Rick and Russ argue that the recently enacted U.S. tax cut and an evolving monetary policy backdrop provides both greater clarity on expected increases in volatility and underscores the need to remain flexible and opportunistic in allocation.

Earlier this month, the Loomis Sayles sector teams published their 2018 outlook. Here's a snapshot of what our investment grade and high yield sector teams are anticipating this year.

The year was 1963, the singer was Lesley Gore, and the song was “It’s My Party.” Clearly, that song seems appropriate given the government shutdown over the weekend. Indeed, “It’s My Party” and the blame rests with both parties in the political equation.

Optimism is pervasive regarding U.S. economic growth in 2018. Based on the solid 3%+ growth rate during the last three quarters of 2017, this optimism is well-founded.

Since the high yield bond market lows in mid-November, prices recovered and have now moved somewhat above the late-October highs. This process has been slow—and we remained suspect that an intermediate-term trend had not been established.

Many investors think that this bull market and economic expansion have gone on long enough and a bear market and a recession will take place soon. In my view, we have at least a year or two before the next major downturn in either the market or the economy, barring a major geopolitical conflict such as a shooting war with North Korea, Russia or Iran.

The economic impact of the partial government shutdown will depend on how long it lasts. Government workers will still get paid, but those supporting government workers (food service, etc.) will not. Economic data reports and Treasury auctions may be delayed.

Is the end of quantitative easing (QE) a big deal? Might tax reform provide an added boost to the US economy? Should investors brace for more volatility in 2018? Yes, yes and yes.

In their first-quarter (Q1) 2018 outlook, K2 Advisors’ Research and Portfolio Construction teams believe favorable dispersion has created reasons for optimism in three main hedge-fund strategies: Long/Short Equity – Europe, Relative Value and Discretionary Macro. We believe offering these insights will help investors better understand the rationale for owning retail mutual funds that invest in hedge strategies.

Our bear market dashboards compare current conditions to the conditions that shaped past market cycles. Those comparisons look favorable today, but several risks bear watching.

The economic calendar is normal, but some of the results might not be released on schedule. If the government remains shut down, economic news may take a back seat to the political maneuvering. While we don’t know how that will play out, we can expect an important stream of corporate earnings reports.

2017 was a year characterized by low volatility, a flattening yield curve and narrowing corporate bond spreads. The economy grew modestly and the Federal Reserve (the Fed) began to pull back its monetary accommodation. 

Travel to clients abroad and preoccupation with my coming book on cycles (final draft submitted just the other day) have combined to keep me from writing a memo since September, but fortunately not from thinking. Thus I have ideas to set down on two significant subjects: the market environment and the new tax law. Further, I’m highly motivated to do so, since if I skip a few months, people start writing in, “Are you sick?”

Learn why the U.S. financial sector may be poised for growth in 2018.

Most central banks have targets, too. And judged solely by the numbers, monetary policy would be assigned a substandard rating.

This week the U.S. Global Investors office was visited by a living legend in the junior mining industry, billionaire founder and executive chairman of Ivanhoe Mines, Robert Friedland. In case you don’t know, back in the mid-1970s, Robert was caretaker of an apple orchard south of Portland that one of his buddies from Reed College would often visit. That buddy’s name was Steve Jobs, who later went on to found a little company he named—what else?—Apple.

After a four-year downturn in the oil and gas master limited partnership (MLP) sector, marked by a roughly 47% decline in market value, we believe sentiment toward the sector may be turning. With dividend yields approaching 8% – along with increasing free cash flow and a robust U.S. production outlook...

Investors seeking floating interest-rate exposure and high yields are increasingly turning to credit risk–transfer securities (CRTs), a fairly new type of mortgage-backed bond. But could US tax-code changes hurt the housing market and, by extension, CRTs? We don’t think so.

The constructive conditions for the US economy remain in place, in our view, in keeping with an increasingly solid expansion across the rest of the world. US consumers have been benefiting from an economy that appears close to full employment and a stock market at record levels, while a vibrant corporate sector has been buoyed further by recent tax changes.

Investing in the information age can be a noisy endeavor–investors are barraged with new information minute by minute. At Loomis Sayles, our investors count on sector teams as one way to cut through the noise.

As 2018 begins, cash levels have fallen to the lowest level in 4 years. Allocations to global equities have risen to the highest level in nearly 3 years. In most respects, investors are now bullish. Fund managers remain underweight the US. US equities should outperform their global peers.

In the fall of 1981, the twenty-year US bond yield peaked slightly above 15% and has been zig zagging down through each successive business cycle since. During the last one hundred and sixty-years or so, the average secular, (very long-term) trend in rates has lasted around twenty seven-years. After thirty five-years of declining rates, the current secular bear is getting long in the tooth. 

They are the primary objectives of municipal bond investing: Safety. Income. After-tax return. But the market doesn’t always provide the ideal environment, and the coming year looks to be no exception. How can muni investors avoid getting knocked off course in 2018? They can adhere to these five strategies.

What a difference a year makes. It is hard to recall but at the turn of calendar to 2017 investors were debating whether stronger economic growth would ever return, largely because it had been so weak for much of late 2015 and 2016.

Tina Byles Williams, CIO and CEO of FIS Group, has just published the latest Q1 2018 Market Outlook, which delves into predictions for the year ahead, from a more challenging environment for risk assets to geopolitical tensions on the horizon.

Like much of 2017, politics remained keenly in focus at the end of the year. Tax reform took center stage in the U.S., and President Trump wrapped up this major legislative victory just in time for the holidays. The sweeping tax overhaul moved quickly through both chambers of Congress after the House and Senate drafted amended versions from the separate ones each had previously passed.

Changing market conditions over the last five years have taught us a few things about managing risk. The most important lesson? Delivering downside protection constantly requires refining and adjustment.

As the new year begins to unfold, the environment for risk assets is still benign: the global economy is strong, monetary policy is accommodative, and volatility is low and steady. At this point, we don’t see excesses developing that could change that.

Tax reform—or better put, tax cuts—should provide a boost to the economy, but some enthusiasm-curbing is in order regarding the details and timing.

Challenging conventional wisdom is a mainstay of financial conference speakers. I have seen few do so as effectively as Dylan Grice, who dismissed three mainstays of accepted beliefs, most notably that the value premium will deliver risk-adjusted outperformance.

Fear of overvaluation – particularly for U.S. equities – has driven far too many investors to miss the strong bull market. For market bears to be proven right, according to Albert Edwards, it will take one or more of several triggers.

With interest rates rising recently, I have received a number of questions about what that means for our investments. It’s not as simple a question as you might think. As such, it is worth taking some time to think things through.

At the beginning of every year, we update what’s typically one of our most popular pages, the Periodic Table of Commodity Returns. I encourage you to explore 10 years’ worth of data on basic materials such as aluminum, zinc and everything in between. A word of warning, though—the interactive feature makes the table highly addictive.

After just two weeks, the SPX is already within 2% of Wall Street's year-end target. By at least one measure, momentum is at a more than 20 year high: in prior instances, short-term risk/reward has been poor but longer term returns positive. Sentiment, which is exceedingly bullish, has also most often led to positive returns 3-6 months later.

Only two weeks in and 2018 is already breaking records – mostly in a good way. But that leaves 50 potentially less enjoyable weeks to go. So rather than focus on promising current events, I think I’d better dip back into my annual forecast bag and share a few more highlights with you.

The Osterweis Total Return Fund (OSTRX) seeks to preserve capital and attain long-term total returns through a combination of current income and moderate capital appreciation. The fund invests primarily in investment-grade securities and employs tactical shifts in sector allocation, interest rate/yield curve risk and credit quality, attempting to capture return across credit, interest rate and volatility cycles. Its inception date was 12/30/16 and it is managed by lead manager Eddy Vataru.

In this issue, Research Affiliates provides its outlook for 2018 and discusses where it sees attractive return opportunities across the globe.

With a new US tax law now upon us, many investors are questioning what the potential impacts may be on their portfolios—and on their potential investment selections going forward.

Women have gotten the short stick or metaphorically the short rib ever since Eve, and I’m with Oprah for president and much, much more but hey, guys have got a few positive qualities that need to be mentioned.

TIPS finished the year with a very strong performance, their best since the 2016 second quarter. For the 2017 fourth quarter, TIPS posted a total return of 1.8%, much better than the 0.2% on comparable maturity straight Treasurys.

Invesco Fixed Income’s macro factor framework provides an understanding of how developments in growth, inflation and financial conditions globally are likely to impact markets.

Stable value funds can be an investment option for risk-averse, income-oriented participants. Although the bonds that underlie stable value funds may fluctuate in value, these funds offer capital preservation in rising-rate markets, along with income, which is usually higher than money market yields.

The Wall Street Journal published an article on January 7 challenging the safety of municipal bonds as “not [being] the reliable bet they once were.” While its headline may startle some investors, we’ve been endorsing this view for years. Municipal bonds simply aren’t a set-it-and-forget-it choice.

Emerging markets and commodities present the best investment opportunities for this year, according to Jeffrey Gundlach. Those to avoid include the S&P 500, which he claims will show a loss for 2018. His larger warning was that most of the good news on the economic front is already priced into the capital markets.

January is a month of resolutions and predictions, and perhaps more often than not, both tend to be abandoned come spring. While we don’t have a magic crystal ball to predict where the markets may be headed next, we do have a team of respected professionals who recently assembled to discuss whether they think last year’s economic momentum could continue—and where they see potential threats on the horizon.

It’s no secrete that fluctuations in oil prices can lead to dramatic swings in headline price inflation, as chart 1 below shows. After all, not only does oil fuel the vast majority of transportation needs, it’s also a critical raw material used in consumer products far and wide, and much of the price swings in oil are passed on to consumers.

Bonds have been in a "bull market" for the past thirty-seven years. Not every quarter, or every month, but bond yields have fallen consistently since Paul Volcker ended the inflation of the 1970s.

2017 was supposed to be the year that would put an end to modest growth, lukewarm inflation and anemic bond yields. It didn’t live up to the hype. But pressures are building, and that means volatility ahead—as well as opportunity.

Much has been written recently about the yield curve. It is espoused that the flattening yield curve is telegraphing the potential of a recession in the not too distant future.

Last week I shared a personal story with you that, frankly, I very much enjoyed writing. It is a story about two good friends and years of hard work that has resulted in something that I believe may someday win a Nobel Prize. For my friend’s sake, I sure hope so.