There is no question that we haven’t even started to see the economic impact of the coronavirus, since all of the data that we get is in arrears. For example, last week we got two important pieces of data about unemployment that told different stories. The good news is that the unemployment rate in march was 4.4 percent, which is an increase from the previous month, but not bad. However,… Read More
Stocks rallied in response to the fiscal and monetary policy response from the government. On the monetary side, the Federal Reserve announced that they would provide ‘unlimited’ quantitative easing (QE), and announced new facilities to support credit markets. The Fed had recently committed to buying $500 billion in Treasury bonds and $200 billion in mortgage-backed securities, and said that it would continue in the amounts needed to support smooth market… Read More
As I noted here last week, despite the market turmoil, it is important to remember that we planned for this. We have prolonged periods of market stress built into our financial plans. It’s also moments like this when we can see whether we’ve accurately assessed your risk tolerance. Every client has an Investment Policy Statement (IPS) that estimates how much an allocation could lose over certain periods. Importantly, we don’t include… Read More
The selloff was mostly driven by concerns about the spread of the coronavirus outside of China. Although the World Health Organization (WHO) said that it was not yet a pandemic, it increased its risk assessment from ‘high’ to ‘very high.’ Although the bond market received less media attention, the results were equally dramatic. For reference, the yield on the 10-year US Treasury on January 31st was 1.51 percent. On Friday,… Read More
As noted above, the big story last week was about the on-again-off-again trade deal between the US and China. It’s impossible to know where the deal goes from here, but the options are basically as follows: Talks Continue. The negotiation deadline could be extended as it was before with tariffs frozen and additional sanctions possible. The status quo should be stabilizing for markets for a while, despite the policy uncertainty…. Read More
You know the Berkshire Hathaway annual meeting is coming up when every financial media outlet has a story on the company or its leader, businessman and investor extraordinaire, Warren Buffett. My favorite from the weekend was an article in The Financial Times that draws extensively from an interview with Buffett. You can find the article here, but it may be behind a paywall. One of the points made in the… Read More
For the stock market, the first quarter of 2019 turned out to be the mirror image of the last quarter of 2018. Since hitting a low on Christmas Eve, there has been no looking back for the S&P 500 as it rebounded over 13% thus far in 2019, nearly erasing the bear market losses from the end of 2018. Clearly, this renewed optimism in the markets is a result of booming economic… Read More
The market rebounded firmly from yesterday’s slide, with several macro developments in focus. The market was positive on comments from Fed Chair Powell that the Fed will be ‘patient’ as the economy evolves, and that it is listening to the market’s concerns (Powell put anyone?). Participating in a joint interview with former Fed chairs Yellen and Bernanke at the American Economic Association conference in New York, Fed Chair Powell said… Read More
Let’s talk about the week that was, as the S&P 500 fell -7.03 percent, on top of the losses of 5.71 percent over the previous two weeks. All told, the loss for the S&P 500 is now -17.54 percent from the all-time high set on September 20th. Although I don’t follow the Dow Jones Industrial Average (DJIA) closely, I know that many of you do, in part because that’s what’s… Read More
Stocks are suffering for two basic reasons: slowing global growth and tightening central bank policy. While both of these rationales are true, they’re also very generic. Therefore, I thought it would be interesting to look at the big sectors driving the market performance and try to describe what’s happening in each one for a little more granularity. There are 11 sectors, and I won’t be discussing all of them, because… Read More
