Leveraged and Inverse Funds

The country’s leadership has designed a new development model, based on a ‘common prosperity’ philosophy, aimed at modernising the economy by improving the country’s future demographic profile via lowering inequality and promoting sustainable, even if slower, GDP growth which is both less dependent on financial leverage and in harmony with nature.

We have become famous (or infamous) regarding our views that there is a bubble in long-duration assets. In this report, we investigate what’s causing such widespread bubbles, their potential effects on the overall economy, and the interesting investment opportunities resulting from the bubble’s misallocation of capital.

The spillover from the property sector to the broader economy could be significant.

Against the backdrop of a potential Evergrande failure, gold and Bitcoin look very attractive as stores of value, and both happen to be on sale right now.

Today, I want to show you how richly valued the market is and then review some of the top risks that could force it downward. Like those sandpiles I talk about, we don’t know exactly what will trigger a collapse. We know something will do it. Sandpiles don’t grow to infinity.

The recent issues with China Evergrande Group have raised concerns over the broader health of China’s real estate market, the potential risk to its financial system and, more broadly, whether this could trigger a global financial problem. In our latest Q&A, Portfolio Manager Teresa Kong, CFA and Investment Strategist Andy Rothman provide their views and insights.

Senior Sovereign Analyst Bo Zhuang shares his perspective on China's Evergrande situation and how the government may respond.

With COVID-19 still a top employer concern, protecting workers’ health and well-being naturally comes first. But the pandemic’s impact isn’t limited to only physical and mental health: financial wellness is also ailing. The crisis has exacerbated the problem, but it’s not exactly a sudden occurrence.

The Fed governors will soon decide when and how to taper asset purchases.

It’s becoming more and more difficult to be in the fossil fuel business. On both sides of the Atlantic, lawmakers and unelected bureaucrats are turning up the heat, so to speak, on companies over the issue of climate change.

Today we’ll take another walk through the inflation debate. Is it still transitory or should we expect a light-1970s inflation going forward? The answer is critically important.

Several policy-related risks loom in September and October that may lead to an increase in market volatility. The debt ceiling needs to be raised (likely by mid-October), the government needs to be funded to avoid a shutdown by the end of September...

Evergrande is an example of the risk of debt defaults to China's financial stability.

U.S. Treasuries ended their 4-month streak of positive returns and falling yields in August. Intermediate maturity yields rose more than shorter and longer maturities, as the market began to see through the impact of the Delta variant and focus more on the Federal Reserve’s plan to scale back their bond buying program.

Markets now know that the taper can be divorced from interest rate hikes. But for how long? What are your expectations on the timing of tapering?

The 10-year Treasury yield finished 2020 at 0.917% and then climbed to 1.765% before topping on March 30. The 30-year Treasury yield rose to 2.505% on March 18 after ending 2020 at 1.646%. In the January 11 Weekly Technical Review (WTR) I noted that Treasury yields had broken out to the upside and that the 10-year Treasury yield would likely climb to 1.75% to 1.95% in 2021. “Treasury yields broke out on January 6 as expectations of more fiscal stimulus and technical selling kicked into gear. At some point in 2021, the 10-year Treasury yield could spike up to 1.75% to 1.95%.”

Household savings and central bank policies have reduced the need for credit.

Young investors are taking on personal debt to invest in stocks.

The inevitable introduction of Central Bank Digital Currencies (CBDCs) could be the most historical and fundamental change to the global financial system since Bretton Woods. In almost any iteration, CBDCs could completely revamp the global financial system as we know it.

Several potentially big storms are brewing. They could be minor annoyances or catastrophic disasters, or anywhere in between. I truly hope they all resolve with minimal fuss. But they may not. They could even combine into a perfect storm of even greater magnitude… so now is the time to prepare.

During a trying time for the world in 1939, Winston Churchill famously described the largest country in the world and soon-to-be second superpower, the Soviet Union, as “a riddle wrapped in a mystery inside an enigma.”

Franklin Templeton’s 2021 US Retirement Income Strategies and Expectations survey revealed financial-related concerns across generations of Americans including health care, inadequate savings, and debt management—and the need for a personalized approach to retirement planning.

The business development companies (BDCs) sector could follow a growth path similar to REITs.

There are many potential advantages to investing in tax-exempt municipal bonds, but not all advisors are aware of additional strategies and investment vehicles that can help them meet muni-focused client needs.

Just over a year ago, the biggest prevailing worry in the Canadian financial system was the risk of house prices falling in the aftermath of the COVID-19 pandemic.

So many headlines right now are instilling FUD in investors’ minds, which stands for Fear, Uncertainty and Doubt—from the Afghanistan news to fears on cryptocurrency and the delta variant disrupting travel plans. But don’t fall for it.

The current wave of regulatory intervention by the Chinese government has been far reaching, addressing matters including anti-trust, data protection, property speculation, climate change and various interventions in relation to social abuses.

Vaccines have been nothing short of a miracle; however, too many have been opting to not get them, endangering themselves and others, despite overwhelming evidence of the pro versus con.

The question I get most often is “when is the next bear market?” There are three specific items that tend to predict bear markets and recessions with some accuracy.

The “transitory” inflation swamping the country has stubbornly persisted into July.

The data shows the Fed is behind the surging wealth gap.

What we’ve seen this year is an exceptionally high rate of earnings growth across markets, but that’s not going to persist.

Longer term Treasury yields fell for a fourth consecutive month in July, as concerns around the resurgence of coronavirus weighed on forecasts for continued economic growth. Agency MBS underperformed investment grade corporates and Treasuries. While some inflation metrics set generational highs, and other economic data indicated a continued recovery, investors were focused on the potential impact of viral spread.

Rather than predicting what will happen to inflation in the future—a particularly arduous and humbling task—we ask a simple question: What can past inflation dynamics tell us about the equity market’s future returns?

Hidden Risks: Can Investors Trust China?

In 1905, the first gas pump appeared in St. Louis, Missouri, to meet the fueling demands of a rapidly growing number of motorists.

If you look just at 2021, it seems the US economy is tearing higher.

In our baseline forecast, the recent decline in U.S. Treasury yields will reverse somewhat, as some of the near-term factors pressuring yields lower ebb.

With global growth rebounding amid uncertainties over inflation and COVID-19 variants, investors may want to consider a somewhat more cautious and flexible approach when seeking a consistent yield.

In this past weekend’s newsletter, I discussed the issue of the markets next “Minsky Moment.”

You may not be familiar with the term metaverse, but if you’ve been a consumer of popular books, movies and video games over the past 30 years or so, you probably are aware of the concept.

I am worried the Fed will either let inflation become psychologically entrenched, or wait too long to stop it and spark crisis with a too-hasty response, but there are other possibilities. None are especially good.

Howard Marks doesn’t make bets on economic predictions. That’s especially true now when the biggest wildcard is inflation – a phenomenon no one fully understands. But just because something is unknowable doesn’t mean it’s unimportant. That’s why Howard has devoted his latest memo to a topic he largely disavows: macro forecasting.

What is the degree of Emerging Markets (EM) stocks’ undervaluation relative to United States (US) equities?

Despite a strengthening economy in the second quarter, investors were highly focused on the Federal Reserve’s response to the recent spike in inflation data.

In what shaped up to be a very impressive first half of the year for both the economy and stock market, stellar earnings growth has been a key ingredient.

Recent protests offer hope that change may be right around the corner. But for now, gold and Bitcoin have helped fill the gap created by disastrously mismanaged currencies.