The importance of Biden’s veto to save the DOL rule was not about assessing ESG factors. It was about affirming the role of the fiduciary in investment advice.
Some of the world’s biggest investors are looking beyond interest-rate hikes, bank failures and the threat of recession to one of the greatest fears of all money managers — missing out on the next big rally.
The simplest thing that can be said about current financial market and banking conditions is this: the unwinding of this Fed-induced, yield-seeking speculative bubble is proceeding as one would expect, and it’s not over by a longshot.
For years I’ve used a sandpile metaphor to describe complex systems like banking. Keep dropping grains of sand long enough and you will eventually trigger an avalanche.
Sixty-six million Americans currently receive monthly benefits from Social Security, which, if nothing changes, is expected to be insolvent by 2035 at the latest. It’s time for Americans to take a greater role in their own retirement planning.
The extreme “tail” risk ahead may be disorienting.
The high-profile collapse of Silicon Valley Bank last week is a story about bad debt, just not in the way most people think.
Silicon Valley Bank became the biggest US lender to fail in more than a decade, creating fears of contagion in tech and finance sectors in the US and around the world.
The long-term outlook for stocks remains questionable, as most of my leading indicators of risk assets suggest sub-par performance over the next year or so.
While 2023 has started on shaky ground for the municipal bond market, there are reasons to be optimistic for more stability ahead, according to Jennifer Johnston, Franklin Templeton Fixed Income’s Director of Municipal Bond Research. She explains why California’s issues don’t reflect all states, and offers reasons for optimism.
The planet’s billionaires are nearly $2 trillion poorer this year!
We just finished up our annual report on the $20 billion club, and we've concluded that 2022 was a weird year for pension plans.
The asset management unit of JPMorgan Chase & Co. has wiped its ESG portfolios clean of their exposure to the Adani empire.
Every financial plan, regardless of the way in which it was created, requires ongoing monitoring. Here is one way advisors can measure the “funded status” of a plan to determine if adjustments are necessary.
Federal Reserve officials like to call their decisions “data dependent.” Business leaders say it a little differently, often “data driven.” The point, in both cases, is something like: “We consider relevant data when making important decisions.”
Gold is nearing its strongest buy signal in four months as the U.S. dollar eases off a rally that’s carried the greenback to its highest point since early January.
Here are some places where the genuinely rich keep their money.
With the new year in its infancy, it may be too early to think about where to spend Thanksgiving or booking your car’s fall tune-up.
ESG proponents sell the idea to investors that they can achieve both altruism and high returns. In the end, they fail at both.
In 1965 I was studying for a degree in Engineering.
Brookfield Infrastructure Partners LP’s $15 billion commitment last year to help finance Intel Corp.’s giant new semiconductor complex in Arizona, the first deal of its kind, sent investors and bankers racing to find similar opportunities.
I chose the topic for this month’s Absolute Return Letter during the Christmas break.
RIAs will be more financially successful, will retain and attract more investment assets, and will produce superior financial results for their retiree clients when they embrace new thinking that begins with the acknowledgment that, in practice, the safe withdrawal rate is a fiction.
Annie Duke’s latest and best of her books, Quit, is on making decisions under uncertainty.
Equal-weighted portfolios have long outperformed cap-weighted funds. Conventional wisdom is that was because of the small-cap factor, but new research shows more is at play.
Here are six steps to implement multiple niches, bring in new clients, and accelerate their growth goals.
Six Wall Street banks are being pressed by a group of shareholders to move faster on reducing their financing of fossil fuels to meet global climate goals.
COVID-19 has been a catalyst for change in many aspects of our lives, not least the migration to flexible working, which would have taken many more years without the pandemic’s brutal intervention.
So far, my 2023 investing looks just like 2022: lots of waiting.
Macro hedge funds, which look at economic trends and take advantage of dislocations across asset classes, had a banner year in 2022.
Some of the biggest investors in US commercial real estate are looking to cash in before property values slide further.
We believe it is important to keep you informed on the latest proposals and regulations impacting the retirement industry, as well as implications to your business.
The team at Infrastructure Capital Advisors provides key insights and advice on current market conditions and economic outlook for this month and the coming months.
The California Public Employees’ Retirement System is making a $1 billion wager that small private equity firms without the heft of the biggest buyout institutions can boost the pension giant’s returns and clout.
For many investors who started their investing journey following the financial crisis, forward returns will be disappointing compared to the last decade.
Welcome to 2023. It’s Forecast Season on Wall Street, the time when everyone tells us what to expect for the new year. Do they really know? Of course not. Forecasters don’t know, investors know they don’t know, yet we all go through this exercise anyway.
After the biggest loss for 60/40 portfolios since the global financial crisis, better days may lie ahead for the trillion-dollar complex of balanced investment strategies.
Let's examine the three paths the Fed might take in 2023 and what they mean for stock prices.
An OCIO can deliver vastly expanded investment capabilities while seamlessly alleviating the burden of investment infrastructure, operations back-office, and administrative tasks, freeing up advisors’ time for vital client-facing and relationship-building activities.
Relative to the accumulation phase, strategies that mitigate the unique risks faced by retirees in decumulation are less understood and researched. By identifying and illustrating those risks, planners can better prepare clients for retirement.
Contrary to what financial theory predicts, new research from Europe shows that the elderly accumulate assets later in life than expected, likely because they want to leave bequests, are receiving pensions, or are reluctant to part with assets such as their homes.
The Aiguille du Midi, neighboring popular Mont Blanc in the French Alps, is famous for having the highest vertical ascent cable car in the world, a vertigo-inducing ride that is equal parts scary and awe-inspiring.
It’s hard to believe that the post-Covid world at one point was supposed to usher in a new consumer-led boom worthy of the “Roaring Twenties.”
Private credit can be an attractive asset that has provided high yield and protection against the risks of rising inflation. In addition, the asset class has a strong credit history – specifically senior, secured, sponsored debt.
The Fed has massively inverted the yield curve. We explain why investors might be frontrunning themselves and why the long-term rate won’t budge.
“I have never seen so much bearishness in the market,” Jeremy Siegel said, “which is a great sign for stock investors.”
I will use an example and an actuarial model to compare the efficiency of three strategies for strengthening a retired or near-retired client’s balance sheet under both a lower and a higher assumed future inflation scenario.
This will be my last letter of 2022. I want to use this letter as a set-up for my annual forecast issue the first week of January. That means we will touch on a variety of topics, kind of a snapshot into where my mind is today. Get ready to travel the world but let’s start at home with the Federal Reserve meeting this week.
Securities and Exchange Commission Chair Gary Gensler has embarked on an ambitious reform of stock trading.
In his latest memo, Howard Marks weaves together some of the themes he’s explored in 2022 to explain what he believes really matters in investing and what doesn’t. He discusses the disadvantages of short-term thinking, the difference between volatility and risk, and the one word he believes defines the essence of investment excellence.
Stocks are overbought and overvalued relative to bonds.
All the talk lately about the size of the national debt is obscuring the real problem: The US government made the wrong bet on interest rates, and that will cost taxpayers for years to come.
I explore some of the factors driving the superiority of PLIBs, in particular lapsation, mortality experience differences, accessing the equity risk premium, and the marginal role of annuities as part of a retirement strategy.
Let’s look at the powerful feature set an advisory firm could put together from a collection of the higher-rated, low-market-share programs and solutions that I’ve collected from past surveys, many of which you may not even be aware of.
After years of ultra-loose fiscal, monetary, and credit policies and the onset of major negative supply shocks, stagflationary pressures are now putting the squeeze on a massive mountain of public- and private-sector debt.
The asset management unit of BNP Paribas SA is stripping Europe’s top ESG designation from $16 billion worth of funds, adding to a tidal wave of reclassifications that the industry is blaming on unclear rules amid growing signs of anger from investors.
Whether foreign nations want or need tightening or easing, they are stuck with the monetary policy that the Fed decides America needs.
The question most asked by investors late last year, as Treasury bill yields hovered just above zero was “Where can I go for yield?” followed soon after by “What can I do to protect myself from inflation?”
Don’t trust analysis from managers that shows they have outperformed an appropriately selected, passive benchmark. That is true for mutual funds, and new research shows it is equally accurate when it comes to endowments and pension funds.
This week, around my trip to a far-too-cold Denver, then to Dallas, and ultimately Tulsa to spend the Thanksgiving holiday with family, Keith and I did a 45-minute "interview" via Zoom. Less an interview, perhaps, than the two old friends catching up. I was surprised how many topics Keith and I aligned on perfectly, though our few disagreements about what comes next made for a great debate.
The inflationary tremors shaking Wall Street all year are causing big changes to fixed-income capital flows that could ultimately end up disrupting the money-management industry over the long haul.
What do Bill Hwang, the disgraced US investor, and Liz Truss, Britain’s shortest-serving prime minister, have in common?
The recent implosion of FTX is explained and why the inevitable crypto and pension fund collapse was precipitated by Fed policy.
Corporate defined benefit (DB) plan sponsors face two primary risks: equity risk and interest rate risk.
To foresee what crisis might be next, it is vital to understand the dollar's role in global finance and economics and the resulting role that the Fed plays in influencing global monetary policy.
They say a picture is worth 1,000 words and a good chart fulfills a similar function.
While the path to get us here has been painful, investable yields have the potential to meet the return objectives of pension plans, insurance companies, or other investors that may have been sitting on the sidelines—or taking undue risk within fixed income in a reach for yield.
It’s not as if volatility markets have needed extra juice this year.
Historically speaking, this phase of life we call “retirement” is a new concept.
The Fed continues to raise interest rates to try and fix the economy and bring down inflation.
Small businesses have an alternative to 401(k) plans. A cash-balance plan has much higher contribution limits and is a powerful tool for those needing to accelerate retirement savings.
“If the Fed loses its independence, the age of magic money could end in catastrophe”.
After the Federal Reserve meets Nov. 1 and 2 this week, we may know more about how this Fed will be remembered: as a Volcker Fed that decisively conquered inflation or, instead, a Burns Fed that allowed the country to slip into a stagflationary quagmire.
The cost-of-living crisis has prompted more young workers to opt out of their workplace pensions, forgoing contributions from both their employers and the government.
Governments will have to resist the temptation to address stagflation with stimulus.
It is unlikely that US corporate defined benefit (DB) pensions will have to face liquidity issues like those UK DB pensions recently witnessed, primarily because of their different approach to valuing liabilities, varying use of derivatives/leverage, and therefore a different investment style of liability-driven investing (LDI), according to Franklin Templeton Fixed Income’s Tom Meyers.
Every year, the IRS offers taxpayers a polite warning in the form of what it calls the “dirty dozen” – 12 of the latest tax-related scams. We introduce “the permissible dozen” – the 12 easiest ways to reduce federal income taxes – legitimately, of course.
Markets can have more sway over policymakers than vice versa, as demonstrated in the U.K. recently.
The Federal Reserve finally stopped referring to inflation as “transitory” earlier this year and got serious about trying to control the painful rise in prices it has caused.
There are lots of “total return” bond funds these days, almost a half century since I innovated the concept in 1987.
Assets have flowed mightily into ESG funds, and new research shows that many corporations have changed their behavior, with benefits accruing to society at large.
Markets are selling off in unison again. As I discuss in my article below, I believe this reflects their increased centralization. The cure, of course, is to decentralize (no, I don't mean crypto).
The heated debate about how central banks should respond to high and persistent inflation has focused primarily on how high interest rates should go and how long should they stay there.
Internal priorities and external circumstances have brought China's growth to an inflection point.
UK government bonds prices have plunged recently. Sterling-denominated corporate bonds have also fallen sharply and are looking cheap.
Investors today probably feel a bit like the joker and the thief from Dylan’s classic, “All Along the Watchtower” – there’s too much confusion, they can’t get no relief. But our Core Equity team believes there is a way outta here – investing in dominant companies that pay growing dividends.
At the beginning of 2022, our most reliable stock market valuation measures stood at record levels, beyond even their 1929 and 2000 extremes. The 10-year Treasury yield was at 1.5%, the 30-year Treasury bond yield was at 1.9%, and Treasury bill yields were just 0.06%. By our estimates, that combination produced the most negative expected return for a conventional passive investment portfolio in U.S. history.
While the Fed continues to hike rates to combat high inflation levels aggressively, history shows that deflation will become a more significant threat when something “breaks” in the financial or credit markets.
We received a creative bit of poetry from one of our Canadian readers that provides a Shakespearean take on market events.
Defined Benefits
The Fiduciary is the "Decider"
The importance of Biden’s veto to save the DOL rule was not about assessing ESG factors. It was about affirming the role of the fiduciary in investment advice.
Biggest Fear for Trillion-Dollar Funds Is Missing Next Rally
Some of the world’s biggest investors are looking beyond interest-rate hikes, bank failures and the threat of recession to one of the greatest fears of all money managers — missing out on the next big rally.
Edge of the Edge
The simplest thing that can be said about current financial market and banking conditions is this: the unwinding of this Fed-induced, yield-seeking speculative bubble is proceeding as one would expect, and it’s not over by a longshot.
Another Unstable Finger
For years I’ve used a sandpile metaphor to describe complex systems like banking. Keep dropping grains of sand long enough and you will eventually trigger an avalanche.
Pension Reform Showdown: Will The U.S. Follow France’s Bold Retirement Age Changes?
Sixty-six million Americans currently receive monthly benefits from Social Security, which, if nothing changes, is expected to be insolvent by 2035 at the latest. It’s time for Americans to take a greater role in their own retirement planning.
Headed For The Tail
The extreme “tail” risk ahead may be disorienting.
Treasuries: "Risk Free" or "Risk Unlimited"?
The high-profile collapse of Silicon Valley Bank last week is a story about bad debt, just not in the way most people think.
Here’s How SVB’s Collapse Is Reverberating Around the World
Silicon Valley Bank became the biggest US lender to fail in more than a decade, creating fears of contagion in tech and finance sectors in the US and around the world.
Is Now The Time To Buy Stocks?
The long-term outlook for stocks remains questionable, as most of my leading indicators of risk assets suggest sub-par performance over the next year or so.
Muni Bond Update: Credit Quality Still Looks Strong
While 2023 has started on shaky ground for the municipal bond market, there are reasons to be optimistic for more stability ahead, according to Jennifer Johnston, Franklin Templeton Fixed Income’s Director of Municipal Bond Research. She explains why California’s issues don’t reflect all states, and offers reasons for optimism.
Newsletter Volume 16, No. 1 February 2023
The planet’s billionaires are nearly $2 trillion poorer this year!
Is Now The Time To Buy Stocks?
The long-term outlook for stocks remains questionable, as most of my leading indicators of risk assets suggest sub-par performance over the next year or so.
$20 Billion Club: It's Been a Minute Since We've Seen Numbers Like This…
We just finished up our annual report on the $20 billion club, and we've concluded that 2022 was a weird year for pension plans.
JPMorgan Investment Arm Purges Its ESG Funds of Adani Stocks
The asset management unit of JPMorgan Chase & Co. has wiped its ESG portfolios clean of their exposure to the Adani empire.
Focus on Client Funded Status, not Probability of Success
Every financial plan, regardless of the way in which it was created, requires ongoing monitoring. Here is one way advisors can measure the “funded status” of a plan to determine if adjustments are necessary.
Adjustments Matter
Federal Reserve officials like to call their decisions “data dependent.” Business leaders say it a little differently, often “data driven.” The point, in both cases, is something like: “We consider relevant data when making important decisions.”
Gold Nearing Strongest Buy Signal In Four Months
Gold is nearing its strongest buy signal in four months as the U.S. dollar eases off a rally that’s carried the greenback to its highest point since early January.
Where Do Millionaires Keep Their Money?
Here are some places where the genuinely rich keep their money.
Six Tax Planning Strategies for a Good Start to 2023
With the new year in its infancy, it may be too early to think about where to spend Thanksgiving or booking your car’s fall tune-up.
The Real Issue with ESG Investing
ESG proponents sell the idea to investors that they can achieve both altruism and high returns. In the end, they fail at both.
A Walk Down Memory Lane
In 1965 I was studying for a degree in Engineering.
Intel's Planned US Chip Plant Has Bankers Looking for Similar Deals
Brookfield Infrastructure Partners LP’s $15 billion commitment last year to help finance Intel Corp.’s giant new semiconductor complex in Arizona, the first deal of its kind, sent investors and bankers racing to find similar opportunities.
Is the Bubble About to Burst?
I chose the topic for this month’s Absolute Return Letter during the Christmas break.
The Fiction of Safe Withdrawal Rates
RIAs will be more financially successful, will retain and attract more investment assets, and will produce superior financial results for their retiree clients when they embrace new thinking that begins with the acknowledgment that, in practice, the safe withdrawal rate is a fiction.
How the Greatest Female Poker Player Reduces Risk
Annie Duke’s latest and best of her books, Quit, is on making decisions under uncertainty.
Why Have Equal-Weighted Portfolios Outperformed the Market?
Equal-weighted portfolios have long outperformed cap-weighted funds. Conventional wisdom is that was because of the small-cap factor, but new research shows more is at play.
An Uncommon Approach to Implementing Multiple Niches
Here are six steps to implement multiple niches, bring in new clients, and accelerate their growth goals.
Big Banks Told to Phase Out Financing of New Fossil-Fuel Projects
Six Wall Street banks are being pressed by a group of shareholders to move faster on reducing their financing of fossil fuels to meet global climate goals.
A Charitable Way to Beat Taxes in the Afterlife
COVID-19 has been a catalyst for change in many aspects of our lives, not least the migration to flexible working, which would have taken many more years without the pandemic’s brutal intervention.
Why I’m Waiting for the Fed to Pivot
So far, my 2023 investing looks just like 2022: lots of waiting.
Macro Hedge Funds Had a Banner Year. Can They Stage an Encore?
Macro hedge funds, which look at economic trends and take advantage of dislocations across asset classes, had a banner year in 2022.
Investors Seek to Pull $20 Billion From Core Real Estate Funds
Some of the biggest investors in US commercial real estate are looking to cash in before property values slide further.
US Retirement Legislation and Regulation Bulletin: Fourth Quarter 2022
We believe it is important to keep you informed on the latest proposals and regulations impacting the retirement industry, as well as implications to your business.
October 2022 Market & Economic Outlook Report
The team at Infrastructure Capital Advisors provides key insights and advice on current market conditions and economic outlook for this month and the coming months.
Calpers Makes $1 Billion Bet on Small Funds as New CIO Reshapes Pension
The California Public Employees’ Retirement System is making a $1 billion wager that small private equity firms without the heft of the biggest buyout institutions can boost the pension giant’s returns and clout.
Forward Returns Will Disappoint Compared To The Past Decade
For many investors who started their investing journey following the financial crisis, forward returns will be disappointing compared to the last decade.
Year of the Pause
Welcome to 2023. It’s Forecast Season on Wall Street, the time when everyone tells us what to expect for the new year. Do they really know? Of course not. Forecasters don’t know, investors know they don’t know, yet we all go through this exercise anyway.
Bonds to Stage Comeback as Hedge for Stock Losses, Investors Say
After the biggest loss for 60/40 portfolios since the global financial crisis, better days may lie ahead for the trillion-dollar complex of balanced investment strategies.
Three Paths for 2023
Let's examine the three paths the Fed might take in 2023 and what they mean for stock prices.
Rethinking the Traditional OCIO Model: A Guide for RIAs
An OCIO can deliver vastly expanded investment capabilities while seamlessly alleviating the burden of investment infrastructure, operations back-office, and administrative tasks, freeing up advisors’ time for vital client-facing and relationship-building activities.
The Four Unique Risks in Decumulation
Relative to the accumulation phase, strategies that mitigate the unique risks faced by retirees in decumulation are less understood and researched. By identifying and illustrating those risks, planners can better prepare clients for retirement.
The Elderly Keep Accumulating Assets
Contrary to what financial theory predicts, new research from Europe shows that the elderly accumulate assets later in life than expected, likely because they want to leave bequests, are receiving pensions, or are reluctant to part with assets such as their homes.
Zooming in on Fixed Income as We Head into 2023
The Aiguille du Midi, neighboring popular Mont Blanc in the French Alps, is famous for having the highest vertical ascent cable car in the world, a vertigo-inducing ride that is equal parts scary and awe-inspiring.
The Roaring Twenties Are Now Over. Time to Get Real.
It’s hard to believe that the post-Covid world at one point was supposed to usher in a new consumer-led boom worthy of the “Roaring Twenties.”
Private Debt Funds Offer Attractive Yield
Private credit can be an attractive asset that has provided high yield and protection against the risks of rising inflation. In addition, the asset class has a strong credit history – specifically senior, secured, sponsored debt.
The Current Yield Curve Inversion, Explained
The Fed has massively inverted the yield curve. We explain why investors might be frontrunning themselves and why the long-term rate won’t budge.
Jeremy Siegel: The Excessive Bearishness is Great for Equity Investors
“I have never seen so much bearishness in the market,” Jeremy Siegel said, “which is a great sign for stock investors.”
Three Strategies to Strengthen Household Balance Sheets
I will use an example and an actuarial model to compare the efficiency of three strategies for strengthening a retired or near-retired client’s balance sheet under both a lower and a higher assumed future inflation scenario.
Higher for Longer
This will be my last letter of 2022. I want to use this letter as a set-up for my annual forecast issue the first week of January. That means we will touch on a variety of topics, kind of a snapshot into where my mind is today. Get ready to travel the world but let’s start at home with the Federal Reserve meeting this week.
The SEC Wants to Upend the Stock Market. Is It Worth It?
Securities and Exchange Commission Chair Gary Gensler has embarked on an ambitious reform of stock trading.
What Really Matters?
In his latest memo, Howard Marks weaves together some of the themes he’s explored in 2022 to explain what he believes really matters in investing and what doesn’t. He discusses the disadvantages of short-term thinking, the difference between volatility and risk, and the one word he believes defines the essence of investment excellence.
Buy Bonds, Sell Stocks
Stocks are overbought and overvalued relative to bonds.
We’ll All Pay for Uncle Sam’s Cheap Debt Fantasies
All the talk lately about the size of the national debt is obscuring the real problem: The US government made the wrong bet on interest rates, and that will cost taxpayers for years to come.
The Drivers of the Efficiency of Protected Lifetime Income Benefit (PLIB) Strategies: Part 3
I explore some of the factors driving the superiority of PLIBs, in particular lapsation, mortality experience differences, accessing the equity risk premium, and the marginal role of annuities as part of a retirement strategy.
The Alternative Tech Stack
Let’s look at the powerful feature set an advisory firm could put together from a collection of the higher-rated, low-market-share programs and solutions that I’ve collected from past surveys, many of which you may not even be aware of.
The Unavoidable Crash
After years of ultra-loose fiscal, monetary, and credit policies and the onset of major negative supply shocks, stagflationary pressures are now putting the squeeze on a massive mountain of public- and private-sector debt.
ESG Fund Chaos Angers Investors as Greenwashing Concerns Mount
The asset management unit of BNP Paribas SA is stripping Europe’s top ESG designation from $16 billion worth of funds, adding to a tidal wave of reclassifications that the industry is blaming on unclear rules amid growing signs of anger from investors.
The Fed is Exporting Global Inflation - Part II
Whether foreign nations want or need tightening or easing, they are stuck with the monetary policy that the Fed decides America needs.
Playing Inflation Russian Roulette in Retirement
The question most asked by investors late last year, as Treasury bill yields hovered just above zero was “Where can I go for yield?” followed soon after by “What can I do to protect myself from inflation?”
Lies, Damn Lies and Performance Benchmarks
Don’t trust analysis from managers that shows they have outperformed an appropriately selected, passive benchmark. That is true for mutual funds, and new research shows it is equally accurate when it comes to endowments and pension funds.
An Interview with Keith Fitz-Gerald
This week, around my trip to a far-too-cold Denver, then to Dallas, and ultimately Tulsa to spend the Thanksgiving holiday with family, Keith and I did a 45-minute "interview" via Zoom. Less an interview, perhaps, than the two old friends catching up. I was surprised how many topics Keith and I aligned on perfectly, though our few disagreements about what comes next made for a great debate.
The Era of the Bond ETF Has Finally Arrived
The inflationary tremors shaking Wall Street all year are causing big changes to fixed-income capital flows that could ultimately end up disrupting the money-management industry over the long haul.
Banks Need to Worry About Shadow Banks
What do Bill Hwang, the disgraced US investor, and Liz Truss, Britain’s shortest-serving prime minister, have in common?
Sam Bankman-Fried FTX’ed Up
The recent implosion of FTX is explained and why the inevitable crypto and pension fund collapse was precipitated by Fed policy.
Is Now the Time to Elevate Your Hedge Ratio?
Corporate defined benefit (DB) plan sponsors face two primary risks: equity risk and interest rate risk.
The Dollar is the World's Problem (Part 1)
To foresee what crisis might be next, it is vital to understand the dollar's role in global finance and economics and the resulting role that the Fed plays in influencing global monetary policy.
Five Charts Investors Need to Watch
They say a picture is worth 1,000 words and a good chart fulfills a similar function.
Fixed-Income Sector Views
While the path to get us here has been painful, investable yields have the potential to meet the return objectives of pension plans, insurance companies, or other investors that may have been sitting on the sidelines—or taking undue risk within fixed income in a reach for yield.
Wall Street's Alchemists Turbocharged Wild Swings in Treasuries
It’s not as if volatility markets have needed extra juice this year.
Dangerous Assumptions
Historically speaking, this phase of life we call “retirement” is a new concept.
The Fed Has a Hammer, and You’re a Nail
The Fed continues to raise interest rates to try and fix the economy and bring down inflation.
How Cash-Balance Plans Help Small Businesses
Small businesses have an alternative to 401(k) plans. A cash-balance plan has much higher contribution limits and is a powerful tool for those needing to accelerate retirement savings.
Deforestation of Magic Money Trees
“If the Fed loses its independence, the age of magic money could end in catastrophe”.
The Fed Should Think in Terms of a Trilemma
After the Federal Reserve meets Nov. 1 and 2 this week, we may know more about how this Fed will be remembered: as a Volcker Fed that decisively conquered inflation or, instead, a Burns Fed that allowed the country to slip into a stagflationary quagmire.
Can You Protect Your Pension From the Cost-of-Living Crisis?
The cost-of-living crisis has prompted more young workers to opt out of their workplace pensions, forgoing contributions from both their employers and the government.
Reflections On The U.K. Meltdown
Governments will have to resist the temptation to address stagflation with stimulus.
UK Vs. US Pensions: The Risks of Derivatives-Led LDI Approach
It is unlikely that US corporate defined benefit (DB) pensions will have to face liquidity issues like those UK DB pensions recently witnessed, primarily because of their different approach to valuing liabilities, varying use of derivatives/leverage, and therefore a different investment style of liability-driven investing (LDI), according to Franklin Templeton Fixed Income’s Tom Meyers.
Reducing Taxes the Right Way: The Permissible Dozen
Every year, the IRS offers taxpayers a polite warning in the form of what it calls the “dirty dozen” – 12 of the latest tax-related scams. We introduce “the permissible dozen” – the 12 easiest ways to reduce federal income taxes – legitimately, of course.
Revenge of the Markets
Markets can have more sway over policymakers than vice versa, as demonstrated in the U.K. recently.
When Will the Fed Throw in the Towel on Rate Hikes?
The Federal Reserve finally stopped referring to inflation as “transitory” earlier this year and got serious about trying to control the painful rise in prices it has caused.
50 Basis Deposit/ No Return
There are lots of “total return” bond funds these days, almost a half century since I innovated the concept in 1987.
Has ESG Investing Changed Corporate Behavior?
Assets have flowed mightily into ESG funds, and new research shows that many corporations have changed their behavior, with benefits accruing to society at large.
Markets Are Reteaching Centralization’s Dangers
Markets are selling off in unison again. As I discuss in my article below, I believe this reflects their increased centralization. The cure, of course, is to decentralize (no, I don't mean crypto).
How Front-Loading Rate Hikes Risks Financial Instability
The heated debate about how central banks should respond to high and persistent inflation has focused primarily on how high interest rates should go and how long should they stay there.
A Deep Dive Into The Chinese Economy
Internal priorities and external circumstances have brought China's growth to an inflection point.
Can the Sell-Off in Sterling Corporate Bonds Last?
UK government bonds prices have plunged recently. Sterling-denominated corporate bonds have also fallen sharply and are looking cheap.
Equity Outlook: Too Much Confusion
Investors today probably feel a bit like the joker and the thief from Dylan’s classic, “All Along the Watchtower” – there’s too much confusion, they can’t get no relief. But our Core Equity team believes there is a way outta here – investing in dominant companies that pay growing dividends.
Estimating Downside Market Risk
At the beginning of 2022, our most reliable stock market valuation measures stood at record levels, beyond even their 1929 and 2000 extremes. The 10-year Treasury yield was at 1.5%, the 30-year Treasury bond yield was at 1.9%, and Treasury bill yields were just 0.06%. By our estimates, that combination produced the most negative expected return for a conventional passive investment portfolio in U.S. history.
Deflation Will Become The Problem When “Something Breaks”
While the Fed continues to hike rates to combat high inflation levels aggressively, history shows that deflation will become a more significant threat when something “breaks” in the financial or credit markets.
A Witch’s Brew
We received a creative bit of poetry from one of our Canadian readers that provides a Shakespearean take on market events.