As the inflation discussion continues to gather momentum, please join guest speakers VanEck Portfolio Managers Shawn Reynolds and Roland Morris, Deputy Portfolio Manager Charles Cameron, and sector specialists Veronica Zhang from VanEck’s natural resource equity and commodity strategies.
It seems like it’s been awhile since there’s been such a strong alignment in commodities and natural resources, from tailwinds associated with the global recovery to strong fundamentals, valuations and growth prospects across industries at a company level. The VanEck team will guide you through an in-depth look at the latest trends, their implications and potential opportunities with an overview on our diverse solutions available to access this space.
A discussion of the potential benefits of owning a basket of high-quality stocks with relative price stability given the current market and economic outlook. During this seminar, listeners will hear the case for multi-factor based investing strategies from one of the leading non-beta ETF providers, First Trust. Topics include what factors are commonly used, how these factors have performed over time, and the reasons many advisors have gravitated toward the First Trust Capital Strength ETF.
The late-February spike in U.S. Treasury bond yields sent ripples throughout the global markets. As yields surged to the highest level in a year, stocks and commodities sold off sharply, while the dollar rallied.
Much statistical analysis in finance depends on the assumption that variables have normal distributions. This assumption is far from correct. As a result, as Nassim Nicholas Taleb has rightly pointed out, most statistical results in finance are wrong. Now, a disciple of Taleb has tried to extend Taleb’s research by relating it to an obscure mathematical concept.
Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? Are we in the beginning stages of another secular bear?
The February US Manufacturing Purchasing Managers' Index conducted by Markit came in at 58.6, down 0.6 from the 59.2 final January figure. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
A goal of environmental, governance and sustainable (ESG) investing is to reduce carbon emissions and improve the quality of the environment. New research shows this effort is succeeding.
Quick take: Based on the February S&P 500 average of daily closes, the Crestmont P/E is 166% above its arithmetic mean and at the 100th percentile of this fourteen-plus-decade monthly metric.
The markets took a tumble to start this week as rising interest rates and inflationary pressures begin to weigh on outlooks. Those worries quickly diminished as Jerome Powell changed the rules to reassure Wall Street that “QE” is here to stay.
Yields have jumped so much, in fact, that they’re giving stocks a serious run for their money. The 10-year yield is now higher than the S&P 500 dividend yield, which may have added to the selling pressure that cost stocks close to 2.5% yesterday.
What normalcy will it be? I don’t expect to simply go back to the way things were. The economy as it was structured in December 2019 is gone forever. The world is different now. The economy will be different, too.
The S&P 500 dropped three out of the five days this week, ending Friday down 0.48% from Thursday. The index is now up just 1.47% YTD and is 3.14% off its record close.
Valid until the market close on March 31, 2021.
The S&P 500 closed February with a monthly gain of 2.61% after a loss of 1.11% in January. At this point, after close on the last day of the month, four of five S&P 500 strategies are signaling "invested" — Vanguard Total Stock Market ETF (VTI), Vanguard FTSE All-World ex-US ETF (VEU), Vanguard REIT Index ETF (VNQ), and Invesco DB Commodity Index Tracking (DBC) — unchanged from last month's quadruple "invested" signal.
Despite the recent weakness in equities, Raymond James CIO Larry Adam expects positive stock growth over the next 12 months.
We hope you enjoy Harold Evensky's latest NewsLetter.
The Queen’s Gambit miniseries helped propel Netflix to a winning earnings report last quarter, but in fact the chess strategy it is named after has helped propel chess players to winning games for decades.
For the last year or two big tech has been hot, so has new tech. For prudence sake, it might be time to take a little money off the table. No one can time the market, and the bubble has risen far further and for a lot longer than any rational person could have predicted.
Inflation is back on investors' minds lately, and some may be wondering how to position their portfolios to confront this potential new scourge.
From cloud computing and automation to self-driving cars, technology continues to be one of the world’s hottest sectors. Our Chief Market Strategist Stephen Dover and Portfolio Managers Donald Huber and John Remmert believe active investing in technology and innovation is a global story, and government support and spending in next-generation technologies is likely a long-term positive.
Even the most promising future can change drastically by a life-threatening event. A healthy individual may require around-the-clock care and supervision after an accident, creating the need to solve complex financial planning problems.
The latest Chicago Purchasing Manager's Index, or the Chicago Business Barometer, fell to 59.5 in February from 63.8 in January, which is in expansion territory. Values above 50.0 indicate expanding manufacturing activity.
The rout in popular technology shares accelerated after the 10-year Treasury rate spiked as much as 23 points, fueling worry that the Federal Reserve will be forced to raise interest rates.
Here is an advance preview of the monthly moving averages we track after the close of the last business day of the month.
The latest Conference Board Leading Economic Index (LEI) for January was up 0.5% from the December final figure of 109.7.
Today’s low bond yields and high equity valuations have led many to jettison the traditional 4% initial safe-withdrawal rate assumption. But I will show that the optimal “safe” withdrawal rate depends considerably on the retiree.
The Great Inflation of the 1960s and 70s, the earliest stages of which were already underway when Graham spoke at the St. Francis Hotel, eventually produced some of the most astonishing economic dislocations in U.S. history.
More than 90% of investors believe the economy will be more robust in 2021, with a consensus it’s a V-shape recovery. For the first time since January 2020, chief investment officers want to increase capital spending rather than improve balance sheets.
Today the National Association of Realtors released the January data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales took a step backward in January as inventory constraints continue to hold back prospective buyers."
Target date funds should be designed to reduce the risk of rash selling.
Franklin Small Cap Value Fund Portfolio Manager Steve Raineri discusses why he thinks the near-record underperformance of higher-quality, profitable small-capitalization (small-cap) value stocks relative to lower-quality, unprofitable companies could present a compelling opportunity for longer-term investors as the US economy continues to recover from the COVID-19 pandemic.
Tencent Holdings Ltd.-backed Yuanfudao is seeking fresh funding at a valuation of more than $20 billion, people familiar with the matter said, as the cash-burning battle in China’s online education arena shows no sign of abating.
Turmoil in mega-caps like Apple Inc. is stirring investor anxiety. But for professional stock pickers, it’s mostly good news when the market’s biggest companies loosen their grip.
Hydrogen’s potential as an energy source is attracting renewed attention. It may take 20 years or so for the potential to be realized. But the effects are likely to be felt within the planning horizons of most long-term investors—a good reason to start thinking now about the investment implications.
I will break down the levels of a standard marketing funnel and provide specific steps that financial advisors can take to create their own.
Casualties are piling up across the stock market as bond yields rise.
The biggest slide in months for Cathie Wood’s funds is testing the resolve of investors who plowed billions of dollars into one of the hottest firms on Wall Street.
One of the most popular investment vehicles in recent years is the Special Purpose Acquisition Companies or “SPACs” as they’re commonly called. While SPACs have been around for years, they’ve increasingly become the investment model of choice for Wall Street firms and fund managers who promote them.
The GMO Asset Allocation Team has released its latest 7-Year Asset Class Forecasts through January 2021.
Looking at the latest economic data reveals V-shaped recoveries in many goods-based indicators; while services has more catch-up to do.
We think this is an excellent time to ponder the thoughts of Buffett and Munger.
Calls of a market bubble might indicate low returns over the next 5-10 years, but not all equities are overvalued. The S&P 500 has been led higher by just a handful of companies that make up a large percentage of the index, and companies that have lagged may now provide better risk-adjusted returns as the economy recovers. We highlight some of the valuation metrics that look stretched and some thoughts on tactical allocation ideas.
A look at two ingredients that make a meaningful impact on performance in the mid cap space.
With today's release of the December S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index saw a 1.25% increase month over month which is cut to 1.1% with inflation adjustment. The non-seasonally adjusted national index saw a 10.4% YoY increase.
The headline number of 91.3 was an increase from the final reading of 88.9 for January. This was above the Investing.com consensus of 90.0.
What recently transpired in GameStop's stock was truly epic. More astonishing, though, was the ease at which a nihilistic narrative took hold in the absence of fact. To me it was telling and an opportunity to improve my thinking.
For bond investors, inflation is pretty much all bad news, eating into the value of future returns. For equity traders, the tidings can be less categorically awful, given the ability of certain companies to wring profits from higher prices.
The obstacles to higher yields in the world’s biggest debt market are slowly melting away.
U.S. stocks have the highest CAPE ratio of any global equity market, but they are still the place to invest. But the inventor of that metric, Robert Shiller, says that stocks are indeed risky.
All eight indexes on our world watch list posted gains through February 8, 2021. The top performer is Hong Kong's Hang Seng with a gain of 7.67%, India's BSE SENSEX is in second is with a gain of 7.53% and Tokyo's Nikkei 225 is in third with a gain of 7.08%. Coming in last is London's FTSE with a gain of 0.98%.
Things are looking up for the US economy. Later this week we'll get an update on real GDP growth for the 4th quarter of 2020. We estimate that'll be revised up to a 4.3% annual rate of growth from a prior estimate of 4.0%.
Political change, continued fiscal support will drive municipal markets in 2021, although outcomes are likely to vary.
What a week for price data! We have been writing about the possibility of higher inflation for months now, most recently here. We have also highlighted the most likely assets to benefit from higher inflation like copper, oil and energy stocks.
Weighing the costs of global vaccine access, minimum wage and the energy rally.
There are times when you are called to advocacy. As a profession, this is one of them. Advisors are the stewards, the informed, the protectors, and if there is a force that stands between the next generation of investors and financial devastation, it is you.
Investment managers produce annual equity return forecasts, and the consensus is much more pessimistic than that of academics. I’ll take a closer look at why the forecasts are so different and the implications for advisors working with clients.
Many investors think there are only two options in a market where participants have become overly exuberant, either 'I want in' or 'Get me out.' Our strategies are more nuanced, and we believe fit better with what we expect to transpire.
That there was a price “bubble” that burst in the American political economy from 1835 to 1845 is beyond question. The challenge is to reconcile the data sets for commodity and securities prices, interest rates and production volumes with the narratives of what happened.
Liquidity is valuable to investors. Therefore, they should demand higher expected return (a risk premium) for less liquid stocks. But new research shows they have not earned that extra return in public equity markets.
Rather than going deep into one theme, this week we will do a “Random Thoughts” from the Frontline. Today we will cover several topics in shorter form: valuations, infrastructure, the debacle in Texas, and a lot more.
Millions of Texans were without power this week when the state was hit with a record setting winter storm. An overhaul of its aging infrastructure would require massive amounts of metals and other materials, which would be positive for miners and producers.
The yield on the 10-year note ended February 19, 2021, at 1.34%, the 2-year note ended at 0.11%, and the 30-year at 2.14%.
In late 2020, a new kid emerged on the bargain-of-the-decade block. UK stocks, and notably UK value, reached very cheap levels relative to value stocks in other developed economies. Today, UK value remains at remarkably low valuations relative to most of its fundamentals.
BlackRock Global Allocation Fund portfolio manager Russ Koesterich explains why he expects volatility to drop -- and cyclicals outperform.
One of the most common complaints I hear from investors is that their advisors or brokers like to tell them when to buy, but never tell them when to sell. Whether those criticisms are fair or not, the sell decision is certainly the most vexing decision that investors face.
Jerome Powell enters the final year of his term as Federal Reserve chair enjoying the support of labor unions with influence in Joe Biden’s White House, an advantage as the administration prepares to decide later this year whether to reappoint the central bank chief.
A vaccine-fueled economic recovery and investors’ surging appetite for risk mean that the European equity rally can keep going in 2021, according to strategists.A vaccine-fueled economic recovery and investors’ surging appetite for risk mean that the European equity rally can keep going in 2021, according to strategists.
This morning's release of the January Existing-Home Sales showed that sales rose to a seasonally adjusted annual rate of 6.69 million units from the previous month's revised 6.65 million. The Investing.com consensus was for 6.61 million. The latest number represents a 0.6% increase from the previous month.
FINRA has released new data for margin debt, now available through January. The latest debt level is up 2.6% month-over-month and is at a record high.
It’s tempting these days for some investors to question the role of fixed income in portfolios. After all, real yields have plunged, potentially leading to less income today and smaller capital gains tomorrow.
Many investors are currently focused on expectations for the market, and more specifically, the choice between value and growth stocks, given the elevated level of uncertainty.
In this webinar, Chief Investment Officer Todd Ahlsten and Turner Miller will discuss key learnings from 2020, perspectives on events to be prepared for in 2021, and how investors can allocate to stocks that can do well whether the market moves up or down.
The Year of the Ox looks bullish for China with economists and analysts forecasting GDP growth of 8.1% and earnings growth of 18% for the MSCI China Index. But February holds key developments for China that could impact this outlook, including stock delistings, trade, and COVID-19.
New virus variants are stoking COVID-19 angst, but we see vaccination programs opening the door to economic and market recoveries.
It’s another milestone for Cathie Wood’s Ark Investment Management. Less than two weeks after hitting $50 billion in assets, the red-hot firm now manages more than $60 billion, as funds flow into Wood’s exchange-traded funds at the fastest pace ever.
I offer 15 explanations for the bubble in stock prices and a single explanation for the one in bond prices. Those bubbles could deflate for any of 10 reasons I also identify, severely diminishing the retirement savings of baby boomers.
Over the last two weeks, we have seen how a cadre of retail traders on Reddit can lay siege on a group of hedge funds that had shorted the stock of the retail company GameStop. We saw the price of GameStop rise from about $20 at the beginning of the year to a peak of $347.5 on January 27. Yesterday, on February 4, it closed at $53.50. This is a brick-and-mortar company that sells video games and lost about $20 million last year. Today we will explore deeper issues surrounding the GameStop saga.
Although US technology equities tend to dominate the conversation about technology investing, Franklin Equity Group’s John Remmert and Don Huber believe there are many innovative international technology companies that tend to get overlooked.
As discussed in Friday’s #Macroview, stimulus, mainly when it comes from debt, does not create organic economic growth. In the second part of this analysis, we delve into why Powell is wrong when he says more stimulus will solve the employment problem.
Is inflation coming? At some point, yes. We know what generates inflation, and we will be watching for it. Until then, we do not expect a wildfire in inflation land.
A brief monthly update on what's happening in the municipal bond market.
The Census Bureau's Advance Retail Sales Report for January was released this morning. Headline sales came in at 5.3% month-over-month to one decimal and was well above the Investing.com forecast of 1.1%. Core sales (ex Autos) came in at 5.9% MoM.
The National Association of Home Builders (NAHB) Housing Market Index (HMI) is a gauge of builder opinion on the relative level of current and future single-family home sales. It is a diffusion index, which means that a reading above 50 indicates a favorable outlook on home sales; below 50 indicates a negative outlook. The latest reading of 84 is up 1 from last month's 83.
U.S. Treasury yields rose to the highest since February 2020 and are at risk of climbing further, as investors start to factor in the full economic impact of a stimulus plan totaling as much as $1.9 trillion.
GameStop mania is off the front page, but the spirit that fed it still rules many corners of the market. Penny stocks are an area where sentiment remains boiling hot, earning the scrutiny of federal regulators.
Ever since the stock market bottomed in 2009 during the financial crisis, people have been coming up with reasons why the bull market was about to end. We heard every reason – Brexit, the end of Quantitative Easing, too much debt, COVID, etc. – and while we understood each may be a cause for consternation, we focused on valuations, which suggested the bull market would continue. Over time, math wins.
Emerging market equities have historically provided investors with outsized returns but have also been the biggest decliners during global equity market pullbacks. For the last 10 years they have lagged the performance of US Equity markets by a considerable margin. But with attractive relative valuations, higher earnings growth forecasts, and underrepresentation in global portfolios, we believe they are set to reverse that trend and outperform US markets over the next 5-10 years.
The object of the game was to get to the finish line first and then become the leader the next round. The stock market has its own game of “Simon says” and that is in the mall property world.
How can you help a family foundation plan for rapid growth in a way that is consistent with their wealth management objectives?
Are proposed fiscal policies and student debt forgiveness too much of a good thing?
Our Chief Market Strategist Stephen Dover believes cryptocurrency (crypto) is evolving into its next cycle of innovation. As an integral foundation for an alternative financial and internet ecosystem, crypto’s disruptions, opportunities, risks, and long-term implications are worth watching.
Capital Growth
The Inflation Trade Anew
As the inflation discussion continues to gather momentum, please join guest speakers VanEck Portfolio Managers Shawn Reynolds and Roland Morris, Deputy Portfolio Manager Charles Cameron, and sector specialists Veronica Zhang from VanEck’s natural resource equity and commodity strategies.
It seems like it’s been awhile since there’s been such a strong alignment in commodities and natural resources, from tailwinds associated with the global recovery to strong fundamentals, valuations and growth prospects across industries at a company level. The VanEck team will guide you through an in-depth look at the latest trends, their implications and potential opportunities with an overview on our diverse solutions available to access this space.
Investing in Low-Volatility, High Quality Stocks to Play Portfolio Defense
A discussion of the potential benefits of owning a basket of high-quality stocks with relative price stability given the current market and economic outlook. During this seminar, listeners will hear the case for multi-factor based investing strategies from one of the leading non-beta ETF providers, First Trust. Topics include what factors are commonly used, how these factors have performed over time, and the reasons many advisors have gravitated toward the First Trust Capital Strength ETF.
Message from the Recent Bond Market Turmoil
The late-February spike in U.S. Treasury bond yields sent ripples throughout the global markets. As yields surged to the highest level in a year, stocks and commodities sold off sharply, while the dollar rallied.
Understanding Fat Tail Returns
Much statistical analysis in finance depends on the assumption that variables have normal distributions. This assumption is far from correct. As a result, as Nassim Nicholas Taleb has rightly pointed out, most statistical results in finance are wrong. Now, a disciple of Taleb has tried to extend Taleb’s research by relating it to an obscure mathematical concept.
A Perspective on Secular Bull and Bear Markets
Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? Are we in the beginning stages of another secular bear?
February Markit Manufacturing: "Production growth near six-year peak but price gauge highest since 2011"
The February US Manufacturing Purchasing Managers' Index conducted by Markit came in at 58.6, down 0.6 from the 59.2 final January figure. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
ESG Investors are Having a Positive Impact on the Environment
A goal of environmental, governance and sustainable (ESG) investing is to reduce carbon emissions and improve the quality of the environment. New research shows this effort is succeeding.
Crestmont Market Valuation Update: February 2020
Quick take: Based on the February S&P 500 average of daily closes, the Crestmont P/E is 166% above its arithmetic mean and at the 100th percentile of this fourteen-plus-decade monthly metric.
Powell Changes The Rules On QE
The markets took a tumble to start this week as rising interest rates and inflationary pressures begin to weigh on outlooks. Those worries quickly diminished as Jerome Powell changed the rules to reassure Wall Street that “QE” is here to stay.
Government Bond Yields Have Surged, but Real Yields Are at Zero
Yields have jumped so much, in fact, that they’re giving stocks a serious run for their money. The 10-year yield is now higher than the S&P 500 dividend yield, which may have added to the selling pressure that cost stocks close to 2.5% yesterday.
The Great Jobs Reset
What normalcy will it be? I don’t expect to simply go back to the way things were. The economy as it was structured in December 2019 is gone forever. The world is different now. The economy will be different, too.
S&P 500 Snapshot: Down 0.5% from Thursday
The S&P 500 dropped three out of the five days this week, ending Friday down 0.48% from Thursday. The index is now up just 1.47% YTD and is 3.14% off its record close.
February Moving Averages: Up 2.6% from January
Valid until the market close on March 31, 2021.
The S&P 500 closed February with a monthly gain of 2.61% after a loss of 1.11% in January. At this point, after close on the last day of the month, four of five S&P 500 strategies are signaling "invested" — Vanguard Total Stock Market ETF (VTI), Vanguard FTSE All-World ex-US ETF (VEU), Vanguard REIT Index ETF (VNQ), and Invesco DB Commodity Index Tracking (DBC) — unchanged from last month's quadruple "invested" signal.
Treasury Auction Results Spark Drop in U.S. Stock Prices
Despite the recent weakness in equities, Raymond James CIO Larry Adam expects positive stock growth over the next 12 months.
NewsLetter - February 2021
We hope you enjoy Harold Evensky's latest NewsLetter.
The Queen’s Gambit Declined
The Queen’s Gambit miniseries helped propel Netflix to a winning earnings report last quarter, but in fact the chess strategy it is named after has helped propel chess players to winning games for decades.
What To Do Before The Tech Bubble Bursts
For the last year or two big tech has been hot, so has new tech. For prudence sake, it might be time to take a little money off the table. No one can time the market, and the bubble has risen far further and for a lot longer than any rational person could have predicted.
Inflation Is Coming for Your Wealth. Here's What Investors Can Do About It
Inflation is back on investors' minds lately, and some may be wondering how to position their portfolios to confront this potential new scourge.
The Birth of Global Tech Continues
From cloud computing and automation to self-driving cars, technology continues to be one of the world’s hottest sectors. Our Chief Market Strategist Stephen Dover and Portfolio Managers Donald Huber and John Remmert believe active investing in technology and innovation is a global story, and government support and spending in next-generation technologies is likely a long-term positive.
He May Never Walk Again
Even the most promising future can change drastically by a life-threatening event. A healthy individual may require around-the-clock care and supervision after an accident, creating the need to solve complex financial planning problems.
Chicago PMI Slipped in February
The latest Chicago Purchasing Manager's Index, or the Chicago Business Barometer, fell to 59.5 in February from 63.8 in January, which is in expansion territory. Values above 50.0 indicate expanding manufacturing activity.
Ten-Year Rate Spike Sinks Tesla and ARKK, Deepening Tech Carnage
The rout in popular technology shares accelerated after the 10-year Treasury rate spiked as much as 23 points, fueling worry that the Federal Reserve will be forced to raise interest rates.
Moving Averages: Month-End Preview
Here is an advance preview of the monthly moving averages we track after the close of the last business day of the month.
CB Leading Economic Index: LEI and CEI Up in January
The latest Conference Board Leading Economic Index (LEI) for January was up 0.5% from the December final figure of 109.7.
Retirement Planning in the Post-4% World
Today’s low bond yields and high equity valuations have led many to jettison the traditional 4% initial safe-withdrawal rate assumption. But I will show that the optimal “safe” withdrawal rate depends considerably on the retiree.
This Era May Come to Be Remembered as the Federal Reserve’s Third Great Mistake
The Great Inflation of the 1960s and 70s, the earliest stages of which were already underway when Graham spoke at the St. Francis Hotel, eventually produced some of the most astonishing economic dislocations in U.S. history.
The Only Reason To Be “Bearish” Is “No One Is Bearish”
More than 90% of investors believe the economy will be more robust in 2021, with a consensus it’s a V-shape recovery. For the first time since January 2020, chief investment officers want to increase capital spending rather than improve balance sheets.
Pending Home Sales Retreat in January
Today the National Association of Realtors released the January data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales took a step backward in January as inventory constraints continue to hold back prospective buyers."
What the Pandemic Taught Us About Target Date Funds
Target date funds should be designed to reduce the risk of rash selling.
A Value Investor’s View on US Small-Cap Stocks
Franklin Small Cap Value Fund Portfolio Manager Steve Raineri discusses why he thinks the near-record underperformance of higher-quality, profitable small-capitalization (small-cap) value stocks relative to lower-quality, unprofitable companies could present a compelling opportunity for longer-term investors as the US economy continues to recover from the COVID-19 pandemic.
Tencent-Backed Edtech Startup Seeks Funding at $20 Billion Value
Tencent Holdings Ltd.-backed Yuanfudao is seeking fresh funding at a valuation of more than $20 billion, people familiar with the matter said, as the cash-burning battle in China’s online education arena shows no sign of abating.
With Tech Oligarchy Shaken, Active Funds Are Having a Great Time
Turmoil in mega-caps like Apple Inc. is stirring investor anxiety. But for professional stock pickers, it’s mostly good news when the market’s biggest companies loosen their grip.
Five Things Investors Should Know About Hydrogen
Hydrogen’s potential as an energy source is attracting renewed attention. It may take 20 years or so for the potential to be realized. But the effects are likely to be felt within the planning horizons of most long-term investors—a good reason to start thinking now about the investment implications.
A Financial Advisor's Guide to Creating a Marketing Funnel
I will break down the levels of a standard marketing funnel and provide specific steps that financial advisors can take to create their own.
SPAC, Hedge Fund, Growth Stock Pain Builds in $1 Trillion Rout
Casualties are piling up across the stock market as bond yields rise.
Cathie Wood Fan Club Faces Big Test as Ark Funds Extend Rout
The biggest slide in months for Cathie Wood’s funds is testing the resolve of investors who plowed billions of dollars into one of the hottest firms on Wall Street.
"SPACs" - Probably Best To Just Say NO
One of the most popular investment vehicles in recent years is the Special Purpose Acquisition Companies or “SPACs” as they’re commonly called. While SPACs have been around for years, they’ve increasingly become the investment model of choice for Wall Street firms and fund managers who promote them.
GMO 7-Year Asset Class Forecast: January 2021
The GMO Asset Allocation Team has released its latest 7-Year Asset Class Forecasts through January 2021.
EleVation: Some V-Shaped Economic Data to Cheer
Looking at the latest economic data reveals V-shaped recoveries in many goods-based indicators; while services has more catch-up to do.
Beating Bobby Fischer
We think this is an excellent time to ponder the thoughts of Buffett and Munger.
Risks of High Equity Valuations Present Tactical Opportunities
Calls of a market bubble might indicate low returns over the next 5-10 years, but not all equities are overvalued. The S&P 500 has been led higher by just a handful of companies that make up a large percentage of the index, and companies that have lagged may now provide better risk-adjusted returns as the economy recovers. We highlight some of the valuation metrics that look stretched and some thoughts on tactical allocation ideas.
The Power of And
A look at two ingredients that make a meaningful impact on performance in the mid cap space.
December S&P/Case-Shiller Home Price Index: National Index up 10.4% YoY NSA
With today's release of the December S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index saw a 1.25% increase month over month which is cut to 1.1% with inflation adjustment. The non-seasonally adjusted national index saw a 10.4% YoY increase.
Consumer Confidence Up in February
The headline number of 91.3 was an increase from the final reading of 88.9 for January. This was above the Investing.com consensus of 90.0.
Using GameStop To Uncover Biases
What recently transpired in GameStop's stock was truly epic. More astonishing, though, was the ease at which a nihilistic narrative took hold in the absence of fact. To me it was telling and an opportunity to improve my thinking.
Inflation Angst Is About to Rewrite the Stock Market Playbook
For bond investors, inflation is pretty much all bad news, eating into the value of future returns. For equity traders, the tidings can be less categorically awful, given the ability of certain companies to wring profits from higher prices.
The Runway Toward Higher Treasury Yields Looks Free and Clear
The obstacles to higher yields in the world’s biggest debt market are slowly melting away.
Robert Shiller: U.S. Equities are Still the Place to Invest
U.S. stocks have the highest CAPE ratio of any global equity market, but they are still the place to invest. But the inventor of that metric, Robert Shiller, says that stocks are indeed risky.
World Markets Update: February 22, 2021
All eight indexes on our world watch list posted gains through February 8, 2021. The top performer is Hong Kong's Hang Seng with a gain of 7.67%, India's BSE SENSEX is in second is with a gain of 7.53% and Tokyo's Nikkei 225 is in third with a gain of 7.08%. Coming in last is London's FTSE with a gain of 0.98%.
Overstimulation on the Way
Things are looking up for the US economy. Later this week we'll get an update on real GDP growth for the 4th quarter of 2020. We estimate that'll be revised up to a 4.3% annual rate of growth from a prior estimate of 4.0%.
Municipal Bond Outlook: Recovering at Different Speeds
Political change, continued fiscal support will drive municipal markets in 2021, although outcomes are likely to vary.
Inflation Here, There and Everywhere
What a week for price data! We have been writing about the possibility of higher inflation for months now, most recently here. We have also highlighted the most likely assets to benefit from higher inflation like copper, oil and energy stocks.
Vaccine Nationalism, Minimum Wage, Rising Energy Prices
Weighing the costs of global vaccine access, minimum wage and the energy rally.
Don’t Let Your Clients’ Kids be the Next Reddit Victims
There are times when you are called to advocacy. As a profession, this is one of them. Advisors are the stewards, the informed, the protectors, and if there is a force that stands between the next generation of investors and financial devastation, it is you.
Are Equity Return Forecasts Too Pessimistic?
Investment managers produce annual equity return forecasts, and the consensus is much more pessimistic than that of academics. I’ll take a closer look at why the forecasts are so different and the implications for advisors working with clients.
Spectate or Speculate
Many investors think there are only two options in a market where participants have become overly exuberant, either 'I want in' or 'Get me out.' Our strategies are more nuanced, and we believe fit better with what we expect to transpire.
Small Change and The Depression of 1837-1843 – Part Five
That there was a price “bubble” that burst in the American political economy from 1835 to 1845 is beyond question. The challenge is to reconcile the data sets for commodity and securities prices, interest rates and production volumes with the narratives of what happened.
Is There Illiquidity in Equity Returns?
Liquidity is valuable to investors. Therefore, they should demand higher expected return (a risk premium) for less liquid stocks. But new research shows they have not earned that extra return in public equity markets.
Random Thoughts from the Frontline
Rather than going deep into one theme, this week we will do a “Random Thoughts” from the Frontline. Today we will cover several topics in shorter form: valuations, infrastructure, the debacle in Texas, and a lot more.
Texas Freezes, but a New Commodities Supercycle Could Be Heating Up
Millions of Texans were without power this week when the state was hit with a record setting winter storm. An overhaul of its aging infrastructure would require massive amounts of metals and other materials, which would be positive for miners and producers.
Treasury Snapshot: 10-Year Note at 1.34%
The yield on the 10-year note ended February 19, 2021, at 1.34%, the 2-year note ended at 0.11%, and the 30-year at 2.14%.
How COVID-19 Vaccines and Brexit Create the Trade of the 2020s
In late 2020, a new kid emerged on the bargain-of-the-decade block. UK stocks, and notably UK value, reached very cheap levels relative to value stocks in other developed economies. Today, UK value remains at remarkably low valuations relative to most of its fundamentals.
As Volatility Fades, Can Cyclicals Shine?
BlackRock Global Allocation Fund portfolio manager Russ Koesterich explains why he expects volatility to drop -- and cyclicals outperform.
How To Know When To Sell A Tech Stock?
One of the most common complaints I hear from investors is that their advisors or brokers like to tell them when to buy, but never tell them when to sell. Whether those criticisms are fair or not, the sell decision is certainly the most vexing decision that investors face.
Powell’s Approach to Recovery, Inflation Will Test Union Loyalty
Jerome Powell enters the final year of his term as Federal Reserve chair enjoying the support of labor unions with influence in Joe Biden’s White House, an advantage as the administration prepares to decide later this year whether to reappoint the central bank chief.
The Great Stock Rally of 2021 Seen Powering Ahead in Europe
A vaccine-fueled economic recovery and investors’ surging appetite for risk mean that the European equity rally can keep going in 2021, according to strategists.A vaccine-fueled economic recovery and investors’ surging appetite for risk mean that the European equity rally can keep going in 2021, according to strategists.
Existing-Home Sales Up 0.6% in January
This morning's release of the January Existing-Home Sales showed that sales rose to a seasonally adjusted annual rate of 6.69 million units from the previous month's revised 6.65 million. The Investing.com consensus was for 6.61 million. The latest number represents a 0.6% increase from the previous month.
Margin Debt and the Market: Up 2.6% in January, Continues Record Trend
FINRA has released new data for margin debt, now available through January. The latest debt level is up 2.6% month-over-month and is at a record high.
Fixed Income: Low Yields Don’t Tell the Whole Story
It’s tempting these days for some investors to question the role of fixed income in portfolios. After all, real yields have plunged, potentially leading to less income today and smaller capital gains tomorrow.
Uncertain Markets: Focusing on “Midfielder” Companies
Many investors are currently focused on expectations for the market, and more specifically, the choice between value and growth stocks, given the elevated level of uncertainty.
In this webinar, Chief Investment Officer Todd Ahlsten and Turner Miller will discuss key learnings from 2020, perspectives on events to be prepared for in 2021, and how investors can allocate to stocks that can do well whether the market moves up or down.
Year of the Ox: Bullish for China?
The Year of the Ox looks bullish for China with economists and analysts forecasting GDP growth of 8.1% and earnings growth of 18% for the MSCI China Index. But February holds key developments for China that could impact this outlook, including stock delistings, trade, and COVID-19.
What Vaccine Progress Means for Stock Markets
New virus variants are stoking COVID-19 angst, but we see vaccination programs opening the door to economic and market recoveries.
Cathie Wood’s ‘Phenomenal Rise’ Brings ETF Assets to $60 Billion
It’s another milestone for Cathie Wood’s Ark Investment Management. Less than two weeks after hitting $50 billion in assets, the red-hot firm now manages more than $60 billion, as funds flow into Wood’s exchange-traded funds at the fastest pace ever.
15 Explanations for the Bubble in Stock Prices
I offer 15 explanations for the bubble in stock prices and a single explanation for the one in bond prices. Those bubbles could deflate for any of 10 reasons I also identify, severely diminishing the retirement savings of baby boomers.
Lessons for Advisors from the GameStop Saga
Over the last two weeks, we have seen how a cadre of retail traders on Reddit can lay siege on a group of hedge funds that had shorted the stock of the retail company GameStop. We saw the price of GameStop rise from about $20 at the beginning of the year to a peak of $347.5 on January 27. Yesterday, on February 4, it closed at $53.50. This is a brick-and-mortar company that sells video games and lost about $20 million last year. Today we will explore deeper issues surrounding the GameStop saga.
There’s Much More to Tech Investing than the US Market
Although US technology equities tend to dominate the conversation about technology investing, Franklin Equity Group’s John Remmert and Don Huber believe there are many innovative international technology companies that tend to get overlooked.
Powell Is Wrong. More Stimulus Won’t Create Employment
As discussed in Friday’s #Macroview, stimulus, mainly when it comes from debt, does not create organic economic growth. In the second part of this analysis, we delve into why Powell is wrong when he says more stimulus will solve the employment problem.
Why Printing Money May Not Create Inflation
Is inflation coming? At some point, yes. We know what generates inflation, and we will be watching for it. Until then, we do not expect a wildfire in inflation land.
Monthly Municipal Market Update, January 2021
A brief monthly update on what's happening in the municipal bond market.
Retail Sales Up 5.3% in January, Beats Forecast
The Census Bureau's Advance Retail Sales Report for January was released this morning. Headline sales came in at 5.3% month-over-month to one decimal and was well above the Investing.com forecast of 1.1%. Core sales (ex Autos) came in at 5.9% MoM.
NAHB Housing Market Index: "High Demand Offsets Higher Costs – For Now"
The National Association of Home Builders (NAHB) Housing Market Index (HMI) is a gauge of builder opinion on the relative level of current and future single-family home sales. It is a diffusion index, which means that a reading above 50 indicates a favorable outlook on home sales; below 50 indicates a negative outlook. The latest reading of 84 is up 1 from last month's 83.
Surging U.S. Yields Show Stimulus Impact Still Getting Priced In
U.S. Treasury yields rose to the highest since February 2020 and are at risk of climbing further, as investors start to factor in the full economic impact of a stimulus plan totaling as much as $1.9 trillion.
Penny Stock Craze at Boiling Point With SEC Eyeing Social Media
GameStop mania is off the front page, but the spirit that fed it still rules many corners of the market. Penny stocks are an area where sentiment remains boiling hot, earning the scrutiny of federal regulators.
It's Not a Bubble
Ever since the stock market bottomed in 2009 during the financial crisis, people have been coming up with reasons why the bull market was about to end. We heard every reason – Brexit, the end of Quantitative Easing, too much debt, COVID, etc. – and while we understood each may be a cause for consternation, we focused on valuations, which suggested the bull market would continue. Over time, math wins.
Emerging Market Equities Set for Outperformance
Emerging market equities have historically provided investors with outsized returns but have also been the biggest decliners during global equity market pullbacks. For the last 10 years they have lagged the performance of US Equity markets by a considerable margin. But with attractive relative valuations, higher earnings growth forecasts, and underrepresentation in global portfolios, we believe they are set to reverse that trend and outperform US markets over the next 5-10 years.
Simon Says
The object of the game was to get to the finish line first and then become the leader the next round. The stock market has its own game of “Simon says” and that is in the mall property world.
Helping Clients Plan for Growth in Their Private Foundations
How can you help a family foundation plan for rapid growth in a way that is consistent with their wealth management objectives?
Weekly Investment Strategy
Student Loan Forgiveness, Super-Sized Stimulus, China-Australia Trade Tensions
Are proposed fiscal policies and student debt forgiveness too much of a good thing?
Cryptocurrency Fascination
Our Chief Market Strategist Stephen Dover believes cryptocurrency (crypto) is evolving into its next cycle of innovation. As an integral foundation for an alternative financial and internet ecosystem, crypto’s disruptions, opportunities, risks, and long-term implications are worth watching.