Strong returns in US equities over the past decade have led many investors to reduce their allocations to emerging markets equities. Yet, for investors focused on capturing growth, emerging markets may present a new frontier by which to participate in the next wave of global economic evolution. Emerging markets equities can provide exposure to transformative forces such as digitalization, productivity enhancements, shifting cultural norms, and rapid urbanization. These dynamics are not just shaping the future of emerging economies; they are laying the groundwork for growth and innovation.
The U.S. economy may be heading into choppy waters, and investors might be wise to buckle up.
The main focus for investors should is no longer if the Fed will cut rates in 2024, but how much and how quickly the Fed will lower interest rates.
Recent growth data have been muddled and subject to conflicting interpretations. There have been mixed signals from leading indicators and hard data and divergent readings across major economies.
OPEC+ is like a teabag – it only works in hot water. The late Robert Mabro, one of the savviest oil-market observers, liked to say the cartel only got the job done when it was under prolonged financial pain. To judge by its latest actions, OPEC+ has yet to realize it’s inside a warming kettle.
Most people see “blockchain” and “funds” in the same sentence and immediately think of pools of money betting on cryptocurrencies like Bitcoin and Ether. That isn’t how Singapore sees the utility of distributed ledgers.
In a recent discussion with Adam Taggart via Thoughtful Money, we quickly touched on the similarities between the U.S. and Japanese monetary policies around the 11-minute mark. However, that discussion warrants a deeper dive. As we will review, Japan has much to tell us about the future of the U.S. economically.
Presidential elections tend to have limited impact on market performance, regardless of party win (although markets prefer Democratic switches). Investors should capitalize on the uptick in market volatility, which investors can use for strategic investing.
Labor Day weekend, marking the end of the US summer driving season, is typically the year’s last hurrah for gasoline producers. This year, the high-fives were reserved for drivers (and White House occupants): The average pre-long weekend pump price was down 13% from last year after gasoline refining margins collapsed in August. Pump prices have eased further this week.
Investors should be careful what they wish for in hoping for an aggressive Fed rate cutting cycle, given stocks tend to do better when cuts are slow and steady.
A bright spot in Chinese investment could spell trouble for its financial institutions.
In this edition, Harold Evensky explores the challenges facing sustainable and active funds, the implications of the new DOL Fiduciary Rule, and the value of long-term performance projections. With candid observations and critical analysis--read on to gain perspective on navigating the complex world of investing, the importance of risk management, and the role of fiduciary advisors in securing your financial future.
After a bruising few years, Asian currencies have suddenly become fashionable again. But this enthusiasm is dependent on words and deeds far away. The direction of global markets is driven overwhelmingly by the US. For now, that means interest-rate cuts by the Federal Reserve.
A soft landing for the U.S. economy still appears to be the most likely outcome.
With his Jackson Hole speech, Federal Reserve Chair Jerome Powell all but promised rate cuts were coming. That’s cool. But it is why that matters.
As more Chinese companies get comfortable paying dividends, investors may find new sources of equity return potential.
On the latest edition of Market Week in Review, Director and Senior Investment Strategist Alex Cousley and ESG and Active Ownership Analyst Zoe Warganz discussed key takeaways from the U.S. Federal Reserve’s (Fed) annual economic symposium in Jackson Hole, Wyoming.
In our view, stagflation scenarios tend to be worse for balanced portfolios than recessions.
I asked my great friend and business partner David Bahnsen, who is about as politically wired as anyone and one of the truly great economic and investment minds, to reflect on the intersection of politics and markets. It is a quick, balanced, and reasonable read...
As I write this, gold continues to trade above $2,500 an ounce after surging past the psychologically important level for the first time ever in mid-August. For seasoned gold mining investors, this should be a moment of validation. After all, the yellow metal has long been seen as the ultimate hedge against economic uncertainty.
Seven of our eight indexes on our world watch list have posted gains through August 30th, 2024. The U.S.'s S&P 500 finished in the top spot with a year-to-date gain of 19.09%. Tokyo's Nikkei 225 finished in second with a year-to-date gain of 15.49% while India's BSE SENSEX finished in third with a year-to-date gain of 14.57%.
Has the tide turned decisively against King Dollar? A fall of around 5% in the greenback versus major currencies in the past two months, pushing the dollar index to a 13-month low, suggests its post-pandemic surge has meaningfully faltered.
Investors pursuing widely followed 60/40 strategies should consider swapping out bonds for commodities, according to strategists at Bank of America Corp.
As tax season draws nearer, advisors and investors increasingly look to their portfolio to optimize exposures for taxation purposes.
Copper has been trending lower since the middle of May, but supply disruptions in Latin America could help reverse that trend.
China's economic transformation presents both challenges and opportunities for global markets.
The path for lower rates in the U.S. has finally arrived.
If your home and/or its contents are destroyed or damaged by a disaster such as a fire or flood, the insurance company will need a complete list of what was lost. Do you have such a list?
Is the Japanese yen carry trade back on? Tough question. We think it is, now that the Bank of Japan has toned down its hawkish rhetoric. More on that later. Still, even if we are wrong, the reality is that the market will be talking about the violent ructions of August 2024 for the rest of our careers.
In an election year, we are bound to hear a lot of commentary about the merits and drawbacks of both major candidates’ economic policies. History shows that while a president’s policies can make life easier or more difficult for various sectors of the economy, U.S. Federal Reserve (Fed) policy has much more impact on the economy overall.
The healthcare sector offers a compelling mix of defensive characteristics and growth potential driven by innovation. It also features ample dispersion that presents stock pickers with an opportunity to parse potential leaders and laggards in pursuit of above-market return.
High-yield bonds have been one of the best-performing bond investments so far this year, but there may be better entry points down the road.
The most glaring uncertainties today, which contributed to early August seeing some of the largest market moves in the last several years, are the risks associated with the Federal Reserve’s dual mandate.
Portfolio managers should always have good explanations for their underweight positions. These days, it matters more than ever.
With US payroll and unemployment data surprising to the downside two Fridays ago, Treasury markets quickly repriced the probability of impending recession, helping set off a volatility spike in stocks across the world. According to Bloomberg, economists’ consensus probability of a US recession in the next twelve months is now approximately 30%.
A Soft Landing Scenario Is Still a Realistic Base Case.
Elevated budget deficits imply growing US Treasury issuance. Receding demand from central banks could leave more price-sensitive buyers to pick up the slack. Who are the buyers of US government debt, and how is the market responding? In part two of our series, let’s examine Treasury market supply and demand.
The 19th Century American author Mark Twain once said: “Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one’s lifetime.”
Midstream’s second quarter earnings calls reinforced the positive outlook for US natural gas demand driven in part by expected power demand from data centers. This note discusses the advantages of natural gas for data centers, additional factors contributing to demand growth, and how midstream is uniquely positioned to benefit from these trends.
Global money has flooded into Indonesia’s financial markets this month, signaling the country’s assets have quickly become a preferred investment destination as the US Federal Reserve’s easing cycle nears.
One of the last remaining bright spots for Chinese consumption is rapidly fading, as the nation’s economic malaise takes a toll on demand for even the most accessible of goods.
This week, before she accepted the Democratic Party’s nomination for president, Vice President Kamala Harris threw her support behind President Joe Biden’s tax proposals for 2025, which include a steep 44.6% capital gains rate and an unprecedented 25% tax on unrealized gains.
For years, a Chinese company has dominated one of the most lucrative corners of the cryptocurrency universe. Rising political tensions, and the prospect of Donald Trump retaking the White House, pose an unprecedented threat to that reign.
It’s the hottest trade on Wall Street. Everywhere you turn, money managers have upped their investments in private credit, helping the asset class balloon into a $1.7 trillion industry. But there’s one group where interest appears to already be waning — the family office.
The latest Kansas City Fed Manufacturing Survey composite index did not decline as much in August following a sharper decline last month. The composite index came in at -3, up from -13 in July. Meanwhile, the future outlook increased to 8.
Emerging-market stocks are trading at the steepest discount to US equities since the Covid-19 panic in March 2020 as skittish investors look elsewhere for growth opportunities.
Since our last update of the Three Tactical Rules on June 25, 2024, equity markets have retraced most of the rally from the spring. The change in market sentiment came abruptly, due to the labor market showing signs of weakness as the number of jobs available per unemployed worker fell to 1.2 and the unemployment rate rose to 4.3%. The recent market volatility has had a dramatic impact on our tactical rules.
Amid expectations of rate cuts from major central banks, managers are increasing their exposure to more cyclical and value-oriented names, including autos, transportation, and short-cycle industrials.
Since the release of ChatGPT, mega-cap technology companies poised to profit from AI-enhanced software tools or cloud AI-model training capabilities have seen a surge in their stock prices. Yet, many have yet to realize significant AI-driven revenue growth, let alone a substantial impact on their bottom lines.
Citigroup Inc. says the carry trade is back, but with a key difference: hedge funds are borrowing US dollars rather than the yen for their wagers on emerging markets.
Oil, copper, soybeans and a handful of others monopolized the attention — but of all commodities, the humble lump of iron ore benefited the most from the Chinese economic boom of the last 25 years.
Silver is an important component of solar photovoltaic (PV) panels, meaning that for China to reach its ambitious climate targets, it must import massive amounts of the white metal. In June alone, China spent over $228 million on silver, a new monthly record based on Bloomberg data going back to 2009.
Ethical Capital's Sloane Ortel marshals the data to counter the arguments against aggressively fighting climate change laid out in Larry Siegel's recent article.
Investors including JPMorgan Asset Management, M&G Investments and Aviva Investors say they seized on the retreat in riskier assets at the start of the month to bolster their holdings of emerging-market bonds.
Just as bond traders grow more assured that inflation is finally under control, a camp of investors is quietly building up protection against the risk of a future spike in prices.
Markets were recently rattled by concerns the U.S. may slip into recession, but it's not clear that those fears are justified.
Texas Instruments Inc. is set to receive $1.6 billion in Chips Act grants and $3 billion in loans, the Biden administration announced Friday, marking the latest major award from a program designed to boost American semiconductor manufacturing.
Emerging-market stocks rallied on Friday, driven by tech companies in Asia, following US data which boosted investor optimism that the world’s biggest economy will avoid a recession.
Earlier this year, around the time Nvidia Corp.’s market cap eclipsed that of the entire S&P 500 energy sector, I wrote about whether oil and gas stocks might offer a decent hedge when AI-fever breaks. The past several weeks have offered a test.
Portfolio Manager Jeremy Sutch, CFA, and Chief Investment Officer Sean Taylor assess the issues besetting the region’s key markets—from domestic challenges to geopolitical headwinds—as well as their structural strengths, and whether prospects may brighten with the onset of a U.S. rate-cutting cycle.
BlackRock Inc. says the market for blended finance has now reached a “turning point,” as it targets growth in deals that combine private and public funding.
With US equities on the rebound, this summer’s selloff is looking more like a pause in the bull market than the beginning of its end.
Because there is unprecedented use of the word “unprecedented,” we thought it appropriate to expand our annual Charts for the Beach from 5 charts to 10 charts and tables this year. So, probably best to stay under the beach umbrella as you read our unprecedented extended edition.
The recent U.S. Treasury yield rally is compared to a similar rally in Q4 2023, driven by expectations of a shift in Federal Reserve policy.
We manage risk within our strategic, long-term allocations based on diversification across equity, fixed income, and alternative assets.
The inflation numbers this week — both for producer and consumer prices — have served to reassure markets in two distinct ways: confirming continued progress in the battle against high price increases and supporting the ongoing shift in the Federal Reserve’s focus from its inflation mandate to its employment mandate.
The tea trade has lessons for today’s global commerce.
Bond prices whipsawed over the past month as volatility spiked across markets. What's next for fixed income markets?
The financial markets appear to be rather confident the Fed will finally begin its rate cutting process at the September Federal Open Market Committee meeting, at a minimum. The debate has now shifted as to what this easing cycle will ultimately look like.
For plan sponsors, the trend toward de-risking often leads to a simplification of the equity manager lineup in the return-seeking portion of the portfolio.
Franklin Templeton’s David Mann highlights the firm’s diverse ETF lineup and offers perspective on stocks, bonds, and crypto. VettaFi’s Zeno Mercer goes in-depth on the “Magnificent Seven” stocks.
MSCI Inc. continues to cull China stocks from its indexes, setting the stage for a further drop in the nation’s share of a key emerging-market benchmark.
Having been warned about the risk, investors now ask if the yen carry trade unwind is complete. Here's how far it might still go.
When two popular trades, such as buying US big tech stocks and selling the Japanese yen, are unraveling at the same time, investors naturally think they are somehow related.
The acquisition further expands Janus Henderson’s private credit capabilities and complements Janus Henderson’s existing highly successful securitized credit franchise and expertise in public asset-backed securitized markets, and further expands our capabilities into the private markets.
The benchmark indexes for emerging-market equities and currencies, respectively, moved in opposite directions Monday, deepening a trend that emerged last week, when their short-term correlation was interrupted for the first time in 21 years.
I can't let this month pass without noting a significant anniversary: This is the 25th year I’ve been writing Thoughts from the Frontline. You can visit the archive and see every issue since January 2001.
On Monday, global equities and digital assets underwent a dramatic selloff as the unwinding of the Japanese yen carry trade rattled markets. The S&P Global Broad Market Index (BMI), which measures the performance of more than 14,000 stocks around the world, retreated 3.3%, its worst trading day in over two years.
Emerging-market currencies are set to clock their biggest weekly gains of 2024, led by a rise in Brazil’s real on expectations its central bank could raise interest rates later this year.
China’s two-speed economy and the internationalization of the renminbi suggest long-term opportunities may be found amid near-term challenges.
The Biden administration is nearly finished divvying up $39 billion in grants under the Chips and Science Act, the landmark bipartisan legislation aimed at revitalizing the domestic semiconductor industry. The bigger test still lies ahead.
When the Federal Reserve lowers its key short-term interest rate, the impact isn't uniform across the financial universe.
When markets gyrated at the turn of the month, US and Japanese stocks had the cushion of an earlier surge to fall back on. In Europe, the rout hit share prices that had been weakening since May. An earnings season dominated by pessimism from many of the region’s bosses has vindicated investors’ caution.
In this PIMCO Perspectives, we explore the dispersion playing out across monetary policy and financial markets.
As the number of Americans retiring in other countries continues to grow, our Bill Cass shares five considerations for individuals planning to retire abroad.
Let's take a close look at July's employment report numbers on Full and Part-Time Employment. The latest data shows that 82.8% of total employed workers are full-time (35+ hours) and 17.2% of total employed workers are part-time (<35 hours).
Portfolio Managers Shuntaro Takeuchi, Michael Oh, CFA, and Andrew Mattock, CFA, assess the reasons for the heightened volatility and sharp moves in global markets.
Copper prices have pulled back since peaking in May at $5.12, but the long-term bull case for copper remains strong.
For bond investors looking to the near- and longer-term, Matt Eagan stepped through considerations and opportunities in the global market.
Andy Rothman provides four reasons why he’s stubbornly convinced that Xi Jinping will eventually overcome his stubbornness and make the changes necessary to put China back on track to reach its potential growth rate.
Emerging Markets
LiveCast: Navigating emerging markets: Seizing growth opportunities
Strong returns in US equities over the past decade have led many investors to reduce their allocations to emerging markets equities. Yet, for investors focused on capturing growth, emerging markets may present a new frontier by which to participate in the next wave of global economic evolution. Emerging markets equities can provide exposure to transformative forces such as digitalization, productivity enhancements, shifting cultural norms, and rapid urbanization. These dynamics are not just shaping the future of emerging economies; they are laying the groundwork for growth and innovation.
The Yield Curve Inversion Just Ended, but Economic Risks Remain
The U.S. economy may be heading into choppy waters, and investors might be wise to buckle up.
Fed Rate Cuts Coming in September: What’s Next?
The main focus for investors should is no longer if the Fed will cut rates in 2024, but how much and how quickly the Fed will lower interest rates.
Back to School: Macro Cliff Notes and a Look Ahead
Recent growth data have been muddled and subject to conflicting interpretations. There have been mixed signals from leading indicators and hard data and divergent readings across major economies.
OPEC+ Kicks the Can Down a Very Uphill Road
OPEC+ is like a teabag – it only works in hot water. The late Robert Mabro, one of the savviest oil-market observers, liked to say the cartel only got the job done when it was under prolonged financial pain. To judge by its latest actions, OPEC+ has yet to realize it’s inside a warming kettle.
Why Singapore Is Bringing Blockchain Into Mutual Funds
Most people see “blockchain” and “funds” in the same sentence and immediately think of pools of money betting on cryptocurrencies like Bitcoin and Ether. That isn’t how Singapore sees the utility of distributed ledgers.
Japanese Style Policies And The Future Of America
In a recent discussion with Adam Taggart via Thoughtful Money, we quickly touched on the similarities between the U.S. and Japanese monetary policies around the 11-minute mark. However, that discussion warrants a deeper dive. As we will review, Japan has much to tell us about the future of the U.S. economically.
Maintain Your Investment Strategy During Election Years
Presidential elections tend to have limited impact on market performance, regardless of party win (although markets prefer Democratic switches). Investors should capitalize on the uptick in market volatility, which investors can use for strategic investing.
American Drivers Signal a Top in Gasoline Demand
Labor Day weekend, marking the end of the US summer driving season, is typically the year’s last hurrah for gasoline producers. This year, the high-fives were reserved for drivers (and White House occupants): The average pre-long weekend pump price was down 13% from last year after gasoline refining margins collapsed in August. Pump prices have eased further this week.
It's Time … For a Fed Pivot
Investors should be careful what they wish for in hoping for an aggressive Fed rate cutting cycle, given stocks tend to do better when cuts are slow and steady.
China’s Bond Market Rally
A bright spot in Chinese investment could spell trouble for its financial institutions.
Navigating the Investment Landscape: Insights and Warnings
In this edition, Harold Evensky explores the challenges facing sustainable and active funds, the implications of the new DOL Fiduciary Rule, and the value of long-term performance projections. With candid observations and critical analysis--read on to gain perspective on navigating the complex world of investing, the importance of risk management, and the role of fiduciary advisors in securing your financial future.
The Fed Is Containing Yuan Bears. That’s Ironic
After a bruising few years, Asian currencies have suddenly become fashionable again. But this enthusiasm is dependent on words and deeds far away. The direction of global markets is driven overwhelmingly by the US. For now, that means interest-rate cuts by the Federal Reserve.
August Sees Markets Close Strong After Tough Start
A soft landing for the U.S. economy still appears to be the most likely outcome.
Navigating Earnings Season: Tailwinds of Tomorrow
With his Jackson Hole speech, Federal Reserve Chair Jerome Powell all but promised rate cuts were coming. That’s cool. But it is why that matters.
Chinese Equities: How Investors Can Unlock the Power of Dividends
As more Chinese companies get comfortable paying dividends, investors may find new sources of equity return potential.
Key Highlights From Q2 Earnings Season Around the Globe
On the latest edition of Market Week in Review, Director and Senior Investment Strategist Alex Cousley and ESG and Active Ownership Analyst Zoe Warganz discussed key takeaways from the U.S. Federal Reserve’s (Fed) annual economic symposium in Jackson Hole, Wyoming.
Stagflation vs. Recession
In our view, stagflation scenarios tend to be worse for balanced portfolios than recessions.
Your Portfolio and the Election
I asked my great friend and business partner David Bahnsen, who is about as politically wired as anyone and one of the truly great economic and investment minds, to reflect on the intersection of politics and markets. It is a quick, balanced, and reasonable read...
Why Gold Stocks Could Be a Contrarian Investor’s Dream Right Now
As I write this, gold continues to trade above $2,500 an ounce after surging past the psychologically important level for the first time ever in mid-August. For seasoned gold mining investors, this should be a moment of validation. After all, the yellow metal has long been seen as the ultimate hedge against economic uncertainty.
World Markets Watchlist: August 30, 2024
Seven of our eight indexes on our world watch list have posted gains through August 30th, 2024. The U.S.'s S&P 500 finished in the top spot with a year-to-date gain of 19.09%. Tokyo's Nikkei 225 finished in second with a year-to-date gain of 15.49% while India's BSE SENSEX finished in third with a year-to-date gain of 14.57%.
King Dollar's Softening Is Good News for Nearly Everyone
Has the tide turned decisively against King Dollar? A fall of around 5% in the greenback versus major currencies in the past two months, pushing the dollar index to a 13-month low, suggests its post-pandemic surge has meaningfully faltered.
Swap Bonds for Commodities in 60/40 Funds, BofA Strategists Say
Investors pursuing widely followed 60/40 strategies should consider swapping out bonds for commodities, according to strategists at Bank of America Corp.
The Tax Implications of Your Short-Term Investments
As tax season draws nearer, advisors and investors increasingly look to their portfolio to optimize exposures for taxation purposes.
Supply Disruptions Could Push Copper Prices Higher
Copper has been trending lower since the middle of May, but supply disruptions in Latin America could help reverse that trend.
China's Growth Evolution: Opportunities and Challenges for the Global Economy
China's economic transformation presents both challenges and opportunities for global markets.
The Shot Heard Round The World
The path for lower rates in the U.S. has finally arrived.
How to Get Full Protection From Your Homeowners Insurance
If your home and/or its contents are destroyed or damaged by a disaster such as a fire or flood, the insurance company will need a complete list of what was lost. Do you have such a list?
There’s Another New Carry Trade in Town
Is the Japanese yen carry trade back on? Tough question. We think it is, now that the Bank of Japan has toned down its hawkish rhetoric. More on that later. Still, even if we are wrong, the reality is that the market will be talking about the violent ructions of August 2024 for the rest of our careers.
Why the Fed Is Bigger Than the President, No Matter Who Gets Elected
In an election year, we are bound to hear a lot of commentary about the merits and drawbacks of both major candidates’ economic policies. History shows that while a president’s policies can make life easier or more difficult for various sectors of the economy, U.S. Federal Reserve (Fed) policy has much more impact on the economy overall.
Where It Pays to Get Choosy: A Case Study in Stock Selection
The healthcare sector offers a compelling mix of defensive characteristics and growth potential driven by innovation. It also features ample dispersion that presents stock pickers with an opportunity to parse potential leaders and laggards in pursuit of above-market return.
High-Yield Bonds: Are They Attractive Now?
High-yield bonds have been one of the best-performing bond investments so far this year, but there may be better entry points down the road.
Let’s Get Real (Rates)!
The most glaring uncertainties today, which contributed to early August seeing some of the largest market moves in the last several years, are the risks associated with the Federal Reserve’s dual mandate.
So Why Don’t You Own It?
Portfolio managers should always have good explanations for their underweight positions. These days, it matters more than ever.
‘Recession Dashboard’ Update: US Remains Resilient
With US payroll and unemployment data surprising to the downside two Fridays ago, Treasury markets quickly repriced the probability of impending recession, helping set off a volatility spike in stocks across the world. According to Bloomberg, economists’ consensus probability of a US recession in the next twelve months is now approximately 30%.
Sweet Spot
A Soft Landing Scenario Is Still a Realistic Base Case.
Gradually, then Suddenly: Financing the Nation’s Growing Debt
Elevated budget deficits imply growing US Treasury issuance. Receding demand from central banks could leave more price-sensitive buyers to pick up the slack. Who are the buyers of US government debt, and how is the market responding? In part two of our series, let’s examine Treasury market supply and demand.
Global Tourism Regains Lost Ground
The 19th Century American author Mark Twain once said: “Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one’s lifetime.”
AI, Natural Gas & Midstream’s Emerging Opportunities
Midstream’s second quarter earnings calls reinforced the positive outlook for US natural gas demand driven in part by expected power demand from data centers. This note discusses the advantages of natural gas for data centers, additional factors contributing to demand growth, and how midstream is uniquely positioned to benefit from these trends.
Global Money Piles Into Indonesia as Fed Easing Cycle Approaches
Global money has flooded into Indonesia’s financial markets this month, signaling the country’s assets have quickly become a preferred investment destination as the US Federal Reserve’s easing cycle nears.
PDD’s $55 Billion Stock Crash Sends Warning on China Economy
One of the last remaining bright spots for Chinese consumption is rapidly fading, as the nation’s economic malaise takes a toll on demand for even the most accessible of goods.
How Price Controls Could Harm the U.S. Economy Under a President Harris
This week, before she accepted the Democratic Party’s nomination for president, Vice President Kamala Harris threw her support behind President Joe Biden’s tax proposals for 2025, which include a steep 44.6% capital gains rate and an unprecedented 25% tax on unrealized gains.
Trump’s ‘Made in USA’ Bitcoin Threatens China Juggernaut Bitmain’s Reign
For years, a Chinese company has dominated one of the most lucrative corners of the cryptocurrency universe. Rising political tensions, and the prospect of Donald Trump retaking the White House, pose an unprecedented threat to that reign.
Private Credit Loses Ground in Fight for Family Office Money
It’s the hottest trade on Wall Street. Everywhere you turn, money managers have upped their investments in private credit, helping the asset class balloon into a $1.7 trillion industry. But there’s one group where interest appears to already be waning — the family office.
Kansas City Fed Manufacturing: Activity Declined Less in August
The latest Kansas City Fed Manufacturing Survey composite index did not decline as much in August following a sharper decline last month. The composite index came in at -3, up from -13 in July. Meanwhile, the future outlook increased to 8.
EM Stocks Getting Cheaper as Investors Cool to Analyst Optimism
Emerging-market stocks are trading at the steepest discount to US equities since the Covid-19 panic in March 2020 as skittish investors look elsewhere for growth opportunities.
Tactical Rules Turn Bullish
Since our last update of the Three Tactical Rules on June 25, 2024, equity markets have retraced most of the rally from the spring. The change in market sentiment came abruptly, due to the labor market showing signs of weakness as the number of jobs available per unemployed worker fell to 1.2 and the unemployment rate rose to 4.3%. The recent market volatility has had a dramatic impact on our tactical rules.
August 2024 Active Management Insights: Positive Outlook for Cyclical and Value-Oriented Stocks
Amid expectations of rate cuts from major central banks, managers are increasing their exposure to more cyclical and value-oriented names, including autos, transportation, and short-cycle industrials.
Where Are the AI Revenues? A Look at Mega-Cap Tech Sales Multiples
Since the release of ChatGPT, mega-cap technology companies poised to profit from AI-enhanced software tools or cloud AI-model training capabilities have seen a surge in their stock prices. Yet, many have yet to realize significant AI-driven revenue growth, let alone a substantial impact on their bottom lines.
Citi Says Hedge Funds Are Using Dollars for New Carry Trades
Citigroup Inc. says the carry trade is back, but with a key difference: hedge funds are borrowing US dollars rather than the yen for their wagers on emerging markets.
Welcome to the End of the Biggest Commodity Boom
Oil, copper, soybeans and a handful of others monopolized the attention — but of all commodities, the humble lump of iron ore benefited the most from the Chinese economic boom of the last 25 years.
The Fine Line Between Content Moderation and Censorship in the Digital Age
Silver is an important component of solar photovoltaic (PV) panels, meaning that for China to reach its ambitious climate targets, it must import massive amounts of the white metal. In June alone, China spent over $228 million on silver, a new monthly record based on Bloomberg data going back to 2009.
A Rebuttal to an Energy Transition “Realist”
Ethical Capital's Sloane Ortel marshals the data to counter the arguments against aggressively fighting climate change laid out in Larry Siegel's recent article.
JPMorgan, Aviva Shrug Off EM Rout on Bet for Soft US Landing
Investors including JPMorgan Asset Management, M&G Investments and Aviva Investors say they seized on the retreat in riskier assets at the start of the month to bolster their holdings of emerging-market bonds.
Global Bond Traders Are Seeking Protection From Inflation Threat
Just as bond traders grow more assured that inflation is finally under control, a camp of investors is quietly building up protection against the risk of a future spike in prices.
Schwab Market Perspective: Spinning
Markets were recently rattled by concerns the U.S. may slip into recession, but it's not clear that those fears are justified.
Texas Instruments Wins $4.6 Billion in Chips Act Grants, Loans
Texas Instruments Inc. is set to receive $1.6 billion in Chips Act grants and $3 billion in loans, the Biden administration announced Friday, marking the latest major award from a program designed to boost American semiconductor manufacturing.
Tech Rally Propels Emerging Stocks to Best Week in Four Months
Emerging-market stocks rallied on Friday, driven by tech companies in Asia, following US data which boosted investor optimism that the world’s biggest economy will avoid a recession.
Oil’s AI Hedge Works, Just Don’t Mention a Recession
Earlier this year, around the time Nvidia Corp.’s market cap eclipsed that of the entire S&P 500 energy sector, I wrote about whether oil and gas stocks might offer a decent hedge when AI-fever breaks. The past several weeks have offered a test.
Latin America's Long-Term Potential
Portfolio Manager Jeremy Sutch, CFA, and Chief Investment Officer Sean Taylor assess the issues besetting the region’s key markets—from domestic challenges to geopolitical headwinds—as well as their structural strengths, and whether prospects may brighten with the onset of a U.S. rate-cutting cycle.
BlackRock Says Blended Finance at ‘Turning Point’ as Deals Grow
BlackRock Inc. says the market for blended finance has now reached a “turning point,” as it targets growth in deals that combine private and public funding.
What Panic? Stocks Are Quickly on Way Back to Record Highs
With US equities on the rebound, this summer’s selloff is looking more like a pause in the bull market than the beginning of its end.
Charts for the Beach 2024
Because there is unprecedented use of the word “unprecedented,” we thought it appropriate to expand our annual Charts for the Beach from 5 charts to 10 charts and tables this year. So, probably best to stay under the beach umbrella as you read our unprecedented extended edition.
The Treasury Rally Ticket Needs to Be Validated
The recent U.S. Treasury yield rally is compared to a similar rally in Q4 2023, driven by expectations of a shift in Federal Reserve policy.
The August 2024 Dashboard: Our Three Layers of Risk Management
We manage risk within our strategic, long-term allocations based on diversification across equity, fixed income, and alternative assets.
The Market May Be Too Aggressive on Fed Rate Cuts
The inflation numbers this week — both for producer and consumer prices — have served to reassure markets in two distinct ways: confirming continued progress in the battle against high price increases and supporting the ongoing shift in the Federal Reserve’s focus from its inflation mandate to its employment mandate.
Tea-Conomics
The tea trade has lessons for today’s global commerce.
Bond Market: Shaken, Not Stirred
Bond prices whipsawed over the past month as volatility spiked across markets. What's next for fixed income markets?
Cutting Rates Without the Fed
The financial markets appear to be rather confident the Fed will finally begin its rate cutting process at the September Federal Open Market Committee meeting, at a minimum. The debate has now shifted as to what this easing cycle will ultimately look like.
De-Risking? Get Your Transition Management Plan in Place First
For plan sponsors, the trend toward de-risking often leads to a simplification of the equity manager lineup in the return-seeking portion of the portfolio.
Franklin Templeton’s David Mann on Stocks, Bonds, & Crypto
Franklin Templeton’s David Mann highlights the firm’s diverse ETF lineup and offers perspective on stocks, bonds, and crypto. VettaFi’s Zeno Mercer goes in-depth on the “Magnificent Seven” stocks.
MSCI Trims China’s Index Presence by Removing DozenAbhishek Vishnoi and Sangmi Chas of Stocks
MSCI Inc. continues to cull China stocks from its indexes, setting the stage for a further drop in the nation’s share of a key emerging-market benchmark.
Carry Trade Unwind: Is It Really Over?
Having been warned about the risk, investors now ask if the yen carry trade unwind is complete. Here's how far it might still go.
How Big Is the Yen Carry Trade, Really?
When two popular trades, such as buying US big tech stocks and selling the Japanese yen, are unraveling at the same time, investors naturally think they are somehow related.
Janus Henderson Announces Acquisition of Global Private Credit Manager Victory Park Capital
The acquisition further expands Janus Henderson’s private credit capabilities and complements Janus Henderson’s existing highly successful securitized credit franchise and expertise in public asset-backed securitized markets, and further expands our capabilities into the private markets.
Emerging Stocks, Currencies Diverge as Markets Price Fed Easing
The benchmark indexes for emerging-market equities and currencies, respectively, moved in opposite directions Monday, deepening a trend that emerged last week, when their short-term correlation was interrupted for the first time in 21 years.
25 Years and Counting
I can't let this month pass without noting a significant anniversary: This is the 25th year I’ve been writing Thoughts from the Frontline. You can visit the archive and see every issue since January 2001.
Understanding the Yen Carry Trade Impact on World Markets
On Monday, global equities and digital assets underwent a dramatic selloff as the unwinding of the Japanese yen carry trade rattled markets. The S&P Global Broad Market Index (BMI), which measures the performance of more than 14,000 stocks around the world, retreated 3.3%, its worst trading day in over two years.
Emerging-Market Currencies Gain, Set for Best Week of 2024
Emerging-market currencies are set to clock their biggest weekly gains of 2024, led by a rise in Brazil’s real on expectations its central bank could raise interest rates later this year.
China's Nuanced Outlook May Favor Corporate Bonds
China’s two-speed economy and the internationalization of the renminbi suggest long-term opportunities may be found amid near-term challenges.
With US Chips Act Money Mostly Divvied Up, the Real Test Begins
The Biden administration is nearly finished divvying up $39 billion in grants under the Chips and Science Act, the landmark bipartisan legislation aimed at revitalizing the domestic semiconductor industry. The bigger test still lies ahead.
What Declining Interest Rates Could Mean for You
When the Federal Reserve lowers its key short-term interest rate, the impact isn't uniform across the financial universe.
The S&P Always Looks Good Next to European Stocks
When markets gyrated at the turn of the month, US and Japanese stocks had the cushion of an earlier surge to fall back on. In Europe, the rout hit share prices that had been weakening since May. An earnings season dominated by pessimism from many of the region’s bosses has vindicated investors’ caution.
Summer of Dispersion
In this PIMCO Perspectives, we explore the dispersion playing out across monetary policy and financial markets.
From Dreaming to Living: What You Need to Know About Retiring Abroad
As the number of Americans retiring in other countries continues to grow, our Bill Cass shares five considerations for individuals planning to retire abroad.
A Closer Look at Full-time and Part-time Employment
Let's take a close look at July's employment report numbers on Full and Part-Time Employment. The latest data shows that 82.8% of total employed workers are full-time (35+ hours) and 17.2% of total employed workers are part-time (<35 hours).
Our Thoughts on the Global Selloff
Portfolio Managers Shuntaro Takeuchi, Michael Oh, CFA, and Andrew Mattock, CFA, assess the reasons for the heightened volatility and sharp moves in global markets.
Don’t Count Out Copper Yet
Copper prices have pulled back since peaking in May at $5.12, but the long-term bull case for copper remains strong.
A Second-Half Global Bond Market Outlook
For bond investors looking to the near- and longer-term, Matt Eagan stepped through considerations and opportunities in the global market.
Stubborn
Andy Rothman provides four reasons why he’s stubbornly convinced that Xi Jinping will eventually overcome his stubbornness and make the changes necessary to put China back on track to reach its potential growth rate.