Can a High-Yield Allocation Still Offset Equity Volatility?
Should you be concerned that high-yield bonds didn’t predict last year’s equity market selloff? We don’t think so. In fact, we think investors should consider adding high-yield exposure to reduce overall risk.
Latest Jobs Data Show a Robust US Labor Market
The government shutdown and temporary displacement of some workers didn’t cause the strong US labor market to miss a beat. Today’s jobs report reinforces that gains have been accelerating. That’s good news for the economy and markets.
Municipal Bonds: Three Strategies for 2019
Municipal bond investors like their muni portfolios to play the role of Old Faithful in their overall asset allocation, providing safety and income. But that doesn’t mean that the investment environment is reliably the same. How can muni investors stay on track in 2019? They can adhere to these three strategies.
Brexit and Beyond: Investing in Europe amid Political Risk
With Brexit headlines dominating the European news, equity investors face an ongoing challenge. Building resilient portfolios requires a clear view of the long-term outlook for European companies that also reflects major short-term political uncertainties.
Nigeria and South Africa: Will Elections Bring Change for Investors?
Africa’s two largest economies will hold elections this year, and there’s a good chance the outcomes will lead to slightly faster growth and higher asset prices. But rising populism and nationalism remain a longer-term risk.
Are Global Stocks Divorced from Reality?
Equities declined around the world in 2018, and valuations fell sharply. The risks are clearly significant—but have stocks fallen too far? With earnings still expected to advance this year, we think selective investors can find attractive entry points.
US Government Shutdown—Dimensioning the Economic Effects
The US government shutdown is almost four weeks old, and there’s no sign that the standoff will be resolved anytime soon. How much has the shutdown impacted—and how much will it impact—economic growth? That depends on how long it lasts.
Populism Is Alive and Well: What’s the Big-Picture Impact?
It’s been two years since our initial research on populism, and populist-inspired policies continue to advance today on multiple fronts. As we see it, investors should expect more of the same ahead—influencing everything from global economic growth and inflation to policies directed specifically at the corporate sector.
It’s Different This Time: Risk Is Up and Here to Stay
Investors are likely to remember 2018 as the end of the era of easy money, low volatility and steady margin expansion. Investing will be more challenging in 2019—and diversification will be more important than ever.
Steering Equity Portfolios Through Stormy Style Seas
As volatility returned to global markets in 2018, return patterns for equity styles were very unstable. With more signs of turbulence ahead, investors should prepare to reduce the impact of short-term factor swings on portfolio performance.
US Equities: Could 2018 Pain Become 2019 Gain?
With US stocks facing multiple risks, it’s easy to lose sight of the positive trends that could help the market recover. In 2019, investors should search for select stocks with the right attributes to produce positive surprises in a potentially tricky market environment.
Don’t Rely on Cheap Oil to Power Equity Markets
It’s taken for granted in financial circles that lower oil prices are a boon for stocks, as they fuel an economy-boosting cycle in which money saved at the pump ultimately flows to the market. But oil prices that are too low could be too much of a good thing.
Wary of Emerging-Market Debt in 2019? You Shouldn’t Be.
There’s no sugarcoating it: 2018 was hard on emerging markets. But as Nietzsche (and Kelly Clarkson) said, what doesn’t kill you can make you stronger. And as 2019 begins, we see many pockets of strength—and opportunity.
Fewer Fed Rate Hikes in Store—But Not Because the Economy’s Faltering
As expected, the Fed hiked interest rates yesterday, but we now think there will be fewer hikes in 2019 than we previously called for. Not because the US economy is in trouble, but because the Fed is changing its approach to setting policy.
Is the US Housing Market Headed for a Correction?
The median price of a US single-family home has risen just over 40% since the last housing-market crash. While newspaper headlines may put readers on edge, our analysis indicates a gradual slowdown, not a bursting bubble—in most regions.
Faster, Smarter, More Efficient: Bond Investing Goes Digital
Bond investing is going digital. Find out how fixed-income managers who are integrating technology into their processes will be able to move from great ideas to executed trades faster and with better results than those who stick with the analog status quo.
Going Out of Style? Value vs. Growth
Recent market gyrations have many people asking: Is it time to pivot from a growth equities allocation to a value equities allocation? But that’s the wrong question. Instead of asking which style is likely to outperform, investors should be asking why they’re performing differently.
When It’s Rocky, Keep Your Bonds Balanced
The balanced approach to income generation for fixed income has certainly been under challenge. If we look at five-year yields—early September, 180 basis points; today they’re at about 2.8%. So, 100 basis points higher means you’re going to put price pressure on a balanced approach to generating income.
Ready and Able to Exploit Equity Volatility
Recent volatility in equity markets has certainly increased anxieties for many investors. But we believe in being prepared and ready to exploit volatility—to position a portfolio for what will drive excess performance over the next three to five years.
Less Favorable Growth-Inflation Mix in 2019
As we get ready to move into 2019, the macro backdrop points to a less favorable mix of growth and inflation at a time when central bank balance sheets are starting to shrink. Even if growth is simply returning to trend, the year ahead is likely to be more challenging—with populism and China looming as key downside risks.
New Year’s Resolutions for High-Income Investors
First, the bad news: high-income investors should saddle up for another bumpy ride in 2019. Now the good: with challenges come opportunities—and we see plenty on the horizon for investors who take the long view.
Digital Revolution Checklist: Questions to Ask Your Manager
When it comes to creating alpha, fixed-income managers that stay ahead of rapidly evolving technology will have an advantage over those that remain stuck in the analog world. But how do you assess how well your manager is navigating the changing technological landscape?
Active US Investors Gain Hedge Edge with Global Bonds
Rates are low globally. But yield isn’t the only component to consider when investing. Active US-based investors can take advantage of differences between the US dollar and other currencies to pick up a decided edge by investing in international bond markets.
Beyond the Sugar Rush: Strategic Stimulus for Chinese Stocks
Whenever the Chinese economy slows and its stocks take a serious hit, investors have come to expect the government to unleash large-scale fiscal and monetary stimulus. Another heaping spoonful of sugar may do more harm than good this time around, however. It’s time for the ailing market to take some medicine.
Is the New Brexit Deal Already Dead?
With cabinet ministers resigning by the hour, it’s tempting to think that British Prime Minister Theresa May’s Brexit deal with the European Union (EU) is dead on arrival, and that a hard Brexit is now the most likely way forward. But some form of soft Brexit is still the most likely scenario, in our view.
Market Sell-Off Shows Risk Is a Moving Target
Recent volatility reminds us that new risks are testing standard defensive equity strategies. Portfolios that offer downside protection need to go beyond standard risk models and position themselves for changing challenges ranging from trade wars to European political instability.
Will Energy Bonds Hold Up in a Volatile Oil Market?
A dramatic fall in oil prices, followed by a sell-off in high-yield energy bonds—is it time to worry about oil and gas companies again? Quite the contrary. The North American issuers that make up most of the world’s high-yield energy market are in a better position today than they have been in years.
Smoke and Mirrors: Earnings Flatter US Stock Valuations
After October’s sharp market declines, many investors might think US stocks look relatively cheap again. But equity valuations require closer scrutiny, and earnings metrics might be distorting the fundamental performance of businesses.
What Does a Divided US Congress Mean for the Economy and Markets?
Democrats took the House of Representative. Republicans held the Senate. What should investors expect from the US midterm election outcome? In the way of policy, not much. But the new political landscape may be good for markets.
Value Stocks Show Signs of Awakening
Value stocks have underperformed for years. But things may be changing. Cheaper stocks have shown signs of awakening recently, and several market forces could tip the scales in favor of value after a prolonged growth surge.
Red Wave/Blue Wave? Thoughts on the US Election
What might the US midterm election results mean for fiscal policy and financial markets? Probably not much if Democrats and Republicans end up splitting control of Congress. But a sweep by either party could lead to very different outcomes.
Looking Beyond the Equity Market Sell-Off
The intensifying global equity sell-off this week has rattled many investors. More turbulence can be expected in the short term, but the recent volatility isn’t particularly extreme in historical perspective, and long-term market fundamentals still look solid.
Crowded Trades, Liquidity Problems and Tech Solutions
Crowded trades have become all too common in fixed-income markets. But running with the crowd is risky, particularly when it comes to illiquid assets like bank loans that may not be easy to sell during a market downturn.
Bond Managers Power Up for the Digital Future
The digital revolution took its time getting to fixed income, but today it’s transforming the investing landscape. Already, major advances in technology are helping early adopters gain unique insights and act faster in markets where speed and alpha are increasingly and inextricably linked.
How Low Can Emerging Markets Go?
Emerging-market (EM) stocks fell in the third quarter and continued to diverge sharply from developed-market equities. While it may be too soon to buy into the weakness, investors should watch for signs that could herald a quick rebound.
Retirement and Beyond: Congress Considers Changes to the Way Americans Save
With the midterm elections looming and an executive order that underscores President Trump’s interest in how Americans save for retirement, it’s increasingly possible that Congress could approve substantive retirement reform in the coming weeks.
What the US Midterm Elections Mean for Policy and the Markets
Will Democrats retake the House of Representatives in the US midterm elections this fall? Will it matter for your investment portfolio if they do? Probably not so much, although a Democratic sweep of both houses could be more disruptive.
The Fed’s on Auto-Pilot—For Now
When it comes to the official US short-term interest rate, the Federal Reserve now appears to be on autopilot, with three more quarter-percentage-point increases likely by mid-2019. But after that, things should get more complicated.