Deep dive into the next market regime, shielding against risks, and safeguarding your investments in a highly anticipated webcast featuring Kevin O’Leary, renown investor and TV personality.
Five of the eight indexes on our world watch list posted gains through October 2, 2023. Tokyo's Nikkei 225 finished in the top spot with a YTD gain of 21.71%. The U.S.'s S&P 500 finished in second with a YTD gain of 12.14% while India's BSE SENSEX finished in third with a YTD gain of 7.40%.
As of September 30, 2023, the 10-year note was 407 basis points above its historic closing low of 0.52% reached on August 4, 2020.
We can and are building much taller skyscrapers. But they are impractical money losers because so much floor space is taken up by elevators. A new book explains the interplay between size and scale, and what it means for our economy and investments.
The Institute for Supply Management (ISM) manufacturing purchasing managers index (PMI) rose to 49.0 in September. The latest figure marks the eleventh consecutive month the index has been in contraction territory after a 29-month period of growth dating back to June 2020. The August reading was above the forecast of 47.7.
The September S&P Global US Manufacturing PMI™ rose to 49.8 from 47.9 in August, signaling only a fractional decline in operating conditions. The September reading was higher than the expected 48.9 reading.
Hedge funds are in regulators’ sights again. Their risk-taking with borrowed money must be better monitored and will sometimes have to be limited, the head of a global group of supervisors told the Financial Times last week.
The third quarter was a story of dashed hopes in emerging markets, with the unraveling of some of the most profitable trades in the asset class.
Last week was all about financial factors, primarily interest rates. But this week was all about the real economy, notably the United Auto Workers (UAW) strike and the pending government shutdown. Indeed, worries about a recession rose on those two risks.
The BEA's core Personal Consumption Expenditures (PCE) Price Index for August shows that core inflation continues to be above the Federal Reserve's 2% long-term target at 3.9%. The August core Consumer Price Index (CPI) release was higher, at 4.3%. The Fed is on record as using core PCE data as its primary inflation gauge.
The S&P 500 has fallen almost 3% within the past month, highlighting the volatility that typically hits at the end of the summer. For volatility through the end of 2023, investors may want to consider two active ETFs from American Century.
The commercial real estate sector’s continued challenges could potentially impact US banks. Franklin Templeton Fixed Income’s Shawn Lyons discusses the ongoing commercial real estate crisis and how US banks are safeguarding themselves against these issues.
Change is inevitable. When those changes involve tax law, it is extremely important for clients to meet with their financial professional, tax advisor, and legal advisor to discuss any adjustments that may need to be made to their financial, retirement, or estate plan.
As September comes to a close, Bitcoin is poised to end the quarter on a down note in its first quarterly decline this year.
The Chinese yuan has lost nearly 6% of its value against the U.S. dollar this year, while Shanghai-listed stocks are off about 8% from their 2023 high, set back in May.
U.S. stocks typically post their best returns in the final quarter of the year. Our review of S&P 500 performance since the index’s inception in 1957 found an average Q4 uptick of 4%. (Q1 was next best at an average of 2%.)
The prevailing narrative about the U.S. economy is that it’s ‘resilient’: despite rapid rate hikes, economic growth has held up and may even be accelerating.
We believe a mild U.S. recession is more likely than not in 2024, although a soft-landing scenario cannot be ruled out. A recession is also likely in the UK and eurozone, but appears less likely in Australia.
Active management in ETFs are gaining market share in 2023, as leading managers bring their best ideas into the ETF industry.
Rising real interest rates invariably trigger recessions. The residual impact of pandemic related behaviors delayed the impact in this cycle.
The Oakland Hills Public Use Microdata Area, or PUMA (a Census Bureau designation that I’ll explain in a moment), in Oakland, California, contains some of the most appealing urban neighborhoods in the US.
The Fed-induced selloff in technology stocks has traders dusting off their turmoil playbooks. Trouble is, one of the most popular strategies isn’t working: hiding out in Apple Inc.
Amid the debate over student loans — President Joe Biden’s administration tried and failed to forgive some of the debt, which starts accruing interest this month after a three-year pause — a crucial question has often been overlooked: Who benefits the most from student loans? It’s not necessarily the students.
The Bank of Japan met last night to cap off a week of central bank activity.
Intermission is over. Today we resume my series on the global cycle theories that, probably not by coincidence, all point to major change unfolding in the next few years. Finishing it may take some time since I keep finding new material.
Valid until the market close on October 31, 2023
The S&P 500 closed September with a monthly loss of 4.93%, after a loss of 1.71% in August. At this point, after close on the last day of the month, three of five Ivy portfolio ETFs — Vanguard FTSE All-World ex-US Index Fund (VEU), iShares 7-10 Year Treasury Bond ETF (IEF) and Vanguard Real Estate ETF (VNQ)— are signaling "cash", up from last month's double "cash" signal.
For all the importance of China’s subpar recovery, the country's woes are notably absent from the plethora of projections and commentary that flow from the Federal Reserve these days. Judging from recent remarks, there's either no problem or nothing sufficiently grave to prod Chair Jay Powell to hint at switching gears. Give it time.
Like any recovering reporter, I like to keep tabs on my old beats, and the marijuana ETF space never disappoints. Or, perhaps more accurately, it never stops disappointing.
The JPMorgan Asset Management money manager at the helm of the largest active exchange-traded fund in the $7.2 trillion industry is coming to market with another equity strategy geared toward investors bracing for a period of uncertainty.
Quarterly commentary giving an overview of the markets and the importance of having and implementing a strategy when investing in the markets.
The latest Chicago Purchasing Manager's Index (Chicago Business Barometer) fell to 44.1 in September from 48.7 in August. The latest reading is worse than the 47.6 forecast and marks the 13th straight month in contraction territory.
Personal income (excluding transfer receipts) rose 0.5% in August and is up 5.3% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, real personal income (excluding transfer receipts) was up 0.1% month-over-month and 1.7% year-over-year.
With the release of August'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 0.18% month-over-month change in disposable income comes to -0.21% when we adjust for inflation. The year-over-year metrics are 6.76% nominal and 3.17% real.
The BEA's Personal Income and Outlays report revealed inflation slowed in August. Core PCE, the Fed's favored measure of inflation, was up 0.1% from July and slowed to 3.9% year-over-year, the lowest reading in over two years but still above the Fed's 2% target rate.
The weekly leading economic index (WLEI) is a composite for the U.S economy that draws from over 20 time-series and groups them into the following six broad categories which are then used to construct an equally weighted average. As of September 15th, the index was at 9.655, up 2.343 from the previous week.
Monetary tightening still continues in the form of quantitative tightening, bringing potential volatility, earnings pressures, and lackluster performance to stock markets.
Small-cap stocks and related exchange traded funds are taking a back seat to large-cap counterparts this year. The Russell 2000 Index has shed almost 5% over the past month. However, some market observers remain constructive on smaller stocks.
In our latest Quarterly Letter, Ben Inker and John Pease discuss the new economic regime, how investors can prepare for a recession, and the merits of combining high quality and cheap assets in today’s environment.
Five out of the 12 Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. The September average of the five districts is -6.5, down from the previous month.
Real gross domestic product (GDP) is comprised of four major subcomponents. In the Q2 GDP third estimate, all four components made positive contributions.
The third estimate for Q2 GDP came in at 2.1%, a deceleration from 2.2% for the Q1 third estimate. With a per-capita adjustment, the headline number is lower at 1.60%, a decrease from 1.81% for the Q1 headline number.
We've updated our periodic look at the Philly Fed ADS Index which includes real GDP (Q2 2023 third estimate) and initial jobless claims through 9/23.
The latest Kansas City Fed Manufacturing Survey composite index declined somewhat in September and the future outlook fell slightly. The composite index came in at -8, down from 0 in August, while the future outlook decreased to 1 from 2 last month.
The increasing prospects of a US federal government shutdown has some Bitcoin advocates predicting a rally similar to one that happened in response to the regional bank crisis earlier this year.
The National Association of Realtors® (NAR) released the latest monthly data for its pending home sales index. The index plummeted 7.1% in August to 71.8, a larger decline than the expected -0.8% decrease. This is the lowest reading for the index since April 2020 and is the second lowest figure in the historical series. Pending home sales are down 18.7% compared to one year ago.
However, the regulators made asset management news with their focus on “truth in advertising.” Despite their well-intentioned efforts, it will remain paramount for investors to do their homework and look inside the portfolio.
Active ETFs have scored more investor interest this year than smart beta ETFs—but does that mean the latter will soon be out of the game completely? David Mann, Head of ETF Product & Capital Markets at Franklin Templeton, opines.
The Census Bureau has posted its advance report on new orders for durable goods for August. This series dates from 1992 and is not adjusted for either population growth or inflation. Let's review durable goods data with those two adjustments.
So, here’s an idea: Dedicate the revenue collected from the estate tax into a trust fund that finances early childhood education, spanning childcare to preschool.
While September has been a bit sloppy so far, will further weakness in October weigh on investor sentiment before the seasonally strong period begins?
New orders for manufactured durable goods unexpectedly rose in August, coming in at $284.75B. This is a 0.2% increase from the previous month and is better than the expected 0.5% decline. The series is up 3.5% year-over-year (YoY). If we exclude transportation, "core" durable goods were up 0.4% from the previous month and up 1.1% from one year ago.
This stock market rally in the first half of 2023 was built on the back of technology stocks, as investors bet on a resilient US consumer and hype surrounding artificial intelligence to keep the shares soaring.
The stock market is buckling under the weight of a simple equation: cash earns more than equities.
Even the best scientists in the world cannot reliably forecast drug-test results, so why should investors gamble? Quality businesses are key for healthcare stocks.
Gas prices inched down from last week but remain elevated. As of September 25, the price of regular and premium gas fell by 4 and 2 cents from the previous week, respectively. The WTIC end-of-day spot price for crude oil closed at $89.68, down 1.0% from last week.
Fifth district manufacturing activity improved in August, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index increased from -7 in August to 5 in September, marking its 1st positive reading in 17 months. This month's reading is higher than the -6 forecast.
The August release for new home sales from the Census Bureau came in at a seasonally adjusted annual rate of 675,000 units, below the forecast of 700,000. New home sales were down 8.7% month-over-month from a revised rate of 739,000 in July but up 5.8% from one year ago. The median home price is now at $430,300, down $6,300 from July on a nominal basis.
The Conference Board's Consumer Confidence Index® declined again in September, marking two consecutive months of decline. The index dropped to 103.0 from August's upwardly revised reading of 108.7. This month's reading was worse than expected, falling below the 105.5 forecast.
Deride the tactics of car salespeople all you wish, but their primary sales tool shows just how much brokers pay their employers.
Home prices continued to trend upwards in July as the benchmark 20-city index rose for a fifth consecutive month. The S&P Case-Shiller Home Price Index revealed seasonally adjusted home prices for the 20-city index saw a 0.9% increase month-over-month (MoM) and a 0.1% increase year-over-year (YoY). After adjusting for inflation, the MoM was reduced to 0.4% and the YoY was reduced to -7.0%.
The Federal Housing Finance Agency (FHFA) house price index (HPI) continued its climb in July, coming in at 409.5. U.S. house prices increased by 0.8% from the previous month and by 4.6% from one year ago. After adjusting for inflation, the real index is up 0.8% month-over-month and up 3.4% year-over-year.
The aim of this series is to move beyond the simplistic example of goals that exist at a single point in the future to consider retirement, the most common purpose for long-term investing for an individual.
As the cross-asset sell-off engulfed Wall Street last week, hedge funds ramped up their bets against stocks while one measure of their market positioning plunged the most since the March 2020 crash.
In many ways, 2023 continues to be the mirror image of 2022, with the most volatile assets being some of the best performers for much of the year.
Wednesday’s Federal Reserve (Fed) decision to keep the federal funds rate unchanged wasn’t a surprise at all. Markets, as we argued last week, had predicted that the Fed was going to stay put and that is what it did.
A balanced portfolio needs assets with strong return potential and those that may provide downside mitigation. We believe direct lending can deliver both—a potentially valuable feature, particularly in today’s uncertain market.
We started RBA in 2009 primarily because we thought the US stock market was entering one of the biggest bull markets of our careers. However, most investors did not agree with our bullishness. Now, risk aversion seems a thing of the past.
Investors think about companies as being either large or small. In between those extremes are midcaps. Based on historical performance and fundamentals, midcaps should command more attention.
The Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for September. The latest general business activity index came in at -18.1, down 0.9 from last month. This is the first monthly decline in the general business activity index in the past 4 months and marks the 17th consecutive month it has been in contraction territory.
Consumer stocks, one of the brightest corners of the market this year, are about to lose their shine as risks build for the sector, according to Morgan Stanley’s Michael Wilson.
US small-cap and industrial stocks are dropping, typically signals of a recession, but in a year where equities have already beaten expectations some investors are dismissing the moves as little more than noise — for now.
Environmental, social, and governance policies and investing have become targets of political derision. That doesn’t dampen the need for corporations and governments to pursue agendas tied to climate change and diversity, equity, and inclusion.
I, however, like all Kens, have always had a firm grip on the remote for 100% of the time but I decided to let her have her way just once.
When it comes to sheer equities performance over the last 30 years, there’s no denying the United States compared to the rest of the world. However, that could be changing according to one hedge fund manager.
Many of the speakers and attendees were bullish on the physical metal, pointing to gold’s resilience in the face of a very strong U.S. dollar and multiyear-high yields.
Artificial intelligence (AI) is widely viewed as the fuel for the rocket known as growth and technology stocks in 2023. While there is truth to that notion, there’s more to the story. Including the “magnificent seven” cadre of mega-cap growth names that are powering the market higher this year.
For many wealth advisors, workplace retirement plans are either a burden or an afterthought, according to John Kutz, National Retirement Plan Strategist at Franklin Templeton. He and his team explore why embracing these plans can benefit their practice, and their clients.
Fund managers have been avoiding emerging markets (EM), especially when it comes to China. However, that doesn’t mean there aren’t opportunities that exist.
The Federal Reserve weighs the data while investors wonder: Is the rate-hike cycle over?
Last week we began exploring the details of my personal portfolio. This week we will finish and then move back to our discussion of various cycles.
With the rapid pace of urbanization, there’s an increasing demand for efficient and sustainable power solutions, and ABB’s advancements in smart grids and renewable energy integration are pivotal in meeting the demands of this transition.
While some stocks may seem expensive, there are areas of opportunity that feature attractive valuations and growth catalysts, according to the Franklin Templeton Investment Solutions team.
The yield on the 10-year note ended September 22, 2023 at 4.44%, the 2-year note ended at 5.10%, and the 30-year at 4.53%.
Yesterday’s Equity Symposium brought together industry thought leaders. Attendees were treated to actionable information. Additionally, the panels presented cutting-edge thinking around equities.
Given concentration risk, understanding what a strategy and portfolio owns is more important than ever in current markets.
The latest Underlying Inflation Gauge full data set for August is 3.0%, down 0.1% from last month, while the prices-only measure is 2.3%, unchanged from last month. Current Headline CPI is now 3.7% and Core CPI is 4.3%.
Cathie Wood’s Ark Investment Management has acquired a fellow exchange-traded fund issuer in its biggest push yet into Europe’s nascent market for trend-driven investing.
In our view, the specific market dynamics that influence a company's sales growth prospects have a greater impact on equity returns than the overall direction of the economy.
In State Street Global Advisors’ recent Gold ETF Impact Study, the firm reported that “36% of surveyed investors don’t invest in gold because they don’t know enough about the ways that they can invest in gold.”
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.
Small Cap
Why Now: Seizing Opportunities in Small-Caps
Deep dive into the next market regime, shielding against risks, and safeguarding your investments in a highly anticipated webcast featuring Kevin O’Leary, renown investor and TV personality.
World Markets Watchlist: October 2, 2023
Five of the eight indexes on our world watch list posted gains through October 2, 2023. Tokyo's Nikkei 225 finished in the top spot with a YTD gain of 21.71%. The U.S.'s S&P 500 finished in second with a YTD gain of 12.14% while India's BSE SENSEX finished in third with a YTD gain of 7.40%.
Treasury Yields: A Long-Term Perspective
As of September 30, 2023, the 10-year note was 407 basis points above its historic closing low of 0.52% reached on August 4, 2020.
Why Are Elephants So Smart and Buildings So Short?
We can and are building much taller skyscrapers. But they are impractical money losers because so much floor space is taken up by elevators. A new book explains the interplay between size and scale, and what it means for our economy and investments.
ISM Manufacturing Index Contracts for Eleventh Consecutive Month
The Institute for Supply Management (ISM) manufacturing purchasing managers index (PMI) rose to 49.0 in September. The latest figure marks the eleventh consecutive month the index has been in contraction territory after a 29-month period of growth dating back to June 2020. The August reading was above the forecast of 47.7.
S&P Global US Manufacturing PMI™: Slower Contraction in September
The September S&P Global US Manufacturing PMI™ rose to 49.8 from 47.9 in August, signaling only a fractional decline in operating conditions. The September reading was higher than the expected 48.9 reading.
Why Central Banks Will Soon Lend to Hedge Funds
Hedge funds are in regulators’ sights again. Their risk-taking with borrowed money must be better monitored and will sometimes have to be limited, the head of a global group of supervisors told the Financial Times last week.
The Bull Case for Emerging Markets in 2023 Is Finally Shattering
The third quarter was a story of dashed hopes in emerging markets, with the unraveling of some of the most profitable trades in the asset class.
What Mattered This Week? The Real Economy
Last week was all about financial factors, primarily interest rates. But this week was all about the real economy, notably the United Auto Workers (UAW) strike and the pending government shutdown. Indeed, worries about a recession rose on those two risks.
CPI and PCE: Two Measures of Inflation and Fed Policy
The BEA's core Personal Consumption Expenditures (PCE) Price Index for August shows that core inflation continues to be above the Federal Reserve's 2% long-term target at 3.9%. The August core Consumer Price Index (CPI) release was higher, at 4.3%. The Fed is on record as using core PCE data as its primary inflation gauge.
2 Active ETFs to Help Shield Against Volatility
The S&P 500 has fallen almost 3% within the past month, highlighting the volatility that typically hits at the end of the summer. For volatility through the end of 2023, investors may want to consider two active ETFs from American Century.
Stress Testing the Foundations: Analyzing the Vulnerability of Us Banks To Falling Commercial Real Estate Values
The commercial real estate sector’s continued challenges could potentially impact US banks. Franklin Templeton Fixed Income’s Shawn Lyons discusses the ongoing commercial real estate crisis and how US banks are safeguarding themselves against these issues.
Preparing for the Sunset of the TCJA Tax Relief
Change is inevitable. When those changes involve tax law, it is extremely important for clients to meet with their financial professional, tax advisor, and legal advisor to discuss any adjustments that may need to be made to their financial, retirement, or estate plan.
Bitcoin Is Ending September With First Quarterly Loss This Year
As September comes to a close, Bitcoin is poised to end the quarter on a down note in its first quarterly decline this year.
China’s Economic Woes Have Sparked A Gold Rush
The Chinese yuan has lost nearly 6% of its value against the U.S. dollar this year, while Shanghai-listed stocks are off about 8% from their 2023 high, set back in May.
Taking Stock: Q4 2023 Equity Market Outlook
U.S. stocks typically post their best returns in the final quarter of the year. Our review of S&P 500 performance since the index’s inception in 1957 found an average Q4 uptick of 4%. (Q1 was next best at an average of 2%.)
Stealth Stagnation: Why the U.S. Economy Is Not as Robust as You Think
The prevailing narrative about the U.S. economy is that it’s ‘resilient’: despite rapid rate hikes, economic growth has held up and may even be accelerating.
2023 Global Market Outlook – Q4 Update: Falling with Style
We believe a mild U.S. recession is more likely than not in 2024, although a soft-landing scenario cannot be ruled out. A recession is also likely in the UK and eurozone, but appears less likely in Australia.
Why Investors Are Gravitating Toward Active Management In 2023
Active management in ETFs are gaining market share in 2023, as leading managers bring their best ideas into the ETF industry.
Visions of Sugar Plums and Soft Landings
Rising real interest rates invariably trigger recessions. The residual impact of pandemic related
behaviors delayed the impact in this cycle.
The Geography of Working From Home Begins to Shift Again
The Oakland Hills Public Use Microdata Area, or PUMA (a Census Bureau designation that I’ll explain in a moment), in Oakland, California, contains some of the most appealing urban neighborhoods in the US.
Megacap Slump Is Testing Apple’s Safe-Haven Status
The Fed-induced selloff in technology stocks has traders dusting off their turmoil playbooks. Trouble is, one of the most popular strategies isn’t working: hiding out in Apple Inc.
Make Student Loans Work for Students
Amid the debate over student loans — President Joe Biden’s administration tried and failed to forgive some of the debt, which starts accruing interest this month after a three-year pause — a crucial question has often been overlooked: Who benefits the most from student loans? It’s not necessarily the students.
The Market Thinks the BoJ is In Play
The Bank of Japan met last night to cap off a week of central bank activity.
Cyclical Forces
Intermission is over. Today we resume my series on the global cycle theories that, probably not by coincidence, all point to major change unfolding in the next few years. Finishing it may take some time since I keep finding new material.
Moving Averages: S&P Finishes September Down 4.9%
Valid until the market close on October 31, 2023
The S&P 500 closed September with a monthly loss of 4.93%, after a loss of 1.71% in August. At this point, after close on the last day of the month, three of five Ivy portfolio ETFs — Vanguard FTSE All-World ex-US Index Fund (VEU), iShares 7-10 Year Treasury Bond ETF (IEF) and Vanguard Real Estate ETF (VNQ)— are signaling "cash", up from last month's double "cash" signal.
Powell Can’t Ignore the Elephant in the Room Forever
For all the importance of China’s subpar recovery, the country's woes are notably absent from the plethora of projections and commentary that flow from the Federal Reserve these days. Judging from recent remarks, there's either no problem or nothing sufficiently grave to prod Chair Jay Powell to hint at switching gears. Give it time.
Marijuana ETFs Rise – and Fall – on Regulatory Hopes
Like any recovering reporter, I like to keep tabs on my old beats, and the marijuana ETF space never disappoints. Or, perhaps more accurately, it never stops disappointing.
JPMorgan Manager Behind Biggest Active ETF Debuts Fund
The JPMorgan Asset Management money manager at the helm of the largest active exchange-traded fund in the $7.2 trillion industry is coming to market with another equity strategy geared toward investors bracing for a period of uncertainty.
Pave Paradise
Quarterly commentary giving an overview of the markets and the importance of having and implementing a strategy when investing in the markets.
Chicago PMI Contracts for 13th Straight Month
The latest Chicago Purchasing Manager's Index (Chicago Business Barometer) fell to 44.1 in September from 48.7 in August. The latest reading is worse than the 47.6 forecast and marks the 13th straight month in contraction territory.
The Big Four Economic Indicators: Real Personal Income Rises in August
Personal income (excluding transfer receipts) rose 0.5% in August and is up 5.3% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, real personal income (excluding transfer receipts) was up 0.1% month-over-month and 1.7% year-over-year.
Real Disposable Income Per Capita Down 0.2% in August
With the release of August'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 0.18% month-over-month change in disposable income comes to -0.21% when we adjust for inflation. The year-over-year metrics are 6.76% nominal and 3.17% real.
Core PCE Inflation Slows in August
The BEA's Personal Income and Outlays report revealed inflation slowed in August. Core PCE, the Fed's favored measure of inflation, was up 0.1% from July and slowed to 3.9% year-over-year, the lowest reading in over two years but still above the Fed's 2% target rate.
RecessionAlert Weekly Leading Economic Index
The weekly leading economic index (WLEI) is a composite for the U.S economy that draws from over 20 time-series and groups them into the following six broad categories which are then used to construct an equally weighted average. As of September 15th, the index was at 9.655, up 2.343 from the previous week.
Risk: Hikes May Be Over, But QT Goes On
Monetary tightening still continues in the form of quantitative tightening, bringing potential volatility, earnings pressures, and lackluster performance to stock markets.
Glimmers of Hope Emerge for Small-Caps
Small-cap stocks and related exchange traded funds are taking a back seat to large-cap counterparts this year. The Russell 2000 Index has shed almost 5% over the past month. However, some market observers remain constructive on smaller stocks.
Beyond the Landing
In our latest Quarterly Letter, Ben Inker and John Pease discuss the new economic regime, how investors can prepare for a recession, and the merits of combining high quality and cheap assets in today’s environment.
Regional Fed Manufacturing Overview: September 2023
Five out of the 12 Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. The September average of the five districts is -6.5, down from the previous month.
An Inside Look at the Q2 2023 GDP Third Estimate
Real gross domestic product (GDP) is comprised of four major subcomponents. In the Q2 GDP third estimate, all four components made positive contributions.
Q2 Real GDP Per Capita at 1.6% vs. Q2 Real GDP at 2.1%
The third estimate for Q2 GDP came in at 2.1%, a deceleration from 2.2% for the Q1 third estimate. With a per-capita adjustment, the headline number is lower at 1.60%, a decrease from 1.81% for the Q1 headline number.
The Philly Fed ADS Business Conditions Index
We've updated our periodic look at the Philly Fed ADS Index which includes real GDP (Q2 2023 third estimate) and initial jobless claims through 9/23.
Kansas City Fed Manufacturing Activity Declined Somewhat in September
The latest Kansas City Fed Manufacturing Survey composite index declined somewhat in September and the future outlook fell slightly. The composite index came in at -8, down from 0 in August, while the future outlook decreased to 1 from 2 last month.
Bitcoin's Refuge Appeal Being Touted Again With Shutdown Prospects Rising
The increasing prospects of a US federal government shutdown has some Bitcoin advocates predicting a rally similar to one that happened in response to the regional bank crisis earlier this year.
Pending Home Sales Plummet 7.1% in August
The National Association of Realtors® (NAR) released the latest monthly data for its pending home sales index. The index plummeted 7.1% in August to 71.8, a larger decline than the expected -0.8% decrease. This is the lowest reading for the index since April 2020 and is the second lowest figure in the historical series. Pending home sales are down 18.7% compared to one year ago.
ETF Homework Remains Despite SEC Efforts
However, the regulators made asset management news with their focus on “truth in advertising.” Despite their well-intentioned efforts, it will remain paramount for investors to do their homework and look inside the portfolio.
Can Smart Beta ETFs Return to Prime Time?
Active ETFs have scored more investor interest this year than smart beta ETFs—but does that mean the latter will soon be out of the game completely? David Mann, Head of ETF Product & Capital Markets at Franklin Templeton, opines.
The "Real" Goods on the August Durable Goods Data
The Census Bureau has posted its advance report on new orders for durable goods for August. This series dates from 1992 and is not adjusted for either population growth or inflation. Let's review durable goods data with those two adjustments.
Use the Estate Tax to Finance Early Childhood Education
So, here’s an idea: Dedicate the revenue collected from the estate tax into a trust fund that finances early childhood education, spanning childcare to preschool.
October Weakness Before The Year-End Run?
While September has been a bit sloppy so far, will further weakness in October weigh on investor sentiment before the seasonally strong period begins?
Durable Goods Orders Unexpectedly Rise in August
New orders for manufactured durable goods unexpectedly rose in August, coming in at $284.75B. This is a 0.2% increase from the previous month and is better than the expected 0.5% decline. The series is up 3.5% year-over-year (YoY). If we exclude transportation, "core" durable goods were up 0.4% from the previous month and up 1.1% from one year ago.
Tech Stocks That Drove Market Rally Are Now Down 10%
This stock market rally in the first half of 2023 was built on the back of technology stocks, as investors bet on a resilient US consumer and hype surrounding artificial intelligence to keep the shares soaring.
Wall Street Bets on High-Yielding Cash Deals in Fresh Blow to Stocks
The stock market is buckling under the weight of a simple equation: cash earns more than equities.
Healthcare Stocks Invest in Business, not Science
Even the best scientists in the world cannot reliably forecast drug-test results, so why should investors gamble? Quality businesses are key for healthcare stocks.
Weekly Gasoline Prices Inch Down But Remain Elevated
Gas prices inched down from last week but remain elevated. As of September 25, the price of regular and premium gas fell by 4 and 2 cents from the previous week, respectively. The WTIC end-of-day spot price for crude oil closed at $89.68, down 1.0% from last week.
Richmond Fed Manufacturing Activity Improved in September
Fifth district manufacturing activity improved in August, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index increased from -7 in August to 5 in September, marking its 1st positive reading in 17 months. This month's reading is higher than the -6 forecast.
New Home Sales Tumble in August
The August release for new home sales from the Census Bureau came in at a seasonally adjusted annual rate of 675,000 units, below the forecast of 700,000. New home sales were down 8.7% month-over-month from a revised rate of 739,000 in July but up 5.8% from one year ago. The median home price is now at $430,300, down $6,300 from July on a nominal basis.
Consumer Confidence Declined Again in September
The Conference Board's Consumer Confidence Index® declined again in September, marking two consecutive months of decline. The index dropped to 103.0 from August's upwardly revised reading of 108.7. This month's reading was worse than expected, falling below the 105.5 forecast.
Ask Brad: What Can a Wirehouse Broker Learn from a Car Salesperson?
Deride the tactics of car salespeople all you wish, but their primary sales tool shows just how much brokers pay their employers.
S&P Case-Shiller Home Price Index: Continues to Trend Upward in July
Home prices continued to trend upwards in July as the benchmark 20-city index rose for a fifth consecutive month. The S&P Case-Shiller Home Price Index revealed seasonally adjusted home prices for the 20-city index saw a 0.9% increase month-over-month (MoM) and a 0.1% increase year-over-year (YoY). After adjusting for inflation, the MoM was reduced to 0.4% and the YoY was reduced to -7.0%.
FHFA House Price Index Rises 0.8% in July
The Federal Housing Finance Agency (FHFA) house price index (HPI) continued its climb in July, coming in at 409.5. U.S. house prices increased by 0.8% from the previous month and by 4.6% from one year ago. After adjusting for inflation, the real index is up 0.8% month-over-month and up 3.4% year-over-year.
Long-Horizon Investing, Part 1: A Ton of Feathers
The aim of this series is to move beyond the simplistic example of goals that exist at a single point in the future to consider retirement, the most common purpose for long-term investing for an individual.
Hedge Funds Cut Stock Leverage at Fastest Pace Since 2020 Crash
As the cross-asset sell-off engulfed Wall Street last week, hedge funds ramped up their bets against stocks while one measure of their market positioning plunged the most since the March 2020 crash.
As the Economy Slows, Favor Consistency Over Volatility
In many ways, 2023 continues to be the mirror image of 2022, with the most volatile assets being some of the best performers for much of the year.
The Match Continues: The Fed vs. The Market
Wednesday’s Federal Reserve (Fed) decision to keep the federal funds rate unchanged wasn’t a surprise at all. Markets, as we argued last week, had predicted that the Fed was going to stay put and that is what it did.
Offense or Defense? Direct Lending Can Play Both
A balanced portfolio needs assets with strong return potential and those that may provide downside mitigation. We believe direct lending can deliver both—a potentially valuable feature, particularly in today’s uncertain market.
Investors’ Shift From Fear to Greed Presents Historic Opportunities
We started RBA in 2009 primarily because we thought the US stock market was entering one of the biggest bull markets of our careers. However, most investors did not agree with our bullishness. Now, risk aversion seems a thing of the past.
The Compelling Opportunity in Midcaps
Investors think about companies as being either large or small. In between those extremes are midcaps. Based on historical performance and fundamentals, midcaps should command more attention.
Dallas Fed Manufacturing: Business Conditions Continue to Worsen in September
The Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for September. The latest general business activity index came in at -18.1, down 0.9 from last month. This is the first monthly decline in the general business activity index in the past 4 months and marks the 17th consecutive month it has been in contraction territory.
Morgan Stanley’s Wilson Sees Risks Rising for US Consumer Stocks
Consumer stocks, one of the brightest corners of the market this year, are about to lose their shine as risks build for the sector, according to Morgan Stanley’s Michael Wilson.
Stocks Flash Recession Warning as Trouble Spreads to Industrials
US small-cap and industrial stocks are dropping, typically signals of a recession, but in a year where equities have already beaten expectations some investors are dismissing the moves as little more than noise — for now.
Why ESG Investing Still Matters
Environmental, social, and governance policies and investing have become targets of political derision. That doesn’t dampen the need for corporations and governments to pursue agendas tied to climate change and diversity, equity, and inclusion.
Call Me Ken
I, however, like all Kens, have always had a firm grip on the remote for 100% of the time but I decided to let her have her way just once.
Hedge Fund Manager Sees Opportunities in International Equities
When it comes to sheer equities performance over the last 30 years, there’s no denying the United States compared to the rest of the world. However, that could be changing according to one hedge fund manager.
Why Junior Gold Stocks Could Be Gearing Up For A Glittering Performance
Many of the speakers and attendees were bullish on the physical metal, pointing to gold’s resilience in the face of a very strong U.S. dollar and multiyear-high yields.
Beyond AI: Reasons to Believe in Technology Stocks
Artificial intelligence (AI) is widely viewed as the fuel for the rocket known as growth and technology stocks in 2023. While there is truth to that notion, there’s more to the story. Including the “magnificent seven” cadre of mega-cap growth names that are powering the market higher this year.
Workplace Retirement Voice: Why Wealth Advisors Should Embrace Workplace Retirement Plans
For many wealth advisors, workplace retirement plans are either a burden or an afterthought, according to John Kutz, National Retirement Plan Strategist at Franklin Templeton. He and his team explore why embracing these plans can benefit their practice, and their clients.
Despite Fund Managers Exiting Emerging Markets Assets, Opportunities Exist
Fund managers have been avoiding emerging markets (EM), especially when it comes to China. However, that doesn’t mean there aren’t opportunities that exist.
Quarterly Market Outlook: A Delicate Balance
The Federal Reserve weighs the data while investors wonder: Is the rate-hike cycle over?
More Personal Portfolio: Biotech, Commodities, and Gold
Last week we began exploring the details of my personal portfolio. This week we will finish and then move back to our discussion of various cycles.
Wired for the Future
With the rapid pace of urbanization, there’s an increasing demand for efficient and sustainable power solutions, and ABB’s advancements in smart grids and renewable energy integration are pivotal in meeting the demands of this transition.
Where to Add Risk in Multi-Asset Portfolios Right Now
While some stocks may seem expensive, there are areas of opportunity that feature attractive valuations and growth catalysts, according to the Franklin Templeton Investment Solutions team.
Treasury Yields Snapshot: September 22, 2023
The yield on the 10-year note ended September 22, 2023 at 4.44%, the 2-year note ended at 5.10%, and the 30-year at 4.53%.
What You Might Have Missed at Yesterday’s Equity Symposium
Yesterday’s Equity Symposium brought together industry thought leaders. Attendees were treated to actionable information. Additionally, the panels presented cutting-edge thinking around equities.
The Importance of Valuations in High Concentration Markets
Given concentration risk, understanding what a strategy and portfolio owns is more important than ever in current markets.
Underlying Inflation Gauge Falls for 14th Straight Month
The latest Underlying Inflation Gauge full data set for August is 3.0%, down 0.1% from last month, while the prices-only measure is 2.3%, unchanged from last month. Current Headline CPI is now 3.7% and Core CPI is 4.3%.
Cathie Wood’s Ark Buys Rize ETF in Big Bet on European Growth
Cathie Wood’s Ark Investment Management has acquired a fellow exchange-traded fund issuer in its biggest push yet into Europe’s nascent market for trend-driven investing.
Catching the Wave: Why Secular Growth Matters
In our view, the specific market dynamics that influence a company's sales growth prospects have a greater impact on equity returns than the overall direction of the economy.
Gaining Leveraged Exposure to Gold
In State Street Global Advisors’ recent Gold ETF Impact Study, the firm reported that “36% of surveyed investors don’t invest in gold because they don’t know enough about the ways that they can invest in gold.”
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.