Understanding the equity markets is critical to building a portfolio that can strategically tackle the challenges that continue to face investors. Rates, inflation, and economic factors continue to be important, and advisors need to rapidly understand which styles, market segments, and regions are most strategically ripe to meet their needs.
Join the experts at T. Rowe Price and VettaFi as they unpack the equity market outlook.
Join FS Investments Chief U.S. Economist Lara Rhame as she discusses the economy, the path forward for rates and alternative ways to navigate markets in the coming year.
The biggest growth companies continue to increase their concentration in major equity indexes this year. It’s not surprising that investors are starting to rethink their exposure to large-caps, given concentration risk and ongoing market uncertainty.
August's ZHVI came in at $349,770, up 0.47% from July and up 0.40% from August 2022. However after adjusting for inflation, the real figures are 0.09% month-over-month and -6.45% year-over-year. Nominal home values have increased for 5 straight months while "real" home values have only increased for 3 straight months.
To better understand the growth mindset as it applies to your practice, look at some common misunderstandings, contrasting them with the outlook predicated by the proper mindset.
Existing home sales continued their downward trend in August as prices remained elevated. According to the data from the National Association of Realtors (NAR), existing home sales fell by 0.7% from July to reach a seasonally adjusted annual rate of 4.04 million units. This figure came in lower than the expected 4.10 million. Existing home sales are down 15.3% compared to one year ago.
The Conference Board Leading Economic Index (LEI) fell for the 17th consecutive month in August as economic uncertainty and recession fears continue to grow. The index dropped 0.4% from last month to 105.4, the index's lowest reading since June 2020.
The latest Philadelphia Fed manufacturing index dropped back into negative territory indicating a decline in activity. In September, the index fell to -13.5, coming in below the forecast of -0.7. The six-month outlook remained positive for a fourth consecutive month at 11.1.
Labor strikes aren’t cheap. Equipment sits idle. Supply chains get gummed up. Workers lose wages, shareholders lose profits, governments lose tax revenue. All these effects can have an adverse impact on economic growth, employment and inflation.
The Federal Reserve’s internal debate about the “neutral” real rate of interest is heating up.
Bond traders are bracing for Treasury yields to keep pushing higher after the Federal Reserve signaled it’s likely to hold interest rates at lofty levels well into next year.
In the week ending September 16, initial jobless claims fell to their lowest level since January. Seasonally adjusted initial jobless claims were at 201,000, a decrease of 20,000 from the previous week's revised figure of 221,000. The latest reading was below the forecast of 225,000.
Can the economy grow 2.0% to 2.5% faster per year over the next 10 years than the last 30 years? I don't think so.
The European Central Bank is likely at or very near its peak policy rate, but we don’t expect rate cuts in the near term.
Inverted curves (when the gold line goes below the red line meaning that short maturity yields are higher compared to longer maturity yields) have preceded recessions.
The Franklin Templeton Fixed Income team believe that issuers that think critically about the environment in which they operate could outperform throughout the full market cycle compared with those who are slower to adapt.
Whatever stories Americans are told about the strength of the economy under President Joe Biden, they are not going to be persuaded to look past the issue of their own living standards. For most Americans, these have declined somewhat as price increases have outpaced wage growth.
Banks have reemerged as a potential pain point for the investment community, as rating agencies recently embarked on a downgrade cycle in the sector.
Industrial securities are unloved by financial advisors. However, it is the backbone of a relatively popular sector ETF and two relatively new thematic ETFs positioned to benefit from transformational changes. Perhaps they want to dive deeper into the fundamentals with us during the VettaFi Equity Symposium on September 21.
Consumers might still be benefiting from inflation pressures abating, but the same is no longer true for corporations.
US five- and 10-year yields rose to the highest levels since 2007 after hotter-than-anticipated inflation data in Canada and rising oil prices added to global concerns about resurgent price pressures.
Investors have had a lot thrown at them this year: more Federal Reserve tightening, a regional banking crisis, and geopolitical turmoil. And yet US stock indexes are on track for a stellar year.
For new investors, the world of finance can appear daunting. But among the sea of investment options, Treasury bonds (often just called “Treasuries”) are a pillar of stability and reliability.
Given the uncertainty over a recession, there are other incremental steps that investors may want to consider instead. These include making adjustments to a portfolio’s market beta and credit exposure.
A return to the Great Moderation Era looks unlikely, which might lead to an increasingly volatile—and somewhat unfamiliar—inflationary, economic, and geopolitical landscape.
Celebrating an exciting milestone: Franklin Income Fund turns 75. Learn more about this flagship strategy and read some fun facts from back in 1948.
The term “Bond Vigilantes” is a nostalgic twist on an old-west theme. In the nineteenth century, the American West formed self-appointed groups, or committees, to seize the duties of law enforcement and judicial authority in situations when citizens found law enforcement lacking or inadequate.
Gas prices climbed to their highest levels since the beginning of October last year. As of September 18, the price of regular and premium gas rose by 6 and 8 cents from the previous week, respectively. The WTIC end-of-day spot price for crude oil closed at $90.58, up 3.8% from last week.
Rather than reacting to financial challenges and opportunities as they arise, local entrepreneurs are embracing new perspectives on change management by preparing for change beforehand.
These days, high-yield US bonds yield just 378 basis points over Treasuries, more than 2 percentage points below the 2022 high and close to the narrowest gap since the Federal Reserve started raising interest rates last year.
Can the Federal Reserve engineer a soft landing, in which it defeats excessive inflation without tipping the US economy into recession? This week, Fed officials will offer important clues as to whether that’s achievable.
Fifty cents on the dollar is a very low price in the world of bonds. In most cases, it signals that investors believe the seller of the debt is in such financial distress that it could default.
Have you ever wondered why your closing ratio on seminar attendees rarely exceeds 40%?
US stocks continued their slog through the end of summer, but the S&P 500 Index just notched a resiliency milestone not seen in five years.
When markets are in a rising tide, all boats (aka stocks) can benefit. When the waters are choppier, active equity selection aims to identify the sounder vessels. Tony DeSpirito reviews five reasons why he believes the new environment is setting up to favor an active approach.
The FOMC will make some close calls and tough decisions.
Confidence is returning to the bond markets and one sign is corporations’ willingness to start taking on debt again with new issuance.
Markets are convinced that the Federal Reserve (Fed) is going to pause its interest rate campaign after it finalizes its Federal Open Market Committee (FOMC) meeting on Wednesday, September 20.
Despite substantial growth and huge advancements in public policy support, clean energy has had an abysmal stretch in the stock market the last two and a half years.
The University of Colorado Buffaloes are undefeated and suck up a lot of oxygen in the college football world.
Managing volatility is a high priority for advisors. The right investments can stabilize a portfolio and dampen volatility, while keeping goals on track. Increasing bond allocations used to be the standard way to reduce volatility, but with bonds more correlated to equities, their diversification value has decreased. With high inflation, bonds also aren’t providing enough real income for many investors.
Demand for private credit has increased because of its low correlation to traditional equities and bonds, and enhanced income potential. As an asset class, private credit has a history of resiliency throughout economic downturns. That was true during the pandemic, and last year when these types of loans largely held up, in contrast to the bond market which had historically bad performance.
My guest today will discuss how advisors can reduce volatility, increase income and diversify equity and bond allocations through private credit and other alternatives.
FINRA has released new data for margin debt, now available through August. The latest debt level fell for the first time since April to $689.19 billion. Margin debt is down 2.9% month-over-month (MoM) and up 0.2% year-over-year (YoY). However, after adjusting for inflation, debt level is down 3.3% MoM and down 3.3% YoY.
His approach to investing was both timeless and accessible to the average investor. It also achieved incredible results.
Here’s how I apply behavioral finance to help clients to think differently about their investing.
High mortgage rates continue to weaken builder confidence. The National Association of Home Builders (NAHB) Housing Market Index (HMI) fell 5 points from last month to 45, the index's second straight monthly decline.
Economists are playing a game of “can-you-top-this this,” seeing who can ramp up their US economic growth forecasts the most.
Okay, I took a little poetic license, but the point is that while we try, predictions of the future are difficult at best and impossible at worst.
Amid signs the bond market has bought into the Federal Reserve keeping interest rates higher for longer, a cohort of investors is placing bets on the economy hitting a wall — and a sharp policy reversal in short order.
Stock-market strategists who were largely wrong about this year’s rally are finally starting to come to face their mistake, raising year-end targets for the S&P 500 Index.
Federal Reserve policymakers’ updated forecasts for their benchmark interest rate, due Wednesday, are looming as a key potential decider for a US Treasuries market at risk of a third straight year of losses.
Forced deleveraging to be chaotic, causing a new Fed and banking panic.
In a significant turnaround for its aviation sector, Mexico’s air safety rating was upgraded from Category 2 back to Category 1 by the Federal Aviation Administration (FAA). The upgrade could be a game-changer, offering opportunities for both Mexican airlines and their U.S. joint venture partners.
The S&P 500 fell sharply on Friday by 1.2%, leading to the index's second consecutive weekly loss. The index is currently up 16.37% year to date and is 7.22% below its record close from January 3, 2022.
Competing narratives have emerged to describe the state of the U.S. economy.
Soft consumer confidence and property-market woes are playing a large role in the slowdown of China’s economy.
The Northern Trust Economics team shares its outlook for U.S. growth, employment, interest rates and inflation.
Now, is it an oversimplification to say that the upgrade to GDP growth is just down to Taylor Swift and Beyoncé? It is, to a degree, no matter how popular they are—and they are very popular indeed.
Bearish China traders have had the upper hand for most of the year. Still, easing deflation could give bulls a glimmer of hope.
The Energizer Bunny! That’s the term that best describes the U.S. economy.
Bridgewater Associates LP founder Ray Dalio said he doesn’t want to own bonds and prefers cash, highlighting difficulties investors face as global central banks try to manage inflation.
Equity funds saw the biggest weekly inflow in 18 months amid growing investor confidence the US economy is headed for a soft landing, according to Bank of America Corp.
Hear from Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments, about the state of the US economy. Get his perspective on the Federal Reserve’s next potential moves.
Although US bond yields are well above their lows of the past decade, it’s always a good idea to think globally.
Federal Reserve Chairman Jerome Powell and his colleagues are likely to shy away from signaling that they’re done raising interest rates when they meet next week.
Industrial production increased for a second straight month in August, surpassing expectations yet again. On a monthly basis, industrial production rose 0.4%, outpacing the projected 0.1% growth. Additionally, compared to one year ago, industrial production showed an increase of 0.25%.
The consensus is wrong, and the Fed has not engineered a “soft landing.” A recession is all but certain in the first half of next year, according to Jeffrey Gundlach.
The September preliminary report for the Michigan Consumer Sentiment Index came in at 67.7, down 1.8 (-2.6%) from the August final. This morning's reading was below the forecast of 69.1. Since its beginning in 1978, consumer sentiment is 20.4% below its average reading (arithmetic mean) of 85.1 and 19.4% below its geometric mean of 84.0.
This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions rose 20.9 points from last month to 1.9. This morning's reading was better than the forecast of -10.0 and pushes the index back into expansion territory.
Americans are downbeat about the economy, even as inflation rates rapidly decline back toward more normal levels, the unemployment rate has held below 4% for the longest stretch since the late 1960s and economists race to raise their growth forecasts.
A resilient US economy will prompt the Federal Reserve to pencil in one more interest-rate hike this year and stay at the peak level next year for longer than previously expected, according to economists surveyed by Bloomberg News.
All week, stock traders have shrugged off everything from hot inflation data in the US to another recession-threatening hike in interest rates over in Europe.
In February this year we wrote an article entitled A Funny Thing Happened on the Way to the Recession. Fast forward to the current situation, where opinion has shifted away from recession in favor of a soft-landing scenario. Does that same contrary analysis mean a recession is now more likely? The simple answer is no, not yet anyway!
Inflation averaged 1.8% in the ten years pre-COVID. Don’t expect inflation to average that low in the decade ahead. Not until the US finds a way to repeat the 1980s policy mix.
The 10-year Treasury yield has climbed steadily over the past two years. But we believe fixed-income investors should be prepared for lower yields ahead.
Measuring, anticipating and controlling the cost of healthcare are all difficult.
How long will the Federal Reserve continue quantitative tightening (QT)? How large will its balance sheet be when QT ends? These important questions impact financial market liquidity, the anchor of asset values. We assess the likely path of QT in the years ahead.
That’s a bold prediction in the title. I believe it will come true.
Earlier this week we posted an update on the median household income for the 50 states and DC based on the Current Population Survey, a joint undertaking of the Census Bureau and Bureau of Labor Statistics, which includes annual data from 1984 to 2022. Let's now look at the actual purchasing power of those median incomes. For this adjustment, we're using the "C2ER Cost of Living Index" produced by C2ER, the Council for Community and Economic Research.
Month-over-month nominal retail sales in August were up 0.6% and up 2.47% year-over-year. However, after adjusting for inflation, real retail sales were down 0.1% MoM and down 1.19% year-over-year.
The labor movement is having a moment. In a tight employment market, there is money to be had — or profits to be more generously shared — and workers have gotten some big wins recently. Even reality TV stars and NFL running backs are getting into it.
The Census Bureau's Advance Retail Sales Report for August revealed a 0.6% increase in headline sales compared to July, marking the fifth consecutive month consumer spending has increased. The latest figure surpassed expectations of 0.2% monthly growth. Core sales (ex Autos) also exceeded expectations by registering 0.6% growth in August, defying the forecasted 0.2% increase.
Wholesale inflation rose more than expected in August as producer prices increased for a second straight month. The producer price index for final demand was up 0.7% month-over-month, its largest monthly increase since June 2022 (s.a.). On an annual basis, headline PPI accelerated for a second straight month from 0.8% in July to 1.6% in August (n.s.a).
A recent paper analyzing the correlation between stock and bond returns going back to 1875 suggests the relationship of the past quarter century is shifting in an uncertain inflationary environment. The results might stimulate some investors to rethink their portfolio allocations.
Expectations of central-bank interventions are helping to steady emerging-market currencies, even as traders adjust to a higher-for-longer regime for developed market interest rates.
The US bond market hasn’t flashed recession warnings so consistently for so long in at least six decades.
In this first episode, Franklin Templeton Institute’s Tony Davidow discusses the democratization of alternative investments and related topics with CAIA’s John Bowman.
The median US income in 2022 was $74,580, up from $22,420 in 1984 — a 233% rise over the 38-year time frame. However, if we adjust for inflation chained in 2022 dollars, the 1984 median is $56,780, and the increase drops to 31%.
This month, the Census Bureau released its annual report on household income data for 2022. Last year the median (middle) average household income fell by 2.3% to $74,580. Let's take a closer look at the quintile averages, which dates from 1967, along with the statistics for the top 5%.
What is the value of education for household income? The Census Bureau's annual survey data for 2022 published in earlier this month gives us some interesting insights into this question. The median income for all households with a householder age 25 and older was $75,980.
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.
Economic Insights
The Importance of Understanding Equities
Understanding the equity markets is critical to building a portfolio that can strategically tackle the challenges that continue to face investors. Rates, inflation, and economic factors continue to be important, and advisors need to rapidly understand which styles, market segments, and regions are most strategically ripe to meet their needs.
Join the experts at T. Rowe Price and VettaFi as they unpack the equity market outlook.
Macro update: Navigating a unique business cycle
Join FS Investments Chief U.S. Economist Lara Rhame as she discusses the economy, the path forward for rates and alternative ways to navigate markets in the coming year.
Looking to Large-Caps: Where Do We Grow From Here?
The biggest growth companies continue to increase their concentration in major equity indexes this year. It’s not surprising that investors are starting to rethink their exposure to large-caps, given concentration risk and ongoing market uncertainty.
Zillow Home Value Index: "Real" Values Increases for Third Straight Month
August's ZHVI came in at $349,770, up 0.47% from July and up 0.40% from August 2022. However after adjusting for inflation, the real figures are 0.09% month-over-month and -6.45% year-over-year. Nominal home values have increased for 5 straight months while "real" home values have only increased for 3 straight months.
Developing a Growth Mindset: Why It Matters
To better understand the growth mindset as it applies to your practice, look at some common misunderstandings, contrasting them with the outlook predicated by the proper mindset.
Existing Home Sales Fall as Prices Rise
Existing home sales continued their downward trend in August as prices remained elevated. According to the data from the National Association of Realtors (NAR), existing home sales fell by 0.7% from July to reach a seasonally adjusted annual rate of 4.04 million units. This figure came in lower than the expected 4.10 million. Existing home sales are down 15.3% compared to one year ago.
CB Leading Economic Index Declines, Deepening Recession Fears
The Conference Board Leading Economic Index (LEI) fell for the 17th consecutive month in August as economic uncertainty and recession fears continue to grow. The index dropped 0.4% from last month to 105.4, the index's lowest reading since June 2020.
Philly Fed Manufacturing Index: Activity Declines
The latest Philadelphia Fed manufacturing index dropped back into negative territory indicating a decline in activity. In September, the index fell to -13.5, coming in below the forecast of -0.7. The six-month outlook remained positive for a fourth consecutive month at 11.1.
More Labor Strife Is Coming to the US Economy
Labor strikes aren’t cheap. Equipment sits idle. Supply chains get gummed up. Workers lose wages, shareholders lose profits, governments lose tax revenue. All these effects can have an adverse impact on economic growth, employment and inflation.
Fed’s Debate About ‘Neutral’ Is Mostly an Exercise
The Federal Reserve’s internal debate about the “neutral” real rate of interest is heating up.
Bond Traders See Yields Marching Higher After September Fed Meeting
Bond traders are bracing for Treasury yields to keep pushing higher after the Federal Reserve signaled it’s likely to hold interest rates at lofty levels well into next year.
Unemployment Claims Fall to Lowest Level Since January
In the week ending September 16, initial jobless claims fell to their lowest level since January. Seasonally adjusted initial jobless claims were at 201,000, a decrease of 20,000 from the previous week's revised figure of 221,000. The latest reading was below the forecast of 225,000.
This Time is Not Different. Yields are Too High
Can the economy grow 2.0% to 2.5% faster per year over the next 10 years than the last 30 years? I don't think so.
ECB Prioritizes Fighting Inflation Above Avoiding Recession
The European Central Bank is likely at or very near its peak policy rate, but we don’t expect rate cuts in the near term.
To the Point!
Inverted curves (when the gold line goes below the red line meaning that short maturity yields are higher compared to longer maturity yields) have preceded recessions.
Weathering the Storm: Exploring Climate Change Adaptation and the Investor’s Imperative
The Franklin Templeton Fixed Income team believe that issuers that think critically about the environment in which they operate could outperform throughout the full market cycle compared with those who are slower to adapt.
Down on the Biden Economy
Whatever stories Americans are told about the strength of the economy under President Joe Biden, they are not going to be persuaded to look past the issue of their own living standards. For most Americans, these have declined somewhat as price increases have outpaced wage growth.
Do We Really Need to Be Worried About the Banking Sector?
Banks have reemerged as a potential pain point for the investment community, as rating agencies recently embarked on a downgrade cycle in the sector.
How Thematic ETFs Differ From Sector Funds
Industrial securities are unloved by financial advisors. However, it is the backbone of a relatively popular sector ETF and two relatively new thematic ETFs positioned to benefit from transformational changes. Perhaps they want to dive deeper into the fundamentals with us during the VettaFi Equity Symposium on September 21.
Inflation or Recession? CEOs Will Decide Next Month
Consumers might still be benefiting from inflation pressures abating, but the same is no longer true for corporations.
Treasury Yields at Highest Levels Since 2007 on Price Concerns
US five- and 10-year yields rose to the highest levels since 2007 after hotter-than-anticipated inflation data in Canada and rising oil prices added to global concerns about resurgent price pressures.
Big Seven Face Test on How Far Rally Can Run
Investors have had a lot thrown at them this year: more Federal Reserve tightening, a regional banking crisis, and geopolitical turmoil. And yet US stock indexes are on track for a stellar year.
The ABCs of Treasury Bonds
For new investors, the world of finance can appear daunting. But among the sea of investment options, Treasury bonds (often just called “Treasuries”) are a pillar of stability and reliability.
A Recession Is Possible, but Far From Certain. So How Should You Consider Positioning Your Portfolio?
Given the uncertainty over a recession, there are other incremental steps that investors may want to consider instead. These include making adjustments to a portfolio’s market beta and credit exposure.
Say Goodbye…to Great Moderation?
A return to the Great Moderation Era looks unlikely, which might lead to an increasingly volatile—and somewhat unfamiliar—inflationary, economic, and geopolitical landscape.
A Pioneering Income Strategy Celebrates 75 Years
Celebrating an exciting milestone: Franklin Income Fund turns 75. Learn more about this flagship strategy and read some fun facts from back in 1948.
Bond Vigilantes And The Waiting For Godot
The term “Bond Vigilantes” is a nostalgic twist on an old-west theme. In the nineteenth century, the American West formed self-appointed groups, or committees, to seize the duties of law enforcement and judicial authority in situations when citizens found law enforcement lacking or inadequate.
Weekly Gasoline Prices Reach 11-Month High
Gas prices climbed to their highest levels since the beginning of October last year. As of September 18, the price of regular and premium gas rose by 6 and 8 cents from the previous week, respectively. The WTIC end-of-day spot price for crude oil closed at $90.58, up 3.8% from last week.
The Top Five Strategies for Working with Small Business Owners
Rather than reacting to financial challenges and opportunities as they arise, local entrepreneurs are embracing new perspectives on change management by preparing for change beforehand.
Bond Mountaineers Easily Scale the Maturity Wall
These days, high-yield US bonds yield just 378 basis points over Treasuries, more than 2 percentage points below the 2022 high and close to the narrowest gap since the Federal Reserve started raising interest rates last year.
Will the Fed Start Believing in a Soft Landing?
Can the Federal Reserve engineer a soft landing, in which it defeats excessive inflation without tipping the US economy into recession? This week, Fed officials will offer important clues as to whether that’s achievable.
Sub-50 Cent Price on Treasury Bond Underscores Investor Pain
Fifty cents on the dollar is a very low price in the world of bonds. In most cases, it signals that investors believe the seller of the debt is in such financial distress that it could default.
How Pre-Screening Avoids “Plate Lickers” at Seminars
Have you ever wondered why your closing ratio on seminar attendees rarely exceeds 40%?
S&P 500 Marks 100 Days Without 1.5% Drop, First Time Since 2018
US stocks continued their slog through the end of summer, but the S&P 500 Index just notched a resiliency milestone not seen in five years.
5 Factors Favoring Stock Selection
When markets are in a rising tide, all boats (aka stocks) can benefit. When the waters are choppier, active equity selection aims to identify the sounder vessels. Tony DeSpirito reviews five reasons why he believes the new environment is setting up to favor an active approach.
Fed Preview: Done, Or More To Be Done?
The FOMC will make some close calls and tough decisions.
Get Active Exposure as Corporate Confidence Returns in Bonds
Confidence is returning to the bond markets and one sign is corporations’ willingness to start taking on debt again with new issuance.
To Increase or Not to Increase: That Is the Question
Markets are convinced that the Federal Reserve (Fed) is going to pause its interest rate campaign after it finalizes its Federal Open Market Committee (FOMC) meeting on Wednesday, September 20.
Turbulence on the Path to Transformation
Despite substantial growth and huge advancements in public policy support, clean energy has had an abysmal stretch in the stock market the last two and a half years.
Higher Rates & A Shutdown On The Menu
The University of Colorado Buffaloes are undefeated and suck up a lot of oxygen in the college football world.
The Outlook for Alternative Investments
Managing volatility is a high priority for advisors. The right investments can stabilize a portfolio and dampen volatility, while keeping goals on track. Increasing bond allocations used to be the standard way to reduce volatility, but with bonds more correlated to equities, their diversification value has decreased. With high inflation, bonds also aren’t providing enough real income for many investors.
Demand for private credit has increased because of its low correlation to traditional equities and bonds, and enhanced income potential. As an asset class, private credit has a history of resiliency throughout economic downturns. That was true during the pandemic, and last year when these types of loans largely held up, in contrast to the bond market which had historically bad performance.
My guest today will discuss how advisors can reduce volatility, increase income and diversify equity and bond allocations through private credit and other alternatives.
Margin Debt Down 2.9% in August; First Decline Since April
FINRA has released new data for margin debt, now available through August. The latest debt level fell for the first time since April to $689.19 billion. Margin debt is down 2.9% month-over-month (MoM) and up 0.2% year-over-year (YoY). However, after adjusting for inflation, debt level is down 3.3% MoM and down 3.3% YoY.
The Greatest Investor You’ve Never Heard Of
His approach to investing was both timeless and accessible to the average investor. It also achieved incredible results.
How I Apply Behavioral Finance to Achieve Better Client Outcomes
Here’s how I apply behavioral finance to help clients to think differently about their investing.
NAHB Housing Market Index: Builder Confidence Weakened by High Mortgage Rates
High mortgage rates continue to weaken builder confidence. The National Association of Home Builders (NAHB) Housing Market Index (HMI) fell 5 points from last month to 45, the index's second straight monthly decline.
Bidenomics Is Having an Unusual Effect on Deficits
Economists are playing a game of “can-you-top-this this,” seeing who can ramp up their US economic growth forecasts the most.
Predictions Are Pointless. Why You Shouldn’t Listen To Gurus.
Okay, I took a little poetic license, but the point is that while we try, predictions of the future are difficult at best and impossible at worst.
Fed’s Higher-for-Longer Mantra Has Doubters in Bond Market
Amid signs the bond market has bought into the Federal Reserve keeping interest rates higher for longer, a cohort of investors is placing bets on the economy hitting a wall — and a sharp policy reversal in short order.
Wall Street Comes to Grips With How Wrong It’s Been in 2023
Stock-market strategists who were largely wrong about this year’s rally are finally starting to come to face their mistake, raising year-end targets for the S&P 500 Index.
Bond Market at Risk of Third Annual Loss Needs a Dot-Plot Rescue
Federal Reserve policymakers’ updated forecasts for their benchmark interest rate, due Wednesday, are looming as a key potential decider for a US Treasuries market at risk of a third straight year of losses.
Leveraged Assets Beginning to Buckle under High Rates
Forced deleveraging to be chaotic, causing a new Fed and banking panic.
Why Mexico’s Category 1 Air Safety Status Spells Good News For Investors
In a significant turnaround for its aviation sector, Mexico’s air safety rating was upgraded from Category 2 back to Category 1 by the Federal Aviation Administration (FAA). The upgrade could be a game-changer, offering opportunities for both Mexican airlines and their U.S. joint venture partners.
S&P 500 Snapshot: Friday Slump Leads to Weekly Loss
The S&P 500 fell sharply on Friday by 1.2%, leading to the index's second consecutive weekly loss. The index is currently up 16.37% year to date and is 7.22% below its record close from January 3, 2022.
Schwab Market Perspective: Tension
Competing narratives have emerged to describe the state of the U.S. economy.
China Hits a Speed Bump. Could the Road Ahead Feature More Stimulus?
Soft consumer confidence and property-market woes are playing a large role in the slowdown of China’s economy.
U.S. Economic Outlook, September 2023
The Northern Trust Economics team shares its outlook for U.S. growth, employment, interest rates and inflation.
Barbie, Beyoncé, Taylor Swift and the Economic Outlook
Now, is it an oversimplification to say that the upgrade to GDP growth is just down to Taylor Swift and Beyoncé? It is, to a degree, no matter how popular they are—and they are very popular indeed.
Easing Deflation Could Give China Bulls Some Hope
Bearish China traders have had the upper hand for most of the year. Still, easing deflation could give bulls a glimmer of hope.
Keeping an Eye on the Fed’s Projections
The Energizer Bunny! That’s the term that best describes the U.S. economy.
Ray Dalio Says He Doesn’t Want to Hold Bonds, Cash ‘Is Good’
Bridgewater Associates LP founder Ray Dalio said he doesn’t want to own bonds and prefers cash, highlighting difficulties investors face as global central banks try to manage inflation.
BofA’s Hartnett Says Equity Inflows Surge on Soft Landing Hopes
Equity funds saw the biggest weekly inflow in 18 months amid growing investor confidence the US economy is headed for a soft landing, according to Bank of America Corp.
Anatomy of a Recession Update: What Is a Recession, Exactly?
Hear from Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments, about the state of the US economy. Get his perspective on the Federal Reserve’s next potential moves.
Why Global Bonds Make Sense for US Investors
Although US bond yields are well above their lows of the past decade, it’s always a good idea to think globally.
Fed Is Likely to Shy Away From Calling Interest-Rate Peak Next Week
Federal Reserve Chairman Jerome Powell and his colleagues are likely to shy away from signaling that they’re done raising interest rates when they meet next week.
The Big Four Economic Indicators: Industrial Production Increases for Second Straight Month
Industrial production increased for a second straight month in August, surpassing expectations yet again. On a monthly basis, industrial production rose 0.4%, outpacing the projected 0.1% growth. Additionally, compared to one year ago, industrial production showed an increase of 0.25%.
Gundlach: There Will be a Recession in the First Half of 2024
The consensus is wrong, and the Fed has not engineered a “soft landing.” A recession is all but certain in the first half of next year, according to Jeffrey Gundlach.
Michigan Consumer Sentiment Inches Down in September
The September preliminary report for the Michigan Consumer Sentiment Index came in at 67.7, down 1.8 (-2.6%) from the August final. This morning's reading was below the forecast of 69.1. Since its beginning in 1978, consumer sentiment is 20.4% below its average reading (arithmetic mean) of 85.1 and 19.4% below its geometric mean of 84.0.
Empire State Manufacturing Survey: Activity Little Changed
This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions rose 20.9 points from last month to 1.9. This morning's reading was better than the forecast of -10.0 and pushes the index back into expansion territory.
Why Are Consumers Still So Gloomy? Blame Covid.
Americans are downbeat about the economy, even as inflation rates rapidly decline back toward more normal levels, the unemployment rate has held below 4% for the longest stretch since the late 1960s and economists race to raise their growth forecasts.
Fed Seen Signaling One More Hike and Pushing Out 2024 Rate Cuts
A resilient US economy will prompt the Federal Reserve to pencil in one more interest-rate hike this year and stay at the peak level next year for longer than previously expected, according to economists surveyed by Bloomberg News.
A $4 Trillion ‘Triple Witching’ Event Endangers Stock Market Calm
All week, stock traders have shrugged off everything from hot inflation data in the US to another recession-threatening hike in interest rates over in Europe.
A Soft-Landing Scenario Gains More Adherents but How Long Will it be Viable?
In February this year we wrote an article entitled A Funny Thing Happened on the Way to the Recession. Fast forward to the current situation, where opinion has shifted away from recession in favor of a soft-landing scenario. Does that same contrary analysis mean a recession is now more likely? The simple answer is no, not yet anyway!
Our Stagflationary Future
Inflation averaged 1.8% in the ten years pre-COVID. Don’t expect inflation to average that low in the decade ahead. Not until the US finds a way to repeat the 1980s policy mix.
Inflation Is Coming Down. Will Treasury Yields Be Next?
The 10-year Treasury yield has climbed steadily over the past two years. But we believe fixed-income investors should be prepared for lower yields ahead.
Measuring The Cost Of Healthcare
Measuring, anticipating and controlling the cost of healthcare are all difficult.
Fed’s Quantitative Tightening (Qt) Will Face Constraints
How long will the Federal Reserve continue quantitative tightening (QT)? How large will its balance sheet be when QT ends? These important questions impact financial market liquidity, the anchor of asset values. We assess the likely path of QT in the years ahead.
The Fed Will Cut Rates in 2024
That’s a bold prediction in the title. I believe it will come true.
Median Household Purchasing Power for the 50 States and DC
Earlier this week we posted an update on the median household income for the 50 states and DC based on the Current Population Survey, a joint undertaking of the Census Bureau and Bureau of Labor Statistics, which includes annual data from 1984 to 2022. Let's now look at the actual purchasing power of those median incomes. For this adjustment, we're using the "C2ER Cost of Living Index" produced by C2ER, the Council for Community and Economic Research.
The Big Four Economic Indicators: Real Retail Sales Down 0.1% in August
Month-over-month nominal retail sales in August were up 0.6% and up 2.47% year-over-year. However, after adjusting for inflation, real retail sales were down 0.1% MoM and down 1.19% year-over-year.
The Future of Unions Looks Very Different
The labor movement is having a moment. In a tight employment market, there is money to be had — or profits to be more generously shared — and workers have gotten some big wins recently. Even reality TV stars and NFL running backs are getting into it.
Retail Sales Rise 0.6% in August, Exceeding Expectations
The Census Bureau's Advance Retail Sales Report for August revealed a 0.6% increase in headline sales compared to July, marking the fifth consecutive month consumer spending has increased. The latest figure surpassed expectations of 0.2% monthly growth. Core sales (ex Autos) also exceeded expectations by registering 0.6% growth in August, defying the forecasted 0.2% increase.
Producer Price Index: Wholesale Inflation Rises to 1.6% in August
Wholesale inflation rose more than expected in August as producer prices increased for a second straight month. The producer price index for final demand was up 0.7% month-over-month, its largest monthly increase since June 2022 (s.a.). On an annual basis, headline PPI accelerated for a second straight month from 0.8% in July to 1.6% in August (n.s.a).
What Shifting Stock-Bond Correlations Mean for Your Money
A recent paper analyzing the correlation between stock and bond returns going back to 1875 suggests the relationship of the past quarter century is shifting in an uncertain inflationary environment. The results might stimulate some investors to rethink their portfolio allocations.
Emerging Markets Boosted by Interventions as Rate Fears Grow
Expectations of central-bank interventions are helping to steady emerging-market currencies, even as traders adjust to a higher-for-longer regime for developed market interest rates.
The Bond Market Has Never Sounded Recession Alarms for This Long
The US bond market hasn’t flashed recession warnings so consistently for so long in at least six decades.
Alternative Allocations: The State of the Alternative Investments Industry
In this first episode, Franklin Templeton Institute’s Tony Davidow discusses the democratization of alternative investments and related topics with CAIA’s John Bowman.
Median Household Income by State: 2022 Update
The median US income in 2022 was $74,580, up from $22,420 in 1984 — a 233% rise over the 38-year time frame. However, if we adjust for inflation chained in 2022 dollars, the 1984 median is $56,780, and the increase drops to 31%.
U.S. Household Incomes: A 50+ Year Perspective
This month, the Census Bureau released its annual report on household income data for 2022. Last year the median (middle) average household income fell by 2.3% to $74,580. Let's take a closer look at the quintile averages, which dates from 1967, along with the statistics for the top 5%.
Household Incomes 2022: The Value of Higher Education
What is the value of education for household income? The Census Bureau's annual survey data for 2022 published in earlier this month gives us some interesting insights into this question. The median income for all households with a householder age 25 and older was $75,980.
Inside the Consumer Price Index: August 2023
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.