2020 Outlook: An Optimistic View of Capital Markets
As we look ahead to 2020, it’s clear that central banks are still shouldering the burden for stimulating the economy via monetary policy. That should bode well for 2020, in our view. However, we believe such monetary easing should be more positively impactful for asset prices than the overall economy. Economic uncertainty is likely to continue to depress capital spending, in our view, and we must watch vigilantly to ensure it doesn’t spill over into diminished hiring plans.
Amid A Host Of Central Bank Developments, One Constant Remains: Global Market Pressure
Last week brought a number of key developments from central banks around the world, from the release of the Federal Reserve’s (Fed) latest meeting minutes, to a reaffirmation of the Bank of Canada’s (BOC) monetary policy, to the first speech from European Central Bank (ECB) President Christine Lagarde.
Don’t Fret The Rate Rise: Party Like It’s 1995
Recent market events look a lot like the mid-90s when the Fed stopped tightening and the cycle found new life. To make it simple, I’ll state my conclusion upfront. My outlook for 2020, or at least the first half of 2020, is quite sanguine.
Dispelling Myths About Emerging Market Debt Growth
The Fed Gives Stocks Free Rein To Run. Can The Rally Continue?
Last week’s Federal Reserve (Fed) meeting proceeded largely as expected, but a very important development for stocks occurred during the follow-up press conference. As expected, the Fed decided to cut rates by 25 basis points. Additionally, in its announcement, the Fed removed the language that stated it would “act as appropriate to sustain the expansion.”
Will This Week’s Data Confirm Last Week’s Optimism For Stocks?
After a positive week for stocks, markets brace for news on the Fed’s outlook, US-China trade negotiations, and the eurozone and Chinese economies. Last week was a “risk on” week for the markets, with stocks rising.
Should Investors Be Scared Of A Halloween Sell-Off?
After all, some of the biggest stock market crashes have occurred in October, such as the Panic of 1907, the 1929 crash, and the 1987 crash. We even witnessed a significant stock market sell-off last October. However, if we were to look at the overall statistics, we would see that October has not historically been the worst month for stock market performance. In fact, there is even a name for this behavioral finance phenomenon — “the October effect.”
Steelpath October MLP Update and News
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.