Stephen Dover, Head of Franklin Templeton Institute, recently sat down with Franklin Templeton Fixed Income Portfolio Manager Josh Lohmeier and Western Asset Portfolio Manager Mark Lindbloom to discuss the fixed income landscape—and why they believe 2024 will be a good year for fixed income investors.
When it comes to commercial real estate, a lot of attention is obviously paid to offices. But it's not the only sector facing strains.
Jeremy Grantham will be a keynote speaker at Exchange, joining an exceptional roster of luminaries, thought leaders, and industry titans.
The winter holiday season is here, and I wanted to join in the festivities. Recently, advisors have become more comfortable turning to active ETFs to help them and their clients navigate the uncertain market environment. Actively managed ETFs have gained traction in 2023.
It should be no surprise that Bitcoin sold for over $44,000 this week, more than double its March 13 price. Going back to 2014, it has taken the cryptocurrency an average of nine months and 21 days to double; the milestone came 28 days early this time.
Bond traders who powered a ferocious rally in the $26 trillion US Treasury market are about to find out if they’ve gotten ahead of themselves.
Although some volatility may continue, we believe interest rates have peaked. We expect lower Treasury yields and positive returns for investors in 2024.
As of late Monday, bitcoin had surged nearly 14% over the past seven days. That’s exceeded 42% for the first time since May 2022.
Our portfolio managers field some tough questions on Matthews Asia Dividend’s performance, its positioning and what they believe are its unique strengths for investors.
Stock investors are turning to roughed-up corners of the market from small caps to value shares as they seek out bargains with the S&P 500 Index riding a five-week winning streak and soaring almost 9% since the start of November.
Insurance is making national headlines in 2023 as major providers retreat from writing new policies in large parts of the country and renewal premium prices skyrocket.
The U.S. international trade in goods and services is published monthly by the Bureau of Economic Analysis with data going back to 1992 and details U.S. exports and imports of goods and services. In October, the trade deficit expanded by 5.1% to $64.26B. The latest reading was worse than the forecast of $64.30B.
If Mike Tyson were speaking to a group of investors, what he may have been saying is that everyone has a financial plan until life throws a “punch.”
The message coming from Wall Street is that investor optimism is running dangerously high.
How do you get financial information to make sense to people who aren’t numbers-minded? How do you become the advisor who helps complicated things make sense without making people feel stupid or overwhelmed?
The global economy is still overwhelmingly powered by fossil fuels, with more than 80% of primary energy sourced from coal, oil, and gas, as of 2021.
Among Asia’s major economies, China has long been the benchmark against which other countries’ growth is measured. India, currently the continent’s third-largest economy behind China and Japan, appears poised to take the baton of economic growth leadership.
Money markets paid nothing. The dividend yield for the S&P 500 Index was 2%, and the 10-Year Treasury yield was stuck between 2%-3%.
Gas prices were down for an eleventh straight week, the longest streak since the summer of 2022. As of December 4, the price of regular and premium gas fell by 1 cent and 2 cents from the previous week, respectively. The WTIC end-of-day spot price for crude oil closed at $73.04, down 2.4% from last week.
Our outlook for 2024 is for a gradual U-shaped recovery composed of seemingly chaotic movements in economic data with turning points in policy rates and earnings growth.
Recency bias is too ingrained within us as human beings to ever go away regardless of the evidence. As advisors, we must learn to manage it.
December’s whipsaw opening shows investors may be concerned November’s epic rallies went too far, too fast in anticipating a near-perfect soft landing for the economy.
Our portfolio managers field some tough questions on Pacific Tiger’s performance, its positioning and what they believe are its unique strengths for investors.
For much of 2023, the market has tried to anticipate a Fed pivot – only to be wrongfooted several times. However, sharply higher interest rates, cooling inflation pressures and moderating wages have the market convinced that the Fed’s current tightening cycle is over.
The dearth of homes for sale has underpinned the housing market’s surprising resilience and may further lift home prices despite reduced affordability.
With more than 3,000 ETFs to cover and many new ones launching each month, it is easy to forget. For many people, S&P 500 Index-based ETFs remain the core of their portfolio. Heading into 2024, these products topped the latest monthly flow leaderboard.
Trench warfare in the early 20th century has been described as long periods of boredom punctuated by moments of terror.
The AQR Style Premia Alternative Fund (QSPIX) was introduced a decade ago to provide pure exposure to four market factors that had historically delivered excess returns. Let’s look at how it performed over that period.
Two years ago, the Journal of Finance — the most prestigious journal in the field — retracted a published paper because of data errors, either the first or second withdrawal ever by a top-three finance journal.
In November, Treasury rates dropped, and risk assets rallied. The market expects continuing drops in inflation and slower, but not disastrous, growth. The data support the market's sanguine assessment.
US stocks are headed for a rocky end to the year after rallying in November as bond yields fluctuate, according to Morgan Stanley’s Michael Wilson.
A torrid bond market rally shows traders are convinced the Federal Reserve’s rate-rising cycle is over. The debate now turns to when central bankers start cutting, and by how much.
The moving average for vehicle sales per capita series peaked in August 1978. Fast forward 45 years, it is now down 38.9% from that peak.
Inflation is a touchy subject, and given there are many ways to analyze it, investors should take note of the nuances that exist within the data.
Back in the Great Financial Crisis era, someone quipped that the federal government had become a giant hedge fund with an army attached. That wasn’t far off. Various agencies and entities were absorbing all kinds of risky assets to stabilize an overleveraged system.
The life story of Charlie Munger, who passed away on Tuesday at age 99, serves as a shining example of the enduring American Dream, especially now at a time when many people doubt whether the promise of a better life is still intact.
In a turnaround from last year, there is renewed interest in the fixed income asset class as yields have risen. Ed Perks, CIO of Franklin Income Investors, shares his analysis of recent macro developments and where he sees opportunities for income.
Tax-loss harvesting creates an opportunity every year for advisors to turn lemons into lemonade. Advisors can realize losses that their clients experienced during the year and use them to offset realized gains in other parts of their portfolio.
Many advisors and investors in 2023 have turned to fixed income ETFs with an average duration of less than one year. Taking on very little interest rate risk through duration has been rewarding as well.
After the underperformance of stocks and bonds last year, it’s no surprise that diversification strategies are a significant focus this year. Alternatives continue to garner advisor and investor interest as market dispersion grows, including managed futures and long/short strategies.
Franklin Templeton recently hosted due diligence meetings with financial advisors where Tony Davidow, Senior Alternatives Investment Strategist, led discussions focused on alternative investments.
In the wake of recent underperformance, healthcare is entering the new year with compressed valuations just as innovation picks up and a post-COVID reset winds down. That should make for a positive outlook, says Janus Henderson Portfolio Managers Andy Acker and Dan Lyons.
We hope you enjoy the latest Newsletter from Harold Evensky.
The likes of consumer resiliency based on the earliest readings on Black Friday sales and the degree to which the Artificial Intelligence theme continues support the idiosyncratic tendencies of the markets concentrated in the Magnificent 7.
The BEA's core Personal Consumption Expenditures (PCE) Price Index for October shows that core inflation continues to be above the Federal Reserve's 2% long-term target at 3.5%. The October core Consumer Price Index (CPI) release was higher, at 4.0%. The Fed is on record as using core PCE data as its primary inflation gauge.
With the release of October's report on personal incomes and outlays, we can now take a closer look at "real" disposable personal income per capita. At two decimal places, the nominal 0.26% month-over-month change in disposable income comes to 0.21% when we adjust for inflation. The year-over-year metrics are 6.44% nominal and 3.33% real.
Personal income (excluding transfer receipts) rose 0.3% in October and is up 5.4% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, real personal income (excluding transfer receipts) was up 0.3% month-over-month and 2.3% year-over-year.
Even Ken Griffin is a little worried. Multimanager funds like Griffin’s Citadel have come to dominate the hedge fund industry, riding a steady run of outperformance to oversee more than $1 trillion, including a healthy dose of leverage.
As a rush of Wall Street strategists call for all-time highs in US stocks in the year ahead, JPMorgan Chase & Co. stands apart, releasing the gloomiest forecast so far among its peers.
There is broad agreement that economic damages will increase with warming, but there is substantial disagreement on the magnitude of these damages.
Despite an increasingly challenging economic and geopolitical environment, the global economy performed better than expected over the past year. But although analysts’ projections for 2023 were too pessimistic, it appears that consensus forecasts for the coming year may have have swung too far in the opposite direction.
Drew O'Neil discusses fixed income market conditions and offers insight for bond investors.
Free-cash-flow yield is the surplus cash after expenses and investments divided by the price of the security. Free-cashflow yield has been used for a long time by active hedge funds. Now it has become part of the indexing landscape, competing for assets with other quantitative approaches. It has historically outperformed in markets that favored value stocks and shown resilience in growth markets. My guest today will explain why, in today's intangible asset-driven economy, traditional metrics like price to earnings and price to book face challenges, making free cash flow a more relevant valuation metric. We will discuss how advisors should think about free cash flow and the steps VictoryShares & Solutions has taken to enhance traditional approaches.
All investments involve some degree of risk.
The article explores the current state of the bull market, offering insights from Pring Turner Capital. The author discusses indicators supporting optimism for a second leg of the bull market, citing economic, monetary, and technical factors.
The unhappiness of American consumers despite rapid job and economic growth in the past few years is a hotly debated topic. Is it inflation? High borrowing costs for homes and automobiles? Crowded airports and packed airplanes?
It’s the latest critique of the passive-investing boom: Fresh academic research claims that the relentless flood of index-chasing cash on Wall Street is distorting stock prices and causing extreme market moves.
While equity styles go in and out of favor, quality companies continue to serve clients as a core holding, resilient to economic headwinds and market drawdowns. For long-term investors searching for a durable equity solution, we believe quality is “the real McCoy"
Often misunderstood, crypto has an important role to play in the alternatives sleeve of a portfolio.
Commodities entered 2023 behind a strong performance in 2022. For investors revisiting their portfolios ahead of 2024, it may be worth assessing the commodities outlook. From energy to precious metals, commodities can add meaningful diversification to a portfolio.
Economic pain is likely in 2024, but that doesn’t mean stocks will struggle all year, especially if there is a continuation of the rolling recessions that have hit the economy.
What were the big ETF trends of 2023? David Mann, Global Head of ETF Product & Capital Markets, reviews some of his predictions for this year—and how they panned out.
When the crypto bubble was on the rise, it prompted governments to step up development of their own form of electronic cash, known as central bank digital currencies. Now that enthusiasm for crypto has waned, will CBDCs fade away, too?
The recent sharp pullback in volatility as year-end approaches creates hedging opportunities given the cloudy outlook for equities, according to Goldman Sachs Group Inc. strategists.
Brooks Friederich is a little-known figure in the world of investment advisory, even among the Wall Street cognoscenti. Yet every year, the 39-year-old — and his Berwyn, Pennsylvania-based employer Envestnet — helps steer billions of dollars into tailor-made strategies for financial advisers, part of what’s known as the model-portfolio boom.
As banks pull back from many types of lending, demand for capital is outpacing supply, providing the best potential opportunities in private credit since the GFC.
While Treasury inflation-protected securities (TIPS) may seem complex and daunting, it’s important to dive into their intricacies. After all, their current yields present an enticing opportunity and a compelling alternative to conventional Treasury bonds.
With relentless market volatility and other stubborn headwinds, advisors must find an adequate portfolio balance for their clients. What role will alternative investments play in offsetting market challenges? In this episode, we dive into this question with Andrea Mody, U.S. wealth private markets head at Macquarie Asset Management. We discuss how Macquarie continues to be a trailblazer for the democratization of alternatives, how traditional asset managers are reorganizing to incorporate alternatives, the roadblocks for allocation and Andrea’s outlook for the space.
I'll share the impact healthcare costs have on financial plans, the critical healthcare information to include (such as medical tax deductions and IRMAA), how to budget for costs in a world of variables, and tangible strategies to implement during open enrollment and beyond to ensure clients are on the optimal coverage.
How can RIAs avoid missing the mark when it comes to private market investments?
As I wrote this blog, the S&P 500 index is up roughly 17% year-to-date. Most likely, your portfolio isn’t. This is a common frustration among many investors in the market this year in particular.
It’s the major casualty of November’s sizzling stock rally: Investor caution.
While the fall in inflation is welcome, the impact of higher interest rates on mortgage borrowers still has some way to play out. The reduction in inflation will help DB members that are drawing on their pension. Pension trustees should consider their investment strategy and support members with their retirement planning.
CIO designate Sean Taylor gives his take on what Asia has to offer global and emerging markets investors, from growth, to diversification, to innovation.
Former Bridgewater Associates LP executive Bob Elliott’s plan for exchange-traded funds that employ hedge fund strategies has sharpened the debate about whether retail investors should have access to such approaches.
Doug Drabik discusses fixed income market conditions and offers insight for bond investors.
A quirk in retirement fund accounting is making corporate pensions look particularly flush now, giving them more incentive to cut risk by dumping equities and buying bonds.
My guest, Sam Reid, is here to discuss the role and impact of structured credit within a retail investor portfolio. In an environment of rising rates and accumulating debt, this asset class offers investors a chance to alleviate risks and further enhance their portfolios.
Sam uses a process-driven approach to minimize the impact of rising rates, and his underwriting standards allow for enhancements to be built into securities. He focuses on short-duration investments.
Should the US Securities and Exchange Commission approve an exchange-traded fund focused on the spot market for Bitcoin? The question has yet again gained relevance, thanks to the District of Columbia Court of Appeals, which last week reversed the SEC’s decision to reject a Bitcoin ETF proposed by Grayscale Investments.
New orders for manufactured durable goods fell more than expected in October, coming in at $279.44B. This is a 5.4% decrease from the previous month and is more than the expected 3.1% decline. The series is up 0.3% year-over-year (YoY). If we exclude transportation, "core" durable goods were unchanged from the previous month and up 1.3% from one year ago.
Reasons prompting concern around investing in China may be improving, but volatility is likely to remain characteristic of Chinese stocks in 2024.
Existing home sales fell further, remaining at their lowest level since 2010, as lack of inventory and high mortgage rates continued to impact sales. According to the data from the National Association of Realtors (NAR), existing home sales fell 4.1% from September to reach a seasonally adjusted annual rate of 3.79 million units. This figure came in lower than the expected 3.90 million. Existing home sales are down 14.6% compared to one year ago.
I show how the best way to utilize bonds in retirement is not to rebalance between stocks and bonds in retirement, but rather to draw down on the bond side of the portfolio first and let the portfolio drift towards a greater equity allocation.
The Age of AI (And Our Human Future), by Henry Kissinger, Eric Schmidt, and Daniel Huttenlocher, is keenly relevant.
The S&P 500 has rallied in recent days and was up close to 20% for the year. However, heading into 2024, many advisors are exploring a range of investment ideas that offer exposure beyond the stock market.
David Dali, Head of Portfolio Strategy, provides his 12-month outlook for global equity markets.
Dina Ting, Franklin Templeton’s Head of Global Index Portfolio Management, sheds light on the benefits of single-country ETF allocations against what has been a rocky macro backdrop and discusses ways to re-evaluate potential opportunities in terms of tax-loss decision-making.
Today's uncertain economic climate is putting particular pressure on four market segments. Here's what to watch out for in the months ahead.
The steepening yield curve has grabbed my attention. Historically, it's been a reliable investment signal. However, as I discuss in my article below, today's might not be occurring for the same reasons as in the past. It's not that it's different this time. It just might not be the same (so far).
In this issue of Fixed-Income Sector Views, our Sector Teams identify positive technical trends that have helped to support spreads, but remain vigilant for signs of credit deterioration as the slowing economy and the bite of higher rates start to be felt by issuers.
Investors should embrace a genuine long-term perspective, extending their time horizons to at least 20 to 30 years. The traditional notion of long-term investing (five to 10 years) may fall short of realizing the full benefits of long-term strategies.
Risk Management
Investment Ideas—the Case for Fixed Income in 2024
Stephen Dover, Head of Franklin Templeton Institute, recently sat down with Franklin Templeton Fixed Income Portfolio Manager Josh Lohmeier and Western Asset Portfolio Manager Mark Lindbloom to discuss the fixed income landscape—and why they believe 2024 will be a good year for fixed income investors.
Why Multifamily Is the Next Stress Point in Commercial Real Estate
When it comes to commercial real estate, a lot of attention is obviously paid to offices. But it's not the only sector facing strains.
Jeremy Grantham Announced as Latest Exchange Keynote
Jeremy Grantham will be a keynote speaker at Exchange, joining an exceptional roster of luminaries, thought leaders, and industry titans.
8 Under-the-Radar Active ETFs for the Holidays
The winter holiday season is here, and I wanted to join in the festivities. Recently, advisors have become more comfortable turning to active ETFs to help them and their clients navigate the uncertain market environment. Actively managed ETFs have gained traction in 2023.
Bitcoin Is Earning Its Place in a Balanced Portfolio
It should be no surprise that Bitcoin sold for over $44,000 this week, more than double its March 13 price. Going back to 2014, it has taken the cryptocurrency an average of nine months and 21 days to double; the milestone came 28 days early this time.
Bond Traders to Face a Reality Check With Friday’s Jobs Report
Bond traders who powered a ferocious rally in the $26 trillion US Treasury market are about to find out if they’ve gotten ahead of themselves.
Fixed Income Outlook: The Rocky Road Bond Market
Although some volatility may continue, we believe interest rates have peaked. We expect lower Treasury yields and positive returns for investors in 2024.
2 Factors Sparking Bitcoin Surge
As of late Monday, bitcoin had surged nearly 14% over the past seven days. That’s exceeded 42% for the first time since May 2022.
Staying the Course: Matthews Asia Dividend
Our portfolio managers field some tough questions on Matthews Asia Dividend’s performance, its positioning and what they believe are its unique strengths for investors.
Beaten-Down Stocks Get Some Revenge After Big Tech’s 2023 Rally
Stock investors are turning to roughed-up corners of the market from small caps to value shares as they seek out bargains with the S&P 500 Index riding a five-week winning streak and soaring almost 9% since the start of November.
Insurance → Inflation + Issuance
Insurance is making national headlines in 2023 as major providers retreat from writing new policies in large parts of the country and renewal premium prices skyrocket.
Trade Deficit Expands to $64.26B
The U.S. international trade in goods and services is published monthly by the Bureau of Economic Analysis with data going back to 1992 and details U.S. exports and imports of goods and services. In October, the trade deficit expanded by 5.1% to $64.26B. The latest reading was worse than the forecast of $64.30B.
Mike Tyson Would be a Financial Planning Genius
If Mike Tyson were speaking to a group of investors, what he may have been saying is that everyone has a financial plan until life throws a “punch.”
‘No Bears Left’ Is Worrying Refrain Coming From Wall Street
The message coming from Wall Street is that investor optimism is running dangerously high.
How Visual Aids Grow Your Business
How do you get financial information to make sense to people who aren’t numbers-minded? How do you become the advisor who helps complicated things make sense without making people feel stupid or overwhelmed?
The Energy Transition and What It Means for Institutional Investors
The global economy is still overwhelmingly powered by fossil fuels, with more than 80% of primary energy sourced from coal, oil, and gas, as of 2021.
India to Take Reins From China as Asia Growth Leader
Among Asia’s major economies, China has long been the benchmark against which other countries’ growth is measured. India, currently the continent’s third-largest economy behind China and Japan, appears poised to take the baton of economic growth leadership.
Just Give Me 5%
Money markets paid nothing. The dividend yield for the S&P 500 Index was 2%, and the 10-Year Treasury yield was stuck between 2%-3%.
Gasoline Prices Down for 11th Straight Week
Gas prices were down for an eleventh straight week, the longest streak since the summer of 2022. As of December 4, the price of regular and premium gas fell by 1 cent and 2 cents from the previous week, respectively. The WTIC end-of-day spot price for crude oil closed at $73.04, down 2.4% from last week.
2024 Global Outlook: The Big Picture
Our outlook for 2024 is for a gradual U-shaped recovery composed of seemingly chaotic movements in economic data with turning points in policy rates and earnings growth.
Fighting Recency Bias
Recency bias is too ingrained within us as human beings to ever go away regardless of the evidence. As advisors, we must learn to manage it.
Did Markets Go Too Far, Too Fast Is Debate to Dominate December
December’s whipsaw opening shows investors may be concerned November’s epic rallies went too far, too fast in anticipating a near-perfect soft landing for the economy.
Staying the Course: Matthews Pacific Tiger
Our portfolio managers field some tough questions on Pacific Tiger’s performance, its positioning and what they believe are its unique strengths for investors.
Recapping November’s Key Market Events
For much of 2023, the market has tried to anticipate a Fed pivot – only to be wrongfooted several times. However, sharply higher interest rates, cooling inflation pressures and moderating wages have the market convinced that the Fed’s current tightening cycle is over.
Mind the Supply: The Counterintuitive Impact of Higher Rates on U.S. Housing
The dearth of homes for sale has underpinned the housing market’s surprising resilience and may further lift home prices despite reduced affordability.
What ETFs Were Popular in November?
With more than 3,000 ETFs to cover and many new ones launching each month, it is easy to forget. For many people, S&P 500 Index-based ETFs remain the core of their portfolio. Heading into 2024, these products topped the latest monthly flow leaderboard.
Long Periods of Boredom
Trench warfare in the early 20th century has been described as long periods of boredom punctuated by moments of terror.
Examining the Performance of AQR’s Style Premia Alternative Fund
The AQR Style Premia Alternative Fund (QSPIX) was introduced a decade ago to provide pure exposure to four market factors that had historically delivered excess returns. Let’s look at how it performed over that period.
Trading Corporate Bonds Is Still More Art Than Science
Two years ago, the Journal of Finance — the most prestigious journal in the field — retracted a published paper because of data errors, either the first or second withdrawal ever by a top-three finance journal.
The Impending Economic Slowdown Should Be Good for Markets
In November, Treasury rates dropped, and risk assets rallied. The market expects continuing drops in inflation and slower, but not disastrous, growth. The data support the market's sanguine assessment.
Morgan Stanley’s Wilson Says December to Be Rocky for Stocks
US stocks are headed for a rocky end to the year after rallying in November as bond yields fluctuate, according to Morgan Stanley’s Michael Wilson.
Bond Market Euphoria Shifts to Debate Over How Low Fed Will Need to Go
A torrid bond market rally shows traders are convinced the Federal Reserve’s rate-rising cycle is over. The debate now turns to when central bankers start cutting, and by how much.
Vehicle Sales as of November 2023
The moving average for vehicle sales per capita series peaked in August 1978. Fast forward 45 years, it is now down 38.9% from that peak.
Lose Yourself in the Inflation Data
Inflation is a touchy subject, and given there are many ways to analyze it, investors should take note of the nuances that exist within the data.
Healthcare, a Minor Major Problem
Back in the Great Financial Crisis era, someone quipped that the federal government had become a giant hedge fund with an army attached. That wasn’t far off. Various agencies and entities were absorbing all kinds of risky assets to stabilize an overleveraged system.
A Tribute to Charlie Munger and the Promise of the American Dream
The life story of Charlie Munger, who passed away on Tuesday at age 99, serves as a shining example of the enduring American Dream, especially now at a time when many people doubt whether the promise of a better life is still intact.
Attractive Income Opportunities for Uncertain Markets
In a turnaround from last year, there is renewed interest in the fixed income asset class as yields have risen. Ed Perks, CIO of Franklin Income Investors, shares his analysis of recent macro developments and where he sees opportunities for income.
Turning Lemons Into Lemonade: The Power of Tax-Loss Harvesting
Tax-loss harvesting creates an opportunity every year for advisors to turn lemons into lemonade. Advisors can realize losses that their clients experienced during the year and use them to offset realized gains in other parts of their portfolio.
Chart of the Week: Advisors Willing to Take on Rate Risk
Many advisors and investors in 2023 have turned to fixed income ETFs with an average duration of less than one year. Taking on very little interest rate risk through duration has been rewarding as well.
2 Strategies to Capitalize on Increased Market Dispersion
After the underperformance of stocks and bonds last year, it’s no surprise that diversification strategies are a significant focus this year. Alternatives continue to garner advisor and investor interest as market dispersion grows, including managed futures and long/short strategies.
Alternative Allocations: Alternatives by Franklin Templeton—Access Granted
Franklin Templeton recently hosted due diligence meetings with financial advisors where Tony Davidow, Senior Alternatives Investment Strategist, led discussions focused on alternative investments.
Healthcare Stocks: Positioned for a Smoother Ride in 2024?
In the wake of recent underperformance, healthcare is entering the new year with compressed valuations just as innovation picks up and a post-COVID reset winds down. That should make for a positive outlook, says Janus Henderson Portfolio Managers Andy Acker and Dan Lyons.
Newsletter - November 2023
We hope you enjoy the latest Newsletter from Harold Evensky.
Black Friday Expectations & AI Hype
The likes of consumer resiliency based on the earliest readings on Black Friday sales and the degree to which the Artificial Intelligence theme continues support the idiosyncratic tendencies of the markets concentrated in the Magnificent 7.
Two Measures of Inflation: October 2023
The BEA's core Personal Consumption Expenditures (PCE) Price Index for October shows that core inflation continues to be above the Federal Reserve's 2% long-term target at 3.5%. The October core Consumer Price Index (CPI) release was higher, at 4.0%. The Fed is on record as using core PCE data as its primary inflation gauge.
Real Disposable Income Per Capita Up 0.2% in October
With the release of October's report on personal incomes and outlays, we can now take a closer look at "real" disposable personal income per capita. At two decimal places, the nominal 0.26% month-over-month change in disposable income comes to 0.21% when we adjust for inflation. The year-over-year metrics are 6.44% nominal and 3.33% real.
The Big Four Recession Indicators: Real Personal Income Increases in October
Personal income (excluding transfer receipts) rose 0.3% in October and is up 5.4% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, real personal income (excluding transfer receipts) was up 0.3% month-over-month and 2.3% year-over-year.
Citadel and Its Peers Are Piling Into the Same Trades. Regulators Are Taking Notice
Even Ken Griffin is a little worried. Multimanager funds like Griffin’s Citadel have come to dominate the hedge fund industry, riding a steady run of outperformance to oversee more than $1 trillion, including a healthy dose of leverage.
JPMorgan’s S&P 500 Outlook for 2024 Is Grimmest on Wall Street
As a rush of Wall Street strategists call for all-time highs in US stocks in the year ahead, JPMorgan Chase & Co. stands apart, releasing the gloomiest forecast so far among its peers.
The Energy Transition, Part 3: Implications for Economies and Markets
There is broad agreement that economic damages will increase with warming, but there is substantial disagreement on the magnitude of these damages.
Beware the New Consensus on the Global Economy
Despite an increasingly challenging economic and geopolitical environment, the global economy performed better than expected over the past year. But although analysts’ projections for 2023 were too pessimistic, it appears that consensus forecasts for the coming year may have have swung too far in the opposite direction.
Bond Market Perspective
Drew O'Neil discusses fixed income market conditions and offers insight for bond investors.
The Advantages of Free-Cash Flow in Portfolio Construction
Free-cash-flow yield is the surplus cash after expenses and investments divided by the price of the security. Free-cashflow yield has been used for a long time by active hedge funds. Now it has become part of the indexing landscape, competing for assets with other quantitative approaches. It has historically outperformed in markets that favored value stocks and shown resilience in growth markets. My guest today will explain why, in today's intangible asset-driven economy, traditional metrics like price to earnings and price to book face challenges, making free cash flow a more relevant valuation metric. We will discuss how advisors should think about free cash flow and the steps VictoryShares & Solutions has taken to enhance traditional approaches.
All investments involve some degree of risk.
The Bull Market Has Just Been Refreshed: Where Does it Go from Here?
The article explores the current state of the bull market, offering insights from Pring Turner Capital. The author discusses indicators supporting optimism for a second leg of the bull market, citing economic, monetary, and technical factors.
Unhappy American Consumers Will Welcome a Slower Economy
The unhappiness of American consumers despite rapid job and economic growth in the past few years is a hotly debated topic. Is it inflation? High borrowing costs for homes and automobiles? Crowded airports and packed airplanes?
The $7 Trillion ETF Boom Gets Blamed Again for Dumb Stock Moves
It’s the latest critique of the passive-investing boom: Fresh academic research claims that the relentless flood of index-chasing cash on Wall Street is distorting stock prices and causing extreme market moves.
Quality: The Real McCoy
While equity styles go in and out of favor, quality companies continue to serve clients as a core holding, resilient to economic headwinds and market drawdowns. For long-term investors searching for a durable equity solution, we believe quality is “the real McCoy"
Industry Experts Share Upbeat Crypto Outlook for 2024
Often misunderstood, crypto has an important role to play in the alternatives sleeve of a portfolio.
The Commodities Outlook Entering 2024
Commodities entered 2023 behind a strong performance in 2022. For investors revisiting their portfolios ahead of 2024, it may be worth assessing the commodities outlook. From energy to precious metals, commodities can add meaningful diversification to a portfolio.
U.S. Outlook: One Thing Leads to Another
Economic pain is likely in 2024, but that doesn’t mean stocks will struggle all year, especially if there is a continuation of the rolling recessions that have hit the economy.
Year in Review: 2023 ETF Predictions Report Card
What were the big ETF trends of 2023? David Mann, Global Head of ETF Product & Capital Markets, reviews some of his predictions for this year—and how they panned out.
Virtual Cash Will Survive the Crypto Winter
When the crypto bubble was on the rise, it prompted governments to step up development of their own form of electronic cash, known as central bank digital currencies. Now that enthusiasm for crypto has waned, will CBDCs fade away, too?
Goldman Says Sharp Drop in Volatility Is Opportunity for Hedging
The recent sharp pullback in volatility as year-end approaches creates hedging opportunities given the cloudy outlook for equities, according to Goldman Sachs Group Inc. strategists.
Wall Street’s $300 Billion Middleman Rides Model-Portfolio Boom
Brooks Friederich is a little-known figure in the world of investment advisory, even among the Wall Street cognoscenti. Yet every year, the 39-year-old — and his Berwyn, Pennsylvania-based employer Envestnet — helps steer billions of dollars into tailor-made strategies for financial advisers, part of what’s known as the model-portfolio boom.
Opportunities in Private Credit: Stepping in as Banks Step Out
As banks pull back from many types of lending, demand for capital is outpacing supply, providing the best potential opportunities in private credit since the GFC.
Diving Into the Intricacies of TIPS
While Treasury inflation-protected securities (TIPS) may seem complex and daunting, it’s important to dive into their intricacies. After all, their current yields present an enticing opportunity and a compelling alternative to conventional Treasury bonds.
New Ways for Advisors to Access Alternative Investments
With relentless market volatility and other stubborn headwinds, advisors must find an adequate portfolio balance for their clients. What role will alternative investments play in offsetting market challenges? In this episode, we dive into this question with Andrea Mody, U.S. wealth private markets head at Macquarie Asset Management. We discuss how Macquarie continues to be a trailblazer for the democratization of alternatives, how traditional asset managers are reorganizing to incorporate alternatives, the roadblocks for allocation and Andrea’s outlook for the space.
The Missing Piece to Advisors’ End-Of-Year Planning Strategies
I'll share the impact healthcare costs have on financial plans, the critical healthcare information to include (such as medical tax deductions and IRMAA), how to budget for costs in a world of variables, and tangible strategies to implement during open enrollment and beyond to ensure clients are on the optimal coverage.
Direct Lending: One Arrow in the Private Credit Quiver
How can RIAs avoid missing the mark when it comes to private market investments?
S&P 500 Market Returns And Why Your Performance Is Worse
As I wrote this blog, the S&P 500 index is up roughly 17% year-to-date. Most likely, your portfolio isn’t. This is a common frustration among many investors in the market this year in particular.
Wall Street Throws Caution to the Wind to Keep Up With Stock Rally
It’s the major casualty of November’s sizzling stock rally: Investor caution.
Falling UK Inflation: What Are the Implications for Pension Savings?
While the fall in inflation is welcome, the impact of higher interest rates on mortgage borrowers still has some way to play out. The reduction in inflation will help DB members that are drawing on their pension. Pension trustees should consider their investment strategy and support members with their retirement planning.
Why Asia Matters
CIO designate Sean Taylor gives his take on what Asia has to offer global and emerging markets investors, from growth, to diversification, to innovation.
Is a Hedge Fund-Style Investment Right for You?
Former Bridgewater Associates LP executive Bob Elliott’s plan for exchange-traded funds that employ hedge fund strategies has sharpened the debate about whether retail investors should have access to such approaches.
Recurring Fiscal Deficits and the Consequences
Doug Drabik discusses fixed income market conditions and offers insight for bond investors.
US Pensions to Gorge on Corporate Bonds as Funding Levels Soar
A quirk in retirement fund accounting is making corporate pensions look particularly flush now, giving them more incentive to cut risk by dumping equities and buying bonds.
Risks and Opportunities in Structured Credit
My guest, Sam Reid, is here to discuss the role and impact of structured credit within a retail investor portfolio. In an environment of rising rates and accumulating debt, this asset class offers investors a chance to alleviate risks and further enhance their portfolios.
Sam uses a process-driven approach to minimize the impact of rising rates, and his underwriting standards allow for enhancements to be built into securities. He focuses on short-duration investments.
Who Needs a Bitcoin ETF? Actually, the SEC Does
Should the US Securities and Exchange Commission approve an exchange-traded fund focused on the spot market for Bitcoin? The question has yet again gained relevance, thanks to the District of Columbia Court of Appeals, which last week reversed the SEC’s decision to reject a Bitcoin ETF proposed by Grayscale Investments.
Durable Goods Orders Fall More Than Expected in October
New orders for manufactured durable goods fell more than expected in October, coming in at $279.44B. This is a 5.4% decrease from the previous month and is more than the expected 3.1% decline. The series is up 0.3% year-over-year (YoY). If we exclude transportation, "core" durable goods were unchanged from the previous month and up 1.3% from one year ago.
Is China Investable?
Reasons prompting concern around investing in China may be improving, but volatility is likely to remain characteristic of Chinese stocks in 2024.
Existing Home Sales Fall Further, Still at Lowest Level Since 2010
Existing home sales fell further, remaining at their lowest level since 2010, as lack of inventory and high mortgage rates continued to impact sales. According to the data from the National Association of Realtors (NAR), existing home sales fell 4.1% from September to reach a seasonally adjusted annual rate of 3.79 million units. This figure came in lower than the expected 3.90 million. Existing home sales are down 14.6% compared to one year ago.
How Rebalancing Thwarts Achieving Retirement Goals
I show how the best way to utilize bonds in retirement is not to rebalance between stocks and bonds in retirement, but rather to draw down on the bond side of the portfolio first and let the portfolio drift towards a greater equity allocation.
Henry Kissinger on the Promise and Threats of AI
The Age of AI (And Our Human Future), by Henry Kissinger, Eric Schmidt, and Daniel Huttenlocher, is keenly relevant.
Chart of the Week: What Alternatives Are Worthy of Attention?
The S&P 500 has rallied in recent days and was up close to 20% for the year. However, heading into 2024, many advisors are exploring a range of investment ideas that offer exposure beyond the stock market.
Market Viewpoint
David Dali, Head of Portfolio Strategy, provides his 12-month outlook for global equity markets.
Using Single-Country ETFS as Part of a Tax-Loss Harvesting Strategy
Dina Ting, Franklin Templeton’s Head of Global Index Portfolio Management, sheds light on the benefits of single-country ETF allocations against what has been a rocky macro backdrop and discusses ways to re-evaluate potential opportunities in terms of tax-loss decision-making.
4 Weak Spots in the Current Market
Today's uncertain economic climate is putting particular pressure on four market segments. Here's what to watch out for in the months ahead.
Today’s Yield Curve Steepening Is Not Different This Time, It’s Not The Same
The steepening yield curve has grabbed my attention. Historically, it's been a reliable investment signal. However, as I discuss in my article below, today's might not be occurring for the same reasons as in the past. It's not that it's different this time. It just might not be the same (so far).
Fourth Quarter 2023 Fixed-Income Sector Views
In this issue of Fixed-Income Sector Views, our Sector Teams identify positive technical trends that have helped to support spreads, but remain vigilant for signs of credit deterioration as the slowing economy and the bite of higher rates start to be felt by issuers.
Breaking the Chains of Time
Investors should embrace a genuine long-term perspective, extending their time horizons to at least 20 to 30 years. The traditional notion of long-term investing (five to 10 years) may fall short of realizing the full benefits of long-term strategies.