Here's What Investors Should Know About Forward Guidance
Last week, at Janet Yellen’s first meeting as Fed Chair, the FOMC revised its forward guidance for the funds rate, dropping its reference to 6.5% unemployment and instead stressing the committee’s...
View ArticleDisability Has Had A Huge Impact On The Labor Force Participation Rate
In searching for explanations for the steep decline in the U.S. labor force participation rate analysts have rightly stressed the importance of retiring baby boomers.Increase in disability share...
View ArticleForecasting New Drug Sales Is More Art Than Science
Predicting sales of new medicines is highly inaccurate and subject to error on both the low- and high-end. A recent McKinsey study found that this inaccuracy holds regardless of whether the drug is...
View ArticleThe Fed's Neutral Funds Rate Is Probably A Lot Higher Than Bond Traders Think
The idea of low neutral funds rate has surprising currency, but could erode with more evidence of solid growth.We believe incoming information suggests the neutral funds rate would be moving higher,...
View ArticleThere's Less Slack In The US Labor Market Than You Think
Today’s low unemployment rate indicates modest slack in labor market, which implies earlier Fed rate hikes and/or more inflation risk.The decline in labor force participation in recent years now looks...
View ArticleWe're Struggling To Figure Out How Underemployment Factors Into Monetary Policy
Fed officials have highlighted underemployment but offered little guidance about how this issue affects the policy outlook. Traditional tools like the Taylor Rule need to be recalibrated if the central...
View ArticleThere Were 3 Important Elements To Janet Yellen's Talk At Jackson Hole
I must have heard it on the radio recently, because Janet Yellen’s speech at this year’s Jackson Hole conference brought to mind lyrics from one of my favorite Beatles songs:I’m looking through you,...
View ArticleThe Current US Economic Recovery Still Has A Lot Of Life In It
The U.S. economy passed a milestone of sorts in August, in that the current business cycle has now surpassed the last one in length. The prior business cycle started in 2001 and continued until the...
View ArticleThe Common Ingredient For Profit Margin Pressure Is Disruption
A mainstay of stock market appreciation over the last several years has been the ability of corporations to manage costs and maintain pricing discipline to deliver high profit margins, even amid tepid...
View ArticleMillennials Are Intensely Conservative When It Comes To Investing — And...
Millennials, the generation in today’s workforce born after 1980, experienced the tech bubble and burst of the 1990s, and entered early adulthood in the wake of the Great Recession. Plagued by massive...
View ArticleHere's What Investors Should Expect From The US Mid-Term Elections
While consensus suggests a slightly better than average chance of a GOP takeover, battle for control of the U.S. Senate is going to be a dramatically close call.When we examine how a GOP win might...
View ArticleQE Worked, But Not As Advertised
While QE proved very effective in reinforcing the Fed’s communication about short-term interest rates, there could be simpler ways to achieve the same outcome.The U.S. experience with QE suggests it...
View ArticleInvestors Make Money By Being In The Market, Not By Timing The Market
30 years equals about 11,000 days. One might assume that eliminating a few of those days would have little impact on investment performance during that time. Yet, if the ten best days of the S&P...
View ArticleLet's Take A Closer Look At These Energy Junk Bonds Everyone's Freaking Out...
Size of the Energy SectorBecause the energy sector is a large component of the U.S. high yield market relative to some other asset classes, the market has received increased scrutiny due to recent...
View ArticleThe Bond Market Doesn't Look Ready For What'll Likely Happen On December 17
*Last week’s news suggests that the center of the FOMC continues to see interest rate hikes in the middle of next year as most appropriate.*December 17 looks like a natural time to begin signaling the...
View ArticleAll Of The Key Signs Say Stocks Will Beat Bonds Again In 2015
*We are as convinced as ever that equities have a significant advantage over other asset classes based on valuation.*Managing the risk of simultaneous drawdown across asset classes requires a process...
View ArticleNow Might Be A Great Time To Book Any Profits You Made In The Bond Market
*The U.S. Treasury market as a whole has returned +1% annualized since the end of 2012 (and +0.5% annualized since the low in 10-year yields in July 2012).*Because of imminent Fed rate hikes and...
View ArticleInventories are a great clue to the health of the US economy
In the first half of this year economic growth averaged about 2.25%, close to its average this cycle, but this masks some wild quarterly swings and sizable subsequent revisions.Inventory changes are...
View ArticleThe failed hedge funds everyone's freaked out about do not look anything like...
The circumstances of two large leveraged debt funds do not mean that investors with exposure to traditional high-yield funds are subject to the same outcomes.While we believe risk premiums should be...
View ArticleHere's What Investors Should Know About Forward Guidance
Last week, at Janet Yellen’s first meeting as Fed Chair, the FOMC revised its forward guidance for the funds rate, dropping its reference to 6.5% unemployment and instead stressing the committee’s...
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