Stock investors are beginning to brace for a rate rise. The combination of a good jobs report, bond market volatility, and the specter of rate increases contributes to stocks and bonds coming under pressure. What’s good for the economy isn’t necessarily good for stock and bond investors. This is what a good jobs report looks
This week, a few things especially caught our attention. International diversification is starting to reward investors again after a considerable period when a blend of U.S. Stocks and bonds outperformed relative to most other asset allocations. Inflation is starting to accelerate a bit, which contributed to a sell-off one day last week. We also noted
If we had told you 25 years ago--when you were earning 8.5% on a 30 year U.S. Treasury bond—that you would be earning 2.5% today on that same bond, you would have labeled the thought sheer madness. Yet, that is today’s reality. This week we review why low interest rates may be with us for
The new year has just begun, but analysts are already forecasting a period of higher market volatility in 2015. Ed Easterling of Crestmont Research graphs the present situation and shows what investors can expect in the coming months. At the same time, Research Affiliates advises investors to use the structural “building blocks” approach to better anticipate real returns. And,
Intriguing subject matter relating to retirement was the topic of several sessions at the AICPA Advanced Personal Financial Planning Conference held January 19-21, 2015. This week we share some of the conference’s golden nuggets and more. Retiring in a Low-Return Environment. Investment returns and retirement spending have been based on information drawn from the past.
Mixed economic signals and investor uncertainty are two interrelated topics we address this week. We explore bond and stock markets that are providing divergent messages. Then, we address a strategy—really a different perspective on what we already are doing—to address uncertainty in conditions like these. Fears over ‘lowflation’ serve up a bond market surprise. Yields
As St. Augustine spoke of the need for restraint, so also the Fed has spoken of its need to begin restraining its large scale asset purchase program. Though the initial bond-buying program may have helped stimulate demand in 2010 and 2011, keeping it going is now doing very little to stimulate economic growth and employment. In its announcement September 18 the Fed showed that it was as reluctant as the great Saint to implement restraint by tapering the size of its asset purchases; its message was “not yet”. Critics of the Fed believe the Fed’s unconventional program creates economic imbalances, stokes inflation, and provides markets a short-term, unsustainable “sugar high”. The unconventional program will continue, at least for a while. Markets were positively surprised by the announcement.
Stock and bond markets are recovering from the spasms felt May 22 to June 24. This week we take a close look at what just happened; review a provocative article on why bond yields may drop further; and re-state the case for investing in Emerging Markets, which have not rallied at the same pace as
Stocks are rebounding from a rough ride, but this is characteristic of many pullbacks since the bull market began in March 2009. According to the analysis of Liz Ann Sonders of Schwab, the stock market appears to be transitioning to a market driven more by traditional fundamentals, and less by Fed policy. On the bond side, Bill Gross of PIMCO believes the Fed is overly optimistic in its outlook for declining unemployment, and the recent spike in bond yields has been overdone
Unlike the fictional town of Lake Wobegon, it has not been a quiet week on Wall Street. Virtually every financial asset is down. This week we look at different perspectives on Federal Reserve communications occurring last Wednesday when Chairman Bernanke discussed tapering the pace of bond-buying.