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.
"This pandemic has magnified every existing inequality in our society – like systemic racism, gender inequality, and poverty." Melinda Gates
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.
Inflation is back on investors' minds lately, and some may be wondering how to position their portfolios to confront this potential new scourge.
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.
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.
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.
About a week ago, an unprecedented polar vortex descended upon the southwestern United States. The deep cold forced power plants in Texas to take production offline, leading to rolling blackouts and leaving more than four million households without power.
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.
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.
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%.
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%.
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.
Despite questions over financing the European Union’s (EU’s) new Green Deal, the green transition is now under way.
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.
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.
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.
The Bureau of Labor Statistics released the January Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 1.40%, up from 1.36% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.41%, down from 1.62% the previous month and below the Fed's 2% PCE target.
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%.
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.
Today I want to discuss an arcane-sounding but incredibly important term you need to know: Yield Curve Control. Several central banks are already using it and I see a strong possibility the Fed will join them. But first we must again consider the Gripping Hand.
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.
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.
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.
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.”
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.
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.
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.
Calls for fiscal stimulus measures to target infrastructure are growing. But new research shows that infrastructure investments have offered few benefits to investors.
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.
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.
Judging by recent phone calls and email queries, inflation is a serious concern among investors this year.
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?
This week investors learned of president-elect Joe Biden’s initial bid for the next round of covid-19 relief. The number came in at $1.9tn. Importantly, included in this figure is mainly covid relief as opposed to a longer-term fiscal package that will be heavily weighted to infrastructure.
The sage advice to “know what you are investing in” is being dangerously overlooked by both novice and seasoned investors when it comes to bitcoin. A former bitcoin miner explains why the price of BTC is nearly certainly a bubble and likely manipulated. Investors should proceed with extreme caution.
Economic snapback to fuel global growth. We have a very optimistic outlook for 2021, with above-consensus GDP calls around the globe.
The Loomis Sayles Emerging Markets Debt Sector Team shares their views on corporate spreads, foreign exchange and leverage in 2021.
Venezuela’s hyperinflation, Japan’s experiment in MMT and China’s rise to global leadership carry ominous lessons for the U.S. and investors in its markets.
How does one then make the case for a cautious outlook for stocks?
What can investors expect this year? Positive (but unsteady) economic growth, a powerful boost in earnings and continued success for information technology stocks, says Raymond James Chief Investment Officer Larry Adam.
Whereas commodity production had been a major economic driver in emerging markets, we think technology is now the leading force. Semiconductor advancement is the “new oil.” semiconductor companies are so far ahead of their competitors that supply is in fact a constraint—and therefore a major investment consideration.
As we enter 2021, there are two myths told to investors to support the bull market narrative. The first, as we debunked recently, is that low-interest rates justify high valuations. The second is that since valuations are not as high as the “dot.com” crisis, there is no “stock market bubble.”
This should be positive for gold, given the potential for greater government spending and, therefore, inflation.
In response to a standing request, here is an updated comparison of four major secular bear markets. The numbers are through the December 31 close.
Emerging-market sovereign debt has rebounded sharply off the lows, but this hard-hit sector offers attractive yields and compelling growth opportunities to discerning investors.
Global carbon pricing is an essential part of any long-term solution to the climate crisis. But advanced economies also need to provide the developing world with highly concessional financing and technical expertise to help it decarbonize – all guided by a World Carbon Bank.
While 2020 brought many challenges and uncertainties for investors in Europe, Franklin Mutual Series Portfolio Managers Katrina Dudley and Mandana Hormozi see reasons to be optimistic about the future. They outline positive long-term attributes many may be overlooking.
U.S. stocks will sink in coming months before resuming their record-setting rally and faster growth will spark inflation and higher yields in Treasuries, according to Byron Wien’s annual list of surprises.
From time to time, readers of the Absolute Return Letter ask for my opinion on this or that and, every now and then, I decide to turn my response into a letter. The last few weeks have been no exception.
The performance of ESG funds has been unimpressive, according to new research, and the occasional outperformance is driven mainly by funds’ expenses, exposures to certain industries and factors.
Gold and Bitcoin had a very good 2020. Investors, worried about currency debasement from all the money-printing, sought stores of value. Gold surged over 25%, its best year in a decade, while Bitcoin was up more than 300%.
Global utility stocks are typically considered defensive in nature because the dependable reoccurring cash flows they generate make them somewhat bond-like.
Although some on the committee agreed with the market consensus for a moderate continuation of economic growth and equity markets, the majority agreed with a more positive scenario in which the global economy outperforms market consensus, while equities, especially those outside of the US, rally sharply.
while big, sweeping forecasts are the ones that draw the headlines, the ones to pay attention to are those that only look one to two months ahead or 10 to 20 years ahead.
How can credit markets help active investors achieve their goals in the present low yield environment? Here are 5 ideas.
With the COVID-19 pandemic spiking again, and with most federal stimulus programs having expired over the last several months, the US poverty rate is soaring at a rate never seen before. Nearly 8 million Americans have fallen into poverty over the last 5 months alone, since the government stimulus programs have largely ended.
Our Head of Equities, Stephen Dover, shares his 2021 equity outlook. He sees opportunity amid upheaval.
The coronavirus pandemic was a once-in-a-lifetime event that transformed society and the economy almost overnight. We believe some of the most significant changes are likely here to stay, and we are focusing our investments on the secular growth trends we expect to strengthen as life returns to normal.
Rick Rieder and team describe how revolutionary changes taking place in corporate business models will impact investing for years.
We were fortunate to watch a recent interview Charlie Munger did with Cal Tech as a distinguished alum. We consider him to be one of the most successful contrarian investment thinkers on the planet. At 96 years of age, he has no fear of being politically incorrect. We contrast this with the mountain of writing, media and rhetoric associated with the topic of climate change.
A nascent global recovery presents both risks and opportunities for fixed income investors. Portfolio Manager Teresa Kong, CFA, discusses why China dominates the universe for EM debt and why Asia may outperform the rest of EM for the foreseeable future.
The holiday shopping season is critical for most retailers. For some, the season is make or break for the whole year. The November retail sales report was weaker than expected, although amplified by the seasonal adjustment. No surprise, consumers are increasingly shopping online.
And then there’s Bitcoin. The world’s biggest cryptocurrency has surged nearly 220% this year, touching an all-time high of $23,717 in intraday trading on Thursday.
As the end of 2020 draws near, many of us are anxious to put this tumultuous year behind us, choosing to look ahead to 2021 in hopes that happier, healthier, and more prosperous times will be had by all.
While COVID-19 rendered many 2020 forecasts obsolete within the first few months of the year, several of BMO Global Asset Management’s key calls proved accurate. Though 2020 was a year of many challenges, we are optimistic for 2021 and expect improved economic conditions and better times ahead.
A lot of things can be expected to go back to normal once the Covid-19 pandemic is truly over. Restaurants, cruise ships and resort towns will be packed again. Spending on home improvements will subside.
Several former world leaders, a Hong Kong media tycoon, the CEO of Theranos and Jeffrey Epstein’s confidante — all are scheduled to have their day in court next year.
They were once America’s corporate titans. Beloved household names. Case studies in success.
“This garage is the birthplace of the world’s first high-technology region, Silicon Valley,” the marker reads. It names two Stanford students, William Hewlett and David Packard, who “in 1938 began developing their first product, an audio oscillator, in this garage.”
Energy
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.
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
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.
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 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.
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.
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.
The Polar Vortex and Texas’ Municipal Power Market
About a week ago, an unprecedented polar vortex descended upon the southwestern United States. The deep cold forced power plants in Texas to take production offline, leading to rolling blackouts and leaving more than four million households without power.
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.
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.
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%.
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%.
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.
The Green Transition: Implications of the European Recovery Plan
Despite questions over financing the European Union’s (EU’s) new Green Deal, the green transition is now under way.
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.
Components of the CPI: January 2021
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.
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.
Consumer Price Index: January Headline & Core at 1.4%
The Bureau of Labor Statistics released the January Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 1.40%, up from 1.36% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.41%, down from 1.62% the previous month and below the Fed's 2% PCE target.
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%.
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.
Controlling the Curve
Today I want to discuss an arcane-sounding but incredibly important term you need to know: Yield Curve Control. Several central banks are already using it and I see a strong possibility the Fed will join them. But first we must again consider the Gripping Hand.
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.
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.
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.
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.”
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.
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.
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.
The Lackluster Record for Infrastructure Investments
Calls for fiscal stimulus measures to target infrastructure are growing. But new research shows that infrastructure investments have offered few benefits to investors.
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.
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 Inflation Outlook
Judging by recent phone calls and email queries, inflation is a serious concern among investors this year.
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?
What is the Best Hedge to Hot Inflation?
This week investors learned of president-elect Joe Biden’s initial bid for the next round of covid-19 relief. The number came in at $1.9tn. Importantly, included in this figure is mainly covid relief as opposed to a longer-term fiscal package that will be heavily weighted to infrastructure.
Bitcoin: Magic Internet Money
The sage advice to “know what you are investing in” is being dangerously overlooked by both novice and seasoned investors when it comes to bitcoin. A former bitcoin miner explains why the price of BTC is nearly certainly a bubble and likely manipulated. Investors should proceed with extreme caution.
CIO Insights – Turning The Page On 2020
Economic snapback to fuel global growth. We have a very optimistic outlook for 2021, with above-consensus GDP calls around the globe.
2021 Outlook: Three Questions for the Emerging Markets Debt Sector Team
The Loomis Sayles Emerging Markets Debt Sector Team shares their views on corporate spreads, foreign exchange and leverage in 2021.
Ominous Lessons from Venezuela, Japan and China
Venezuela’s hyperinflation, Japan’s experiment in MMT and China’s rise to global leadership carry ominous lessons for the U.S. and investors in its markets.
Should You Trust the Stock Market Bulls?
How does one then make the case for a cautious outlook for stocks?
10 Themes That Will Affect Your 2021 Investing
What can investors expect this year? Positive (but unsteady) economic growth, a powerful boost in earnings and continued success for information technology stocks, says Raymond James Chief Investment Officer Larry Adam.
Technology’s Rising Importance in Emerging Markets
Whereas commodity production had been a major economic driver in emerging markets, we think technology is now the leading force. Semiconductor advancement is the “new oil.” semiconductor companies are so far ahead of their competitors that supply is in fact a constraint—and therefore a major investment consideration.
Yes, Virginia. There Is A Stock Market Bubble.
As we enter 2021, there are two myths told to investors to support the bull market narrative. The first, as we debunked recently, is that low-interest rates justify high valuations. The second is that since valuations are not as high as the “dot.com” crisis, there is no “stock market bubble.”
Will Commodities Ride the "Blue Wave" Higher in 2021?
This should be positive for gold, given the potential for greater government spending and, therefore, inflation.
The Four Totally Bad Bear Recoveries: Where Is Today's Market?
In response to a standing request, here is an updated comparison of four major secular bear markets. The numbers are through the December 31 close.
Emerging-Market Sovereigns: Pandemic Aftermath Sets Stage for Cyclical Uplift
Emerging-market sovereign debt has rebounded sharply off the lows, but this hard-hit sector offers attractive yields and compelling growth opportunities to discerning investors.
A Fairer Way to Help Developing Economies Decarbonize
Global carbon pricing is an essential part of any long-term solution to the climate crisis. But advanced economies also need to provide the developing world with highly concessional financing and technical expertise to help it decarbonize – all guided by a World Carbon Bank.
Europe's "Man on the Moon" Moment
While 2020 brought many challenges and uncertainties for investors in Europe, Franklin Mutual Series Portfolio Managers Katrina Dudley and Mandana Hormozi see reasons to be optimistic about the future. They outline positive long-term attributes many may be overlooking.
Byron Wien Says S&P 500 Will Tumble Before Rallying to 4,500
U.S. stocks will sink in coming months before resuming their record-setting rally and faster growth will spark inflation and higher yields in Treasuries, according to Byron Wien’s annual list of surprises.
V for Vaccine?
From time to time, readers of the Absolute Return Letter ask for my opinion on this or that and, every now and then, I decide to turn my response into a letter. The last few weeks have been no exception.
Navigating the Sea of Mediocre ESG Fund Performance
The performance of ESG funds has been unimpressive, according to new research, and the occasional outperformance is driven mainly by funds’ expenses, exposures to certain industries and factors.
2020: Gold’s Best Year in a Decade; Ethereum Beat Bitcoin; Inflation Higher Than Reported
Gold and Bitcoin had a very good 2020. Investors, worried about currency debasement from all the money-printing, sought stores of value. Gold surged over 25%, its best year in a decade, while Bitcoin was up more than 300%.
Active Perspectives on Global Utilities
Global utility stocks are typically considered defensive in nature because the dependable reoccurring cash flows they generate make them somewhat bond-like.
Global Investment Committee Outlook: Especially buoyant non-US equities
Although some on the committee agreed with the market consensus for a moderate continuation of economic growth and equity markets, the majority agreed with a more positive scenario in which the global economy outperforms market consensus, while equities, especially those outside of the US, rally sharply.
Ignore All 2021 Market Predictions - Except This One
while big, sweeping forecasts are the ones that draw the headlines, the ones to pay attention to are those that only look one to two months ahead or 10 to 20 years ahead.
Today's Credit Opportunities in 5 Charts
How can credit markets help active investors achieve their goals in the present low yield environment? Here are 5 ideas.
US Poverty Rate Exploding - Parting Thoughts On 2020
With the COVID-19 pandemic spiking again, and with most federal stimulus programs having expired over the last several months, the US poverty rate is soaring at a rate never seen before. Nearly 8 million Americans have fallen into poverty over the last 5 months alone, since the government stimulus programs have largely ended.
A Year of Lingering Uncertainty, but Ample Global Opportunities
Our Head of Equities, Stephen Dover, shares his 2021 equity outlook. He sees opportunity amid upheaval.
Back to (the New) Normal: Five Secular Growth Trends for 2021
The coronavirus pandemic was a once-in-a-lifetime event that transformed society and the economy almost overnight. We believe some of the most significant changes are likely here to stay, and we are focusing our investments on the secular growth trends we expect to strengthen as life returns to normal.
Investing in a Frictionless World
Rick Rieder and team describe how revolutionary changes taking place in corporate business models will impact investing for years.
Famed Climatologist Charlie Munger
We were fortunate to watch a recent interview Charlie Munger did with Cal Tech as a distinguished alum. We consider him to be one of the most successful contrarian investment thinkers on the planet. At 96 years of age, he has no fear of being politically incorrect. We contrast this with the mountain of writing, media and rhetoric associated with the topic of climate change.
Corporate Emerging Market Debt Poised to Shine in 2021
A nascent global recovery presents both risks and opportunities for fixed income investors. Portfolio Manager Teresa Kong, CFA, discusses why China dominates the universe for EM debt and why Asia may outperform the rest of EM for the foreseeable future.
The Pandemic’s Impact on the Season
The holiday shopping season is critical for most retailers. For some, the season is make or break for the whole year. The November retail sales report was weaker than expected, although amplified by the seasonal adjustment. No surprise, consumers are increasingly shopping online.
Bitcoin Cracks Record High Due to Institutional Investors
And then there’s Bitcoin. The world’s biggest cryptocurrency has surged nearly 220% this year, touching an all-time high of $23,717 in intraday trading on Thursday.
Weekly Investment Strategy
As the end of 2020 draws near, many of us are anxious to put this tumultuous year behind us, choosing to look ahead to 2021 in hopes that happier, healthier, and more prosperous times will be had by all.
2021 Outlook: A Rousing Recovery
While COVID-19 rendered many 2020 forecasts obsolete within the first few months of the year, several of BMO Global Asset Management’s key calls proved accurate. Though 2020 was a year of many challenges, we are optimistic for 2021 and expect improved economic conditions and better times ahead.
The New Battles to Come Over Working From Home: Justin Fox
A lot of things can be expected to go back to normal once the Covid-19 pandemic is truly over. Restaurants, cruise ships and resort towns will be packed again. Spending on home improvements will subside.
The Biggest Trials Coming to Courts Around the World in 2021
Several former world leaders, a Hong Kong media tycoon, the CEO of Theranos and Jeffrey Epstein’s confidante — all are scheduled to have their day in court next year.
America’s Zombie Companies Rack Up $2 Trillion of Debt
They were once America’s corporate titans. Beloved household names. Case studies in success.
Even More Tech Firms Are Leaving Silicon Valley for Texas
“This garage is the birthplace of the world’s first high-technology region, Silicon Valley,” the marker reads. It names two Stanford students, William Hewlett and David Packard, who “in 1938 began developing their first product, an audio oscillator, in this garage.”