George Hosfield, CFA, discusses Ferguson Wellman's quarterly strategy titled, "Inflation's Flame Flickers," which addresses the narrow market leadership, the impact of higher interest rates on inflation and how assets are priced at this stage of the economic cycle.
George Hosfield, CFA, discusses the firm's quarterly strategy titled "Stalemate," which highlights the Fed's ongoing battle to tame inflation along with our views on the health of the banking industry and capital market expectations for the balance of the year.
Director and Chief Investment Officer George Hosfield, CFA, discusses the Fed raising interest rates, peaking inflation and our view on equities and volatility across all asset classes in our Investment Strategy titled, “Balancing Act.”
Federal Reserve Chair Jerome Powell announced this week that the central bank will once again be purchasing U.S. Treasury securities, reversing the recent trend of allowing its balance sheet to shrink. Immediately, many market participants experienced déjà vu, recalling the first time this monetary policy tool was implemented in 2008.
The U.S. economy has been expanding for over 10 years, the longest economic expansion in U.S. history. When looking back, the bull run in stocks and the economic expansion may seem “easy” but there have been multiple periods of angst as we flirted with slow growth.
With the impeachment inquiry being announced this week, clients have been asking, “What does this mean for my investments?” The short answer: markets trade on economic fundamentals, not political headlines.
This week, the Federal Reserve made big news when it reduced the federal funds rate by 0.25 percent, its second cut this year. While any Fed action always dominates the headlines, the interest rate reduction was expected and fully priced into the market. Having raised federal funds a quarter point just last December, it has been a rather dramatic change of monetary policy in which the Fed has now cut rates twice this year.
The global search for yield has driven tremendous fund flows into all corners of the fixed income market. While our primary focus is on investment grade bonds, this trend has also driven yields lower on non-investment grade bonds which are sometimes referred to as “high-yield” or “junk” bonds.
Earlier in this expansion it was all about jobs. Each month, we would wring our collective hands over how many jobs were created, what kind of jobs were created and whether they were even good jobs. Today, while it is still a market moving number, the monthly payroll report doesn’t seem to carry as much mindshare with Wall Street.
There were a number of moving pictures this past week that we could cover. One topic that we have not covered in our communication that caught our attention this week is … opioids.
For the week, the S&P 500 returned -1.41 percent and the 10-year U.S. Treasury bond yield declined to 1.51 percent. On Friday, the S&P 500 declined by more than 2.5 percent on news that China had escalated the trade war which was coupled with a similar response from the White House.
On Wednesday at midday, the global financial media held their collective breath as the benchmark U.S. Treasury Yield Spread (2-year/10-year yield) inverted. Then, as they exhaled, minor hysteria ensued.
We were in consensus regarding our 2019 Investment Outlook theme, “The Fasten Seatbelt Sign Is On,” and this week’s market volatility reinforced that we landed on the right message. The Dow was down by 600 on Tuesday and then rallied by nearly 1,000 points within 24 hours.
After rising in lockstep for most of this year-to-date, stocks and bonds moved in dramatically different directions after a week chocked full of market moving developments.
This morning the Bureau of Economic Analysis released the second quarter GDP estimate and, while growth was down 3.1 percent from the first quarter, it was still a healthy 2.1 percent with consumer and government spending that was strong.
A couple of months ago, Netflix announced it would be losing the number one most-watched show on the platform, The Office, in 2021 to NBC Universal (owned by Comcast) in order to promote their own streaming service set to launch next year.
Federal Reserve Chair Jerome Powell and other members of the rate-setting Federal Open Market Committee (FOMC) have signaled they will be cutting the benchmark federal funds rate at the end of this month. This will be their first interest rate cut since December 2008.
As the second quarter came roaring to a close, stocks marched consistently higher while bond yields moved drastically lower. Those trends continued the first week of July, but it is doubtful that they can continue in unison much longer. Either the economy stabilizes and rates stop falling, or the stock market will inevitably take a break from this rise higher.
The Roman poet Marcus Manilius, proposed author of Astronomica, the earliest work describing astrology, characterized the sign Libra as “the sign in which the seasons are balanced.” Last week, Facebook announced that Libra is now the moniker for its new blockchain-based payment system.
Veruca Salt was a character in the novel and film Charlie and the Chocolate Factory. Her character was the greediest, most spoiled child of all the children that received a “Golden Ticket” and had the opportunity to tour the Wonka Chocolate Factory
Investors anticipating Fed rate cuts in the months ahead have become inversely sensitized to economic news supporting continued economic expansion. Last week’s surprisingly tepid payroll report and today’s reassuring read on U.S. retail sales resulted in opposing stock price reactions.
After a huge run to start the year, equity markets declined throughout May as trade tensions re-escalated and fears of slowing economic growth came back into focus. This week, equity markets moved sharply higher with the S&P 500 closing within 2.5 percent of its all-time high.
As May draws to a close, equity investors were not treated well. Concerns over a slowing economy and heightening trade tensions with China weighed on investor sentiment. The S&P 500 fell over 6 percent for the month, which is the first negative month of May since 2012.
