The U.K.’s “Freedom Day” has been declared a damp squib by taxi firm Addison Lee, and it’s hard to disagree. Even with hospitalizations and deaths low — and cases falling — mobility is plateauing and below pre-pandemic levels in some areas.
Surveying the recent stretch of records for the S&P 500 Index, you’d be tempted to think that when it comes to markets, everything is awesome. Inflation fears have eased, economic indicators are strengthening and the Federal Reserve remains accommodative.
Asian/European Markets
Biden's Neo-Populist Economic Doctrine
Within the space of just half a year, US President Joe Biden has completed a necessary economic-policy regime shift that started chaotically under his predecessor.
Rick Bookstaber on the Risk of a Leverage Liquidity Cascade
Rick Bookstaber warns that investors face the risk of a “leverage liquidity cascade,” where margin calls would trigger forced selling across asset classes.
Is China’s Bear Market an Opportunity?
China’s stock market pullback this year has been in line with the average annual drawdown; historically, this volatility has tended to produce double-digit annualized gains.
The Stay-at-Home Recovery Could Outlast the Pandemic: Lionel Laurent
The U.K.’s “Freedom Day” has been declared a damp squib by taxi firm Addison Lee, and it’s hard to disagree. Even with hospitalizations and deaths low — and cases falling — mobility is plateauing and below pre-pandemic levels in some areas.
China Stocks Meltdown – The Truth Be Told
Although the recent crash or meltdown of prominent China stocks was for the most part political in nature, valuation also played a role.
World Markets Update: August 2, 2021
Six out of eight indexes on our world watch list posted gains through August 2, 2021. The top performer is France's CAC 40 with a gain of 20.26%, our own S&P 500 is in second is with a gain of 16.80%, and India's BSE SENSEX is in third with a gain of 10.89%. Coming in last is Hong Kong's Hang Seng with a loss of 3.66%.
Hanging by a ZIRP Thread
The stock market and economy are hanging by a thread over an economic abyss. That thread is zero interest rate policy (ZIRP).
The Bold Return to In-Person Conferences
Last week witnessed a bold adventure in in-person conferencing… and lessons in how to manage clients (and their portfolios) in an unprecedented market environment. But the memorable moment at the ENGAGE conference was David Kelly’s statement that bitcoin is a cult and not a currency.
July Markit Manufacturing: Record High, Also Record Supply Delays and Price Pressures
The July US Manufacturing Purchasing Managers' Index conducted by Markit came in at 63.4, up from the final June figure and a record high. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
How Advisors Can Maximize After-Tax Returns
Frank Pape is the senior director, portfolio consulting for Russell Investments’ advisor and intermediary solutions business. In this interview, he discusses the latest research on how advisors can maximize the after-tax income for their clients.
The Metaverse: What Every Early-Stage Investor Needs to Know
You may not be familiar with the term metaverse, but if you’ve been a consumer of popular books, movies and video games over the past 30 years or so, you probably are aware of the concept.
Policy Errors Have Consequences
I am worried the Fed will either let inflation become psychologically entrenched, or wait too long to stop it and spark crisis with a too-hasty response, but there are other possibilities. None are especially good.
End of the Recovery and Reflation Trade?
The yield curve is a powerful indicator. More powerful than many others as May West reminds us. As the greatest reopening momentum now appears behind us, today, our All-Weather portfolio looks more all-weather than it did earlier in the year.
Thinking About Macro
Howard Marks doesn’t make bets on economic predictions. That’s especially true now when the biggest wildcard is inflation – a phenomenon no one fully understands. But just because something is unknowable doesn’t mean it’s unimportant. That’s why Howard has devoted his latest memo to a topic he largely disavows: macro forecasting.
A Market in Flux Equity Investment Outlook Third Quarter
Equities continued to rally in the second quarter, but the market remains undecided about whether the recent uptick in inflation is more likely to be transitory or persistent.
Measuring EM Stocks’ Undervaluation
What is the degree of Emerging Markets (EM) stocks’ undervaluation relative to United States (US) equities?
Could China’s Regulatory Crackdown Be Good for Credit?
China’s regulatory crackdown on education and tech companies led early this week to a dramatic sell-off that started in Chinese stocks and extended into offshore Chinese currency and credit markets.
Can Onshore Stocks Offer Shelter from China’s Market Storm?
Chinese stocks have tumbled amid a regulatory crackdown on education and technology companies.
BNY-Backed Crypto Platform Fireblocks Seals Unicorn Status
Fireblocks has raised $310 million in a series D round that values the digital-asset platform at $2 billion, sealing its status as a unicorn.
The Law of Fashion
The great philosopher, John Locke, brilliantly captured the way the world works.
Brace (But Not Too Much) for the CPI Roller-Coaster
Hang on to your hat.
Real Yields Drop to Record Low, Investors Lap Up Inflation Debt
The real yield on 10-year Treasuries fell to a record low as concerns mounted over the outlook for economic growth even as investor flows fueled appetite for inflation-linked debt.
Weekly Market Snapshot
Chief Economist Scott Brown discusses the latest market data.
A Better Way to Pay for Infrastructure Investments
A revival of the Obama-era Build America Bonds would raise funds with less taxes.
Pushing for Productivity
The debate over post-pandemic scheduling often centers on productivity.
Venerated Voices™ Q2 2021 Rankings
We have announced our Venerated Voices™ awards for commentaries published in Q2 2021.
Tweedy Browne: We Are in the Early Stage of Value’s Resurgence
Tweedy Browne is one of the most respected value managers in the world, with a legacy that includes having Benjamin Graham and Warren Buffett as clients. In this interview, members of its investment committee explain why value investing is on the cusp of a resurgence.
Cuba and Venezuela Offer Cautionary Tales of Socialism
Recent protests offer hope that change may be right around the corner. But for now, gold and Bitcoin have helped fill the gap created by disastrously mismanaged currencies.
Three Disruptive Trends Set to Transform the Auto Industry
Over the next 10 years, the global automotive industry is expected to face one of the most significant changes in its history – the replacement of internal combustion engine (ICE) vehicles with electric vehicles (EVs).
The Consequences of Passive Investing
The impacts of passive investing are not as well understood as they should be.
Kazakhstan: A Developing Frontier Market with a Western-friendly Attitude
Frontier markets are popular to investors that seek higher returns, and Central Asia’s Kazakhstan is regarded with particular interest.
Yield Plunge Stirs Thoughts of 1% Treasuries on Delta Variant
Long-term Treasury rates tumbled to the lowest levels in months on Monday as the spread of the delta coronavirus variant called into question optimistic assumptions about economic recovery, also touching off a global stock market slump.
Global Economic Outlook: Dog Days Of Delta
A firm economic recovery is well underway, but the fast-spreading Delta variant is clouding the outlook.
What Triggered the Crash?
The title of this comment may seem odd, given that – as I write this on July 14, 2021 – the S&P 500 is at a record high.
3Q 2021 OUTLOOK
During the second quarter, global equity markets extended their strong performance.
India Is the New Hope for Tech Investors With Fund-Raising Blitz
Last week marked a watershed for technology startups in India, as a record bout of fundraising shifted attention to the world’s second-most populous market, just as investors were becoming spooked by a crackdown on internet companies in China.
Congress Takes Aim at China’s Recruitment of Talent in U.S.
Congress is aiming to hobble China’s ability to recruit scientists and academics in the U.S. as part of broader moves in Washington to confront the Asian nation’s growing clout.
Where To Invest Now: COVID And Correlation
COVID-19 resurgences appear to be the primary driver of moves across many markets this year.
Making Sense of Tesla’s Run-up
The only feasible explanation for the 10x run-up in Tesla’s stock price was a spreading narrative that it is more than a car company.
Delta Force, ECB's Strategy Review, State of the States
Delta has the potential to alter the path of recovery; central banks are rising to face heavy challenges; and U.S. states have survived a major stress event.
Still No Reason to Panic About Inflation
June’s Consumer Price Index (CPI) again surprised to the upside, adding fuel to headline-writers’ panic about inflation spikes and market speculation that the Federal Reserve (Fed) will need to act soon to rein in prices.
Bad ESG News Predicts Poor Stock Performance
New research shows that a company’s history of bad ESG events foretells poor stock performance. That contrasts with other research showing that ESG ratings lack such predictive power.
Summer Quarterly Commentary
“I continue to believe that the American people have a love-hate relationship with inflation. They hate inflation but love everything that causes it.”
Commodities Were the Top Performers in 1H 2021: Halftime Report
Commodities rallied 21% in the first half of 2021, making them the top performing asset group ahead of U.S., European, emerging market and non-Japan Asian stocks. The broad-based index of energy, agriculture, industrial metals and precious metals rose the same amount as high-flying Bitcoin, which pulled back after hitting its all-time high of more than $63,000 on April 13.
Xi’s Big Mistake
Xi has been trying to balance economic freedom and authoritarian control and it’s not working like it used to. Today we’ll review some recent events that illustrate where Xi went wrong.
Why It’s So Hard to Choose ESG Funds and ETFs
Choosing a fund or ETF with a positive ESG profile is fraught with risk. New research shows how carefully investors must weigh considerations such as screening criteria, factor exposures, industry concentration and expenses.
Alibaba – The Chinese Amazon
Alibaba – The Chinese Amazon is one of the stocks I get asked about all the time.
Q2 CIO Review and Outlook
CIO Robert Horrocks, PhD, discusses the short and longer-term prospects for Asia and EM in a rising inflationary environment.
Looking Back and Ahead: Eventful Decades for Emerging Markets
In 2010, 68% of the companies in Fortune Magazine’s Global 500 were domiciled in Group of Seven (G7) countries, compared with 17% in the E20* emerging-market (EM) countries.
What’s Next for Municipal Bonds After a Strong First Half of the Year?
As summer hits its stride, here are some musings about municipal bond performance to mull over as you unwind at the beach or on the couch (no judging!).
Energy Stocks Have Run Out Of Gas
Have energy stocks run out of gas?
Cathie Wood Sells China Tech Stocks, Warning of Valuation Reset
Cathie Wood’s Ark Investment Management has been selling Chinese tech stocks, with holdings in one of the firm’s funds falling to the lowest on record as Beijing’s crackdown on the sector intensifies.
Mid‑Cycle Investing: Time to Get Selective
The global economy is in a mid-cycle expansion, following peaks in policy support and growth, and what is likely a transitory spike in inflation. We expect global growth to moderate to a still above-trend pace in 2022.
ESG Bond Sales Sprint to $1 Trillion as Investors Force Change
Global issuance of bonds for environmental, social and governance goals look set to hit $1 trillion for the first time ever this year. That’s more than double what was sold in all of 2020 as more borrowers are pushed to sell ethical debt by investors.
Returning to Normal?
As the global economy continued to reopen and the recovery gained speed, markets reached new highs.
The Renminbi Outlook: The Journey Is the Reward
Many investors with exposure to the Chinese renminbi (RMB), having enjoyed a strong rally in the second quarter, are worried that policy uncertainties could hurt the currency’s short-term outlook.
Five Ways It’s Different This Time
“It’s different this time” is usually not true, but this time it is. Will we get amplifying extremes, or returns toward average? The feasible and likely scenario spells disaster.
The "Summer of Labor", Latin Lethargy and Sweden's Light Lockdowns
Workers have the upper hand, but not for long; Latin America stagflates; and Sweden provides a case study in COVID-19 response.
Supply Bottlenecks Likely to Ease by the End of the Year
Global demand for consumer goods has rebounded since the second half of 2020, driven initially by large government stimulus packages and, more recently, by resilient capital expenditures and swift vaccination rollouts in most developed markets.
The Second City: First in Derivatives
This is the story of how Chicago evolved from a wilderness outpost of 350 residents in 1833 to the global capital of derivatives trading.
Gold Is Catching a Bid on Pandemic and Inflation Fears. Are You Participating?
Gold notched its third straight week of higher prices as the yield on the 10-year Treasury dipped below 1.3% for the first time since February. The highly transmissible Delta variant was also ruled the most dominant strain of coronavirus in the U.S., threatening economic growth and raising uncertainty about the next interest rate hike.
Lockdown Leadership Unlikely To Last
In the last few weeks, stock market leadership reversed back to lockdown-era defensives as the stock market made new all-time highs.
Bonds Lead Rethink on Reflation as Central Banks Signal Support
Investors are backtracking on reflation bets, with the bond rally extending as central banks signal continued support and stocks falling as Covid-19 variants threatened reopening prospects.
Do-It-All Central Banks Risk Rates Flexibility With New Mission
Central bankers are engaged in the most sweeping rethink of their role in decades, spurred by the success of tight collaboration with governments in countering the pandemic crisis and a new political reality of increased demands on monetary policy makers.
Cryptocurrency, Blockchain, and Digital Assets: Love ‘em, Hate ‘em, but Don’t Ignore ‘em
Our Chief Market Strategist Stephen Dover explores blockchain and digital assets through an equity-investor lens with Anthony Hardy and Christophe Vande Walle.
Deep Questions Rarely Have Surface-Level Answers
The pristine surface of a lake on a perfectly calm and sunny day is easy on the eyes. Yet it usually offers no insight as to what lies beneath.
The Case For Deflation
With so much focus being placed on the inflation versus deflation debate of late and many financial pundits declaring a new inflation paradigm is upon us, what better a time to argue the case for deflation.
The Great Reflation Trade Is Buckling Around the World
The reflation trade that hammered bonds, drove stock gauges to repeated records and re-energized long dormant value shares this year is in rapid retreat.
Where Can You Fly Right Now? Covid Zero Rethink Spurs Asian Travel
With some countries in Asia starting to frame Covid-19 as a disease that needs to be managed rather than stamped out, there’s hope 2021 may not be the total travel writeoff feared a few months ago.
Markets Generally Favored the Wasatch Approach During the Second Quarter
For international investors, we believe the United Kingdom is home to many companies that offer an especially attractive combination of growth, value and quality.
International and Global Markets Commentary & Investment Outlook
With respect to managing portfolios in an inflationary environment, we have taken great care to emphasize companies that we believe have pricing power due to the mission-critical or value-add nature of their products and services.
Earnings Bounce Poses Quality Test for Equity Investors
As the world convalesced from the pandemic, stocks advanced in the second quarter and earnings rebounded across sectors.
Central Banking, Fast and Slow
As the global economy emerges from the COVID-19 shock, systemically important central banks are faced with the unenviable task of deciding when and how quickly to phase out extraordinary stimulus measures.
Capitalism Does Not Equal Corporatism - Pt. 2
In Part-2 of “Capitalism” does not equal “Corporatism,” we delve into why bailouts support corporatism and how to fix the system.
Record S&P 500 Masks a Fear Trade That's Gripping Stock Market
Surveying the recent stretch of records for the S&P 500 Index, you’d be tempted to think that when it comes to markets, everything is awesome. Inflation fears have eased, economic indicators are strengthening and the Federal Reserve remains accommodative.
Investors Don’t See End to Record-Breaking Equity Rally Just Yet
As stocks around the world continue to smash one record after another, some of the world’s biggest money managers have a simple message: Get used to it.
What Are Bond Investors Thinking? Their Three Top Concerns
Bond investors are worried, and who can blame them?
Inflation is Looming and Hiding in Plain View
We’ve had serious inflation, but don’t know it because the barometer we use to measure it ignores security price inflation.
What Will Reverse the Dangerous Trends in U.S. Society?
Rising inequality is but one symptom that the U.S. has swung to a society that is characterized by a disproportionate focus on individuals over the collective good. A national priority, similar to the Apollo moon project of the 1960s, is needed to reverse that trend, and there is an obvious candidate.
Bitcoin Mining Uses a Higher Mix of Sustainable Energy Than Any Major Country or Industry
There may be many reasons why people spread misinformation about Bitcoin. Much of the misinformation may originate from Ripple, which is currently under investigation by the Securities and Exchange Commission (SEC). The fintech firm is believed to employ a great number of bots on Twitter and other social media platforms with the intent of tearing Bitcoin down in favor of its own XRP coin.
The New Inquisition
Rather than my usual economic/investment letter, this week I want to take a more philosophical tack, looking at some of the challenges we face as a country and culture, beginning with the freedom of the press but then turning to technology and even wealth disparity. We will have to consider what freedom of speech meant in the 1800s, what it meant at the turn of this last century, and what it means today in a world of social media.
Investing Is Not a Trivial Pursuit
Raymond James Chief Investment Officer Larry Adam examines the current investing environment through the lens of classic games.
Economic Commentary: Themes of the First Half of 2021
Reflecting on a busy six months of vaccines, inflation, trade relations, supply chains, and policy challenges.
The Sobering News for Private ESG Impact Investments
As predicted by theory, increased investor demand has resulted in higher returns for public stocks with good environmental, social and governance (ESG) characteristics. Unfortunately, that means future returns will be lower for those stocks. New research confirms that this is also the case for private “impact” investments.
Under the Latin American Volcano
Most of Latin America is still far from the horrific conditions prevailing in Venezuela, where output has fallen by a staggering 75% since 2013.
Will Growth Overcome Value?
Over the past few months, we’ve heard plenty about the rotation to value putting pressure on growth stocks.
Spotlight Associated British Foods: Organizational Capital at Work Feeding Britons
Headquartered in London, UK, Associated British Foods is a diversified food ingredients and retail group and owner of the global brands Twinings, Ovaltine and Mazola.
Govcoin
Let me begin with a confession. Govcoin is a made-up name.
Tesla Stall Shows Analyst Rift on Stratospheric Valuation
Few companies have been as polarizing on Wall Street as Tesla Inc. -- and the lackluster run that’s weighed on the S&P 500 Index this year has done nothing to lessen it.
How I Invest For Inflation
Here is how I am positioning my firm’s portfolio for the risk – the possibility, not the certainty – of long-term inflation.