Andrew Milliner, Global Bonds Portfolio Manager at Janus Henderson Investors, has put together the below comments in reaction to current U.S. inflation figures and what it means for the economy and markets moving forward. Please let me know if you have any questions or wish to further discuss with Andrew.
Municipal bonds have held up well this year, despite rising interest rates and inflation. Munis’ long-term outlook is strong too. What accounts for their outperformance in today’s environment?
ETF traders are increasingly wary of the corporate bond market as inflation anxiety boils over.
The switch on the U.S. economy is readying to come fully “on,” more than a year after the global pandemic forced abrupt closures around the world and across industries.
Widespread lockdowns have resulted in record output declines and soaring debt across the euro area. But the political response to the COVID-19 crisis may be positive for the European integration project—and for euro-area bond markets.
A wealth tax “crosses the line and is unnecessary,” according to Ray Dalio.
Labor markets are changing course. When will the Fed do the same? India's second wave will disrupt activity elsewhere.
Today, we find ourselves with particularly high confidence in the likelihood of three scenarios to which we believe all investors should be paying close attention. First, we anticipate the current market euphoria will likely last through the summer.
The strong economic recovery will not be interrupted by inflation or a credit crunch, according to Ed Yardeni, and the S&P 500 will soon reach 4,500.
Markets are pricing in a liftoff from near-zero policy rates as early as next year, even though the Fed through its new framework has committed to stay behind the curve on inflation. We caution against extrapolating too much from strong near-term activity data amid a powerful restart. We see a high bar for the Fed to change its policy stance and believe this may be underappreciated by markets.
It is a particularly good time to invest in the commodities markets.
A host of impediments stand in the way of allocating funds to annuities. Some issues relate to brokers or advisors, and others involve their clients. Some are valid, but others are questionable and reflect irrational behavioral biases.
We are about to see “non-transitory inflation,” according to Bianco. His words were chosen carefully to oppose Fed Chair Jay Powell’s statement on April 28 that the U.S. would face only “transitory” inflation.
One of my all-time favorite quotes comes from Winston Churchill, who was just as witty as he was a great leader: “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
I've developed this kind of duality. It's hard to think of the next 20 years or indeed the last 20 years without being very optimistic about the future of humanity.
The highest-flying tech names are getting no help from one of the sector’s usual lifelines amid a fierce selloff that’s showing few signs of slowing.
The consensus is that U.S. equities will deliver strong performance as the economy recovers, and that higher inflation will drive rising interest rates. All of that is wrong, according to David Rosenberg.
It was ever so tempting to devote today’s letter to a discussion of President Biden’s latest massive government spending, which he proposed Wednesday night in his “First Hundred Days” speech before Congress.
Inflation is likely to rise in 2021—but will the rise be sustained? That seems to be the million-dollar question lately.
Overflowing cargo ships, snarled production lines, copper above $10,000 and a start to earnings season that’s smashing records.
It came as a shock on Wall Street the last few days, how much better the world’s biggest companies were doing than anyone thought. Also unexpected was what the market made of those results. Despite big earnings beats, the share-price performance of the vaunted Faang cohort has been mediocre.
America’s municipal bonds are staging their longest winning streak against Treasuries in seven years.
The Fed is under the misconception that it controls events, according to James Grant. It is overconfident in its belief it can accurately calibrate and attain a 2% inflation target.
There’s an old bit of advice that one shouldn’t count one’s chickens before they’re hatched.
How to structure your portfolio when interest rates are rising.
On April 20, we hosted our first ever virtual Market Outlook Summit. Here is a recap of each session with a link to watch the replay.
The Berkshire Hathaway Annual Meeting was a mixture of caution, wisdom and honesty.
I will explore three approaches to options-based strategies: DIY, an ETF or a RILA.
What do financial folly and religious frenzy have in common?
Supply chain disruptions may be a near-term challenge, but base effects will slow inflation next year.
Valid until the market close on May 310 2021.
The S&P 500 closed April with a monthly gain of 6% after a gain of 4.24% in March. 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.
Chief Economist Scott Brown discusses the latest market data.
There has been much commentary suggesting bonds have gotten overvalued due to historically low rates.
With everything up, where are the value buying opportunities?
Here’s one way the federal government could help America’s black colleges and universities: expand the market for their tax-exempt bonds.
As expected, the Federal Open Market Committee (FOMC) announced no changes to its administered rates following its April meeting, and Federal Reserve Chair Jerome Powell did not provide new information about the Fed’s bond-buying programs.
The reflation trade continued in earnest during the first quarter of 2021. Commodities were up another 13.3% from January to March, following a 14.7% move in the fourth quarter of 2020.
In this webcast, Scott Kefer, CFA, Senior Portfolio Manager, Kevin Bales, CFA, Associate Portfolio Manager at VictoryShares and Solutions, and Ian Saunders, Sr. Analyst at Nasdaq Dorsey Wright will discuss alternative income strategies and their ability to offer the trifecta of benefits many investors seek: attractive income, low correlation to both stocks and bonds, and a level of volatility similar to traditional bonds.
Much has changed since the oil-market collapse in the early pandemic days of 2020, when prices actually turned negative. Franklin Templeton Fixed Income Research Analyst/Portfolio Manager Bryant Dieffenbacher looks back at industry developments since then, and outlines opportunities he sees in the high-yield energy bond market today.
10 year Treasury rates peaked at the end of March at 1.74% after having risen from low of just 0.56% back in the summer of 2020. Now, the rate stands at 1.57% even as economic data continues to come in smoking hot and policy remains incredibly accommodative.
A powerful economic restart is underway in the U.S. – with Europe and emerging markets (EMs) set to follow.
Nuclear decommissioning trusts (NDTs), the pools of money accumulated over decades used to dismantle nuclear power plants and safely dispose of radioactive materials, allocate about 40% of their assets to fixed income securities.
Although we remain constructive about the economic outlook, the recent increase in speculative activity gives us some pause. We continue to favor a cautious approach in the near-to-medium term.
Since the disruptions that roiled financial markets in March 2020, investors have turned more to cash and other short-term instruments typically associated with risk aversion and preservation of capital and liquidity.
Investors aggressively sold off Treasuries in the first quarter in favor of risk assets. We think this is likely to continue as the economy strengthens and inflationary pressures build, and we are maintaining a defensive duration profile to protect against rising rates.
Investors betting against green trades are going up against the world’s most powerful governments.
A corner of the debt capital markets known for still sending official notifications via email and even the occasional fax is poised for a modern update.
Review the latest Weekly Headings by CIO Larry Adam.
For those who elect to take passive strategies, like TDFs, assess your risk profile and that of the markets and invest accordingly.
This article demonstrates why the conventional wisdom of “stocks in taxable, bonds in tax advantaged” is not reliable.
Given the increase in interest of registered index-linked annuities (RILAs) and consistent growth in sales, advisors should understand the basics of the product and how it works.
There will be a large drawdown and an extended low/negative return period to balance out the above average return of the last 12 years.
More than 60 central banks right now are believed to be exploring the idea of digital currencies, including retail tokens that would be used by citizens as well as wholesale applications for financial institutions.
The latest Conference Board Leading Economic Index (LEI) for March was up 1.3% from the February final figure of 110.2.
While a global recovery has now become the base case for financial markets, differences between countries and regions on the path toward normalcy are significant and seem set to widen.
It often happens that associations which end up leaving an indelible mark on our collective memory of certain market events are the result of sheer happenstance
Despite a volatile first quarter, economic fundamentals appear to be improving. We are constructive on the equity market in the near-to-medium term, but we are closely monitoring inflation and interest rates.
According to leading economists and academics, annuities can generate retirement income more efficiently than bonds for today’s retirees. In addition, they can ease the impact of a market downturn on a portfolio and create the opportunity for heavier allocations to equities for discretionary spending or legacy designations. Join this session – the first in a 5-part series – to understand how and why advisors are using commission-free annuities to strengthen their clients’ retirement plans and grow their firms.
This session is the first of a new five-part annuity education series, featuring leading academics Wade Pfau, Ph.D., CFA, RICP® Professor and RICP®️, Michael Finke, Ph.D., Frank M. Engle Distinguished Chair in Economic Security, David Blanchett, PhD, CFA, CFP®, ChFC®, CLU®, and DPL Founder and CEO, David Lau.
Emerging-market bulls who’ve benefited from moderating U.S. Treasury yields are bracing for a relapse as political risks pile up.
John Vail of Nikko Asset Management dives into the findings from Nikko’s latest Global Investment Committee meeting.
How should clients use tax-advantaged accounts? By quantifying the tax benefits of those accounts, we can refine recommendations on asset location and the traditional-versus-Roth decision.
How many bad/failed companies are being carried by the forbearance of their private and public creditors and emergency injections of cash from government?
There has been an explosion in academic research on the impact of implementing ESG on the risk and returns of equity portfolios. Research on fixed income, which has received less attention, shows that positive ESG scores correlate with lower yield spreads, decreasing future returns for bond investors.
Right now, the stock market is in the land-where-there-should-be-sea phase. What we don’t know is when the wave is coming. Maybe there’s time to venture out and see what treasure was hidden beneath the waves... or maybe not. Prudence would suggest that we go searching for treasure on higher ground.
On April 21 the Governing Council of the Bank of Canada (BoC) will meet to discuss monetary policy.
We begin with what we hope will be our final substantive COVID update. The vaccines have arrived and are going into people’s arms at an accelerating pace.
With equity markets continuing to hit new records, the arguments for further upside versus an imminent pullback are intensifying. What direction market go will still be driven by Covid, but not for long.
Quarterly commentary - Discussion on the historic stock market measures presently in place due to the Fed's largesse.
Lost in the debate over whether today's ultra-loose fiscal and monetary policies will trigger painful inflation is the broader risk posed by potential negative supply shocks.
The 2015 Paris Agreement introduced the legally binding goal of maintaining the average global temperature below the pre-industrial revolution average plus 2o Celsius in order to avoid severe stress on natural and socioeconomic systems.
Bond traders searching for an opportunity to challenge central banks are starting to look Down Under, where a likely showdown over yield-curve control is set to test the power of policy makers to contain the next wave of reflation bets.
U.S. consumer prices climbed in March by the most in nearly nine years as the end of pandemic lockdowns triggered a rebound in travel and commuting that pushed up the cost of gasoline, car rentals and hotel stays.
Millions of Americans, it seems, felt that the time was right to trade in their clunkers for a new set of wheels.
How much is a tax deduction worth? Maybe less than your money scripts would have you believe. Here are some common ways that over-emphasizing deductions may reduce your clients’ tax bills but cost them more money than they save.
As the end of the pandemic came into view in the U.S. and the new administration’s stimulus plan became more probable, expectations for economic growth and inflation have increased.
It isn’t hard these days to find investors trumpeting the demise of the decades-long bull run in Treasuries.
Theory predicts and research has shown that positive ESG scores correlate with a lower cost of capital for companies, lowering the expected return on stocks. New research shows a similar effect in the bond market, with positive ESG scores correlated to smaller credit spreads, decreasing the yield to investors.
Institutions are increasingly allocating to digital assets, but their role in a portfolio is not yet well defined or studied. This piece focuses on Bitcoin and reviews its relationship with major asset classes in the context of an institutional caliber portfolio. Standard techniques are used to help advisors better understand position sizing and the associated risk/reward tradeoff.
I used the “Big Picture” client education software to examine the impact of rebalancing frequency on historical SWRs and other retirement outcomes. The results argue against the notion to rebalance often.
From 1949 through 1964, the S&P 500 enjoyed an average annual total return of 16.4%. In the 8 years that followed, through 1972, the total return of the index averaged a substantially lower 7.6% annually; strikingly close to the 7.5% projection that Graham had suggested based on prevailing valuations, yet still providing what Graham had suggested would likely “carry a fair degree of protection” against inflation, which averaged 3.9% over that period.
Another round of stimulus totaling $1.9 trillion is making its way through the US economy, with hopes it will trigger a sharp rebound from the ravages of COVID-19.
We’re more than ready to put the pandemic in the rearview mirror. For the first time since this all started a year ago, more than one million people per day have been flying commercial in the U.S. for 30 straight days.
Yes, the housing market is a bit overheated, but for reasons that make far more sense than the rationalizations of stock market bulls. Some buyers are certainly overpaying and may regret it. Nonetheless, I don’t foresee another 2008-style housing crash in the near future, nor anything like the subprime crisis. There are altogether different fundamentals working here.
Floating-rate notes can help lower a portfolio’s sensitivity to interest rate changes, but they aren’t necessarily the secret weapon to combat a rising-rate environment.
As a backdrop, we’ll bring a bit of scientific language to our analysis this quarter as we celebrate the amazing feats of our scientific brothers and sisters.
The American Jobs Plan is not only the biggest traditional infrastructure proposal in over 50 years, but if approved, it will also fund significant investments in human and environmental infrastructure.
The three-decade bull market in bonds may finally be over. Since the start of this year, the yield on the 10-year Treasury bond has risen 70 basis points. Since its low in August of last year, it has risen 111 basis points. The fear of inflation has been a key driver, fueled by a rapidly rising federal deficit and stimulus checks that will soon be in the wallets of American consumers. Here to discuss what that means for advisors and more importantly for your clients’ portfolios is Simeon Hyman of ProShares.
In 1974, U.S. President Gerald Ford took office “amidst one of the worst economic crises in U.S. history,” which was characterized by double digit inflation.
Ulf Erlandsson isn’t your typical climate campaigner: He prefers the trading desk to the picket line.
Within the growth-vs.-value context, we’d like to discuss three Covid-related scenarios for companies.
Municipal Bonds
US Inflation Figures
Andrew Milliner, Global Bonds Portfolio Manager at Janus Henderson Investors, has put together the below comments in reaction to current U.S. inflation figures and what it means for the economy and markets moving forward. Please let me know if you have any questions or wish to further discuss with Andrew.
Why Munis Should Hold Their Shine Amid Higher Rates
Municipal bonds have held up well this year, despite rising interest rates and inflation. Munis’ long-term outlook is strong too. What accounts for their outperformance in today’s environment?
Biggest Credit ETF Sees Shorts Soar
ETF traders are increasingly wary of the corporate bond market as inflation anxiety boils over.
One Hot Economy, Two Burning Questions on Value and Income
The switch on the U.S. economy is readying to come fully “on,” more than a year after the global pandemic forced abrupt closures around the world and across industries.
Will COVID-19 Accelerate Euro-Area Integration?
Widespread lockdowns have resulted in record output declines and soaring debt across the euro area. But the political response to the COVID-19 crisis may be positive for the European integration project—and for euro-area bond markets.
Ray Dalio – A Wealth Tax “Crosses the Line”
A wealth tax “crosses the line and is unnecessary,” according to Ray Dalio.
Fed's Patience Tested, Slow Labor Markets, India's COVID Crisis
Labor markets are changing course. When will the Fed do the same? India's second wave will disrupt activity elsewhere.
Three Fixed Income Predictions for the Roaring 2020’s
Today, we find ourselves with particularly high confidence in the likelihood of three scenarios to which we believe all investors should be paying close attention. First, we anticipate the current market euphoria will likely last through the summer.
Ed Yardeni – The S&P is Going to 4,500
The strong economic recovery will not be interrupted by inflation or a credit crunch, according to Ed Yardeni, and the S&P 500 will soon reach 4,500.
Mind the (rate expectation) gap
Markets are pricing in a liftoff from near-zero policy rates as early as next year, even though the Fed through its new framework has committed to stay behind the curve on inflation. We caution against extrapolating too much from strong near-term activity data amid a powerful restart. We see a high bar for the Fed to change its policy stance and believe this may be underappreciated by markets.
The Recovery will be Positive for Commodities
It is a particularly good time to invest in the commodities markets.
The Valid and Not-So-Valid Reasons for Rejecting Annuities
A host of impediments stand in the way of allocating funds to annuities. Some issues relate to brokers or advisors, and others involve their clients. Some are valid, but others are questionable and reflect irrational behavioral biases.
Jim Bianco – We Will Face “Non-Transitory” Inflation
We are about to see “non-transitory inflation,” according to Bianco. His words were chosen carefully to oppose Fed Chair Jay Powell’s statement on April 28 that the U.S. would face only “transitory” inflation.
No Country Has Ever Taxed Itself into Prosperity
One of my all-time favorite quotes comes from Winston Churchill, who was just as witty as he was a great leader: “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
This Kind of Duality
I've developed this kind of duality. It's hard to think of the next 20 years or indeed the last 20 years without being very optimistic about the future of humanity.
Ark Slammed Again as Riskiest Tech Bets Blow Past Lifelines
The highest-flying tech names are getting no help from one of the sector’s usual lifelines amid a fierce selloff that’s showing few signs of slowing.
David Rosenberg – The Consensus is Wrong about Stocks, Bonds and Inflation
The consensus is that U.S. equities will deliver strong performance as the economy recovers, and that higher inflation will drive rising interest rates. All of that is wrong, according to David Rosenberg.
When Will Powell’s Fed Have To Blink On Policy?
It was ever so tempting to devote today’s letter to a discussion of President Biden’s latest massive government spending, which he proposed Wednesday night in his “First Hundred Days” speech before Congress.
Rising Inflation: What It Means for TIPS and Other Investments
Inflation is likely to rise in 2021—but will the rise be sustained? That seems to be the million-dollar question lately.
Inflation Haunts Stock Traders in Blockbuster Earnings Season
Overflowing cargo ships, snarled production lines, copper above $10,000 and a start to earnings season that’s smashing records.
Chasing Red-Hot Profit Growth Is a Recipe for Stock-Market Pain
It came as a shock on Wall Street the last few days, how much better the world’s biggest companies were doing than anyone thought. Also unexpected was what the market made of those results. Despite big earnings beats, the share-price performance of the vaunted Faang cohort has been mediocre.
Muni Bonds See Longest Winning Streak Over Treasuries Since 2014
America’s municipal bonds are staging their longest winning streak against Treasuries in seven years.
Jim Grant: The Fed Cannot Control Inflation
The Fed is under the misconception that it controls events, according to James Grant. It is overconfident in its belief it can accurately calibrate and attain a 2% inflation target.
Counting the Chickens Twice
There’s an old bit of advice that one shouldn’t count one’s chickens before they’re hatched.
The Year of Living Dangerously
How to structure your portfolio when interest rates are rising.
A Recap of Our Virtual Market Outlook Summit
On April 20, we hosted our first ever virtual Market Outlook Summit. Here is a recap of each session with a link to watch the replay.
Buffett: No Fish in the Barrel
The Berkshire Hathaway Annual Meeting was a mixture of caution, wisdom and honesty.
It’s Good to Have Options Part 2: DIY vs ETF vs RILA
I will explore three approaches to options-based strategies: DIY, an ETF or a RILA.
Financial Folly, Religious Frenzy and the Delusions of Crowds
What do financial folly and religious frenzy have in common?
The Coming Disinflation
Supply chain disruptions may be a near-term challenge, but base effects will slow inflation next year.
Moving Averages: Up 6% in April
Valid until the market close on May 310 2021.
The S&P 500 closed April with a monthly gain of 6% after a gain of 4.24% in March. 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.
Weekly Market Snapshot
Chief Economist Scott Brown discusses the latest market data.
#MacroView: No, Bonds Aren’t Overvalued. They’re A Warning Sign.
There has been much commentary suggesting bonds have gotten overvalued due to historically low rates.
With Everything Up Right Now, Where are the Value Buying Opportunities?
With everything up, where are the value buying opportunities?
Congress Urged to Use Muni Tax Breaks to Help Black Colleges
Here’s one way the federal government could help America’s black colleges and universities: expand the market for their tax-exempt bonds.
Realigning Inflation Expectations
As expected, the Federal Open Market Committee (FOMC) announced no changes to its administered rates following its April meeting, and Federal Reserve Chair Jerome Powell did not provide new information about the Fed’s bond-buying programs.
2021 Q1 Letter
The reflation trade continued in earnest during the first quarter of 2021. Commodities were up another 13.3% from January to March, following a 14.7% move in the fourth quarter of 2020.
Rethink the “40” in your 60/40: Why Alternative Income Deserves a Slice of the Traditional “40” Fixed Income Allocation
In this webcast, Scott Kefer, CFA, Senior Portfolio Manager, Kevin Bales, CFA, Associate Portfolio Manager at VictoryShares and Solutions, and Ian Saunders, Sr. Analyst at Nasdaq Dorsey Wright will discuss alternative income strategies and their ability to offer the trifecta of benefits many investors seek: attractive income, low correlation to both stocks and bonds, and a level of volatility similar to traditional bonds.
High Yield Bonds in View: Energy
Much has changed since the oil-market collapse in the early pandemic days of 2020, when prices actually turned negative. Franklin Templeton Fixed Income Research Analyst/Portfolio Manager Bryant Dieffenbacher looks back at industry developments since then, and outlines opportunities he sees in the high-yield energy bond market today.
Why Rates Could Still Drift Lower, But Will Ultimately Go Higher
10 year Treasury rates peaked at the end of March at 1.74% after having risen from low of just 0.56% back in the summer of 2020. Now, the rate stands at 1.57% even as economic data continues to come in smoking hot and policy remains incredibly accommodative.
Why We Remain Pro-risk
A powerful economic restart is underway in the U.S. – with Europe and emerging markets (EMs) set to follow.
Nuclear Decommissioning Trusts: Broadening the Fixed Income Opportunity Set
Nuclear decommissioning trusts (NDTs), the pools of money accumulated over decades used to dismantle nuclear power plants and safely dispose of radioactive materials, allocate about 40% of their assets to fixed income securities.
Nonplussed – Strategic Income Outlook, Second Quarter
Although we remain constructive about the economic outlook, the recent increase in speculative activity gives us some pause. We continue to favor a cautious approach in the near-to-medium term.
Rethinking Cash Holdings to Avoid Near‑Zero Yields
Since the disruptions that roiled financial markets in March 2020, investors have turned more to cash and other short-term instruments typically associated with risk aversion and preservation of capital and liquidity.
Tradition… Inflation? – Total Return Outlook, Second Quarter
Investors aggressively sold off Treasuries in the first quarter in favor of risk assets. We think this is likely to continue as the economy strengthens and inflationary pressures build, and we are maintaining a defensive duration profile to protect against rising rates.
Governments Want You to Buy Green. Ignore Them at Your Peril
Investors betting against green trades are going up against the world’s most powerful governments.
Wall Street Banks Say Time for Loan Market to Ditch the Fax
A corner of the debt capital markets known for still sending official notifications via email and even the occasional fax is poised for a modern update.
Weekly Investment Strategy
Review the latest Weekly Headings by CIO Larry Adam.
Are You Playing Roulette with Target Date Funds?
For those who elect to take passive strategies, like TDFs, assess your risk profile and that of the markets and invest accordingly.
Quantifying the Tax Benefit of Retirement Accounts for Better Client Decisions (Part 2)
This article demonstrates why the conventional wisdom of “stocks in taxable, bonds in tax advantaged” is not reliable.
It’s Good to Have Options, Part 1: Meet Registered Index-Linked Annuities (RILAs)
Given the increase in interest of registered index-linked annuities (RILAs) and consistent growth in sales, advisors should understand the basics of the product and how it works.
The Stock Market’s Collapse is Near
There will be a large drawdown and an extended low/negative return period to balance out the above average return of the last 12 years.
Are Central Bank Digital Currencies the Future of Money?
More than 60 central banks right now are believed to be exploring the idea of digital currencies, including retail tokens that would be used by citizens as well as wholesale applications for financial institutions.
CB Leading Economic Index: Sharp Rise in March
The latest Conference Board Leading Economic Index (LEI) for March was up 1.3% from the February final figure of 110.2.
On My Mind: A Tale of Two Recoveries
While a global recovery has now become the base case for financial markets, differences between countries and regions on the path toward normalcy are significant and seem set to widen.
Shiller’s ECY Makes Relative Sense, but the Market’s Absolute Return May Be Another Story
It often happens that associations which end up leaving an indelible mark on our collective memory of certain market events are the result of sheer happenstance
Solid Fundamentals but Questions Remain – Equity Outlook, Second Quarter
Despite a volatile first quarter, economic fundamentals appear to be improving. We are constructive on the equity market in the near-to-medium term, but we are closely monitoring inflation and interest rates.
Annuities for Today’s Retirement Realities
According to leading economists and academics, annuities can generate retirement income more efficiently than bonds for today’s retirees. In addition, they can ease the impact of a market downturn on a portfolio and create the opportunity for heavier allocations to equities for discretionary spending or legacy designations. Join this session – the first in a 5-part series – to understand how and why advisors are using commission-freeannuities to strengthen their clients’ retirement plans and grow their firms.
This session is the first of a new five-part annuity education series, featuring leading academics Wade Pfau, Ph.D., CFA, RICP® Professor and RICP®️, Michael Finke, Ph.D., Frank M. Engle Distinguished Chair in Economic Security, David Blanchett, PhD, CFA, CFP®, ChFC®, CLU®, and DPL Founder and CEO, David Lau.
Emerging-Market Bulls Brace for Treasury Relapse After Rally
Emerging-market bulls who’ve benefited from moderating U.S. Treasury yields are bracing for a relapse as political risks pile up.
Global Investment Committee Outlook: Continue risk-positive
John Vail of Nikko Asset Management dives into the findings from Nikko’s latest Global Investment Committee meeting.
Quantifying the Tax Benefit of Retirement Accounts for Better Client Decisions (Part 1)
How should clients use tax-advantaged accounts? By quantifying the tax benefits of those accounts, we can refine recommendations on asset location and the traditional-versus-Roth decision.
You Want to Buy More Junk Equities?
How many bad/failed companies are being carried by the forbearance of their private and public creditors and emergency injections of cash from government?
ESG Investing Means Lower Bond Yields
There has been an explosion in academic research on the impact of implementing ESG on the risk and returns of equity portfolios. Research on fixed income, which has received less attention, shows that positive ESG scores correlate with lower yield spreads, decreasing future returns for bond investors.
Tsunami Warning
Right now, the stock market is in the land-where-there-should-be-sea phase. What we don’t know is when the wave is coming. Maybe there’s time to venture out and see what treasure was hidden beneath the waves... or maybe not. Prudence would suggest that we go searching for treasure on higher ground.
Bank of Canada: Walking a Tightrope
On April 21 the Governing Council of the Bank of Canada (BoC) will meet to discuss monetary policy.
Spring Quarterly Commentary
We begin with what we hope will be our final substantive COVID update. The vaccines have arrived and are going into people’s arms at an accelerating pace.
The Direction of Equity Markets After Covid
With equity markets continuing to hit new records, the arguments for further upside versus an imminent pullback are intensifying. What direction market go will still be driven by Covid, but not for long.
The Day the Music Died
Quarterly commentary - Discussion on the historic stock market measures presently in place due to the Fed's largesse.
Is Stagflation Coming?
Lost in the debate over whether today's ultra-loose fiscal and monetary policies will trigger painful inflation is the broader risk posed by potential negative supply shocks.
Seven Policy Proposals to Meet the Paris Agreement Objectives
The 2015 Paris Agreement introduced the legally binding goal of maintaining the average global temperature below the pre-industrial revolution average plus 2o Celsius in order to avoid severe stress on natural and socioeconomic systems.
Bond Traders Face Reflation Fight That Will Echo Around World
Bond traders searching for an opportunity to challenge central banks are starting to look Down Under, where a likely showdown over yield-curve control is set to test the power of policy makers to contain the next wave of reflation bets.
Consumer Prices in U.S. Advance by Most in Nearly Nine Years
U.S. consumer prices climbed in March by the most in nearly nine years as the end of pandemic lockdowns triggered a rebound in travel and commuting that pushed up the cost of gasoline, car rentals and hotel stays.
The Best Business Conditions of the 21st Century?
Millions of Americans, it seems, felt that the time was right to trade in their clunkers for a new set of wheels.
When Tax Deductions Cost Clients Money
How much is a tax deduction worth? Maybe less than your money scripts would have you believe. Here are some common ways that over-emphasizing deductions may reduce your clients’ tax bills but cost them more money than they save.
Which Way is Up?
As the end of the pandemic came into view in the U.S. and the new administration’s stimulus plan became more probable, expectations for economic growth and inflation have increased.
The Debate Over the Next Move in Bonds Has Never Been Fiercer
It isn’t hard these days to find investors trumpeting the demise of the decades-long bull run in Treasuries.
Positive ESG Ratings Decrease Returns to Investors
Theory predicts and research has shown that positive ESG scores correlate with a lower cost of capital for companies, lowering the expected return on stocks. New research shows a similar effect in the bond market, with positive ESG scores correlated to smaller credit spreads, decreasing the yield to investors.
Bitcoin: An Asset Allocator’s Perspective
Institutions are increasingly allocating to digital assets, but their role in a portfolio is not yet well defined or studied. This piece focuses on Bitcoin and reviews its relationship with major asset classes in the context of an institutional caliber portfolio. Standard techniques are used to help advisors better understand position sizing and the associated risk/reward tradeoff.
Rebalancing Frequency and Safe Withdrawal Rates
I used the “Big Picture” client education software to examine the impact of rebalancing frequency on historical SWRs and other retirement outcomes. The results argue against the notion to rebalance often.
Always a Reckoning
From 1949 through 1964, the S&P 500 enjoyed an average annual total return of 16.4%. In the 8 years that followed, through 1972, the total return of the index averaged a substantially lower 7.6% annually; strikingly close to the 7.5% projection that Graham had suggested based on prevailing valuations, yet still providing what Graham had suggested would likely “carry a fair degree of protection” against inflation, which averaged 3.9% over that period.
State and Local Governments Get Shot of Stimulus
Another round of stimulus totaling $1.9 trillion is making its way through the US economy, with hopes it will trigger a sharp rebound from the ravages of COVID-19.
Positive First-Quarter Data Point to a Global, Sustained Economic Boom
We’re more than ready to put the pandemic in the rearview mirror. For the first time since this all started a year ago, more than one million people per day have been flying commercial in the U.S. for 30 straight days.
Tiny Housing Bubbles
Yes, the housing market is a bit overheated, but for reasons that make far more sense than the rationalizations of stock market bulls. Some buyers are certainly overpaying and may regret it. Nonetheless, I don’t foresee another 2008-style housing crash in the near future, nor anything like the subprime crisis. There are altogether different fundamentals working here.
Rising Rates: When to Consider Floating-Rate Notes
Floating-rate notes can help lower a portfolio’s sensitivity to interest rate changes, but they aren’t necessarily the secret weapon to combat a rising-rate environment.
CIO Says, “Resilience Is in Our DNA – and in the Markets”
As a backdrop, we’ll bring a bit of scientific language to our analysis this quarter as we celebrate the amazing feats of our scientific brothers and sisters.
Quick Thoughts: The American Jobs Plan is Not Just an Infrastructure Plan
The American Jobs Plan is not only the biggest traditional infrastructure proposal in over 50 years, but if approved, it will also fund significant investments in human and environmental infrastructure.
Minisode - Investing in the Post-Pandemic Economy
The three-decade bull market in bonds may finally be over. Since the start of this year, the yield on the 10-year Treasury bond has risen 70 basis points. Since its low in August of last year, it has risen 111 basis points. The fear of inflation has been a key driver, fueled by a rapidly rising federal deficit and stimulus checks that will soon be in the wallets of American consumers. Here to discuss what that means for advisors and more importantly for your clients’ portfolios is Simeon Hyman of ProShares.
In Unprecedented Times, Don’t Rely on (Obvious) Precedent
In 1974, U.S. President Gerald Ford took office “amidst one of the worst economic crises in U.S. history,” which was characterized by double digit inflation.
Bond Vigilante Calls Out ‘Dead Fish’ Credit Investors on Climate
Ulf Erlandsson isn’t your typical climate campaigner: He prefers the trading desk to the picket line.
Market Leadership Shifted as Investors Gained Confidence in a Post-Covid Economic Rebound
Within the growth-vs.-value context, we’d like to discuss three Covid-related scenarios for companies.