Exploring Paths to Independence
Independence means doing things your way. Advisors go independent with a variety of goals in mind. Some want to design every aspect of their Registered Investment Advisor (RIA) firm, while others simply want to be able to focus on their clients. Some want to build equity in their business, while others prefer to join a firm and negotiate for income and an equity percentage in a larger asset.
Market Cap to GDP: August Buffett Valuation Indicator
With the Q2 GDP Third Estimate and the September close data, we now have an updated look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The current reading is 155.7%, down from 194.1% the previous quarter.
Computer-Driven Hedge Funds Surge Ahead Amid Chaotic Markets
A $200 billion corner of the hedge funds industry dominated by computer-driven algorithms has been making the most of wild swings in global markets, putting many of those funds on course for a record year of gains.
What Would You Do If You Were Suddenly Debt-Free? Millions of Student Borrowers Will Find Out
As student borrowers get set to apply for federal loan forgiveness, some of them are also considering for the first time homeownership and other major milestones as they embark on new lives without the specter of debt hanging over them.
Today's Options Market Update
Stocks extend yesterday’s gains as rates continue to ease.
Northern Trust Asset Management’s Capital Market Forecast
Every year, Northern Trust Asset Management issues a multi-asset class, five-year investment outlook known as its Capital Market Assumptions Report. Per the recently released 2023 edition, Northern Trust is expecting market returns to be slightly below long-term historical averages. While they believe lower stock valuations may provide some support, upside will be limited by higher interest rates. They see a somewhat similar dynamic playing out with bonds, where returns will be supported by higher yields that will be capped by flatter global yield curves. Among the six investment themes they’ve identified as driving markets over the next five years are Slow Growth Transitions, which looks at such slow transitions across the globe as pandemic to endemic; globalization to regionalization; and fossil fuels to renewables. Here today to discuss CMA’s themes and forecasts is Chris Shipley.
US Retirement Legislation And Regulation Bulletin: Third Quarter 2022
On August 16th, President Joe Biden signed the Inflation Reduction Act into law, ending months of uncertainty over whether congressional Democrats would ever reach agreement on a compromise budget reconciliation bill.
Fed Pivot Trade Sparks Again as Bonds Rally, Dollar Weakens
Global bonds and stocks are rallying on hopes that the latest signs of weakness in the US economy will push the Federal Reserve to rethink the aggressive monetary policy tightening that some fear will trigger a recession.
World Markets Update: October 3, 2022
All eight indexes on our world watch list posted losses through October 3, 2022. The top performer is India's BSE SENSEX with a YTD loss of 2.51%. London's FTSE 100 is in second with a loss of 6.44% and Tokyo's Nikkei 225 is in third with a loss of 8.95%. Coming in last is Hong Kong's Hang Seng with a loss of 27% YTD.
CPI and PCE: Two Measures of Inflation and Fed Policy
The BEA's Core Personal Consumption Expenditures Chain-type Price Index for August, released recently, shows that core inflation is above the Federal Reserve's 2% long-term target at 4.91%. The August Core Consumer Price Index release is currently higher, at 6.32%. The Fed is on record as using Core PCE data as its primary inflation gauge.
Gold Extends Its Rally as Treasury Yields Continue to Retreat
Gold climbed higher, helped by a continued decline in Treasury yields, as traders weighed concerns that central banks’ monetary tightening will lead to recession and the possibility that bond rates may have reached a peak.
Runaway Bear Market Blows Past Everything Meant to Slow It Down
Unwavering profit projections. Benign chart patterns. Big hedges in the options market. All the things that bulls expected to put a brake on the worst equity selloff in 30 months have just summarily failed.
SPONSORED Fed’s Inflation Fight Likely to Persist
The cost of goods may be peaking, but the rising cost of services clouds the inflation outlook. In our view, the Fed’s fight with inflation is far from over and will likely continue to be a headwind for the economy and equity markets. Therefore, our outlook remains cautious, and our Asset Allocation Committee is underweight stocks relative to bonds.
Hurricane Ian Highlights the Importance of Flood Insurance, a Hedge on Your Investment
Just 18.5% of homes in Florida counties that were told to evacuate have coverage through the National Flood Insurance Program (NFIP), which is administered by FEMA. Most regular homeowners’ insurance policies don’t cover flood damage, which is why Congress created the NFIP in 1968. But at an average cost of $995 a year, according to Forbes, the insurance may be out of reach to many households.
Moving Averages: S&P Down 9.3% in September
Valid until the market close on October 31, 2022.
The S&P 500 closed September with a monthly loss of 9.34% after a loss of 4.24% in August. At this point, after close on the last day of the month, all five S&P 500 strategies are signaling "cash" — Vanguard REIT Index ETF (VNQ), iShares Barclays 7-10 Year Treasury (IEF) and Vanguard All-World Index ex-US ETF (VEU), and Vanguard Total Stock Market ETF (VTI), Invesco DB Commodity Index Tracking (DBC) — up from last month's quadruple "cash" signal.
Airlines Had a ‘Revenge Travel’ Summer. The Stocks Went Nowhere
Airlines enjoyed a hot summer, as “revenge travel” and soaring fares lifted the companies. But investors have been reluctant to get on board as recession fears cloud the outlook, leaving the stocks languishing.
Now Comes the Hard Part
Surveying the current condition of the financial markets, we presently observe a combination of still historically-extreme valuations, rising yet still only normalizing interest rates, measurably inadequate risk-premiums in both equities and bonds, and ragged, unfavorable market internals, suggesting continued risk-aversion among investors.
Michigan Consumer Sentiment Mostly Unchanged in September
The September Final Report came in at 58.6, up 0.4 (0.7%) from the July Final. Investing.com had forecast 59.5. Since its beginning in 1978, consumer sentiment is 31.5 percent below the average reading (arithmetic mean) and 30.7 percent below the geometric mean.
PCE Price Index: August Headline at 6.25% YoY
The BEA's Personal Income and Outlays report for August was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index was up 0.29% month-over-month (MoM) and is up 6.25% year-over-year (YoY). Core PCE (YoY) is now at 4.91%, well above the Fed's 2% target rate.
Real Disposable Income Per Capita Creeps Up in August
With the release of this morning's report on August's Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal 0.33% month-over-month change in disposable income comes to 0.05% when we adjust for inflation. This is generally a decrease from last month's 0.31% nominal and 0.42% real change. The year-over-year metrics are 1.19% nominal and -4.76% real.
The Big Four: Real Personal Income in August
Personal Income (excluding Transfer Receipts) in August rose 0.35% and is up 6.8% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was up 0.07%. The real number is up 0.6% year-over-year.
Debt & Why The Fed Is Trapped
The massive debt levels provide the single most significant risk and challenge to the Federal Reserve. It is also why the Fed is desperate to return inflation to low levels, even if it means weaker economic growth.
Bond Markets Are Nearing a Painful Inflection Point
This week’s bond meltdown has sent the mean 10-year borrowing cost for Group of Seven countries to its highest in more than a decade, with the average yield surging above 3%. What happens next could set the tone for financial markets and the global economy for years to come.
Q2 GDP Third Estimate: Real GDP at -0.6%, As Expected
The Third Estimate for Q2 GDP, to one decimal, came in at -0.6% (-0.58% to two decimal places), an increase from -1.6% (-1.57% to two decimal places) for the Q1 Third Estimate. Investing.com had a consensus of -0.6%.
The Untold Story of Convertible Bonds
There is no relief in sight. The market remains volatile. Both equity and fixed-income assets are taking a beating as investors grapple with 40-year-high inflation and the Federal Reserve’s attempts to rein it in. My next guest says there is potential upside in this tumultuous market. He claims high volatility has historically had positive effect on a little-known class of bonds known as convertibles. He will explain why adding convertible bonds to your portfolio is a smart move as we weather this financial storm.
529 Plan Contribution Limits for 2022
Unlike with 401(k) plans and other retirement savings accounts, the IRS does not set annual contribution limits for 529 college savings plans. Instead, the states that sponsor individual 529 plans set parameters for the life of the plan.
It’s Infrastructure’s Time to Shine. Here’s What Investors Should Know About the Asset Class.
As the U.S. CPI data continues to rise, Charles Hamieh, Portfolio Manager at ClearBridge Investments, dives into the opportunity present for investors looking at the infrastructure space as an inflation hedge moving forward.
Biden’s Student Loan Reforms Are a Looming Disaster
Amid the stir caused by President Biden’s plan to cancel student loan debts, far too little attention has been paid to another far-reaching reform: the administration’s change to a lending program known as income-driven repayment (or IDR). If widely applied, Biden’s proposal would provide additional relief to millions of borrowers...
Municipals in focus: Why munis? Why now?
Join the Delaware Funds by Macquarie® Municipal Fixed Income team for an interactive discussion that will help answer some of the biggest questions on municipal bond investors’ minds.
The Secret Sauce for Private Equity Is Running Dry
As banks get burned from financing billion-dollar buyouts and pension funds grow impatient with private equity’s endless thirst for capital, skepticism is growing louder over the industry’s performance — and whether some of their daredevil deals could result in disastrous losses for their financiers.
Middle-Class Hourly Wages as of August 2022
We've updated this series to include the August release of the Consumer Price Index as the deflator and the monthly employment update. The latest hypothetical real (inflation-adjusted) annual earnings are at $46,918, down 8.8% from 45-plus years ago. Hourly earnings are below their all-time high after adjusting for inflation.
Pending Home Sales Waned in August
The National Association of Realtors released the August data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales sagged for the third straight month in August."
July S&P/Case-Shiller Home Price Index: Down ~1% YoY Inflation Adjusted
With this morning's release of the July S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index saw a 0.44% decrease month over month. The non-seasonally adjusted national index saw a 16% YoY increase. This is reduced to -0.86% after adjusting for inflation.
Lowly T-Bills Are Suddenly Sexy. Yes, Treasury Bills!
If a long, ugly recession is in fact going to happen later this year, many investors will want to shift some additional money into cash. There’s good news: In July, yields on many cash-like investments, which means they're virtually risk-free and liquid, started soaring.
Risk Parity Funds Have Failed to Work as Advertised
In times like these, when nothing seems to work in financial markets, risk parity strategies should act as a sort of shock absorber. It’s a simple concept, really. Unless you have reason to believe one investment is better than another, you should take equal risk in each.
Everything-Selloff on Wall Street Deepens on 98% Recession Odds
Monday brought a stark warning for Wall Street daredevils: Stocks are still in free fall and bearish sentiment is far from getting exhausted -- especially with hawkish central bankers rattling recession-obsessed markets like this.