It’s been two years since our initial research on populism, and populist-inspired policies continue to advance today on multiple fronts. As we see it, investors should expect more of the same ahead—influencing everything from global economic growth and inflation to policies directed specifically at the corporate sector.
Investors are likely to remember 2018 as the end of the era of easy money, low volatility and steady margin expansion. Investing will be more challenging in 2019—and diversification will be more important than ever.
As volatility returned to global markets in 2018, return patterns for equity styles were very unstable. With more signs of turbulence ahead, investors should prepare to reduce the impact of short-term factor swings on portfolio performance.
With US stocks facing multiple risks, it’s easy to lose sight of the positive trends that could help the market recover. In 2019, investors should search for select stocks with the right attributes to produce positive surprises in a potentially tricky market environment.
The past year was a rough ride for bond investors. Will 2019 deliver more of the same?
Yes, investor concerns are swirling around China’s economy and the gradual opening of its domestic equity market, but the long-term picture presents significant opportunities for active investors.
It’s taken for granted in financial circles that lower oil prices are a boon for stocks, as they fuel an economy-boosting cycle in which money saved at the pump ultimately flows to the market. But oil prices that are too low could be too much of a good thing.
There’s no sugarcoating it: 2018 was hard on emerging markets. But as Nietzsche (and Kelly Clarkson) said, what doesn’t kill you can make you stronger. And as 2019 begins, we see many pockets of strength—and opportunity.
As expected, the Fed hiked interest rates yesterday, but we now think there will be fewer hikes in 2019 than we previously called for. Not because the US economy is in trouble, but because the Fed is changing its approach to setting policy.
The median price of a US single-family home has risen just over 40% since the last housing-market crash. While newspaper headlines may put readers on edge, our analysis indicates a gradual slowdown, not a bursting bubble—in most regions.
The media and some market observers are bracing for a blizzard of BBB-rated bonds to get downgraded to junk as the credit cycle turns. We expect it will be closer to a flurry.
Bond investing is going digital. Find out how fixed-income managers who are integrating technology into their processes will be able to move from great ideas to executed trades faster and with better results than those who stick with the analog status quo.
Recent market gyrations have many people asking: Is it time to pivot from a growth equities allocation to a value equities allocation? But that’s the wrong question. Instead of asking which style is likely to outperform, investors should be asking why they’re performing differently.
The balanced approach to income generation for fixed income has certainly been under challenge. If we look at five-year yields—early September, 180 basis points; today they’re at about 2.8%. So, 100 basis points higher means you’re going to put price pressure on a balanced approach to generating income.
Recent volatility in equity markets has certainly increased anxieties for many investors. But we believe in being prepared and ready to exploit volatility—to position a portfolio for what will drive excess performance over the next three to five years.
As we get ready to move into 2019, the macro backdrop points to a less favorable mix of growth and inflation at a time when central bank balance sheets are starting to shrink. Even if growth is simply returning to trend, the year ahead is likely to be more challenging—with populism and China looming as key downside risks.
A rapid rise in US interest rates has put financial markets on the defensive lately. Will the Federal Reserve respond by slowing the pace of its tightening campaign? Don’t bet on it.
We think populism is here to stay and that it will be a persistent part of the investment backdrop for many years to come.
What drove down US stocks this week? The answer may be the US bond market and what the shape of the yield curve is—or isn’t—telling us about the state of the economy.
First, the bad news: high-income investors should saddle up for another bumpy ride in 2019. Now the good: with challenges come opportunities—and we see plenty on the horizon for investors who take the long view.
When it comes to creating alpha, fixed-income managers that stay ahead of rapidly evolving technology will have an advantage over those that remain stuck in the analog world. But how do you assess how well your manager is navigating the changing technological landscape?
Rates are low globally. But yield isn’t the only component to consider when investing. Active US-based investors can take advantage of differences between the US dollar and other currencies to pick up a decided edge by investing in international bond markets.
US corporate debt has surged over the past decade. As rates begin to rise from historic lows, focusing on quality companies with healthy balance sheets can help equity investors avoid danger zones.
Whenever the Chinese economy slows and its stocks take a serious hit, investors have come to expect the government to unleash large-scale fiscal and monetary stimulus. Another heaping spoonful of sugar may do more harm than good this time around, however. It’s time for the ailing market to take some medicine.
With cabinet ministers resigning by the hour, it’s tempting to think that British Prime Minister Theresa May’s Brexit deal with the European Union (EU) is dead on arrival, and that a hard Brexit is now the most likely way forward. But some form of soft Brexit is still the most likely scenario, in our view.
When it comes to US high-yield bank loans, we don’t mince words: we think the risk rarely justifies the potential reward.
Recent volatility reminds us that new risks are testing standard defensive equity strategies. Portfolios that offer downside protection need to go beyond standard risk models and position themselves for changing challenges ranging from trade wars to European political instability.
A dramatic fall in oil prices, followed by a sell-off in high-yield energy bonds—is it time to worry about oil and gas companies again? Quite the contrary. The North American issuers that make up most of the world’s high-yield energy market are in a better position today than they have been in years.
After October’s sharp market declines, many investors might think US stocks look relatively cheap again. But equity valuations require closer scrutiny, and earnings metrics might be distorting the fundamental performance of businesses.
Democrats took the House of Representative. Republicans held the Senate. What should investors expect from the US midterm election outcome? In the way of policy, not much. But the new political landscape may be good for markets.
Value stocks have underperformed for years. But things may be changing. Cheaper stocks have shown signs of awakening recently, and several market forces could tip the scales in favor of value after a prolonged growth surge.
What might the US midterm election results mean for fiscal policy and financial markets? Probably not much if Democrats and Republicans end up splitting control of Congress. But a sweep by either party could lead to very different outcomes.
The intensifying global equity sell-off this week has rattled many investors. More turbulence can be expected in the short term, but the recent volatility isn’t particularly extreme in historical perspective, and long-term market fundamentals still look solid.
Retirement reality for many Americans may not be as grim as forecasters predict. Could it be better? Yes. But many retirees in our new survey see a glass that’s more than half full.
Crowded trades have become all too common in fixed-income markets. But running with the crowd is risky, particularly when it comes to illiquid assets like bank loans that may not be easy to sell during a market downturn.
The digital revolution took its time getting to fixed income, but today it’s transforming the investing landscape. Already, major advances in technology are helping early adopters gain unique insights and act faster in markets where speed and alpha are increasingly and inextricably linked.
US Treasury yields have risen in response to strong economic growth. In the first week of October, the yield on the 10-year bond surged to its highest level in more than seven years. The question is: Do yields have more room to run?
Emerging-market (EM) stocks fell in the third quarter and continued to diverge sharply from developed-market equities. While it may be too soon to buy into the weakness, investors should watch for signs that could herald a quick rebound.
With the midterm elections looming and an executive order that underscores President Trump’s interest in how Americans save for retirement, it’s increasingly possible that Congress could approve substantive retirement reform in the coming weeks.
The revised NAFTA deal relieves uncertainty for Canada and avoids a possible Mexican barrier to ratification. But what does it really mean for the three countries involved—or for trade tension with China?
Will Democrats retake the House of Representatives in the US midterm elections this fall? Will it matter for your investment portfolio if they do? Probably not so much, although a Democratic sweep of both houses could be more disruptive.
When it comes to the official US short-term interest rate, the Federal Reserve now appears to be on autopilot, with three more quarter-percentage-point increases likely by mid-2019. But after that, things should get more complicated.
Harnessing the potential of Big Data will be a major factor in the future of healthcare. And some of the greatest innovations in the sector’s future may not come from companies in healthcare, but from technology companies.
Investing in companies that have favorable ratings on environmental, social and governance (ESG) issues has become increasingly popular. But investors might do better targeting companies with poor ESG ratings and a clear commitment to mend their ways.
At long last, fixed-income investing is entering the digital age—and investors should pay close attention to what their asset managers are doing to keep up. From better pricing to better solution design, the digital revolution that’s transforming the fixed-income management landscape can lead to a host of benefits.
Equity investors in the emerging markets (EM) have suffered significantly as a result of the escalation of the Turkish crisis. But a closer look at the EM index reveals that not all emerging markets are in crisis mode.
President Trump’s most recent executive order creates the potential for significant changes in how private sector retirement plans operate.
From the US-China trade war to the ongoing Brexit negotiations, global investors are grappling with a wide array of unpredictable events. Yet with the right approach, equity portfolios can confidently cope with the next bout of market uncertainty.
Investors in emerging-market (EM) stocks have taken a big hit as Turkey’s crisis has escalated. But a closer look inside the EM benchmark suggests that the entire developing world isn’t broken.
