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 variety of macro and fundamental factors are converging in emerging markets, signaling a period of resurgence. We believe structural changes, a supportive investment environment, and dynamic geopolitical influences make EM particularly attractive right now. For example, semiconductor production could soon become more critical to EM growth than commodities. Now may prove to be an inflection point, especially for portfolios focused on capturing this dynamic change. Please join us for an interactive webinar highlighting EM's changing nature and the added value of active management.
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.
"This pandemic has magnified every existing inequality in our society – like systemic racism, gender inequality, and poverty." Melinda Gates
This morning the Institute for Supply Management published its monthly Manufacturing Report for February. The latest headline Purchasing Managers Index (PMI) was 60.8, an increase of 2.1 from 58.7 the previous month and in expansion territory. Today's headline number was above the Investing.com forecast of 58.8 percent.
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.
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.
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.
Inflation is back on investors' minds lately, and some may be wondering how to position their portfolios to confront this potential new scourge.
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.
Personal Income (excluding Transfer Receipts) in January fell 0.14% and is down 0.6% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was down 0.48%. The real number is down 2.0% year-over-year.
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.
The energy sector is beginning to adapt to the realities of climate change. Who is best positioned for the future?
We think this is an excellent time to ponder the thoughts of Buffett and Munger.
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.
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.
As of February 15, the price of Regular and Premium were up twelve and thirteen cents, respectively, from the previous week and have risen for the 13th consecutive week. According to GasBuddy.com, California has the highest average price for Regular at $3.57 and Mississippi has the cheapest at $2.27. The WTIC end of day spot price closed at 61.70, up 2.7% from the last week.
The details of the January Producer Price Index showed a further surge in prices of raw materials. Breakeven inflation rates (the yield spread between inflation-adjusted Treasuries and fixed-rate Treasuries) have continued to move higher.
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.
Led by improvements in personal consumption-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.66 in January from +0.41 in December. All four broad categories of indicators used to construct the index made positive contributions in January, but three categories decreased from December. The index’s three-month moving average, CFNAI-MA3, decreased to +0.47 in January from +0.60 in December
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.
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%.
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.
Month-over-month nominal sales in January increased by 5.3%. Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, increased by 5%.
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.
There are signs that the food inflation that’s gripped the world over the past year, raising prices of everything from shredded cheese to peanut butter, is about to get worse.
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.
The Emerging Markets (EM) asset class is often labelled a commodity play for investment purposes. The argument is simple and directional; EM countries export commodities, so rising commodity prices are good for the asset class, whereas falling commodity prices hurt EM countries.
No advisor has asked me about the plight of the prisoners in The Shawshank Redemption. But I am frequently asked what an advisor should expect as they leave their current firm to transition to the RIA model.
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.
It isn't over and financial markets don't accept that yet. I realize suggesting anything negative about the virus is misanthropic, but the truth matters and the optics are misleading.
Happy Year of the Ox! Today China and a number of other Asian countries celebrate the Lunar New Year, also known as the Spring Festival.
Rob Arnott: “There hasn’t been a better time to be a value investor at any other time in my career. I look back at the tech bubble and I never thought I would see valuations stretched the way they were then. We're back to that, and then some." We invite you to revisit “Reports of Value’s Death Have Been Greatly Exaggerated” now published in the Financial Analysts Journal.
Stephen Dover, our Chief Market Strategist and Head of Franklin Templeton Investment Institute, shares four investment themes he’s thinking about as the world recovers from the COVID-19 pandemic.
Tesla announced in a public filing Monday that it bought $1.5 billion worth of Bitcoin as part of a corporate policy that allows the electric vehicle (EV) maker to invest in “alternative reserve assets,” including not just cryptocurrencies but also gold bullion and gold ETFs.
Our Fixed Income CIO Sonal Desai shares her investment views and strategies for the post-pandemic recovery. She explains why inflation looks likely to gain steam, and how the balance of fundamentals and valuations become especially crucial today when looking for attractive returns in fixed income.
Rick Rieder and team think that today’s potent policy cocktail holds important implications for the path of economic growth, markets and the value of a dollar.
In making the case for a mammoth $1.9 trillion economic relief package, President Joe Biden and his acolytes had maintained that economists across the board agreed that now is the time to go big in the fight against the pandemic.
For the first time in a long time, there’s a conversation on Wall Street about when equities might start to feel the heat from reflation signals in the bond market.
This commentary has been updated to include Friday morning's release of Nonfarm Employment. January's 49K increase in total nonfarm payrolls had revisions that resulted in 72K fewer jobs than previously reported. ("Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.") The Investing.com consensus was for 50K jobs gained and the unemployment rate to remain at 6.7%.
Inflation is not dead. It is not gone. It has not been tamed. We know it seems like it, especially after the past few decades which generated in many an "inflation-complacency" that feels justified. After all, following the 2008 Financial Panic, many predicted Quantitative Easing would cause hyper-inflation.
For the 1830s, as for the 1990s, the great change would come not in the technology of delivery systems but in the extraordinary increases in the volumes of news and financial information being delivered because of the dramatic reduction in the cost of reproducing each item of news.
Powerful demographic trends will cause higher inflation and interest rates, and a reduction in inequality as labor reclaims its bargaining power in the global economy.
It’s hoped that an extra $1,400 in the pockets of everyday Americans may help support lagging U.S. consumption. We believe the stimulus, along with improved vaccine roll out, may also help support commercial air travel.
With the previous week’s short-squeeze headlines behind us, investors remained optimistic about a fiscal support package, which passed the Senate by a vote of 51-50, with Vice President Harris breaking the tie.
The 4th quarter of 2020 began with tremendous anxiety and divisiveness around the Presidential election. Investment markets reflected that anxiety.
The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 199 and details U.S. exports and imports of goods and services. Today's headline number of -66.61B was more negative than the Investing.com forecast of -65.70B.
Discerning investors could eke more gains out of developing-nation bonds, but the bulk of the rally in the riskiest corners of the market may have passed.
We’ll touch on several bases today. We start with the latest news from the Commerce Department which just released its initial estimate of 4Q economic growth (or lack thereof). 2020 goes down as the worst economic year since the end of World War II.
As of January 29, the 10-year note is 59 basis points above its historic closing low of 0.52%, reached on August 4.
Massive growth in central bank balance sheets via quantitative easing, debt monetization, and firing of “big bazooka” stimulus packages brings renewed focus to potential shocks in the business cycle. An awareness of the macroeconomic “shocks” and their impact on asset prices should be incorporated in investors’ tactical asset-allocation decisions.
When investors talk about “the stock market” they are most often referring to an index that tracks stocks only in their home country. This “home bias” is evident when it comes to the make-up of investors’ stock portfolios. Investors around the world tend to hold mostly domestic stocks.
February begins with a stack of important economic scorecards. Among them are the last of the fourth-quarter corporate earnings reports, last week’s assessment of the 2020 gross domestic product (GDP), unemployment figures, consumer spending, as well as all the other regular reports that give us a snapshot of our recent economic history.
Nobody loves oil companies. Tesla Inc., the emblem of an emissions-free future, is worth more today than the top five Western supermajors combined.
Emerging markets seek a sustainable solution to debts, and the Fed takes a step toward sustainability.
Malkiel and other detractors who claim ESG is a fad are missing a key element in their arguments, namely that companies are incorporating sustainability into their operations both in response to – and increasingly quite apart from – the ESG investing trend.
The purpose of the Constitutional gold standard was to establish a reference point against which the prices of credits and commodities were set by the open exchange of bank notes and other promises to pay money.
In a year that offered a pandemic and an election as reasons for investors to bail on risky assets, 2020 turned out to be a great year for those that stayed the course. A 60/40 portfolio of diversified stocks and bonds increased by a double-digit percentage, exceeding expectations.
Those of you with kids and grandkids may at some point have stepped inside a GameStop. If so, you might be familiar with the video game retailer’s tagline: “Power to the players.”
I’m often asked if I foresee inflation or deflation. Both are possible in their own ways, and frankly I feel a little funny telling people I think we will see both. I would just like to have a growing economy and dependable money that holds its value.
Senior Credit Research Analyst Ryan McGrail explains why he believes President Biden's early orders will have a limited near-term impact on oil producers and production.
Precious metals in general did very well in 2020, and I expect them to keep pace in 2021, supported by heightened efforts in the U.S. and elsewhere to transition from fossil fuels to renewable energy.
The Census Bureau has posted the Advance Report on Durable Goods New Orders. This series dates from 1992 and is not adjusted for either population growth or inflation. Let's now review Durable Goods data with two adjustments.
As a review of the year that was, today’s report analyzes and dissects the nature of the K-shaped recovery in both the economy and stock market.
As China begins the year of the Ox, many investors are wondering whether another bull run is possible in 2021. Given that last year’s rally was extremely narrow, we believe many parts of the market still offer pent-up recovery potential.
In the waning days of Donald Trump’s presidency, Jeremy Grantham warned that U.S. stocks were in an epic bubble. He now predicts Joe Biden’s economic-recovery plan will propel them to perilous new heights, followed by an inevitable crash.
There are two incorrect assumptions in most stock return forecasts.
By the end of the first decade of the 19th century, everyone in the U.S. was accepting denominations printed on paper by banks as payments in dollars. Americans had invented retail credit banking and discovered how much they liked it.
Faster vaccination and bigger stimulus can pave the way to a better year, and agriculture subsidies upset trade relationships.
In the years since the end of the gold standard, there’s been a significant lack of discipline in government spending. Today, the federal debt is closing in on an astronomical $28 trillion, which is more than 130% of the size of the U.S. economy.
What goes up must come down... but does what goes down have to come up? According to the laws of gravity, no. As for commodity markets, however, history tells us it is true.
The newly inaugurated President and Vice President of the United States are proposing much that will have significance for advisors interested in ESG and impact investing.
Despite some news reports that suggest the green ambitions of the US Democratic Party could spell doom and gloom for traditional oil and gas companies.
While the COVID-19 pandemic presented unprecedented challenges around the world in 2020, there are hopes that 2021 will see an economic recovery as businesses adjust to the new normal. With the dollar continuing to weaken and uncertainty surrounding the ultimate outcome of the fight against this virus, investors are focusing on precious metals as a potential investment solution. In this webcast, Steve Dunn, CIMA®, Head of Exchange Traded Funds, and Stan Kiang, Director of Strategic Accounts, will speak on behalf of Aberdeen Standard Investments to review the performance of Precious Metals in 2020 and provide an outlook for the new year. They will also explain why we believe precious metals are a critical component of a well-diversified investment portfolio. This webinar will discuss current events in this corner of the financial markets and layout the fundamentals underlying the need for a longer-term, strategic allocation. This webcast is eligible for Continuing Education (CE) Credit.
Several pundits have raised the possibility that the current Covid-recession will be followed by a boom reminiscent of the Roaring '20s. Although we think that may be a tad too optimistic, we think the recovery will continue and feel “real economy” stocks could fare particularly well.
Our outlook for 2021 is formed by the need to get away from the crowd and to expect some very stormy weather in the U.S. stock market. We are not afraid of drowning. Therefore, we will review the circumstances at the bottom of the market in 2009 with today’s market to see where the crowd is and where we need to go to avoid the coming storm.
The speculative “V” is one of the most interesting and challenging features of the market cycle. For passive investors, it can be a period of exhilaration followed by panic.
The new year kicked off with a sharp rise in Treasury bond yields, despite unprecedented political turmoil and signs that the economic recovery is slowing.
Judging by recent phone calls and email queries, inflation is a serious concern among investors this year.
Rescues by the Federal Reserve and aggressive monetary policies have helped stock and bond investors, but the degree of money printing will be paid for by future generations.
Every January, I start keeping track of the predictions for the upcoming year I hear in the financial media and from advisors and investors. With the arrival of 2021, it’s time for my final review of how the 2020 forecasts played out.
Founding Father Benjamin Franklin said it best: “They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.” In this light, what are we to make of Trump’s social media suspension?
For stock market participants, weak economic data has often been taken as a positive, since that implies more fiscal stimulus. However, investors have grown more concerned about possible stumbling blocks. Democratic majorities in the House and Senate are very narrow, some lawmakers are worried about running up the debt, and the window for bipartisan agreement may be short.
Commodities
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.
Technology is the New Oil: The Changing Nature of Emerging Markets
A variety of macro and fundamental factors are converging in emerging markets, signaling a period of resurgence. We believe structural changes, a supportive investment environment, and dynamic geopolitical influences make EM particularly attractive right now. For example, semiconductor production could soon become more critical to EM growth than commodities. Now may prove to be an inflection point, especially for portfolios focused on capturing this dynamic change. Please join us for an interactive webinar highlighting EM's changing nature and the added value of active management.
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.
The Global Economy Post COVID-19
"This pandemic has magnified every existing inequality in our society – like systemic racism, gender inequality, and poverty." Melinda Gates
February ISM Manufacturing Index: Continued Expansion
This morning the Institute for Supply Management published its monthly Manufacturing Report for February. The latest headline Purchasing Managers Index (PMI) was 60.8, an increase of 2.1 from 58.7 the previous month and in expansion territory. Today's headline number was above the Investing.com forecast of 58.8 percent.
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.
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.
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.
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.
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.
The Big Four: Real Personal Income in January
Personal Income (excluding Transfer Receipts) in January fell 0.14% and is down 0.6% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was down 0.48%. The real number is down 2.0% year-over-year.
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.
Will the Energy Sector Evolve or Devolve?
The energy sector is beginning to adapt to the realities of climate change. Who is best positioned for the future?
Beating Bobby Fischer
We think this is an excellent time to ponder the thoughts of Buffett and Munger.
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.
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.
Weekly Gasoline Prices: Regular and Premium Up Again
As of February 15, the price of Regular and Premium were up twelve and thirteen cents, respectively, from the previous week and have risen for the 13th consecutive week. According to GasBuddy.com, California has the highest average price for Regular at $3.57 and Mississippi has the cheapest at $2.27. The WTIC end of day spot price closed at 61.70, up 2.7% from the last week.
The Inflation Outlook, Part 2
The details of the January Producer Price Index showed a further surge in prices of raw materials. Breakeven inflation rates (the yield spread between inflation-adjusted Treasuries and fixed-rate Treasuries) have continued to move higher.
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.
Chicago Fed: "Index suggests economic growth increased in January"
Led by improvements in personal consumption-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.66 in January from +0.41 in December. All four broad categories of indicators used to construct the index made positive contributions in January, but three categories decreased from December. The index’s three-month moving average, CFNAI-MA3, decreased to +0.47 in January from +0.60 in December
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.
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%.
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.
The Big Four: January Real Retail Sales Up 5.3%
Month-over-month nominal sales in January increased by 5.3%. Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, increased by 5%.
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.
The World Will Pay More for Meat as Food Inflation Deepens
There are signs that the food inflation that’s gripped the world over the past year, raising prices of everything from shredded cheese to peanut butter, is about to get worse.
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.
EM Is No Longer a Commodity Play
The Emerging Markets (EM) asset class is often labelled a commodity play for investment purposes. The argument is simple and directional; EM countries export commodities, so rising commodity prices are good for the asset class, whereas falling commodity prices hurt EM countries.
Ask Brad: Shawshank Redemption’s Lessons for Breakaway Advisors
No advisor has asked me about the plight of the prisoners in The Shawshank Redemption. But I am frequently asked what an advisor should expect as they leave their current firm to transition to the RIA model.
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.
Beware the Fourth Wave of COVID-19
It isn't over and financial markets don't accept that yet. I realize suggesting anything negative about the virus is misanthropic, but the truth matters and the optics are misleading.
The Chinese Economy Charges Ahead in the Year of the Ox
Happy Year of the Ox! Today China and a number of other Asian countries celebrate the Lunar New Year, also known as the Spring Festival.
Reports of Value's Death May Be Greatly Exaggerated
Rob Arnott: “There hasn’t been a better time to be a value investor at any other time in my career. I look back at the tech bubble and I never thought I would see valuations stretched the way they were then. We're back to that, and then some." We invite you to revisit “Reports of Value’s Death Have Been Greatly Exaggerated” now published in the Financial Analysts Journal.
Global Equities: Four Things We Are Watching in 2021
Stephen Dover, our Chief Market Strategist and Head of Franklin Templeton Investment Institute, shares four investment themes he’s thinking about as the world recovers from the COVID-19 pandemic.
Tesla Just Bought $1.5 Billion Worth of Bitcoin. Is Apple Next?
Tesla announced in a public filing Monday that it bought $1.5 billion worth of Bitcoin as part of a corporate policy that allows the electric vehicle (EV) maker to invest in “alternative reserve assets,” including not just cryptocurrencies but also gold bullion and gold ETFs.
Investment Strategies for a Booster-Shot Recovery
Our Fixed Income CIO Sonal Desai shares her investment views and strategies for the post-pandemic recovery. She explains why inflation looks likely to gain steam, and how the balance of fundamentals and valuations become especially crucial today when looking for attractive returns in fixed income.
What’s the Value of a Dollar?
Rick Rieder and team think that today’s potent policy cocktail holds important implications for the path of economic growth, markets and the value of a dollar.
Yellen, Summers Spar About Overheating Risk in Stimulus Plan
In making the case for a mammoth $1.9 trillion economic relief package, President Joe Biden and his acolytes had maintained that economists across the board agreed that now is the time to go big in the fight against the pandemic.
Great Reflation Trade Brings New Threats to the Stock Rally
For the first time in a long time, there’s a conversation on Wall Street about when equities might start to feel the heat from reflation signals in the bond market.
The Big Four Economic Indicators: January Employment
This commentary has been updated to include Friday morning's release of Nonfarm Employment. January's 49K increase in total nonfarm payrolls had revisions that resulted in 72K fewer jobs than previously reported. ("Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.") The Investing.com consensus was for 50K jobs gained and the unemployment rate to remain at 6.7%.
The Return of Inflation
Inflation is not dead. It is not gone. It has not been tamed. We know it seems like it, especially after the past few decades which generated in many an "inflation-complacency" that feels justified. After all, following the 2008 Financial Panic, many predicted Quantitative Easing would cause hyper-inflation.
Small Change and The Depression of 1837-1843 – Part Four
For the 1830s, as for the 1990s, the great change would come not in the technology of delivery systems but in the extraordinary increases in the volumes of news and financial information being delivered because of the dramatic reduction in the cost of reproducing each item of news.
Will Demographic Trends Drive Higher Inflation and Interest Rates?
Powerful demographic trends will cause higher inflation and interest rates, and a reduction in inequality as labor reclaims its bargaining power in the global economy.
Could $1,400 Stimulus Checks Lift Air Travel Demand?
It’s hoped that an extra $1,400 in the pockets of everyday Americans may help support lagging U.S. consumption. We believe the stimulus, along with improved vaccine roll out, may also help support commercial air travel.
Weekly Market Snapshot
With the previous week’s short-squeeze headlines behind us, investors remained optimistic about a fiscal support package, which passed the Senate by a vote of 51-50, with Vice President Harris breaking the tie.
Quarterly Letter
The 4th quarter of 2020 began with tremendous anxiety and divisiveness around the Presidential election. Investment markets reflected that anxiety.
December Trade Deficit at $66.6B, 3.5% Less Than November
The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 199 and details U.S. exports and imports of goods and services. Today's headline number of -66.61B was more negative than the Investing.com forecast of -65.70B.
Bond Traders Struggle to Pick Winners in Riskiest Markets
Discerning investors could eke more gains out of developing-nation bonds, but the bulk of the rally in the riskiest corners of the market may have passed.
Overview: 2020 Economy Worst in 74 Years
We’ll touch on several bases today. We start with the latest news from the Commerce Department which just released its initial estimate of 4Q economic growth (or lack thereof). 2020 goes down as the worst economic year since the end of World War II.
Treasury Yields: A Long-Term Perspective
As of January 29, the 10-year note is 59 basis points above its historic closing low of 0.52%, reached on August 4.
Beware the Shocks in the Road
Massive growth in central bank balance sheets via quantitative easing, debt monetization, and firing of “big bazooka” stimulus packages brings renewed focus to potential shocks in the business cycle. An awareness of the macroeconomic “shocks” and their impact on asset prices should be incorporated in investors’ tactical asset-allocation decisions.
Your Portfolio May Be Less Diversified Than You Think
When investors talk about “the stock market” they are most often referring to an index that tracks stocks only in their home country. This “home bias” is evident when it comes to the make-up of investors’ stock portfolios. Investors around the world tend to hold mostly domestic stocks.
Volatility Spikes; First Monthly S&P 500 Loss Since October
February begins with a stack of important economic scorecards. Among them are the last of the fourth-quarter corporate earnings reports, last week’s assessment of the 2020 gross domestic product (GDP), unemployment figures, consumer spending, as well as all the other regular reports that give us a snapshot of our recent economic history.
Why Oil Companies’ Fall From Favor Could Cause Next Price Spike
Nobody loves oil companies. Tesla Inc., the emblem of an emissions-free future, is worth more today than the top five Western supermajors combined.
Emerging Market Debt Problems, Fed Exploring Climate Change, Bitcoin Skepticism
Emerging markets seek a sustainable solution to debts, and the Fed takes a step toward sustainability.
Burton Malkiel’s Misguided View of ESG Investing
Malkiel and other detractors who claim ESG is a fad are missing a key element in their arguments, namely that companies are incorporating sustainability into their operations both in response to – and increasingly quite apart from – the ESG investing trend.
Small Change and The Depression of 1837-1843 - Part Three
The purpose of the Constitutional gold standard was to establish a reference point against which the prices of credits and commodities were set by the open exchange of bank notes and other promises to pay money.
First Quarter 2021 Economic & Market Outlook: Looking Beyond the Traditional
In a year that offered a pandemic and an election as reasons for investors to bail on risky assets, 2020 turned out to be a great year for those that stayed the course. A 60/40 portfolio of diversified stocks and bonds increased by a double-digit percentage, exceeding expectations.
Power to the Players: Reddit, Robinhood and Bitcoin
Those of you with kids and grandkids may at some point have stepped inside a GameStop. If so, you might be familiar with the video game retailer’s tagline: “Power to the players.”
Inflation and Broken Windows
I’m often asked if I foresee inflation or deflation. Both are possible in their own ways, and frankly I feel a little funny telling people I think we will see both. I would just like to have a growing economy and dependable money that holds its value.
Biden’s Energy Moves: Swift Execution, Limited Near-Term Impact
Senior Credit Research Analyst Ryan McGrail explains why he believes President Biden's early orders will have a limited near-term impact on oil producers and production.
Precious Metals Outlook 2021: Renewable Energy Will Be a Key Driver
Precious metals in general did very well in 2020, and I expect them to keep pace in 2021, supported by heightened efforts in the U.S. and elsewhere to transition from fossil fuels to renewable energy.
The "Real" Goods on the December Durable Goods Data
The Census Bureau has posted the Advance Report on Durable Goods New Orders. This series dates from 1992 and is not adjusted for either population growth or inflation. Let's now review Durable Goods data with two adjustments.
Bridging the Gap(s): Converging and Diverging Trends Stemming From the Crisis
As a review of the year that was, today’s report analyzes and dissects the nature of the K-shaped recovery in both the economy and stock market.
China’s Uneven Equity Rally Opens New Roads to Recovery
As China begins the year of the Ox, many investors are wondering whether another bull run is possible in 2021. Given that last year’s rally was extremely narrow, we believe many parts of the market still offer pent-up recovery potential.
Grantham Warns of Biden Stimulus Further Inflating Epic Bubble
In the waning days of Donald Trump’s presidency, Jeremy Grantham warned that U.S. stocks were in an epic bubble. He now predicts Joe Biden’s economic-recovery plan will propel them to perilous new heights, followed by an inevitable crash.
Why 2021 Stock Market Forecasts Are Too Optimistic
There are two incorrect assumptions in most stock return forecasts.
Small Change and the Depression of 1837-1843 - Part Two
By the end of the first decade of the 19th century, everyone in the U.S. was accepting denominations printed on paper by banks as payments in dollars. Americans had invented retail credit banking and discovered how much they liked it.
Economic Commentary: Vaccination, Stimulus, Agriculture
Faster vaccination and bigger stimulus can pave the way to a better year, and agriculture subsidies upset trade relationships.
Closing the Gold Window Opened the Door to Modern Monetary Theory (MMT)
In the years since the end of the gold standard, there’s been a significant lack of discipline in government spending. Today, the federal debt is closing in on an astronomical $28 trillion, which is more than 130% of the size of the U.S. economy.
The Rise and Fall and Rise of Commodities – A story bound to be told again.
What goes up must come down... but does what goes down have to come up? According to the laws of gravity, no. As for commodity markets, however, history tells us it is true.
The Inauguration and the Next Economy
The newly inaugurated President and Vice President of the United States are proposing much that will have significance for advisors interested in ESG and impact investing.
Why the Future Still Means Fossil Fuels, for Now
Despite some news reports that suggest the green ambitions of the US Democratic Party could spell doom and gloom for traditional oil and gas companies.
New Year, New Reasons to Diversify with Precious Metals
While the COVID-19 pandemic presented unprecedented challenges around the world in 2020, there are hopes that 2021 will see an economic recovery as businesses adjust to the new normal. With the dollar continuing to weaken and uncertainty surrounding the ultimate outcome of the fight against this virus, investors are focusing on precious metals as a potential investment solution. In this webcast, Steve Dunn, CIMA®, Head of Exchange Traded Funds, and Stan Kiang, Director of Strategic Accounts, will speak on behalf of Aberdeen Standard Investments to review the performance of Precious Metals in 2020 and provide an outlook for the new year. They will also explain why we believe precious metals are a critical component of a well-diversified investment portfolio. This webinar will discuss current events in this corner of the financial markets and layout the fundamentals underlying the need for a longer-term, strategic allocation. This webcast is eligible for Continuing Education (CE) Credit.
The Roaring ’20s? Maybe.
Several pundits have raised the possibility that the current Covid-recession will be followed by a boom reminiscent of the Roaring '20s. Although we think that may be a tad too optimistic, we think the recovery will continue and feel “real economy” stocks could fare particularly well.
Outlook 2021: “Frenzy” is the Opposite of Bull Market Stew
Our outlook for 2021 is formed by the need to get away from the crowd and to expect some very stormy weather in the U.S. stock market. We are not afraid of drowning. Therefore, we will review the circumstances at the bottom of the market in 2009 with today’s market to see where the crowd is and where we need to go to avoid the coming storm.
The Speculative “V”
The speculative “V” is one of the most interesting and challenging features of the market cycle. For passive investors, it can be a period of exhilaration followed by panic.
Why Longer-Term Treasury Yields Are Rising
The new year kicked off with a sharp rise in Treasury bond yields, despite unprecedented political turmoil and signs that the economic recovery is slowing.
The Inflation Outlook
Judging by recent phone calls and email queries, inflation is a serious concern among investors this year.
The Good, the Bad and the Ugly of Federal Reserve Rescues
Rescues by the Federal Reserve and aggressive monetary policies have helped stock and bond investors, but the degree of money printing will be paid for by future generations.
Final Review of 2020 “Sure Things”
Every January, I start keeping track of the predictions for the upcoming year I hear in the financial media and from advisors and investors. With the arrival of 2021, it’s time for my final review of how the 2020 forecasts played out.
Signal and Bitcoin: Twenty-First Century Tools of Personal and Economic Freedom
Founding Father Benjamin Franklin said it best: “They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.” In this light, what are we to make of Trump’s social media suspension?
Weekly Market Snapshot
For stock market participants, weak economic data has often been taken as a positive, since that implies more fiscal stimulus. However, investors have grown more concerned about possible stumbling blocks. Democratic majorities in the House and Senate are very narrow, some lawmakers are worried about running up the debt, and the window for bipartisan agreement may be short.