A discussion of the potential benefits of owning a basket of high-quality stocks with relative price stability given the current market and economic outlook. During this seminar, listeners will hear the case for multi-factor based investing strategies from one of the leading non-beta ETF providers, First Trust. Topics include what factors are commonly used, how these factors have performed over time, and the reasons many advisors have gravitated toward the First Trust Capital Strength ETF.
The late-February spike in U.S. Treasury bond yields sent ripples throughout the global markets. As yields surged to the highest level in a year, stocks and commodities sold off sharply, while the dollar rallied.
As more plan participants worry about retirement income security, demand for guaranteed income solutions is growing—and plan sponsors are pondering the options.
There is hope that economies will see a more sustainable and robust recovery this year, given unprecedented levels of monetary and fiscal stimulus and as more individuals are vaccinated against COVID-19. But one question for investors is what happens next—will inflation and higher interest rates be a consequence?
"This pandemic has magnified every existing inequality in our society – like systemic racism, gender inequality, and poverty." Melinda Gates
How long will the effects of COVID be felt in potential growth, the tourism sector and bankruptcy filings?
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.
A goal of environmental, governance and sustainable (ESG) investing is to reduce carbon emissions and improve the quality of the environment. New research shows this effort is succeeding.
The markets took a tumble to start this week as rising interest rates and inflationary pressures begin to weigh on outlooks. Those worries quickly diminished as Jerome Powell changed the rules to reassure Wall Street that “QE” is here to stay.
Yields have jumped so much, in fact, that they’re giving stocks a serious run for their money. The 10-year yield is now higher than the S&P 500 dividend yield, which may have added to the selling pressure that cost stocks close to 2.5% yesterday.
What normalcy will it be? I don’t expect to simply go back to the way things were. The economy as it was structured in December 2019 is gone forever. The world is different now. The economy will be different, too.
Valid until the market close on March 31, 2021.
The S&P 500 closed February with a monthly gain of 2.61% after a loss of 1.11% in January. At this point, after close on the last day of the month, four of five S&P 500 strategies are signaling "invested" — Vanguard Total Stock Market ETF (VTI), Vanguard FTSE All-World ex-US ETF (VEU), Vanguard REIT Index ETF (VNQ), and Invesco DB Commodity Index Tracking (DBC) — unchanged from last month's quadruple "invested" signal.
"Travel on all roads and streets changed by -10.3% (-28.1 billion vehicle miles) for December 2020 as compared with December 2019. Travel for the month is estimated to be 244.1 billion vehicle miles." The 12-month moving average was down 0.98% month-over-month and down 13.2% year-over-year. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) was down 1.04% month-over-month and down 13.5% year-over-year.
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.
Italy’s new prime minister, Mario Draghi, has a well-earned reputation for turning around difficult situations. But can he reverse Italy’s relative economic decline? And what does his program mean for Italian bond yields?
Inflation is back on investors' minds lately, and some may be wondering how to position their portfolios to confront this potential new scourge.
From cloud computing and automation to self-driving cars, technology continues to be one of the world’s hottest sectors. Our Chief Market Strategist Stephen Dover and Portfolio Managers Donald Huber and John Remmert believe active investing in technology and innovation is a global story, and government support and spending in next-generation technologies is likely a long-term positive.
Our positive 2021 economic outlook, combined with better-than-expected company fundamentals, supports strong credit performance and spreads.
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.
Opponents of Harvard College’s affirmative action policies asked the Supreme Court to bar colleges from using race as an admissions factor, setting up what could be a defining showdown for higher education and the court’s conservative majority.
House lawmakers kicked off an effort to tackle dominant technology companies, vowing a revamp of competition laws to curb their power.
The rout in popular technology shares accelerated after the 10-year Treasury rate spiked as much as 23 points, fueling worry that the Federal Reserve will be forced to raise interest rates.
With the release of this morning's report on January Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal 11.33% month-over-month change in disposable income is cut to 10.95% when we adjust for inflation. This is an increase from last month's 0.55% nominal and 0.18% real increases last month. The year-over-year metrics are 14.38% nominal and 12.74% real. Increases can be attributed to the second round of funds distributions through the CARES Act.
The latest Conference Board Leading Economic Index (LEI) for January was up 0.5% from the December final figure of 109.7.
Today’s low bond yields and high equity valuations have led many to jettison the traditional 4% initial safe-withdrawal rate assumption. But I will show that the optimal “safe” withdrawal rate depends considerably on the retiree.
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.
Target date funds should be designed to reduce the risk of rash selling.
Franklin Small Cap Value Fund Portfolio Manager Steve Raineri discusses why he thinks the near-record underperformance of higher-quality, profitable small-capitalization (small-cap) value stocks relative to lower-quality, unprofitable companies could present a compelling opportunity for longer-term investors as the US economy continues to recover from the COVID-19 pandemic.
The latest index came in at 24, up 7 from last month's 17, which indicates expansion in February. The future outlook increased to 34 this month from 24. Here is a snapshot of the complete Kansas City Fed Manufacturing Survey.
This morning's seasonally adjusted 730K new claims, down 111K from the previous week's downwardly revised figure, was much better than the Investing.com forecast of 838K.
Continuing our series, Going Independent, we want to provide those considering going out on their own with an easy-to-follow checklist of everything you need to do to form your own RIA.
The unprecedented $9 trillion rescue mission by central banks to haul the world economy from its coronavirus recession is being tested as rising bond yields and inflation bets threaten their ability to keep borrowing costs down.
Tencent Holdings Ltd.-backed Yuanfudao is seeking fresh funding at a valuation of more than $20 billion, people familiar with the matter said, as the cash-burning battle in China’s online education arena shows no sign of abating.
Turmoil in mega-caps like Apple Inc. is stirring investor anxiety. But for professional stock pickers, it’s mostly good news when the market’s biggest companies loosen their grip.
Hydrogen’s potential as an energy source is attracting renewed attention. It may take 20 years or so for the potential to be realized. But the effects are likely to be felt within the planning horizons of most long-term investors—a good reason to start thinking now about the investment implications.
RIA technology products are not known for their efficiency, low cost or delightful user experience. Altruist is a new, seamlessly integrated digital investing platform, which results in extraordinary ROI for financial advisors and enables them to spend far more time with clients.
Plastic-wrapped foam mattresses, dilapidated plastic shelving units, three-legged Ikea chairs—Jay Reno calls this “end-of-life” furniture. And it’s accumulating by the dumpster-full in landfills.
Casualties are piling up across the stock market as bond yields rise.
The biggest slide in months for Cathie Wood’s funds is testing the resolve of investors who plowed billions of dollars into one of the hottest firms on Wall Street.
The energy sector is beginning to adapt to the realities of climate change. Who is best positioned for the future?
The GMO Asset Allocation Team has released its latest 7-Year Asset Class Forecasts through January 2021.
A solution for the challenge of moving wirehouse clients with active securities-based loans.
Looking at the latest economic data reveals V-shaped recoveries in many goods-based indicators; while services has more catch-up to do.
We think this is an excellent time to ponder the thoughts of Buffett and Munger.
Calls of a market bubble might indicate low returns over the next 5-10 years, but not all equities are overvalued. The S&P 500 has been led higher by just a handful of companies that make up a large percentage of the index, and companies that have lagged may now provide better risk-adjusted returns as the economy recovers. We highlight some of the valuation metrics that look stretched and some thoughts on tactical allocation ideas.
A look at two ingredients that make a meaningful impact on performance in the mid cap space.
With today's release of the December S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index saw a 1.25% increase month over month which is cut to 1.1% with inflation adjustment. The non-seasonally adjusted national index saw a 10.4% YoY increase.
What recently transpired in GameStop's stock was truly epic. More astonishing, though, was the ease at which a nihilistic narrative took hold in the absence of fact. To me it was telling and an opportunity to improve my thinking.
For bond investors, inflation is pretty much all bad news, eating into the value of future returns. For equity traders, the tidings can be less categorically awful, given the ability of certain companies to wring profits from higher prices.
The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for December. U.S. house prices were up 1.1 percent on a seasonally adjusted nominal basis from the previous month. Year-over-year the index is up 11.4% on a non-seasonally adjusted nominal basis. After adjusting for inflation and seasonality, the index is up 0.82% in December and up 10.22% year-over-year (seasonally adjusted).
The obstacles to higher yields in the world’s biggest debt market are slowly melting away.
U.S. college enrollment of first-time undergraduates declined at the fastest pace in decades last year, according to research published Monday by the Federal Reserve Bank of St. Louis.
All eight indexes on our world watch list posted gains through February 8, 2021. The top performer is Hong Kong's Hang Seng with a gain of 7.67%, India's BSE SENSEX is in second is with a gain of 7.53% and Tokyo's Nikkei 225 is in third with a gain of 7.08%. Coming in last is London's FTSE with a gain of 0.98%.
Things are looking up for the US economy. Later this week we'll get an update on real GDP growth for the 4th quarter of 2020. We estimate that'll be revised up to a 4.3% annual rate of growth from a prior estimate of 4.0%.
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.
Political change, continued fiscal support will drive municipal markets in 2021, although outcomes are likely to vary.
As COVID-19 vaccines roll out and resrictions lift, a US economic rebound could lead to tighter Federal Reserve policy and higher yields. Municipal bond investors may worry about how rising yields could hurt their portfolios.
What a week for price data! We have been writing about the possibility of higher inflation for months now, most recently here. We have also highlighted the most likely assets to benefit from higher inflation like copper, oil and energy stocks.
Weighing the costs of global vaccine access, minimum wage and the energy rally.
There are times when you are called to advocacy. As a profession, this is one of them. Advisors are the stewards, the informed, the protectors, and if there is a force that stands between the next generation of investors and financial devastation, it is you.
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
Liquidity is valuable to investors. Therefore, they should demand higher expected return (a risk premium) for less liquid stocks. But new research shows they have not earned that extra return in public equity markets.
It doesn’t take Black History Month to remind our listeners of the lack of diversity in the advisory profession. Of the countless conferences I’ve attended – when it was possible to attend such conferences – the overwhelming majority of attendees were like me: white, male and middle aged. We’ve seen a number of efforts to address this lack of diversity, particularly in the last year in light of the tragic events that have particularly affected people of color. Here to talk with me today is someone at the forefront of those efforts within the advisory profession.
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 Department of Energy's Energy Information Administration (EIA) monthly data on volume sales is several weeks old when it released. The latest numbers, through mid-December, are now available.
In late 2020, a new kid emerged on the bargain-of-the-decade block. UK stocks, and notably UK value, reached very cheap levels relative to value stocks in other developed economies. Today, UK value remains at remarkably low valuations relative to most of its fundamentals.
A strong economic rebound is expected towards the middle of the year, followed by a return to more normal growth in 2022.
BlackRock Global Allocation Fund portfolio manager Russ Koesterich explains why he expects volatility to drop -- and cyclicals outperform.
Apart from some high-profile downgrades, the muni credit markets finished 2020 buoyed by breakthrough vaccines and signs that state and local tax collections were better than anticipated.
Jerome Powell enters the final year of his term as Federal Reserve chair enjoying the support of labor unions with influence in Joe Biden’s White House, an advantage as the administration prepares to decide later this year whether to reappoint the central bank chief.
The U.S. economy is starting to display pockets of price pressures, further stoking the debate among economists and market participants over the future path of inflation.
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%.
It’s tempting these days for some investors to question the role of fixed income in portfolios. After all, real yields have plunged, potentially leading to less income today and smaller capital gains tomorrow.
The Year of the Ox looks bullish for China with economists and analysts forecasting GDP growth of 8.1% and earnings growth of 18% for the MSCI China Index. But February holds key developments for China that could impact this outlook, including stock delistings, trade, and COVID-19.
For a variety of reasons, many investors are worried about higher inflation. While we may see reflation (a pickup in prices that were restrained due to the pandemic), a significant increase in underlying inflation appears unlikely.
New virus variants are stoking COVID-19 angst, but we see vaccination programs opening the door to economic and market recoveries.
We expect US core inflation to surge in the months ahead, as comparisons to low price levels of a year ago cause sizable fluctuations. Ultimately, supply should respond to recovering demand, bringing inflation down and facilitating easy Fed policy.
Two top Senate Democrats said Wednesday they will keep pressuring President Joe Biden to wipe out up to $50,000 per borrower in student loan debt after he shot down the idea of doing so by executive action or without restrictions.
In this strange college admissions season, fewer high schoolers are turning in that dreaded number, their SAT score.
It’s another milestone for Cathie Wood’s Ark Investment Management. Less than two weeks after hitting $50 billion in assets, the red-hot firm now manages more than $60 billion, as funds flow into Wood’s exchange-traded funds at the fastest pace ever.
I offer 15 explanations for the bubble in stock prices and a single explanation for the one in bond prices. Those bubbles could deflate for any of 10 reasons I also identify, severely diminishing the retirement savings of baby boomers.
In conversations with financial planners or therapists who ask about the specifics of my practice, I am inclined to answer, “I am in the wellness business.” This results in a deep and theoretical dialogue.
Over the last two weeks, we have seen how a cadre of retail traders on Reddit can lay siege on a group of hedge funds that had shorted the stock of the retail company GameStop. We saw the price of GameStop rise from about $20 at the beginning of the year to a peak of $347.5 on January 27. Yesterday, on February 4, it closed at $53.50. This is a brick-and-mortar company that sells video games and lost about $20 million last year. Today we will explore deeper issues surrounding the GameStop saga.
Although US technology equities tend to dominate the conversation about technology investing, Franklin Equity Group’s John Remmert and Don Huber believe there are many innovative international technology companies that tend to get overlooked.
Factor-Based Investing
Investing in Low-Volatility, High Quality Stocks to Play Portfolio Defense
A discussion of the potential benefits of owning a basket of high-quality stocks with relative price stability given the current market and economic outlook. During this seminar, listeners will hear the case for multi-factor based investing strategies from one of the leading non-beta ETF providers, First Trust. Topics include what factors are commonly used, how these factors have performed over time, and the reasons many advisors have gravitated toward the First Trust Capital Strength ETF.
Message from the Recent Bond Market Turmoil
The late-February spike in U.S. Treasury bond yields sent ripples throughout the global markets. As yields surged to the highest level in a year, stocks and commodities sold off sharply, while the dollar rallied.
As Retirement Income Needs Grow, DC Plan Sponsors Weigh Solutions
As more plan participants worry about retirement income security, demand for guaranteed income solutions is growing—and plan sponsors are pondering the options.
Coming Out of COVID-19: A Look at Interest Rates and Inflation in Europe
There is hope that economies will see a more sustainable and robust recovery this year, given unprecedented levels of monetary and fiscal stimulus and as more individuals are vaccinated against COVID-19. But one question for investors is what happens next—will inflation and higher interest rates be a consequence?
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
Economic Commentary: Long-Term Growth, Tourism, Bankruptcies
How long will the effects of COVID be felt in potential growth, the tourism sector and bankruptcy filings?
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.
ESG Investors are Having a Positive Impact on the Environment
A goal of environmental, governance and sustainable (ESG) investing is to reduce carbon emissions and improve the quality of the environment. New research shows this effort is succeeding.
Powell Changes The Rules On QE
The markets took a tumble to start this week as rising interest rates and inflationary pressures begin to weigh on outlooks. Those worries quickly diminished as Jerome Powell changed the rules to reassure Wall Street that “QE” is here to stay.
Government Bond Yields Have Surged, but Real Yields Are at Zero
Yields have jumped so much, in fact, that they’re giving stocks a serious run for their money. The 10-year yield is now higher than the S&P 500 dividend yield, which may have added to the selling pressure that cost stocks close to 2.5% yesterday.
The Great Jobs Reset
What normalcy will it be? I don’t expect to simply go back to the way things were. The economy as it was structured in December 2019 is gone forever. The world is different now. The economy will be different, too.
February Moving Averages: Up 2.6% from January
Valid until the market close on March 31, 2021.
The S&P 500 closed February with a monthly gain of 2.61% after a loss of 1.11% in January. At this point, after close on the last day of the month, four of five S&P 500 strategies are signaling "invested" — Vanguard Total Stock Market ETF (VTI), Vanguard FTSE All-World ex-US ETF (VEU), Vanguard REIT Index ETF (VNQ), and Invesco DB Commodity Index Tracking (DBC) — unchanged from last month's quadruple "invested" signal.
America's Driving Habits as of December 2020
"Travel on all roads and streets changed by -10.3% (-28.1 billion vehicle miles) for December 2020 as compared with December 2019. Travel for the month is estimated to be 244.1 billion vehicle miles." The 12-month moving average was down 0.98% month-over-month and down 13.2% year-over-year. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) was down 1.04% month-over-month and down 13.5% year-over-year.
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.
Can Mario Draghi Recharge Italy’s Economy?
Italy’s new prime minister, Mario Draghi, has a well-earned reputation for turning around difficult situations. But can he reverse Italy’s relative economic decline? And what does his program mean for Italian bond yields?
Inflation Is Coming for Your Wealth. Here's What Investors Can Do About It
Inflation is back on investors' minds lately, and some may be wondering how to position their portfolios to confront this potential new scourge.
The Birth of Global Tech Continues
From cloud computing and automation to self-driving cars, technology continues to be one of the world’s hottest sectors. Our Chief Market Strategist Stephen Dover and Portfolio Managers Donald Huber and John Remmert believe active investing in technology and innovation is a global story, and government support and spending in next-generation technologies is likely a long-term positive.
High-Yield and Bank Loan Outlook - First Quarter 2021
Our positive 2021 economic outlook, combined with better-than-expected company fundamentals, supports strong credit performance and spreads.
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.
Harvard Critics Ask Supreme Court to Ban Race in Admissions
Opponents of Harvard College’s affirmative action policies asked the Supreme Court to bar colleges from using race as an admissions factor, setting up what could be a defining showdown for higher education and the court’s conservative majority.
Tech Gets Congress Antitrust Warning: ‘Change Is Coming’
House lawmakers kicked off an effort to tackle dominant technology companies, vowing a revamp of competition laws to curb their power.
Ten-Year Rate Spike Sinks Tesla and ARKK, Deepening Tech Carnage
The rout in popular technology shares accelerated after the 10-year Treasury rate spiked as much as 23 points, fueling worry that the Federal Reserve will be forced to raise interest rates.
Real Disposable Income Per Capita in January, CARES Act 2.0
With the release of this morning's report on January Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal 11.33% month-over-month change in disposable income is cut to 10.95% when we adjust for inflation. This is an increase from last month's 0.55% nominal and 0.18% real increases last month. The year-over-year metrics are 14.38% nominal and 12.74% real. Increases can be attributed to the second round of funds distributions through the CARES Act.
CB Leading Economic Index: LEI and CEI Up in January
The latest Conference Board Leading Economic Index (LEI) for January was up 0.5% from the December final figure of 109.7.
Retirement Planning in the Post-4% World
Today’s low bond yields and high equity valuations have led many to jettison the traditional 4% initial safe-withdrawal rate assumption. But I will show that the optimal “safe” withdrawal rate depends considerably on the retiree.
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.
What the Pandemic Taught Us About Target Date Funds
Target date funds should be designed to reduce the risk of rash selling.
A Value Investor’s View on US Small-Cap Stocks
Franklin Small Cap Value Fund Portfolio Manager Steve Raineri discusses why he thinks the near-record underperformance of higher-quality, profitable small-capitalization (small-cap) value stocks relative to lower-quality, unprofitable companies could present a compelling opportunity for longer-term investors as the US economy continues to recover from the COVID-19 pandemic.
Kansas City Fed Survey: Manufacturing Climbed Higher in February
The latest index came in at 24, up 7 from last month's 17, which indicates expansion in February. The future outlook increased to 34 this month from 24. Here is a snapshot of the complete Kansas City Fed Manufacturing Survey.
Weekly Unemployment Claims: Down 111K, Beats Forecast
This morning's seasonally adjusted 730K new claims, down 111K from the previous week's downwardly revised figure, was much better than the Investing.com forecast of 838K.
Going Independent: A Guided Checklist to Forming Your Own RIA
Continuing our series, Going Independent, we want to provide those considering going out on their own with an easy-to-follow checklist of everything you need to do to form your own RIA.
Powell Goes Easy on Surging Yields While Central Bank Peers Fret
The unprecedented $9 trillion rescue mission by central banks to haul the world economy from its coronavirus recession is being tested as rising bond yields and inflation bets threaten their ability to keep borrowing costs down.
Tencent-Backed Edtech Startup Seeks Funding at $20 Billion Value
Tencent Holdings Ltd.-backed Yuanfudao is seeking fresh funding at a valuation of more than $20 billion, people familiar with the matter said, as the cash-burning battle in China’s online education arena shows no sign of abating.
With Tech Oligarchy Shaken, Active Funds Are Having a Great Time
Turmoil in mega-caps like Apple Inc. is stirring investor anxiety. But for professional stock pickers, it’s mostly good news when the market’s biggest companies loosen their grip.
Five Things Investors Should Know About Hydrogen
Hydrogen’s potential as an energy source is attracting renewed attention. It may take 20 years or so for the potential to be realized. But the effects are likely to be felt within the planning horizons of most long-term investors—a good reason to start thinking now about the investment implications.
Minisode - How Digital Automation Will Drive the Next Generation of Investment Platforms
RIA technology products are not known for their efficiency, low cost or delightful user experience. Altruist is a new, seamlessly integrated digital investing platform, which results in extraordinary ROI for financial advisors and enables them to spend far more time with clients.
Renting All Your Furniture Means Never Discarding Another Sofa
Plastic-wrapped foam mattresses, dilapidated plastic shelving units, three-legged Ikea chairs—Jay Reno calls this “end-of-life” furniture. And it’s accumulating by the dumpster-full in landfills.
SPAC, Hedge Fund, Growth Stock Pain Builds in $1 Trillion Rout
Casualties are piling up across the stock market as bond yields rise.
Cathie Wood Fan Club Faces Big Test as Ark Funds Extend Rout
The biggest slide in months for Cathie Wood’s funds is testing the resolve of investors who plowed billions of dollars into one of the hottest firms on Wall Street.
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?
GMO 7-Year Asset Class Forecast: January 2021
The GMO Asset Allocation Team has released its latest 7-Year Asset Class Forecasts through January 2021.
Easing Advisors' Transition to Independence
A solution for the challenge of moving wirehouse clients with active securities-based loans.
EleVation: Some V-Shaped Economic Data to Cheer
Looking at the latest economic data reveals V-shaped recoveries in many goods-based indicators; while services has more catch-up to do.
Beating Bobby Fischer
We think this is an excellent time to ponder the thoughts of Buffett and Munger.
Risks of High Equity Valuations Present Tactical Opportunities
Calls of a market bubble might indicate low returns over the next 5-10 years, but not all equities are overvalued. The S&P 500 has been led higher by just a handful of companies that make up a large percentage of the index, and companies that have lagged may now provide better risk-adjusted returns as the economy recovers. We highlight some of the valuation metrics that look stretched and some thoughts on tactical allocation ideas.
The Power of And
A look at two ingredients that make a meaningful impact on performance in the mid cap space.
December S&P/Case-Shiller Home Price Index: National Index up 10.4% YoY NSA
With today's release of the December S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index saw a 1.25% increase month over month which is cut to 1.1% with inflation adjustment. The non-seasonally adjusted national index saw a 10.4% YoY increase.
Using GameStop To Uncover Biases
What recently transpired in GameStop's stock was truly epic. More astonishing, though, was the ease at which a nihilistic narrative took hold in the absence of fact. To me it was telling and an opportunity to improve my thinking.
Inflation Angst Is About to Rewrite the Stock Market Playbook
For bond investors, inflation is pretty much all bad news, eating into the value of future returns. For equity traders, the tidings can be less categorically awful, given the ability of certain companies to wring profits from higher prices.
FHFA House Price Index: Up 1.1% in December
The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for December. U.S. house prices were up 1.1 percent on a seasonally adjusted nominal basis from the previous month. Year-over-year the index is up 11.4% on a non-seasonally adjusted nominal basis. After adjusting for inflation and seasonality, the index is up 0.82% in December and up 10.22% year-over-year (seasonally adjusted).
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.
U.S. College Enrollment Slumps, Bucking Usual Gain in Recessions
U.S. college enrollment of first-time undergraduates declined at the fastest pace in decades last year, according to research published Monday by the Federal Reserve Bank of St. Louis.
World Markets Update: February 22, 2021
All eight indexes on our world watch list posted gains through February 8, 2021. The top performer is Hong Kong's Hang Seng with a gain of 7.67%, India's BSE SENSEX is in second is with a gain of 7.53% and Tokyo's Nikkei 225 is in third with a gain of 7.08%. Coming in last is London's FTSE with a gain of 0.98%.
Overstimulation on the Way
Things are looking up for the US economy. Later this week we'll get an update on real GDP growth for the 4th quarter of 2020. We estimate that'll be revised up to a 4.3% annual rate of growth from a prior estimate of 4.0%.
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.
Municipal Bond Outlook: Recovering at Different Speeds
Political change, continued fiscal support will drive municipal markets in 2021, although outcomes are likely to vary.
Muni Credit Plays Defense When Rates Rise
As COVID-19 vaccines roll out and resrictions lift, a US economic rebound could lead to tighter Federal Reserve policy and higher yields. Municipal bond investors may worry about how rising yields could hurt their portfolios.
Inflation Here, There and Everywhere
What a week for price data! We have been writing about the possibility of higher inflation for months now, most recently here. We have also highlighted the most likely assets to benefit from higher inflation like copper, oil and energy stocks.
Vaccine Nationalism, Minimum Wage, Rising Energy Prices
Weighing the costs of global vaccine access, minimum wage and the energy rally.
Don’t Let Your Clients’ Kids be the Next Reddit Victims
There are times when you are called to advocacy. As a profession, this is one of them. Advisors are the stewards, the informed, the protectors, and if there is a force that stands between the next generation of investors and financial devastation, it is you.
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
Is There Illiquidity in Equity Returns?
Liquidity is valuable to investors. Therefore, they should demand higher expected return (a risk premium) for less liquid stocks. But new research shows they have not earned that extra return in public equity markets.
Minisode - Overcoming the Diversity Challenge in the Advisory Profession
It doesn’t take Black History Month to remind our listeners of the lack of diversity in the advisory profession. Of the countless conferences I’ve attended – when it was possible to attend such conferences – the overwhelming majority of attendees were like me: white, male and middle aged. We’ve seen a number of efforts to address this lack of diversity, particularly in the last year in light of the tragic events that have particularly affected people of color. Here to talk with me today is someone at the forefront of those efforts within the advisory profession.
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.
Gasoline Volume Sales Down 15% from All-Time High
The Department of Energy's Energy Information Administration (EIA) monthly data on volume sales is several weeks old when it released. The latest numbers, through mid-December, are now available.
How COVID-19 Vaccines and Brexit Create the Trade of the 2020s
In late 2020, a new kid emerged on the bargain-of-the-decade block. UK stocks, and notably UK value, reached very cheap levels relative to value stocks in other developed economies. Today, UK value remains at remarkably low valuations relative to most of its fundamentals.
Emerging From The Shadows
A strong economic rebound is expected towards the middle of the year, followed by a return to more normal growth in 2022.
As Volatility Fades, Can Cyclicals Shine?
BlackRock Global Allocation Fund portfolio manager Russ Koesterich explains why he expects volatility to drop -- and cyclicals outperform.
COVID 19 Disrupts Municipalities—Will Taxing Millionaires Accelerate Outmigration?
Apart from some high-profile downgrades, the muni credit markets finished 2020 buoyed by breakthrough vaccines and signs that state and local tax collections were better than anticipated.
Powell’s Approach to Recovery, Inflation Will Test Union Loyalty
Jerome Powell enters the final year of his term as Federal Reserve chair enjoying the support of labor unions with influence in Joe Biden’s White House, an advantage as the administration prepares to decide later this year whether to reappoint the central bank chief.
U.S. Price Pressures Percolate With Surging Sales, Input Costs
The U.S. economy is starting to display pockets of price pressures, further stoking the debate among economists and market participants over the future path of inflation.
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%.
Fixed Income: Low Yields Don’t Tell the Whole Story
It’s tempting these days for some investors to question the role of fixed income in portfolios. After all, real yields have plunged, potentially leading to less income today and smaller capital gains tomorrow.
Year of the Ox: Bullish for China?
The Year of the Ox looks bullish for China with economists and analysts forecasting GDP growth of 8.1% and earnings growth of 18% for the MSCI China Index. But February holds key developments for China that could impact this outlook, including stock delistings, trade, and COVID-19.
The Inflation Outlook
For a variety of reasons, many investors are worried about higher inflation. While we may see reflation (a pickup in prices that were restrained due to the pandemic), a significant increase in underlying inflation appears unlikely.
What Vaccine Progress Means for Stock Markets
New virus variants are stoking COVID-19 angst, but we see vaccination programs opening the door to economic and market recoveries.
Four Things Investors Should Know About US Inflation in 2021
We expect US core inflation to surge in the months ahead, as comparisons to low price levels of a year ago cause sizable fluctuations. Ultimately, supply should respond to recovering demand, bringing inflation down and facilitating easy Fed policy.
Schumer, Warren Challenge Biden on Student Debt Cancellation
Two top Senate Democrats said Wednesday they will keep pressuring President Joe Biden to wipe out up to $50,000 per borrower in student loan debt after he shot down the idea of doing so by executive action or without restrictions.
SATs, Once Hailed as Ivy League Equalizers, Fall From Favor
In this strange college admissions season, fewer high schoolers are turning in that dreaded number, their SAT score.
Cathie Wood’s ‘Phenomenal Rise’ Brings ETF Assets to $60 Billion
It’s another milestone for Cathie Wood’s Ark Investment Management. Less than two weeks after hitting $50 billion in assets, the red-hot firm now manages more than $60 billion, as funds flow into Wood’s exchange-traded funds at the fastest pace ever.
15 Explanations for the Bubble in Stock Prices
I offer 15 explanations for the bubble in stock prices and a single explanation for the one in bond prices. Those bubbles could deflate for any of 10 reasons I also identify, severely diminishing the retirement savings of baby boomers.
Advisors are in the Wellness Business
In conversations with financial planners or therapists who ask about the specifics of my practice, I am inclined to answer, “I am in the wellness business.” This results in a deep and theoretical dialogue.
Lessons for Advisors from the GameStop Saga
Over the last two weeks, we have seen how a cadre of retail traders on Reddit can lay siege on a group of hedge funds that had shorted the stock of the retail company GameStop. We saw the price of GameStop rise from about $20 at the beginning of the year to a peak of $347.5 on January 27. Yesterday, on February 4, it closed at $53.50. This is a brick-and-mortar company that sells video games and lost about $20 million last year. Today we will explore deeper issues surrounding the GameStop saga.
There’s Much More to Tech Investing than the US Market
Although US technology equities tend to dominate the conversation about technology investing, Franklin Equity Group’s John Remmert and Don Huber believe there are many innovative international technology companies that tend to get overlooked.