. As of June 13, 2018, the median estimate of Federal Open Market Committee (FOMC) members of the appropriate federal funds rate by the end of 2081 was 2.40%.
On CNBC last Friday, we stated that we have been in a stealth bull market. Indeed, after anticipating the stock market’s bottom in early February, the stealth bull market emerged.
Headlines about the death of the American shopping mall have become so common that the phrase “retail apocalypse” has its own Wikipedia page. But this is a death wrongly foretold—and that creates investment opportunities.
Fed Chairman Jerome Powell will deliver his semi-annual monetary policy testimony to Congress on Tuesday and Wednesday, but he’s not expected to cover any new ground.
A review of last month’s market-moving events across countries and asset classes.
As Russ explains the key to asset returns in the first half of 2018 was the dollar, not interest rates.
The Northern Trust economics team explores agriculture markets globally and in the United States.
With market returns expected to be lower going forward, target-date funds that invest in passively managed underlying components are at risk of underdelivering. We think diversifying beyond traditional asset classes and tapping alpha opportunities with a multi-manager structure can increase the chances of success.
A brief monthly update on what's happening in the municipal bond market.
The second quarter was marked with market volatility from geopolitical tensions, the president’s tweets, and “America first” rhetoric.
Rising interest rates and volatile markets can create headwinds for all types of investors. Franklin Equity Group’s Alan Muschott makes a case for convertible securities, a hybrid asset class that he thinks can adapt to various market conditions.
Over the next few years, financial markets could be set for a series of “Rude Awakenings,” as we forecasted in our latest Secular Outlook. The global economy is transitioning out of a post-crisis period characterized by remarkable stability, and the changes ahead could be jarring for investors.
Given that we are in the later stages of this economic cycle, with factors such as increased trade tensions and geopolitical uncertainty at play, we do expect greater volatility may be ahead. But it’s important to remember that experiencing these ups and downs is a normal aspect of our market environment.
Actions by the U.S. will play an outsized role in the course of global growth. Today we are in the nascent stages of a trade war, with the Trump administration antagonizing important trading partners on three fronts: China, the E.U., and North America.
A bond allocation is like a railroad. Credit is the locomotive that generates high returns, duration the track that keeps the train in line. Take the track away and you risk running your portfolio into the ditch. That’s why duration-hedged credit strategies are dangerous.
The “yield curve” has been a popular topic of discussion this year. The yield curve is the spread between interest rates at various maturities, typically among Treasury securities.
The Northern Trust economics team shares its outlook for US economic growth, inflation, unemployment and interest rates.
Shortening duration, maintaining an investment-grade portfolio, and generating attractive yields do not have to be competing investment objectives for core fixed-income investors.
Nonfarm payrolls rose more than expected in June, but the unemployment rate rose and average hourly earnings rose moderately. That’s a seemingly sweet combination for investors. The economy remains strong, but not so much that the Fed has to slam on the brakes.
The economic calendar is a light one, and many regular participants are on vacation. The most important data include PPI, CPI, and JOLTS, the best read on a tightening labor market.
Alternative investments (alts) were first embraced by institutions, and some people still view them as a complex solution for complex needs. However, a growing number of alternative strategies are now available via mutual funds.
This article considers the juxtaposition of colliding worldviews and the unified message that voters across the political spectrum are sending. While many investors are aware of the political change afoot, very few have considered how said changes will affect the economy and financial markets.
Clearly the stock market’s “internals” are pretty perky with the NYSE Advance/Decline Line continuing to point the way higher, and in the process made yet another new all-time high last week.
TIPS earned 0.9% in 18Q2, better than the 0.1% earned on straight Treasuries, due to the CPI inflation adjustment. Although May CPI accelerated a bit, the rise in TIPS yields may suggest slowing inflation (perhaps related to trade/tariff concerns). If so, straight Treasurys may be a better buy near term.
The Northern Trust Economics team addresses a variety of questions heard most often from our audiences.
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 largest risk to the economy is the escalation in trade war rhetoric.
The Chinese Yuan has fallen precipitously in the last 10 weeks raising concerns of whether China was using the currency as a weapon to preemptively mitigate looming tariffs.
Italy suffers from a series of major structural problems that, even with the best of intentions, cannot be corrected anytime soon, and the new Italian government is about to find out that it has landed in the deep end of the pool.
We continue with our theme of “it’s getting late” when looking ahead to the second half; with important and rising risks to weigh against the rewards.
The economic calendar is loaded with the most important reports. The four trading days are divided by a Wednesday holiday, meaning some extra days off for most. Normally the data would dominate the discussion.
Personally, I start with a base position of actively managed mutual funds, but not just any fund. The funds I want to own are the ones where I know the portfolio manager.
Life-cycle economics contributes two foundational concepts to financial planning. The first is that individuals and couples must accumulate savings during their working years to support themselves in retirement. The second is consumption smoothing – clients prefer to maintain a steady standard of living over the full cycle of accumulation and decumulation.
The days are long and people’s thoughts naturally move to the mountains, lakes, and beaches. But these coming summer days may not be so “dog-like” as we normally anticipate.
US equities are up three months in a row and positive for the year. Historically, equities have a very strong propensity to end the year higher under these circumstances. That remains our long term view. Shorter-term, the S&P remains in a 5 month consolidation/trading range.
Stop buying Iranian oil or face the music. That’s the message the U.S. government shared with the world this week, giving importers until November 4 to cut their consumption of Iran’s crude to zero—or expect sanctions. The threat comes a month after President Donald Trump withdrew the U.S. from the Obama-era nuclear deal.
Market twists and turns can cause anxiety but it is several unsustainable trends that pose a greater risk. As a result, it makes sense for long term investors to seriously consider exactly what they are trying to accomplish and what they need to prepare for throughout their investment horizon.
Not too long ago, investors, consultants, and advisors in the asset management field struggled with the role of Multi-Asset Class (MAC) strategies. They were perceived as misfits, given their cross-asset mandate and their dynamic nature. Today, however, they are utilized and embraced in all sorts of different settings.
A rational analysis of the emerging markets affirms our belief that now is the time to buy, not sell. The panic being peddled by pundits today is simply not justified.
There’s new rumblings about an inverting yield curve ahead. Is it time to panic? Time to stick our heads in the sand? Or time to think sensibly?
Do increasing political risks pose to a threat to global economic growth? See what our strategists’ views are for the third quarter of 2018 and beyond.
July 2018 will mark the 108th month of the economic recovery, making it the second longest expansion in history. Another 12-months or so and it will be the longest ever. Moreover, the consensus of economists foresees little trouble ahead.
With the economy in the later stages of its post-crisis recovery, we believe investors should be cautious and selective on corporate credit. Within the high yield sector, this caution may warrant a move up in quality toward the higher end of the spectrum: BB rated bonds.
The economic calendar is loaded. The many reports include several of the most-watched. The data may even generate enough fresh news to break the summer slumber. There is plenty of skepticism about the most recent economic data.
What do the internet and China have in common? For better or for worse, policymakers are no longer treating them with kid gloves. This past week, the Supreme Court reversed a decision made before the dawn of the internet that prevented states from taxing sales to their residents unless the business had a "physical presence" in the state. Now, each state gets to decide whether those sales get taxed.
It was back in November 2010 when James Howard Kunstler first wrote the aforementioned quote. We recalled that quote while spending last week in Nashville seeing institutional accounts and speaking at events for our financial advisors and their clients where the question du jour was, “What’s going on with the potential trade war?”
Forecasting currency performance is like predicting the outcome of a horse race. Currencies move up the field and then fall back depending on their respective country conditions. And once in a great while, a very strong contender dominates the field – much like the winner of the Triple Crown.
Despite a recent modest pullback in U.S. stocks, and a sharper one in international markets—reflecting both trade worries and the recent strength in the U.S. dollar—we don’t believe it marks the beginning of a more severe correction. Risks of a prolonged trade dispute have risen but it’s too soon to declare war; while the possibility of a positive resolution that would likely be a tailwind for equities. For now, a healthy U.S. economy is an offset to those growing worries. Threats to the current bull market have risen, and they include this being a midterm election year—which have historically been accompanied by larger-than-average maximum drawdowns. We continue to espouse discipline and diversification; but for now it’s in the context of an ongoing bull market.
We’re a little more than a week into the 2018 FIFA World Cup, and so far Russia has surprised experts and fans alike. Expectations were low at best. Because of recent setbacks, including a disastrous performance at the 2016 UEFA European Championship and injuries sustained by key players, the federation ranked a dismal 66th place among Fédération Internationale de Football Association teams—its lowest position ever. The only reason it didn’t have to qualify to compete was because Russia is the host nation. (This is the first time in its 88-year history, by the way, that the World Cup has been held in Eastern Europe.)
