Three Ways Investing Is Like Baseball
Perhaps more than any other sport, baseball is famous for statistical analysis, and there are seemingly endless ways to evaluate every player. Similarly, there are many ways to evaluate stocks, and different portfolio managers assemble their “teams” using a variety of methods. To understand the differences, consider the ways that coaches can choose players for a baseball team.
News Versus Noise: Assessing The Market Impact Of Three Major Headlines
One of the key themes I have been discussing in the last several years is geopolitical disruption — and we got a heavy dose of it last week. However, one of my main points over the past few years is that investors should try to identify the geopolitical disruption that really matters for the economy and markets, and ignore the events that are just background noise (most fall into this category, in my view).
Markets Shake Off A Series Of Unusual Events
Another very surprising but ultimately anticlimactic chain of events occurred over the last week. There was a serious drone strike on Saudi oil facilities over the weekend of Sept. 14 and 15, knocking out two key installations and dramatically curtailing oil production. Not surprisingly, there was a major shock to the price of oil on Monday, Sept. 16, with crude oil rising more than $10 per barrel in price.1
When It Comes To College, Think ‘Savings’ Over ‘Scholarships’
Here’s the reality, parents: While organized sports offer a great way for your child to learn valuable life lessons and develop their skills, they’re far from a scholarship guarantee. To truly set your child up for success, you have to start saving for college as soon as possible — and I believe a 529 plan can help.
Is A Recession Inevitable?
The yield curve has been a constant topic of conversation among investors since mid-August, when the 2-year/10-year Treasury curve briefly inverted and launched furious speculation that a recession may be around the corner. The same holds true among Invesco’s market strategists, who have been debating what an inverted yield curve means and whether a recession is indeed inevitable.
It’s Time To Trade In Uncertainty For Stability
As we embarked on this year, I expected 2019 to be the year of slower growth but better policy. And that, I posited, would be better for financial markets than 2018’s combination of strong growth and bad policy, specifically Federal Reserve (Fed) interest rate hikes and trade tariffs.
Beyond The Yield Curve: Other Economic Indicators To Watch
Last week, the US Treasury yield curve, specifically the spread between the 10-year US Treasury rate and the 2-year US Treasury rate, briefly inverted. An inverted yield curve is considered to be a good predictor of recession, and so markets sold off on fears that a recession will occur in the next year. However, I believe a US recession is not a foregone conclusion — and so we should monitor the economic data closely.
You Can’t Train A Great White Shark – Or Control Global Trade
In my view, the US has exhibited these two forms of overconfidence bias in its current trade situation. First, the desirability effect: In my travels, it has been clear that the vast majority of Americans I’ve spoken with believe it would be desirable to have more favorable trading conditions, which helps to explain why the Trump administration has been so focused on strong-arming other nations, especially China, into better trade agreements.
Measure Twice, Cut Once: Fed Delivers Expected Cut
The Federal Reserve (Fed) cut rates by 0.25% for the first time in over a decade,1 a move largely expected by the market. Heading into the July Federal Open Market Committee (FOMC) meeting, much of the debate was around whether or not the Fed would deliver 25 or 50 basis points. However, we were focused on the statement and Fed Chairman Jerome Powell’s press conference for further insight on future policy.
Financial Markets Aren’t Woolly Mammoths: Running From Fear Can Be Counterproductive
Remember the widespread concern about the Federal Reserve’s monetary policy response to the financial crisis? A decade ago, investors worried that the Fed’s policy, which was designed to combat deep-rooted deflationary impulses, was going to be “massively inflationary,” thereby leading to a spike in US interest rates and depressed equity valuations.
This Week The Fed Will Remind Us That It’s The World’s Central Bank
The IMF revised global growth for 2019 down to 3.2% from 3.3% in April, which continues a series of downward revisions to growth. Of note is that the IMF substantially downgraded its estimate of world trade growth to just 2.5% this year, which is a downgrade of nearly a point since April’s outlook.
Senate Hearing Focuses On Retirement Challenges
On May 14, 2019, the Senate Finance Committee held a hearing titled “Challenges in the Retirement System.” The hearing focused on a variety of issues relating to retirement security, such as increasing workplace retirement plan coverage and participation and increasing participant savings.
Waiting For A Rate Cut: How Much Is Too Much?
There is a famous Rolling Stones song that provides sage advice for demanding toddlers and spoiled teenagers — and perhaps financial markets: “You can’t always get what you want. But if you try sometimes, well you might find, you get what you need.” That refrain is stuck in my head as I anticipate this month’s Federal Reserve (Fed) meeting.
ECB Worries Have Receded, But Fed Policy Doubts Have Some Pundits On The Defensive
One major risk that I have worried about for a year now was the potential for the next European Central Bank (ECB) president to be a monetary policy hawk. I felt that would create a significant headwind for European markets, given that current ECB President Mario Draghi’s dovishness had driven down systemic stress during his tenure.
The US Cycle Breaks A Record. So Now What?
What Do You Want Most From Your Portfolio?
Will the Fed Lose Its Patience This Week?
All eyes will be on this week’s US Federal Reserve (Fed) meeting — especially the statement (whether the central bank will retain its “patient” stance) and the “dot plot” (which charts the outlook for interest rates). The June 18-19 Fed meeting is very important because market expectations have gotten so dovish recently.
Central Banks Provide A Silver Lining To The Escalating Trade War
A collective sigh of relief was expelled on Friday evening as US President Donald Trump announced he would indefinitely suspend the planned imposition of tariffs on Mexico — which was set to go into effect on June 10.
The Month Of May Was A ‘Game-Changer’ For Markets
It’s the beginning of June, and I haven’t been this happy to welcome a new month in a very long time. I suspect many investors and market watchers have that same feeling. May was brutal for markets — but it was more than just that. The month of May was, in my opinion, a game-changer.
Small-Cap Stocks: Why Patience Matters
The payment sector has been the darling of Wall Street the last few years and has continued to be an active space with several mega-mergers. Only four months into 2019, the payment sector already reached $85 billion of merger and acquisition announcements — almost doubling the full-year record of $49 billion in 2018.1 I expect the trend to continue.
Global Markets: Five Events To Watch This Week
Weekly Market Compass: Tracking elections in Europe and India, and several reports in the US. It seems that so much happens in a given week these days. However, this week could be particularly momentous as we start to get answers on some key questions that have implications for global markets. Here are five events to watch…
How Is The Fed Changing Its Approach To Inflation?
US-China Trade Talks Stumble, And Stocks Tumble
US-China trade talks have taken a turn for the worse in the last several days and may temporarily go off the rails. It all started when President Trump threatened to increase the level of tariffs on $200 billion of Chinese goods to 25% by May 10, asserting that China is taking too long in the negotiations and is attempting to “renegotiate.” He also threatened to place 25% tariffs on additional goods. Now China, in response, has threatened to cancel trade negotiations planned for this week between the US and China.
Witnesses At House Hearing Say SEC’s Regulation Best Interest Needs To Be Improved
Witnesses at a March 14 hearing held by the House Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets called on the Securities and Exchange Commission (SEC) to strengthen its investment advice reform proposal.Rep. Carolyn Maloney, D-NY, chairwoman of the subcommittee, said in her opening statement that the SEC’s Regulation Best Interest (BI), which is designed to raise broker conduct above the current suitability standard, falls short of needed investor protections.