Are you ready for some real news? How about corporate earnings? While there is some economic data on tap, the Q1 earnings season starts in earnest this week. With questions about economic strength, the dollar and the Fed in mind, pundits will be looking for fresh data.
Yes, active management has had its collective head beaten bloody for the past few years; and the proclivity for passive investing may persist a lot longer than any of us imagine, driving markets higher than many of us believe possible; but I think the stampede into passive investment is going to end up painfully, at the bottom of a cliff, for many investors.
The world’s major economies have performed quite well in recent months despite the influence of political and policy upheaval. Brexit and the outcome of the U.S. election have yet to produce the negative outcomes some had feared.
United Parcel Service Inc. (UPS) currently offers a dividend yield in excess of 3%. Moreover, it is also available at a valuation that is slightly below historical norms. The company has provided a stable and growing dividend since it went public in 1999.
Without a surge in monetary growth, fiscal policy alone doesn’t indicate inflation.
I’m going to try to tie two related themes together today. The first, and I have to admit I was surprised when I saw the research, is the incredible shrinking universe of stocks. Think corporate share buybacks, mergers and acquisitions and fewer companies going public. The second is the popularity of index investment products...
We have a big economic calendar and potential Fed news. Those stories will take a back burner this week. My safest prediction is that we are about to see a new rash of China experts both in print media and on CNBC!
Today we continue looking at angst in America, the financial worries that so afflict us here in the world’s largest economy and by extension in much of the developed world. We may be the envy of the world in some ways, but we also have no shortage of stress. Today we’ll look at some data on retirement savings – or lack thereof.
Imagine driving a car moving down the road at 20 miles an hour. You hold a rope out the window. At the other end of that rope is a skateboard. If the skateboard is behind the car, yanking the rope pulls the skateboard forward, so the skateboard might temporarily speed ahead until it gets way ahead of the car and the rope tightens again.
We caution investors on sterling and UK gilts as Brexit negotiations commence and the likelihood of a “hard Brexit” remains high.
Donald Trump swept into office on a populist wave. His promise of greater growth for the United States economy resonated with a large part of those disappointed with stagnant wages and a lack of opportunity. He said he would bring manufacturing jobs back and provide better healthcare coverage at a lower cost.
Upcoming data reports will help to fill in the near-term picture of the economy, while developments in Washington will lead to a reassessment of the intermediate outlook.
The opportunity to help women plan for retirement is great. Women control $11.2 trillion dollars in investable assets (Turner Moffitt 2015) and are forecast to hold two-thirds of the nation’s wealth by 2030 (O’Connor and Ettinger 2015). Women make up 44 percent of primary breadwinners and 48 percent of millionaires (O’Connor and Ettinger 2015).
We touched down late last night in Salt Lake City. Susan, the boys, Brianna and me along with a dozen bags. It’s a long-standing family tradition and let’s just say everyone is really excited. A snowstorm just ended and my Snowbird app says 11” of fresh new snow.
In a companion paper, “Six Impossible Things Before Breakfast,” we present evidence that asset markets are generally priced for “secular stagnation,” and argue that this requires a number of extreme assumptions on the part of investors.
There is plenty of “upside risk.” Earnings growth is improving, even in the environment of modest growth. The recent market strength could go on for years without any policy changes. If some of the Trump agenda (probably with Democratic support) becomes law, it could mean a spike in both economic growth and profits. We already see improved business and consumer confidence.
Regardless of its failure to be repealed, tax reform is on its way. Just today, Treasury Secretary Steven Mnuchin reassured Americans that we could still expect “comprehensive” tax reform by August. It’s also worth recalling that, even though he failed to reform health care during his eight years in office, President Bill Clinton still managed to tackle tax reform with the Omnibus Budget Reconciliation Act of 1993.
A common lament during the presidential campaign was over middle-class income stagnation and the wealth of the top 1%. But are most people getting poorer while the rich get richer? In a sparkling – and delightfully short – new contribution to the econo-optimist genre, Johan Norberg, author of Progress: Ten Reasons to Look Forward to the Future, emphatically answers “no.”
This week we begin a series of letters exploring the new economic and sociological anxiety. I want to look at what causes it and think about what we can do to ease it. I don’t know how many letters this dive will take. I may break away for other topics and then come back to the topic of angst.
Investor exuberance is being supported by proposed fiscal policy such as lower corporate taxes, deregulation and historically large budget cuts to help finance the rebuilding of the nation’s infrastructure and military.
As the National People’s Congress convenes, we highlight three government priorities to watch.
Nothing seems to be able to phase the stock market recently. Political infighting, Presidential tweets, North Korean missile launches, oil falling below $50, European political uncertainty, higher bond yields, and the Fed raising rates: none of those forces have knocked stocks off their recent uptrend.
As I’ve previously written, I had the opportunity to visit South Africa recently and meet with a number of executives at companies there, as well as talk to people and observe various trends.
Just as I do with the economy, I review the market each month for warning signs of trouble in the near future. Although valuations are now high—a noted risk factor in past bear markets—markets can stay expensive (or get much more expensive) for years and years, which doesn’t give us much to go on timing-wise.
Yield-hungry investors are quickly regaining their taste for deeply subordinated bank bonds. Some of these securities offer appetizing yields, but it’s important not to overindulge.
How is your bracket doing? Before the ACA Repeal and Replace plan hit the court last week, it already looked like its odds of passage were longer than Mount St. Mary's chance to win the Men's NCAA Basketball Tournament on April 3rd.
Eight years ago this week, President Barack Obama gave investors a surprisingly hot trading tip. In office less than two months, he commented that we were at “the point where buying stocks is a potentially good deal if you’ve got a long-term perspective.” Obama couldn’t have known then how accurate his call was. The market found a bottom that very week, and investors who took the president’s advice managed to get in on the absolute ground floor.
Introduction According to an article in Quartz today, March 9, 2017, marks the 8th birthday of the US bull market which started on March 9, 2009. According to the article, this is the 2nd longest and 4th strongest bull market in history for the S&P 500.
The majority of U.S. economic data are based on statistical samples and the various figures are typically adjusted for seasonal variation. That means that the numbers are subject to some level of uncertainty.
On February 13th, Kim Jong Nam, the older half-brother of Kim Jong Un, the leader of the Democratic People’s Republic of Korea, was assassinated at an airport in Malaysia. This event offers insights into the “Hermit Kingdom” and shows the audacious nature of the regime.
The economic calendar is light until the Friday employment report. Most of the punditry are still digesting the more aggressive talk in the recent speeches from Fed participants. With many observers expecting a correction and looking for a catalyst, pundits will be asking: Will a more aggressive Fed derail the rally in stocks?
Emerging Markets rebound after post-election "Trump slump," indicating that Trump’s economic policies may benefit some emerging markets countries and assets.
Research has shown that individual and household spending declines in real-dollar terms upon and following retirement. Yet most financial advisors still use traditional retirement planning approaches that target constant real-dollar spending for the client’s planning period.
"The issue is no longer whether the current market resembles those preceding the 1929, 1969-70, 1973-74, and 1987 crashes. The issue is only - are conditions like October of 1929, or more like April? Like October of 1987, or more like July?
Some investors are swearing off emerging markets in the age of President Trump. That’s a mistake, says Rick Friedman, a member of GMO’s Asset Allocation team. To these bears, “the double whammy of stimulative US fiscal policies coupled with possible protectionist barriers, makes emerging investments less attractive,” Friedman writes in a new piece “Emerging Markets: Value Trumps Headlines.”
At the beginning of each month I like to take a look at the most recent published equity market valuations. So let’s do that today. As you review the charts, keep in the back of your mind that valuation metrics are pretty much useless in identifying market peaks but they are outstanding at helping us zero in on what the forward 10-year returns are likely to be.
40 percent of companies now in operation around the world will not exist “in a meaningful way” sometime within the next two decades. To survive, companies will need to reinvent themselves by integrating digitization into the fabric of their business strategy.
Is inflation finally back? There are certainly signs that it is – at least in some countries – and it appears that both central bankers and investors have already picked up the early signs. We argue why investors should worry more about the US and UK and less about the Eurozone, where higher inflation more recently is all non-core.
While the majority of the financial world has its focus on every move in Washington D.C., there is another very important development happening in the German bond market.
President Trump promises that his economic plan, if enacted, will result in 3-4% annual GDP growth. Yet I get the feeling most Americans don’t understand Trump’s economic plan. Maybe that’s because the mainstream media has criticized it at every turn, even though similar plans have jump-started the economy in the past – think Ronald Reagan.
It is a big week for economic data and the first address to Congress from the new President. Most of the punditry is engaged in a collective head-shake about overbought conditions. Even if the data flow remains strong.
Dramatic growth offers significant opportunity for the index fund industry, but not without its risks. As assets move from active to passive management, what systemic danger lurks? What market disruptions might occur with a concentration of assets backed by monolithic indexes on autopilot?
Macro forecasting has been disapproved of by value investors, and for 20 years this attitude paid off. The economic climate was favorable, the stock market was in overdrive and price-to-earnings ratios were expanding. Macro did not matter – until the housing bubble and financial crisis. Value investors who had had their heads in the sand got annihilated.
Citing an improving economy and the possibility of more spending and lower taxes from the Trump administration, Fed officials are signaling rising rates immediately ahead.
This week I was in beautiful Argentina with a diverse team of investors and mining executives. Together we toured various natural gas and crude oil mining projects in Tierra del Fuego, Mendoza and Santa Cruz, where we had the opportunity to speak with Governor Alicia Kirchner, elder sister to former Argentinian president Néstor Kirchner.
It’s hard to believe that U.S. President Donald Trump has only been in office for a month, given the dizzying activity in Washington. Yet our observations from before the inauguration seem to be holding true, at least so far: Governing is indeed harder than campaigning.
President Trump is expected to announce a revised tax cut plan soon. In the meantime, it’s worth revisiting how the sausage gets made in Washington. By law, tax code changes must originate in the House of Representatives, and the Senate will have its say.
