The Fed has repeatedly said that they are “data dependent”. Historically, many have assumed “data” to be defined as backward-looking economic data (i.e. GDP growth, unemployment rate, inflation, retail sales, etc.) and forward-looking economic indicators (i.e. consumer confidence, housing starts, small business confidence, etc.). The somewhat esoteric stuff that academics and economists get excited about. […]
A Little Help Here Please!
Picking up on a theme from recent posts, central banks continue to demand help from fiscal policymakers. According to Bloomberg article entitled “Central Bankers Are Sick of Rescuing the World Economy Alone”, while central banks in Europe, Japan and even the US seem prepared to act in the short-term to ease monetary policy, they have […]
Is a New Easing Cycle Now in the Cards?
We have indicated previously, that the evidenced-based justification for anything but a “one and done” 25-bp Fed rate cut in July — as an offset to policy hubris in December — was thin. Still, the market seems to be pricing in more. If we are to believe the June Fed minutes, a 50-bp rate cut […]
The Next Shoe to Drop?
The S&P 500 briefly hit 3,000 today — something that has never happened in history – before closing slightly below this level. Can the markets keep on roaring higher purely on the hope of favorable monetary policy? Not unless the Fed plans to embark on a new rate-cutting cycle — a “one and done” move […]
Inaction as Fiscal Policy
As monetary authorities around the world race to make things “easier” and provide almost unlimited liquidity in the face of decelerating growth, they are getting very little help from government bureaucrats. Many, like the International Monetary Fund, have gone so far as to suggest that it is massively irresponsible to rely so heavily on monetary policy alone.
Italian Bonds – Now a Safe Haven?
Italian bonds traded significantly higher earlier in the week as the Italian coalition government pledged to meet a lower budget deficit target in 2019. Despite the debate over whether or not this actually represented financial discipline or a series of one-time revenue windfalls, the market reacted positively.
Utilities – Another Challenged Safety Trade
Everything in moderation. We believe this phrase applies to the “safety trade” as well. Recently, we have seen many strategists/traders suggesting that they are positioning equity portfolios using a “barbell” approach – pairing aggressive momentum names (including IPOs) with lower-BETA defensive stocks (Utilities, Consumer Staples, REITs) — primarily as a way to deal with market […]
Convergence – Gold and Negatively Yielding Bonds
Perhaps just a coincidence, but two of our recent posts have come together beautifully in a recent chart from Deutsche Bank depicting and supporting our view of how gold prices have moved almost in lock-step with the growing universe of negative-yielding bonds. There is no guarantee that any historical trend illustrated above will be repeated […]
High Yield Can Mean High Caution
“Boy, that double-digit yield looks pretty juicy….” We would advise caution. Often, double digit yields can be an indication that the market doesn’t believe the current distribution is sustainable. Usually, yields move higher as investors perceive more risk. In this way, a higher current return is delivered as a way of responding to those concerns […]
Gold: After many years in obscurity, finally playing a role as a safe haven asset
Since the end of May, gold has been on a run unlike we have seen in over five years – up 10.5%. The last time gold reached $1,400 per oz. was back in 2013. While silver (the other precious metal) is up 6.4% during that time as well, it continues to lag. Presently, the gold/silver […]