Harry Markopolos, the investigator who exposed Madoff, has uncovered a new fraud. The unfunded status of the pension fund of the Boston Transit Authority is $500 million bigger than previously thought. This will have a significant impact on the municipal bond market, especially if it turns out that the problems are endemic among similar pension funds.
With all the usual disclaimers, today I will review some recent analysis from my reliable sources and let you take a peek into my worry closet.
You could say I’m hoping for the best but preparing for the worst. I advise investors to do the same. No one can say what the future holds, and it’s prudent to have a portion of your portfolio in gold, gold stocks and short-term, tax-free municipal bonds, all of which have a history of performing well in volatile times.
In this issue: Equity market volatility exhibits an inverse relationship with stock/bond correlation. This is a benefit to managed risk funds; As a result of ongoing low volatility, managed risk funds have generally implemented their respective maximum equity allocations for most of 2017; and market-based measures.
We think there are ample catalysts for ongoing corporate earnings growth. Growth appears to be broadening to more cyclical parts of the economy, such as manufacturing, as well as outside the U.S. The political climate – including the outcome of the remaining elections across Europe and President Donald Trump’s political agenda – is evolving. We think it will be difficult to predict Trump’s next move, but think tax reform is likely to remain on the agenda this year.
The financial markets continued to absorb major news events with surprising ease last week. Be it the tragedies in the U.K., the withdrawal from the Paris climate agreement, or the weakness in Friday's employment data, the stock and bond markets both continued to edge higher. Investors seem to have become conditioned toward individual isolated disappointments all while the bigger picture is toward one of global economic growth and relative stability.
The initial conditions or the starting point conditions, mean to me that a small degree of monetary restraint has a very quick and strong impact on economic activity.
Surprising no one, President Donald Trump announced his decision to withdraw the U.S. from the Paris climate agreement this week, highlighting the depth of his commitment to keep “America First.” Also surprising no one, the media is making much of the fact that the U.S. now joins only Nicaragua and Syria in refusing to participate in the accord.
Over the next two to three weeks, I’m going to share with you my high level notes of the 2017 Strategic Investment Conference and some investment ideas (e.g., India looks great). There was bullish discussion on China and emerging markets, but the developed markets are a different story. The Fed and central bankers must remain on our radars.
We thought it would be very helpful to review Warren Buffett’s argument in 19991, the last time there was very high expectations attached to technology stocks and to the overall level of common stock prices. We will reference Buffett’s quotes by the year he said them. The sections labeled 2017 offer our current observations on the markets and thoughts from respected experts.
Political noise emanating from Washington has prompted fresh concerns that a US equity market correction may be looming. But have no fear: the market often takes a leg down, only to bounce back quickly.
It’s been a whirlwind week. After attending two big conferences, I landed in Vancouver today where I’ll be presenting at the International Metal Writers Conference. Markets continue to close at record highs, even as political uncertainty remains and the threat of terrorism looms large over Western nations. On Monday, gold flashed a bullish signal we haven’t seen in over a year. There’s much to talk about! Below are five things you need to know from the week now behind us.
This is the final report of our four-part series on trade. This week, our discussion on trade continues with a look at the relationship between trade, employment and inflation. We also conclude the series with market ramifications.
This is one of the more important pieces I’m sharing with you. It’s a candid look at where we are in the economic cycle and what that likely means for the global markets.
The Fed story may well command attention. I classify it as an important story, but not an urgent one. I have some strongly-held viewpoints:
The defined contribution (DC) community has been buzzing about lifetime-income products lately. It’s a topic that’s been dormant for several years, but there are good reasons for renewed interest.
Last year, the Federal Register—the U.S. government’s depository of rules and regulations—hit an all-time high of 81,640 pages. Among the industries that bear the greatest regulatory oversight is financials, which has seen a disproportionate amount of scrutiny in recent years, especially following the 9/11 attacks and subprime mortgage crisis.
In this Q&A, Kathleen Gaffney and Henry Peabody share their outlooks for the bond market and the impact of stronger global growth, and how they seek to position the Multisector Income strategy.
A synchronized pickup in global economic activity has lifted the spirits of businesses, consumers and investors worldwide. Though many equity markets are near 52-week highs and credit spreads are near multi-year lows, corporate profits are now growing again in most countries.
In this multi-part report, we offer reflections on trade to provide insight into how to use macroeconomics to judge the veracity of certain claims.
Unlike in March, April’s soft inflation across a range of core goods and services prices cannot be explained away by large, one-off price adjustments or other quirks in the data.
After stumbling out of the gate, a 2.5% rally in the second half of April left the broad-market S&P 1500 1% higher on the month.
When Ronald Reagan entered office in 1981, forward return expectations were a high 18.91% (see chart below: green line, left-hand side). Equally important was that risk of loss was a low -4.29% (red line, left-hand side). The prior bear market reached its end, yet few knew it. Scream as one might, clients weren’t buying.
Today I’m going to share a small sample of Peter Boockvar’s daily output. Below are three articles he published on one day – Thursday, May 11, 2017. And he does this every day, week and month and year in and out. He never fails to make cogent, interesting points about the day’s events. Think about the brainpower it takes to generate this sort of creative output every working day.
As you can see in the chart below, based on data provided by Moore Research Center, the five-year pattern, represented by the orange line, is diverging from the longer-term trends. Note that the index on the left measures the greatest tendency for the asset to make a seasonal high (100) or low (0) at a given time.
In this issue, Research Affiliates offers insight into its CPI-based secondary return benchmarks, its business cycle modeling and continued opportunities in emerging markets.
Voters across the globe seem to be clamoring for change, and South Korea’s presidential election may be viewed as another example. Moon Jae-in, considered a left-leaning liberal, won the presidential election in South Korea.
As the VIX flirts with single digits, the S&P 500 has been flopping around like a live fish on deck. But for U.S. investors in foreign equities, the music continues to play as cheaper valuations overseas and a weaker U.S. dollar pushed fund flows into other geographies.
In this Q&A, Thornburg’s Connor Browne doubts the Senate will pass the House’s American Health Care Act (AHCA) in its current form, and is cautious that the status quo may even prevail.
With markets seeking to avoid similar toe-stubbing in the policy arena, we examine the drivers of the fixed income markets for the near term. In doing so, we consider President Trump’s fiscal policy influence, Janet Yellen’s monetary policy impacts and evolving exogenous geopolitical dynamics. So, who or what will determine the market’s course moving forward?
Our founder has decided to turn us into a sales operation. He has hired a consultant to work with us, has put goals in place for new sales and is turning those of us who are investment experts into nothing more than sales agents.
There is in interesting dichotomy currently occurring within the economy. While consumer confidence, as reported by the Census Bureau, soared to some of the highest levels seen since the turn of the century, the hard economic data continues to remain quite weak.
There has been much debate about the current low levels of interest rates in the economy today. The primary argument is that the “30-year bull market in bonds”, due to consistently falling interest rates, must be near its end.
Municipal bonds have performed exceptionally well this year, but aspects of Trump’s proposed tax policies threaten to disrupt segments of that market. Here is the latest news and analysis on the likely impact on the municipal bond market.
Economic data is volatile. Weather, seasonal adjustments, calendar flukes, and measurement errors all affect the data. Nonetheless, those with a political axe to grind, or an economic forecast of recession or boom, will grab one piece of data and act as if they have discovered the Holy Grail.
We wrap-up our three-part series on Behavioral Finance in this issue of the Outlook with a discussion of Emotional Biases, which often adversely affect investors’ outcomes. This discussion and the tie-in with Sir Isaac Newton is found in the second half of this quarter’s Outlook.
A high-conviction, bottom-up approach to finding sustainable profit margins.
I enjoy reading 720 Global’s research blog. Quick, crisp and to the point. The message in their most recent piece is about human behavioral tendencies and ego. Ultimately, it’s about how to weave behavior and ego into our investment thinking.
If Trump gets his way—and let’s be clear, it’s going to be an uphill fight—U.S. corporate taxes will decline from being the highest among fellow Organization for Economic Cooperation and Development (OECD) economies to just a few degrees north of Ireland’s highly favorable 12.5 percent.
At Sprott, our investment thesis for gold is significantly long-term in scope. We believe gold’s methodical advance since 2000 has had more to do with the growing disconnect between productive output (GDP) and ever-inflating claims on that output (debt and equity valuations), than with short-term fluctuations in variables such as CPI-type inflation or interest rates.
Now that I am an honored member of the “gray-beard club” of investment managers, I can reminisce fondly back to the time when I first entered this business and began learning my trade with the utmost confidence of the “cute, fuzzy, teddy bear” youngster I was.
“As I was waiting to be introduced, I got the latest headline from the North Korean government saying ‘a super preemptive strike will reduce the United States to ashes.’ So we have that to look forward to.” Ian Bremmer said as he began his presentation yesterday afternoon at the iShares Multi-Asset Summit in New York City."
As some market worries have been put to rest, there is a growing appetite for new ones. Pundits who say that things look OK are not very exciting. Last week we saw a shift in attention. Despite healthy earnings and good economic data.
There is one problem that is very definitely coming our way that I really don’t think we can Muddle Through and where even the middle-of-the-road scenarios are terrible, and that’s the public pension crisis. I really see no way it can end well. It’s going to hurt just about everyone.
The sorry state of US infrastructure was a major talking point during the 2016 US presidential election, and was seen as one of the few areas that could garner bipartisan political support. But certainly, the need for infrastructure is a global issue that can offer a bridge to economic growth, particularly in emerging markets. Here, the Franklin Real Asset Advisors team builds a case for investing in infrastructure-related securities
Is the dollar losing its grip on its status as the world’s reserve currency?
“Not see the forest for the trees” is an idiom derived from British English that describes someone who is so focused on the minutiae that they miss the larger picture.
Big Box retailers and many other popular chain stores – including Sears, JC Penney, Macy’s, Payless, Sports Authority, American Eagle, Radio Shack and many others – are closing their stores at a record pace so far this year.
