What if balancing the tradeoffs between index investing and building portfolios tailored to personal priorities such as ESG or tax-efficiency didn’t have to be mutually exclusive?
In this webinar, Independent Advisor Solutions by SEI’s Director of Investment Products & Services J. Womack and Director of Distribution and Engagement Erich Holland will discuss how mass personalization is pivotal for advisor growth in an increasingly digital and personal world.
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.
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
Much statistical analysis in finance depends on the assumption that variables have normal distributions. This assumption is far from correct. As a result, as Nassim Nicholas Taleb has rightly pointed out, most statistical results in finance are wrong. Now, a disciple of Taleb has tried to extend Taleb’s research by relating it to an obscure mathematical concept.
How long will the effects of COVID be felt in potential growth, the tourism sector and bankruptcy filings?
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.
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.
We hope you enjoy Harold Evensky's latest NewsLetter.
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.
Even the most promising future can change drastically by a life-threatening event. A healthy individual may require around-the-clock care and supervision after an accident, creating the need to solve complex financial planning problems.
Our positive 2021 economic outlook, combined with better-than-expected company fundamentals, supports strong credit performance and spreads.
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.
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.
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.
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 key to getting referrals from a board is treating those influential people as genuine centers of influence.
I will break down the levels of a standard marketing funnel and provide specific steps that financial advisors can take to create their own.
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.
Let’s face it, estate planning tends to be boring, time-consuming, and complex. And with the current estate tax exclusion, some financial professionals feel estate planning impacts fewer and fewer people. Truth be told, estate planning isn’t just for the wealthy – it impacts every client you have. This presentation and the accompanying materials are designed to provide you with fundamental knowledge of must-know estate planning concepts.
A large fiscal package geared toward pandemic relief will likely boost U.S. growth even further in 2021, but long-term inflationary risks are still balanced.
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.
A look at two ingredients that make a meaningful impact on performance in the mid cap space.
U.S. stocks have the highest CAPE ratio of any global equity market, but they are still the place to invest. But the inventor of that metric, Robert Shiller, says that stocks are indeed risky.
Political change, continued fiscal support will drive municipal markets in 2021, although outcomes are likely to vary.
Weighing the costs of global vaccine access, minimum wage and the energy rally.
That there was a price “bubble” that burst in the American political economy from 1835 to 1845 is beyond question. The challenge is to reconcile the data sets for commodity and securities prices, interest rates and production volumes with the narratives of what happened.
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.
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.
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.
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.
A brief monthly update on what's happening in the municipal bond market.
Ever since the stock market bottomed in 2009 during the financial crisis, people have been coming up with reasons why the bull market was about to end. We heard every reason – Brexit, the end of Quantitative Easing, too much debt, COVID, etc. – and while we understood each may be a cause for consternation, we focused on valuations, which suggested the bull market would continue. Over time, math wins.
The object of the game was to get to the finish line first and then become the leader the next round. The stock market has its own game of “Simon says” and that is in the mall property world.
How can you help a family foundation plan for rapid growth in a way that is consistent with their wealth management objectives?
Are proposed fiscal policies and student debt forgiveness too much of a good thing?
Our Chief Market Strategist Stephen Dover believes cryptocurrency (crypto) is evolving into its next cycle of innovation. As an integral foundation for an alternative financial and internet ecosystem, crypto’s disruptions, opportunities, risks, and long-term implications are worth watching.
It isn't over and financial markets don't accept that yet. I realize suggesting anything negative about the virus is misanthropic, but the truth matters and the optics are misleading.
Factor-based models are often criticized for data mining. One way to address that charge is with “out-of-sample” testing over longer time frames. But that takes time. New research provides an alternative out-of-sample test – using emerging-market bonds.
If, however, the pandemic continues into summer, it will mean the Gripping Hand is still squeezing us. Employment won’t recover and more small businesses will fail. This relief package, as large as it is, may prove necessary and maybe even too small.
Hope is high that economic growth will accelerate as more people are vaccinated against COVID-19, but so far economic data has been lackluster. Meanwhile, bond investors are expecting inflation despite signs that the economic recovery’s momentum may be stalling. Why does everything seem so disconnected?
We've updated this series to include the January release of the Consumer Price Index as the deflator and the monthly employment update. The latest hypothetical real (inflation-adjusted) annual earnings are at $43,310, down 5.1% from 45-plus years ago.
Stephen Dover, our Chief Market Strategist and Head of Franklin Templeton Investment Institute, shares four investment themes he’s thinking about as the world recovers from the COVID-19 pandemic.
On October 2, 2019 brokerage firm Charles Schwab announced they were no longer going to charge commissions on stock and ETF trades. Before the day closed E-Trade and TD Ameritrade followed suit. And just like that, commissions were dead.
This is a new type of exchange-traded ETF that is built differently from a traditional ETF.
Tesla announced in a public filing Monday that it bought $1.5 billion worth of Bitcoin as part of a corporate policy that allows the electric vehicle (EV) maker to invest in “alternative reserve assets,” including not just cryptocurrencies but also gold bullion and gold ETFs.
Our Fixed Income CIO Sonal Desai shares her investment views and strategies for the post-pandemic recovery. She explains why inflation looks likely to gain steam, and how the balance of fundamentals and valuations become especially crucial today when looking for attractive returns in fixed income.
Here are the five best practices I’ve used to help advisors and their teams regain clarity about what they are doing to drive value for their clients.
I don’t say this often, but Fed Chairman Jerome Powell is wrong. Regular readers of our investor letters and other publications will recall that we regularly cite Chairman Powell as doing the best he can with the levers he has while arguing correctly for others to do their part.
Joe Biden’s administration has dedicated its first few weeks in office to spending more money on pandemic relief -- and shrugged off warnings that the economy may overheat as a result.
As quickly as it soared to the moon, GameStop came back down to earth; but the lessons learned are key to turning day trading speculators into longer-term investors.
Rick Rieder and team think that today’s potent policy cocktail holds important implications for the path of economic growth, markets and the value of a dollar.
The Northern Trust Economics team shares its outlook for the U.S. economy.
I have had it with people putting their cute kids to their laps on Zoom and introducing their dogs and cats on camera so we can all ooh and aah about them.
The headline number for January came in at 95.0, down 0.9 from the previous month. The index is at the 24th percentile in this series.
Inflation is not dead. It is not gone. It has not been tamed. We know it seems like it, especially after the past few decades which generated in many an "inflation-complacency" that feels justified. After all, following the 2008 Financial Panic, many predicted Quantitative Easing would cause hyper-inflation.
At some point, interest rates will move higher. Advisors must understand the inherent risks, and proactively evaluate alternatives for their fixed income portfolios to manage through successfully.
Any surge in inflation will likely not last for long, but Italy's economic troubles and the shift in rental markets may endure.
For the 1830s, as for the 1990s, the great change would come not in the technology of delivery systems but in the extraordinary increases in the volumes of news and financial information being delivered because of the dramatic reduction in the cost of reproducing each item of news.
Powerful demographic trends will cause higher inflation and interest rates, and a reduction in inequality as labor reclaims its bargaining power in the global economy.
When companies take positive ESG steps, they attract asset flows from fund managers, according to new research. But the price spikes from those flows may not result in outperformance for long-term investors.
The GameStop/Reddit wolfpack plan of herding shorts into a self-destructive, short-covering frenzy seems to be failing for several primary reasons.
It’s hoped that an extra $1,400 in the pockets of everyday Americans may help support lagging U.S. consumption. We believe the stimulus, along with improved vaccine roll out, may also help support commercial air travel.
Today I want to discuss an arcane-sounding but incredibly important term you need to know: Yield Curve Control. Several central banks are already using it and I see a strong possibility the Fed will join them. But first we must again consider the Gripping Hand.
With the previous week’s short-squeeze headlines behind us, investors remained optimistic about a fiscal support package, which passed the Senate by a vote of 51-50, with Vice President Harris breaking the tie.
Effective vaccines, historic fiscal stimulus, Democratic Party control of the legislature, even more stimulus, reopening economies, 6% U.S. real GDP (gross domestic product) growth, 25% U.S. EPS (earnings per share) growth, and maybe even an infrastructure plan sprinkled on top.
The COVID-19 crisis opened up cracks in the muni market, but we don’t expect those cracks to alter the reality that municipal bonds can be a relatively conservative investment option. Many municipalities are under stress, but that’s not a reason to avoid munis, in our view.
Commercial aviation still has some challenging times ahead of it, but I believe the worst is behind us, meaning now may be an opportune time to get exposure.
We’ll touch on several bases today. We start with the latest news from the Commerce Department which just released its initial estimate of 4Q economic growth (or lack thereof). 2020 goes down as the worst economic year since the end of World War II.
When Mountain Dew released a teaser of its new Super Bowl commercial last week, the clip featured a computer-animated dog made of watermelons -- and no people.
When investors talk about “the stock market” they are most often referring to an index that tracks stocks only in their home country. This “home bias” is evident when it comes to the make-up of investors’ stock portfolios. Investors around the world tend to hold mostly domestic stocks.
Internet message boards are lighting up and certain stocks have seen some unusually dramatic price moves. David Mann, our Head of Global Exchange Traded Funds (ETFs) Capital Markets, ponders whether ETFs could be subject to similar volatility.
President Joe Biden faces an economic dilemma as his $1.9 trillion stimulus plan runs into congressional opposition: keep his promise to deliver $2,000 payments to help a battered economy, or target funds to jobless and low-income Americans.
The UK-EU trade agreement entered into just before Christmas is a 1,200-page monster which contains far more cons than pros for the British economy despite Boris Johnson doing his very best to convince the British public of the opposite. In this month’s Absolute Return Letter, you can see why.
Emerging markets seek a sustainable solution to debts, and the Fed takes a step toward sustainability.
The explosive rally in GameStop, pitting retail investors against hedge funds, has renewed calls to ban short selling. But new research shows how valuable short sellers are to the efficient functioning of markets.
Those of you with kids and grandkids may at some point have stepped inside a GameStop. If so, you might be familiar with the video game retailer’s tagline: “Power to the players.”
Changes in government inevitably bring new priorities and policies, one being the area of taxes. Fiduciary Trust International Managing Director Craig Richards examines possible tax implications for individuals under President Joe Biden’s new administration.
The COVID-19 pandemic has expanded the universe of companies in financial distress, creating a buyer’s market for distressed debt funds.
A majority of the Senate (including two Democrats) has agreed to forego efforts to eliminate the filibuster during the Congressional term ending December 2022.
Two New Jersey Democrats are leading an effort to expand a valuable tax break for state and local levies in the next virus-relief package, a long-shot effort as lawmakers continue to squabble over the size and scope of the next round of stimulus.
Here’s how to avoid being misunderstood by a prospect or client.
It has been my tradition to informally rate the investment-related books I read in the past year. I have also included some novels and books of general interest. Here is my list of winners and losers.
Read our year-ahead report to learn how this shift could lead to investment opportunities in 2021 and to understand RBA's positioning.
There have been a small number of consistent alpha-creating axioms in the U.S. stock market over time. Value beat growth over long time frames, tech stocks hit bottom in the summer and crowded trades separate you from your money, to name a few.
Calls for fiscal stimulus measures to target infrastructure are growing. But new research shows that infrastructure investments have offered few benefits to investors.
Tax Planning
Personal to the Core: Making Passive Investing Personal
What if balancing the tradeoffs between index investing and building portfolios tailored to personal priorities such as ESG or tax-efficiency didn’t have to be mutually exclusive?
In this webinar, Independent Advisor Solutions by SEI’s Director of Investment Products & Services J. Womack and Director of Distribution and Engagement Erich Holland will discuss how mass personalization is pivotal for advisor growth in an increasingly digital and personal world.
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.
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
Understanding Fat Tail Returns
Much statistical analysis in finance depends on the assumption that variables have normal distributions. This assumption is far from correct. As a result, as Nassim Nicholas Taleb has rightly pointed out, most statistical results in finance are wrong. Now, a disciple of Taleb has tried to extend Taleb’s research by relating it to an obscure mathematical concept.
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?
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.
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.
NewsLetter - February 2021
We hope you enjoy Harold Evensky's latest NewsLetter.
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.
He May Never Walk Again
Even the most promising future can change drastically by a life-threatening event. A healthy individual may require around-the-clock care and supervision after an accident, creating the need to solve complex financial planning problems.
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.
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.
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.
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.
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.
Five Words That Trigger Referrals from Board Members
The key to getting referrals from a board is treating those influential people as genuine centers of influence.
A Financial Advisor's Guide to Creating a Marketing Funnel
I will break down the levels of a standard marketing funnel and provide specific steps that financial advisors can take to create their own.
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.
Financial Professionals Guide to Estate Planning
Let’s face it, estate planning tends to be boring, time-consuming, and complex. And with the current estate tax exclusion, some financial professionals feel estate planning impacts fewer and fewer people. Truth be told, estate planning isn’t just for the wealthy – it impacts every client you have. This presentation and the accompanying materials are designed to provide you with fundamental knowledge of must-know estate planning concepts.
Fiscal Spending Could Cause a U.S. Growth Spike – Compounding Investors’ Concerns on Inflation
A large fiscal package geared toward pandemic relief will likely boost U.S. growth even further in 2021, but long-term inflationary risks are still balanced.
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.
The Power of And
A look at two ingredients that make a meaningful impact on performance in the mid cap space.
Robert Shiller: U.S. Equities are Still the Place to Invest
U.S. stocks have the highest CAPE ratio of any global equity market, but they are still the place to invest. But the inventor of that metric, Robert Shiller, says that stocks are indeed risky.
Municipal Bond Outlook: Recovering at Different Speeds
Political change, continued fiscal support will drive municipal markets in 2021, although outcomes are likely to vary.
Vaccine Nationalism, Minimum Wage, Rising Energy Prices
Weighing the costs of global vaccine access, minimum wage and the energy rally.
Small Change and The Depression of 1837-1843 – Part Five
That there was a price “bubble” that burst in the American political economy from 1835 to 1845 is beyond question. The challenge is to reconcile the data sets for commodity and securities prices, interest rates and production volumes with the narratives of what happened.
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.
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.
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.
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.
Monthly Municipal Market Update, January 2021
A brief monthly update on what's happening in the municipal bond market.
It's Not a Bubble
Ever since the stock market bottomed in 2009 during the financial crisis, people have been coming up with reasons why the bull market was about to end. We heard every reason – Brexit, the end of Quantitative Easing, too much debt, COVID, etc. – and while we understood each may be a cause for consternation, we focused on valuations, which suggested the bull market would continue. Over time, math wins.
Simon Says
The object of the game was to get to the finish line first and then become the leader the next round. The stock market has its own game of “Simon says” and that is in the mall property world.
Helping Clients Plan for Growth in Their Private Foundations
How can you help a family foundation plan for rapid growth in a way that is consistent with their wealth management objectives?
Student Loan Forgiveness, Super-Sized Stimulus, China-Australia Trade Tensions
Are proposed fiscal policies and student debt forgiveness too much of a good thing?
Cryptocurrency Fascination
Our Chief Market Strategist Stephen Dover believes cryptocurrency (crypto) is evolving into its next cycle of innovation. As an integral foundation for an alternative financial and internet ecosystem, crypto’s disruptions, opportunities, risks, and long-term implications are worth watching.
Beware the Fourth Wave of COVID-19
It isn't over and financial markets don't accept that yet. I realize suggesting anything negative about the virus is misanthropic, but the truth matters and the optics are misleading.
An Out-of-Sample Test for Factor-Based Strategies
Factor-based models are often criticized for data mining. One way to address that charge is with “out-of-sample” testing over longer time frames. But that takes time. New research provides an alternative out-of-sample test – using emerging-market bonds.
Overstimulation Risk
If, however, the pandemic continues into summer, it will mean the Gripping Hand is still squeezing us. Employment won’t recover and more small businesses will fail. This relief package, as large as it is, may prove necessary and maybe even too small.
Schwab Market Perspective: Disconnection
Hope is high that economic growth will accelerate as more people are vaccinated against COVID-19, but so far economic data has been lackluster. Meanwhile, bond investors are expecting inflation despite signs that the economic recovery’s momentum may be stalling. Why does everything seem so disconnected?
Middle-Class Wages in January 2021: Where Are We Now?
We've updated this series to include the January release of the Consumer Price Index as the deflator and the monthly employment update. The latest hypothetical real (inflation-adjusted) annual earnings are at $43,310, down 5.1% from 45-plus years ago.
Global Equities: Four Things We Are Watching in 2021
Stephen Dover, our Chief Market Strategist and Head of Franklin Templeton Investment Institute, shares four investment themes he’s thinking about as the world recovers from the COVID-19 pandemic.
The Real Story Behind Commission Free Trading
On October 2, 2019 brokerage firm Charles Schwab announced they were no longer going to charge commissions on stock and ETF trades. Before the day closed E-Trade and TD Ameritrade followed suit. And just like that, commissions were dead.
Active Semi-Transparent ETFs: What’s Under the Hood?
This is a new type of exchange-traded ETF that is built differently from a traditional ETF.
Tesla Just Bought $1.5 Billion Worth of Bitcoin. Is Apple Next?
Tesla announced in a public filing Monday that it bought $1.5 billion worth of Bitcoin as part of a corporate policy that allows the electric vehicle (EV) maker to invest in “alternative reserve assets,” including not just cryptocurrencies but also gold bullion and gold ETFs.
Investment Strategies for a Booster-Shot Recovery
Our Fixed Income CIO Sonal Desai shares her investment views and strategies for the post-pandemic recovery. She explains why inflation looks likely to gain steam, and how the balance of fundamentals and valuations become especially crucial today when looking for attractive returns in fixed income.
Five Tips to Re-Engage Your Business for Success
Here are the five best practices I’ve used to help advisors and their teams regain clarity about what they are doing to drive value for their clients.
The Fed’s Blindspot
I don’t say this often, but Fed Chairman Jerome Powell is wrong. Regular readers of our investor letters and other publications will recall that we regularly cite Chairman Powell as doing the best he can with the levers he has while arguing correctly for others to do their part.
Biden Presidency Starts With a Giant Bet on Run-It-Hot Economics
Joe Biden’s administration has dedicated its first few weeks in office to spending more money on pandemic relief -- and shrugged off warnings that the economy may overheat as a result.
Lesson Learned? Takeaways From the GameStop Saga
As quickly as it soared to the moon, GameStop came back down to earth; but the lessons learned are key to turning day trading speculators into longer-term investors.
What’s the Value of a Dollar?
Rick Rieder and team think that today’s potent policy cocktail holds important implications for the path of economic growth, markets and the value of a dollar.
U.S. Economic Outlook, February 2021
The Northern Trust Economics team shares its outlook for the U.S. economy.
Do Your Kids and Pets Belong on Zoom Calls?
I have had it with people putting their cute kids to their laps on Zoom and introducing their dogs and cats on camera so we can all ooh and aah about them.
NFIB Small Business Survey Drops in January
The headline number for January came in at 95.0, down 0.9 from the previous month. The index is at the 24th percentile in this series.
The Return of Inflation
Inflation is not dead. It is not gone. It has not been tamed. We know it seems like it, especially after the past few decades which generated in many an "inflation-complacency" that feels justified. After all, following the 2008 Financial Panic, many predicted Quantitative Easing would cause hyper-inflation.
Rising Interest Rates Can Wreak Havoc on Fixed Income Portfolios
At some point, interest rates will move higher. Advisors must understand the inherent risks, and proactively evaluate alternatives for their fixed income portfolios to manage through successfully.
Inflation Concerns, Italy's Battered Economy, Low Rental Demand
Any surge in inflation will likely not last for long, but Italy's economic troubles and the shift in rental markets may endure.
Small Change and The Depression of 1837-1843 – Part Four
For the 1830s, as for the 1990s, the great change would come not in the technology of delivery systems but in the extraordinary increases in the volumes of news and financial information being delivered because of the dramatic reduction in the cost of reproducing each item of news.
Will Demographic Trends Drive Higher Inflation and Interest Rates?
Powerful demographic trends will cause higher inflation and interest rates, and a reduction in inequality as labor reclaims its bargaining power in the global economy.
Does Positive ESG News Move Stock Prices?
When companies take positive ESG steps, they attract asset flows from fund managers, according to new research. But the price spikes from those flows may not result in outperformance for long-term investors.
Gamestonk/Gamestink
The GameStop/Reddit wolfpack plan of herding shorts into a self-destructive, short-covering frenzy seems to be failing for several primary reasons.
Could $1,400 Stimulus Checks Lift Air Travel Demand?
It’s hoped that an extra $1,400 in the pockets of everyday Americans may help support lagging U.S. consumption. We believe the stimulus, along with improved vaccine roll out, may also help support commercial air travel.
Controlling the Curve
Today I want to discuss an arcane-sounding but incredibly important term you need to know: Yield Curve Control. Several central banks are already using it and I see a strong possibility the Fed will join them. But first we must again consider the Gripping Hand.
Weekly Market Snapshot
With the previous week’s short-squeeze headlines behind us, investors remained optimistic about a fiscal support package, which passed the Senate by a vote of 51-50, with Vice President Harris breaking the tie.
Why U.S. Rates Are Only Likely To Rise Modestly In 2021
Effective vaccines, historic fiscal stimulus, Democratic Party control of the legislature, even more stimulus, reopening economies, 6% U.S. real GDP (gross domestic product) growth, 25% U.S. EPS (earnings per share) growth, and maybe even an infrastructure plan sprinkled on top.
Why Widespread Muni Defaults Are Unlikely to Happen
The COVID-19 crisis opened up cracks in the muni market, but we don’t expect those cracks to alter the reality that municipal bonds can be a relatively conservative investment option. Many municipalities are under stress, but that’s not a reason to avoid munis, in our view.
5 Reasons Airline Stocks Could Be a Buy in 2021
Commercial aviation still has some challenging times ahead of it, but I believe the worst is behind us, meaning now may be an opportune time to get exposure.
Overview: 2020 Economy Worst in 74 Years
We’ll touch on several bases today. We start with the latest news from the Commerce Department which just released its initial estimate of 4Q economic growth (or lack thereof). 2020 goes down as the worst economic year since the end of World War II.
Super Bowl Ad Challenge: Get Noticed, Avoid Irking Viewers
When Mountain Dew released a teaser of its new Super Bowl commercial last week, the clip featured a computer-animated dog made of watermelons -- and no people.
Your Portfolio May Be Less Diversified Than You Think
When investors talk about “the stock market” they are most often referring to an index that tracks stocks only in their home country. This “home bias” is evident when it comes to the make-up of investors’ stock portfolios. Investors around the world tend to hold mostly domestic stocks.
ETFs, Message Boards and Volatility
Internet message boards are lighting up and certain stocks have seen some unusually dramatic price moves. David Mann, our Head of Global Exchange Traded Funds (ETFs) Capital Markets, ponders whether ETFs could be subject to similar volatility.
Biden’s Stimulus Risks Giving Money to People Who Won’t Spend It
President Joe Biden faces an economic dilemma as his $1.9 trillion stimulus plan runs into congressional opposition: keep his promise to deliver $2,000 payments to help a battered economy, or target funds to jobless and low-income Americans.
Will Brexit Lead to Bruin? - The Cost of Absurdity
The UK-EU trade agreement entered into just before Christmas is a 1,200-page monster which contains far more cons than pros for the British economy despite Boris Johnson doing his very best to convince the British public of the opposite. In this month’s Absolute Return Letter, you can see why.
Emerging Market Debt Problems, Fed Exploring Climate Change, Bitcoin Skepticism
Emerging markets seek a sustainable solution to debts, and the Fed takes a step toward sustainability.
The Latent Risks in Short Selling
The explosive rally in GameStop, pitting retail investors against hedge funds, has renewed calls to ban short selling. But new research shows how valuable short sellers are to the efficient functioning of markets.
Power to the Players: Reddit, Robinhood and Bitcoin
Those of you with kids and grandkids may at some point have stepped inside a GameStop. If so, you might be familiar with the video game retailer’s tagline: “Power to the players.”
A Taxing Subject: Tax Implications for US Investors Under Biden
Changes in government inevitably bring new priorities and policies, one being the area of taxes. Fiduciary Trust International Managing Director Craig Richards examines possible tax implications for individuals under President Joe Biden’s new administration.
Distressed Debt – A Compelling, and Timely, Opportunity
The COVID-19 pandemic has expanded the universe of companies in financial distress, creating a buyer’s market for distressed debt funds.
The Filibuster and the 2021 Legislative Agenda
A majority of the Senate (including two Democrats) has agreed to forego efforts to eliminate the filibuster during the Congressional term ending December 2022.
Democrats Aim for SALT Write-Off Expansion in Stimulus Bill
Two New Jersey Democrats are leading an effort to expand a valuable tax break for state and local levies in the next virus-relief package, a long-shot effort as lawmakers continue to squabble over the size and scope of the next round of stimulus.
Your Prospects Have a Superpower
Here’s how to avoid being misunderstood by a prospect or client.
The Best and Worst Investment (and other) Books of 2020
It has been my tradition to informally rate the investment-related books I read in the past year. I have also included some novels and books of general interest. Here is my list of winners and losers.
2021: Embrace the Profits Cycle
Read our year-ahead report to learn how this shift could lead to investment opportunities in 2021 and to understand RBA's positioning.
The January Effect
There have been a small number of consistent alpha-creating axioms in the U.S. stock market over time. Value beat growth over long time frames, tech stocks hit bottom in the summer and crowded trades separate you from your money, to name a few.
The Lackluster Record for Infrastructure Investments
Calls for fiscal stimulus measures to target infrastructure are growing. But new research shows that infrastructure investments have offered few benefits to investors.