As of March 31, the 10-year note was 122 basis points above its historic closing low of 0.52%, reached on August 4.
Millions of Americans, it seems, felt that the time was right to trade in their clunkers for a new set of wheels.
Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $19,945 for an annualized real return of 13.89%.
The S&P 500 is up nearly 80% since March 23, 2020 (COVID bottom). The economic recovery is in full swing, and between stimulus checks, warm weather, and widespread vaccinations recovery momentum is likely to surge this summer, although downside volatility is intensifying.
The latest JOLTS report (Job Openings and Labor Turnover Summary), with data through February, is now available.
As of April 5, the price of Regular and Premium were up a penny each from the previous week. According to GasBuddy.com, California has the highest average price for Regular at $3.94 and South Carolina has the cheapest at $2.55. The WTIC end of day spot price closed at 58.65, down 4.7% from last week.
The headline number for March came in at 98.2, up 2.4 from the previous month. The index is at the 38th percentile in this series.
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.
To compensate, retain and attract employees, many companies issue stock options.
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.
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.
The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 199 and details U.S. exports and imports of goods and services. Last week's headline number of -71.08B was more negative than the Investing.com forecast of -70.50B.
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.
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.
Planning for retirement has historically been focused on saving as much as possible.
We've updated our monthly workforce analysis to include last Friday's Employment Report for March. The unemployment rate dropped to 6.0%, and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) came in at 916K.
With the Q4 GDP Third Estimate and the March close data, we now have an updated look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The current reading is 193.3%, up from 173.4% the previous quarter.
The first quarter looks to be the turning point, both for the pandemic here in the U.S. and for the economic damage it has caused.
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.
Well, let’s just say things are different in 2021.
Global stocks rose in the first quarter, but volatile trading patterns reminded investors that the road to normal will be bumpy.
Let's take a closer look at Friday's employment report numbers on Full and Part-Time Employment.
Despite a strong March 2021 jobs report, full employment remains far away.
As Shakespeare might put it, “full of sound and fury, signifying nothing” is perhaps an apt way to describe the character of the market so far this year.
The day-trading Reddit crowd turned the first quarter of 2021 into one of the wildest periods of stock market mania in modern history. Books -- plural -- will undoubtedly be dedicated to the topic in years to come.
Today’s market environment taps into bond investors’ primal fears.
Defining a quality business is easier said than done. We have found that the highest quality businesses either consistently exercise pricing power while maintaining market share or consistently grow market share by undercutting incumbents. A choice few companies we call “compounding machines” can both raise price and increase market share.
In this article, I’ll outline what makes good trading models and how to incorporate that into a thoughtful trading program.
This commentary has been updated to include this morning's release of Nonfarm Employment. March's 916K increase in total nonfarm payrolls had revisions that resulted in 156K more jobs than previously reported. ("Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.") The Investing.com consensus was for 647K jobs gained and the unemployment rate to fall to 6.0%.
The acceptance of digital currencies as a form of payment expanded greatly this week, foreshadowing the increasingly important role cryptos such as Bitcoin and Ether will play in our lives going forward.
Some call the recent rotation from growth to value outperformance transitory. We believe it may have staying power, making value stocks a formidable complement to growth in a balanced equity portfolio.
Within days of each other in March two Northeast Ohio legends passed away: Michael Stanley and Joe Tait.
The March US Manufacturing Purchasing Managers' Index conducted by Markit came in at 59.1, up 0.5 from the 58.6 final February figure. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
Everyone’s excited about the prospects for a sharp economic recovery as increasing numbers of Americans get their Covid-19 vaccinations. Well, almost everyone -- holders of U.S. Treasuries have serious reasons for concern.
The U.S. economic reopening trade is back in full force, sending 10-year Treasury yields up to 1.77% for the first time since January 2020.
With a broad-based economic reopening coming closer into focus, investors are planning for the next stage in the cycle.
We forecast a strong global recovery in 2021 amid significant fiscal support, accommodative monetary policy, diminishing lockdowns, and accelerating vaccinations.
The headline number of 109.7 was an increase of 19.3 from the final reading of 90.4 for February. This was above the Investing.com consensus of 96.9.
One of the most widely studied aspects of the capital markets is the low-volatility anomaly. It is the fact that low-volatility stocks have achieved higher performance than what theory predicts. My guest today, Dan Waldron, oversees one of the most popular ETFs based on that strategy. He is here to talk about how a low-volatility and high-quality strategy will achieve superior returns over time.
Addressing technical, idiosyncratic and structural aspects of inflation.
The summer months tend to deliver stronger-than-average returns for bonds.
I recently discussed why “Free, Isn’t Really Free” regarding the retail investor. While “free trades” have certainly reduced the transaction costs, the selling of data to the highest bidder has likely cost investors more than they saved.
Investing based on ESG concerns should lead to lower returns, since the prices of those stocks will be bid up beyond their intrinsic value. But new research shows that by combining ESG- and momentum-based principles, investors can achieve higher risk-adjusted returns.
Might the federal government launch a digital or cryptocurrency? Early forecasts say the “fedcoin” has bipartisan support.
My question, as always, is whether we’re measuring inflation accurately. What if we’re doing it all wrong? As investors, we want to make decisions based on the best available data, so what should we do if the data is incomplete or flawed?
With the release of this morning's report on February Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal -7.99% month-over-month change in disposable income is cut to -8.20% when we adjust for inflation. This is a decrease from last month's 11.42% nominal and 11.05% real increases last month. The year-over-year metrics are 4.56% nominal and 2.96% real.
Personal Income (excluding Transfer Receipts) in February rose 0.43% and is down 1.0% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was up 0.20%. The real number is down 2.5% year-over-year.
Is it time to give newer or smaller exchange-traded funds (ETFs) a look?
Economic growth is picking up and the stock market is trending higher, but in a choppy fashion that lately resembles a “bunny” market more than a bull market.
This morning's seasonally adjusted 719K new claims, up 61K from the previous week's downwardly revised figure, was worse than the Investing.com forecast of 680K. Annual revisions were made.
The latest new orders number at -1.1% month-over-month (MoM) was worse than the Investing.com 0.8% estimate. The series is up 3.2% year-over-year (YoY). If we exclude transportation, "core" durable goods was down 0.9% MoM, which was worse than the Investing.com consensus of 0.6%. The core measure is up 8.2% YoY.
During these challenging times, growing a financial advisory firm is a study in the fundamentals: understanding your clients and building relationships.
About $22 trillion of wealth was created in U.S. stocks, roughly the country’s total annual output. An exchange-traded fund tracking the airline industry has more than doubled. At least 45 companies in the S&P 500 have surged by more than 200%, including Tesla Inc., up almost 700%.
The Federal Reserve on 19 March announced that the temporary changes to its supplemental leverage ratio, or SLR, will expire as scheduled on 31 March.
As you hunt for yield with less exposure to market volatility, you may want to consider Interval Funds, an unlisted type of closed-end fund. John Cole Scott, chair of the nonprofit Active Investment Company Alliance, says Interval Funds have been around a long time but are now gaining “traction.” While they do not trade on an exchange, they are readily available from fund families and offer a range of asset classes including alternative-style investments. AICA is hosting a free online Interval Fund “boot camp” on March 31.
Fed Chair Jay Powell is giving conflicting guidance to bond investors.
The last few weeks have seen increased volatility in the equity markets as rates have begun to creep back up surrounding inflation fears and investors temporarily pulling out of big tech names that have driven the S&P’s performance for the past few years.
Led by declines in indicators related to production and personal consumption and housing, the Chicago Fed National Activity Index (CFNAI) fell to –1.09 in February from +0.75 in January. Two of the four broad categories of indicators used to construct the index made negative contributions in February, but all four categories decreased from January. The index’s three-month moving average, CFNAI-MA3, decreased to –0.02 in February from +0.46 in January.
Revisiting Bengen’s “4% Rule” at various levels of risk aversion, and generalizing beyond a simple fixed-withdrawal, no-shortfall rule, to flexible rules at different levels of risk aversion.
Market moves rarely make sense in real-time, they only make sense in the rearview mirror. There were 5 big lessons learned over the past year.
"Travel on all roads and streets changed by -11.3% (-28.4 billion vehicle miles) for January 2021 as compared with January 2020. Travel for the month is estimated to be 223.3 billion vehicle miles." The 12-month moving average was down 1% month-over-month and down 14.2% 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 0.86% month-over-month and down 14.7% year-over-year.
The U.S. economy is set for a hiring boom in the months ahead as the coronavirus pandemic recedes. There are signs it’s already underway.
In a new piece from the GMO Event-Driven Team, Doug Francis and Sam Klar discuss the growing supply-demand imbalance in the asset class that has driven focus towards the SPAC boom and away from the opportunity in other investments like merger arbitrage.
The latest Manufacturing Index came in at 51.8, up 28.7 from last month's 23.1. The 3-month moving average came in at 33.8, up from 19.6 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook came in at 61.6, up 22.1 from the previous month's 39.5.
Before things went south, Bastian Bolesta made easy money from a quant strategy that worked for years thanks to the rise of automated stock traders on Wall Street.
The 60/40 portfolio saw investors through the cataclysm of the pandemic. The global recovery is now proving an even tougher test.
What sustained low interest rates could mean for the economy and your wallet.
The case for disaggregating international exposure by allocating to single countries remains strong, according to Dina Ting, Head of Global Index Portfolio Management, Franklin Templeton Exchange-Traded Funds.
The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for February new residential housing starts. The latest reading of 1.421M was below the Investing.com forecast of 1.560M and a decrease from the previous month's upwardly revised 1.548M.
The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for February new residential building permits. The latest reading of 1.682M was down 10.8% from the January reading and is below the Investing.com forecast of 1.750M.
Is it possible to travel in two directions at the same time? Imagine walking to the restroom at the back of an airplane while in mid-flight.
Month-over-month nominal sales in February decreased by 3.0%. Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, decreased by 3.4%.
A better appreciation of the history of market bubbles should help advisors and their clients sidestep some of the carnage when they inevitably burst. It is our intention in this article to take a more clinical approach by quantifying what we mean by a “bubble” solely in terms of market action. In that way, it is possible to compare conditions between individual markets and arrive at a rough standard. There are of course, many other aspects to bubbles and manias, several you can read about here.
The word “bubble” is tossed around quite a bit in the financial markets, but it’s rarely used correctly.
The Census Bureau's Advance Retail Sales Report for February was released this morning. Headline sales came in at -3.0% month-over-month to one decimal and below the Investing.com forecast of -0.5%. Core sales (ex Autos) came in at -2.7% MoM.
The recent rise in interest rates triggered a bout of volatility, but it’s not making the pros in the stock market run for the hills just yet.
Advisors are well aware of the perils of chasing performance, especially when assets become clearly overvalued. New research, based on a variation of Robert Shiller’s CAPE ratio, shows that this is true at the country level.
A little over a hundred years ago, the United States emerged from the double whammy of a world war and deadly pandemic. Eager to get back to “normal” life, Americans went on a decade-long spending splurge, buying cars and radios and stocks.
In this issue of Sinology, we provide a macro perspective for thinking about whether an investor’s portfolio has enough exposure to China.
Even as credit spreads have narrowed, further value remains.
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.
Here is a table showing the annualized change in Headline and Core CPI, not seasonally adjusted, for each of the past six months. Also included are the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation. We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components.
Covered call strategies can help investors manage short-term volatility and may provide better long-term outcomes while seeking to provide attractive monthly income to investors.
US core inflation likely will be volatile during 2021, as underlying economic forces continue to rebalance from the pandemic.
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.
Is the stock market disconnected from the economy? Perhaps, but less so lately.
The left-for-dead value trade has roared back to life to wipe out all its pandemic losses, with its revival reshaping the $2 trillion world of factor investing.
Volatility/Downside Protection
Treasury Yields: A Long-Term Perspective
As of March 31, the 10-year note was 122 basis points above its historic closing low of 0.52%, reached on August 4.
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.
The Latest Look at the Total Return Roller Coaster
Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $19,945 for an annualized real return of 13.89%.
1Q21 Recap: What a difference one year makes
The S&P 500 is up nearly 80% since March 23, 2020 (COVID bottom). The economic recovery is in full swing, and between stimulus checks, warm weather, and widespread vaccinations recovery momentum is likely to surge this summer, although downside volatility is intensifying.
Job Openings & Labor Turnover: February 2020 Update
The latest JOLTS report (Job Openings and Labor Turnover Summary), with data through February, is now available.
Weekly Gasoline Prices: Regular and Premium Up a Penny
As of April 5, the price of Regular and Premium were up a penny each from the previous week. According to GasBuddy.com, California has the highest average price for Regular at $3.94 and South Carolina has the cheapest at $2.55. The WTIC end of day spot price closed at 58.65, down 4.7% from last week.
NFIB Small Business Survey Increases in March
The headline number for March came in at 98.2, up 2.4 from the previous month. The index is at the 38th percentile in this series.
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.
A Primer on Employee Stock Option Plans
To compensate, retain and attract employees, many companies issue stock options.
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.
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.
February Trade Deficit at $71.1B, 4.8% More Than January
The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 199 and details U.S. exports and imports of goods and services. Last week's headline number of -71.08B was more negative than the Investing.com forecast of -70.50B.
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.
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.
Future-Income Focus May Boost Current DC Plan Savings
Planning for retirement has historically been focused on saving as much as possible.
U.S. Workforce: March 2021 Update
We've updated our monthly workforce analysis to include last Friday's Employment Report for March. The unemployment rate dropped to 6.0%, and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) came in at 916K.
Market Cap to GDP: An Updated Look at the Buffett Valuation Indicator
With the Q4 GDP Third Estimate and the March close data, we now have an updated look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The current reading is 193.3%, up from 173.4% the previous quarter.
Looking Back at the Markets in Q1 and Ahead to Q2 2021
The first quarter looks to be the turning point, both for the pandemic here in the U.S. and for the economic damage it has caused.
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.
Q1 2021 Strategy Letter
Well, let’s just say things are different in 2021.
Global Equities: Reviewing the Risks to Recovery
Global stocks rose in the first quarter, but volatile trading patterns reminded investors that the road to normal will be bumpy.
Full-time and Part-time Employment: A Deeper Look
Let's take a closer look at Friday's employment report numbers on Full and Part-Time Employment.
Don’t Mistake Rapid Jobs Gains for a Strong Labor Market
Despite a strong March 2021 jobs report, full employment remains far away.
Hit Me With Your Best Shot: Speculative Trades Take a Breather
As Shakespeare might put it, “full of sound and fury, signifying nothing” is perhaps an apt way to describe the character of the market so far this year.
As Meme Stock Mania Fizzles, Wall Street Sees ‘Big Reckoning’
The day-trading Reddit crowd turned the first quarter of 2021 into one of the wildest periods of stock market mania in modern history. Books -- plural -- will undoubtedly be dedicated to the topic in years to come.
Three Strategies for Navigating Turbulent Bond Markets
Today’s market environment taps into bond investors’ primal fears.
Price Makers, Share Gainers, and Compounding Machines: Three Quality Business Models
Defining a quality business is easier said than done. We have found that the highest quality businesses either consistently exercise pricing power while maintaining market share or consistently grow market share by undercutting incumbents. A choice few companies we call “compounding machines” can both raise price and increase market share.
A Guide to Understanding Systematic Trading
In this article, I’ll outline what makes good trading models and how to incorporate that into a thoughtful trading program.
The Big Four Economic Indicators: March Employment
This commentary has been updated to include this morning's release of Nonfarm Employment. March's 916K increase in total nonfarm payrolls had revisions that resulted in 156K more jobs than previously reported. ("Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.") The Investing.com consensus was for 647K jobs gained and the unemployment rate to fall to 6.0%.
We’re on the Cusp of Mass Crypto Acceptance
The acceptance of digital currencies as a form of payment expanded greatly this week, foreshadowing the increasingly important role cryptos such as Bitcoin and Ether will play in our lives going forward.
Opportunity Still Alive in Value Stocks
Some call the recent rotation from growth to value outperformance transitory. We believe it may have staying power, making value stocks a formidable complement to growth in a balanced equity portfolio.
Money Seemingly Boundless
Within days of each other in March two Northeast Ohio legends passed away: Michael Stanley and Joe Tait.
March Markit Manufacturing: "March PMI at second-highest on record amid marked new order growth and supply chain disruptions"
The March US Manufacturing Purchasing Managers' Index conducted by Markit came in at 59.1, up 0.5 from the 58.6 final February figure. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
Bond Traders Gird for More Pain After Biggest Loss Since 1980
Everyone’s excited about the prospects for a sharp economic recovery as increasing numbers of Americans get their Covid-19 vaccinations. Well, almost everyone -- holders of U.S. Treasuries have serious reasons for concern.
Bond Rout Reignites as U.S. Stimulus Bets Overshadow Quarter-End
The U.S. economic reopening trade is back in full force, sending 10-year Treasury yields up to 1.77% for the first time since January 2020.
K2 Advisors Second Quarter Hedge-Fund Strategy Outlook
With a broad-based economic reopening coming closer into focus, investors are planning for the next stage in the cycle.
Dealing With an Inflation Head Fake
We forecast a strong global recovery in 2021 amid significant fiscal support, accommodative monetary policy, diminishing lockdowns, and accelerating vaccinations.
Consumer Confidence Highest in a Year
The headline number of 109.7 was an increase of 19.3 from the final reading of 90.4 for February. This was above the Investing.com consensus of 96.9.
The Case for a Low-Volatility, High-Quality Strategy
One of the most widely studied aspects of the capital markets is the low-volatility anomaly. It is the fact that low-volatility stocks have achieved higher performance than what theory predicts. My guest today, Dan Waldron, oversees one of the most popular ETFs based on that strategy. He is here to talk about how a low-volatility and high-quality strategy will achieve superior returns over time.
Economic Commentary on Inflation: Base Effects, Supply Chain Disruptions and Aging Populations
Addressing technical, idiosyncratic and structural aspects of inflation.
Don’t Look Now, But Bond Seasonality Is Turning Bullish
The summer months tend to deliver stronger-than-average returns for bonds.
#MacroView: Could A “Transaction Tax” Be A Good Thing?
I recently discussed why “Free, Isn’t Really Free” regarding the retail investor. While “free trades” have certainly reduced the transaction costs, the selling of data to the highest bidder has likely cost investors more than they saved.
Combining Momentum and ESG Ratings Enhances Performance
Investing based on ESG concerns should lead to lower returns, since the prices of those stocks will be bid up beyond their intrinsic value. But new research shows that by combining ESG- and momentum-based principles, investors can achieve higher risk-adjusted returns.
Say Hello to Fedcoin, the U.S. Digital Currency
Might the federal government launch a digital or cryptocurrency? Early forecasts say the “fedcoin” has bipartisan support.
What If We're Measuring Inflation All Wrong?
My question, as always, is whether we’re measuring inflation accurately. What if we’re doing it all wrong? As investors, we want to make decisions based on the best available data, so what should we do if the data is incomplete or flawed?
Real Disposable Income Per Capita in February
With the release of this morning's report on February Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal -7.99% month-over-month change in disposable income is cut to -8.20% when we adjust for inflation. This is a decrease from last month's 11.42% nominal and 11.05% real increases last month. The year-over-year metrics are 4.56% nominal and 2.96% real.
The Big Four: Real Personal Income in February
Personal Income (excluding Transfer Receipts) in February rose 0.43% and is down 1.0% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was up 0.20%. The real number is down 2.5% year-over-year.
Take the Time to Love ETF Liquidity
Is it time to give newer or smaller exchange-traded funds (ETFs) a look?
Quarterly Market Outlook: Different Speeds
Economic growth is picking up and the stock market is trending higher, but in a choppy fashion that lately resembles a “bunny” market more than a bull market.
Weekly Unemployment Claims: Up 61K, Worse Than Forecast, Annual Revisions
This morning's seasonally adjusted 719K new claims, up 61K from the previous week's downwardly revised figure, was worse than the Investing.com forecast of 680K. Annual revisions were made.
Headline Durable Goods Orders Down 1.1% in February
The latest new orders number at -1.1% month-over-month (MoM) was worse than the Investing.com 0.8% estimate. The series is up 3.2% year-over-year (YoY). If we exclude transportation, "core" durable goods was down 0.9% MoM, which was worse than the Investing.com consensus of 0.6%. The core measure is up 8.2% YoY.
Growing Your Practice During COVID`
During these challenging times, growing a financial advisory firm is a study in the fundamentals: understanding your clients and building relationships.
Market Timers in S&P 500 Pay a High Price for Perfect Prescience
About $22 trillion of wealth was created in U.S. stocks, roughly the country’s total annual output. An exchange-traded fund tracking the airline industry has more than doubled. At least 45 companies in the S&P 500 have surged by more than 200%, including Tesla Inc., up almost 700%.
SLR Expiration: Treasury Markets Likely to Shoulder the Costs
The Federal Reserve on 19 March announced that the temporary changes to its supplemental leverage ratio, or SLR, will expire as scheduled on 31 March.
John Cole Scott Interval Funds
As you hunt for yield with less exposure to market volatility, you may want to consider Interval Funds, an unlisted type of closed-end fund. John Cole Scott, chair of the nonprofit Active Investment Company Alliance, says Interval Funds have been around a long time but are now gaining “traction.” While they do not trade on an exchange, they are readily available from fund families and offer a range of asset classes including alternative-style investments. AICA is hosting a free online Interval Fund “boot camp” on March 31.
The Fed’s Mixed Messaging on the Yield Curve
Fed Chair Jay Powell is giving conflicting guidance to bond investors.
Increased Market Volatility Creates Opportunities in Alternative Strategies
The last few weeks have seen increased volatility in the equity markets as rates have begun to creep back up surrounding inflation fears and investors temporarily pulling out of big tech names that have driven the S&P’s performance for the past few years.
Chicago Fed: "Index suggests economic growth declined in February"
Led by declines in indicators related to production and personal consumption and housing, the Chicago Fed National Activity Index (CFNAI) fell to –1.09 in February from +0.75 in January. Two of the four broad categories of indicators used to construct the index made negative contributions in February, but all four categories decreased from January. The index’s three-month moving average, CFNAI-MA3, decreased to –0.02 in February from +0.46 in January.
Beyond the 4% Rule: Flexible Withdrawal Strategies Using Certainty-Equivalent Spending
Revisiting Bengen’s “4% Rule” at various levels of risk aversion, and generalizing beyond a simple fixed-withdrawal, no-shortfall rule, to flexible rules at different levels of risk aversion.
5 Reflections on a Most Eventful Year
Market moves rarely make sense in real-time, they only make sense in the rearview mirror. There were 5 big lessons learned over the past year.
America's Driving Habits as of January 2021
"Travel on all roads and streets changed by -11.3% (-28.4 billion vehicle miles) for January 2021 as compared with January 2020. Travel for the month is estimated to be 223.3 billion vehicle miles." The 12-month moving average was down 1% month-over-month and down 14.2% 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 0.86% month-over-month and down 14.7% year-over-year.
Bars and Restaurants Are About to Go on an Epic Post-Covid Hiring Spree
The U.S. economy is set for a hiring boom in the months ahead as the coronavirus pandemic recedes. There are signs it’s already underway.
A Spac-Tacular Distraction
In a new piece from the GMO Event-Driven Team, Doug Francis and Sam Klar discuss the growing supply-demand imbalance in the asset class that has driven focus towards the SPAC boom and away from the opportunity in other investments like merger arbitrage.
Philly Fed Mfg Index: Continued Strength in March
The latest Manufacturing Index came in at 51.8, up 28.7 from last month's 23.1. The 3-month moving average came in at 33.8, up from 19.6 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook came in at 61.6, up 22.1 from the previous month's 39.5.
Quant Investors Left Reeling as a Booming S&P 500 Trade Misfires
Before things went south, Bastian Bolesta made easy money from a quant strategy that worked for years thanks to the rise of automated stock traders on Wall Street.
Scorned 60/40 Model Finds Allies in Biggest Test Since 2016
The 60/40 portfolio saw investors through the cataclysm of the pandemic. The global recovery is now proving an even tougher test.
Don’t Hold Your Breath for the Return of Double-Digit Rates
What sustained low interest rates could mean for the economy and your wallet.
Single-Country Allocation: Viewing the Opportunity Through Three Lenses
The case for disaggregating international exposure by allocating to single countries remains strong, according to Dina Ting, Head of Global Index Portfolio Management, Franklin Templeton Exchange-Traded Funds.
New Residential Housing Starts at 1.42M in February
The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for February new residential housing starts. The latest reading of 1.421M was below the Investing.com forecast of 1.560M and a decrease from the previous month's upwardly revised 1.548M.
New Residential Building Permits: Down 10.8% in February
The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for February new residential building permits. The latest reading of 1.682M was down 10.8% from the January reading and is below the Investing.com forecast of 1.750M.
Finding Some ‘Real Perspective’ in this Market Cycle
Is it possible to travel in two directions at the same time? Imagine walking to the restroom at the back of an airplane while in mid-flight.
The Big Four: February Real Retail Sales Down 3.3%
Month-over-month nominal sales in February decreased by 3.0%. Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, decreased by 3.4%.
Timing the End of the Tech and Bitcoin Bubbles
A better appreciation of the history of market bubbles should help advisors and their clients sidestep some of the carnage when they inevitably burst. It is our intention in this article to take a more clinical approach by quantifying what we mean by a “bubble” solely in terms of market action. In that way, it is possible to compare conditions between individual markets and arrive at a rough standard. There are of course, many other aspects to bubbles and manias, several you can read about here.
How to Spot a Bubble
The word “bubble” is tossed around quite a bit in the financial markets, but it’s rarely used correctly.
Retail Sales Down 3% in February
The Census Bureau's Advance Retail Sales Report for February was released this morning. Headline sales came in at -3.0% month-over-month to one decimal and below the Investing.com forecast of -0.5%. Core sales (ex Autos) came in at -2.7% MoM.
Masters of Equities Universe Are Unfazed by Spike in Bond Yields
The recent rise in interest rates triggered a bout of volatility, but it’s not making the pros in the stock market run for the hills just yet.
Is the CAPE 10 Useful in Forecasting Country Returns?
Advisors are well aware of the perils of chasing performance, especially when assets become clearly overvalued. New research, based on a variation of Robert Shiller’s CAPE ratio, shows that this is true at the country level.
This Summer Could Be the Start of a New Roaring Twenties
A little over a hundred years ago, the United States emerged from the double whammy of a world war and deadly pandemic. Eager to get back to “normal” life, Americans went on a decade-long spending splurge, buying cars and radios and stocks.
Why China? A Macro Perspective
In this issue of Sinology, we provide a macro perspective for thinking about whether an investor’s portfolio has enough exposure to China.
Staying on Offense: Fixed-Income Outlook
Even as credit spreads have narrowed, further value remains.
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.
Inflation: An X-Ray View of the Components
Here is a table showing the annualized change in Headline and Core CPI, not seasonally adjusted, for each of the past six months. Also included are the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation. We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components.
Making More by Losing Less
Covered call strategies can help investors manage short-term volatility and may provide better long-term outcomes while seeking to provide attractive monthly income to investors.
Four Things Investors Should Know About US Inflation in 2021
US core inflation likely will be volatile during 2021, as underlying economic forces continue to rebalance from the pandemic.
Components of the CPI: February 2021
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.
Is the Stock Market Disconnected From the Economy?
Is the stock market disconnected from the economy? Perhaps, but less so lately.
Value Investing Gains $100 Billion and Wipes Out Pandemic Losses
The left-for-dead value trade has roared back to life to wipe out all its pandemic losses, with its revival reshaping the $2 trillion world of factor investing.