So Far, So Good.
Solid U.S. economic growth, an improving global backdrop and high expectations for approaching policy rate cuts are sustaining the risk-on phase and spurring pockets of speculative fever. Hopes for a Goldilocks outcome will persist until an economic roadblock emerges. Global risk asset markets have soared this year, underscoring that liquidity conditions are still plentiful. The […]
Continued Hope for a Soft Landing
The U.S. economy avoided a much-anticipated recession in 2023 and made significant progress toward a soft landing. The key surprise was much stronger-than-expected economic growth as the labor market continued to rebalance and inflation continued to fall. In the U.S. and across many parts of the world, inflation declined, approaching but not reaching central bank […]
It’s Always Darkest Before the Light.
An oversold condition in the bond market and then a war in the Middle East two weekends ago have allowed bond yields to ease, providing yet another reprieve for fixed income investors. Many investors have stated that rising bond yields will do the work for the Fed and allow it to stand pat. The Fed […]
Soft or Hard Landing?
A soft inflation report last week halted the upward grind in government bond yields that were on the verge of setting new cycle highs. The global economic expansion, while slowing, certainly continues, probably making bond yield easing limited/temporary. Such market action is working at cross-purposes to central banks’ desire to slow growth and engineer some […]
One More Hike and Then a Pause?
Global financial markets have moved past the shock from the abrupt failure of Silicon Valley Bank and a few other banks as well as the forced takeover of Credit Suisse. There will be lingering fears of additional fallout, since many financial institutions are sitting on portfolio losses arising from the cyclical rise in bond yields, […]
What Will the Fed do Next?
The key economic question for 2023 is whether central banks will be able to bring down inflation to acceptable levels without a recession. Beyond the inflation dynamic, we remain concerned about potential political and economic shocks that could impact the U.S. and global economy via higher uncertainty and/or tighter financial conditions. The most significant reason […]
The Roller Coaster Ride Continues
Risk assets attempted to rebound last week from deeply oversold levels on hopes that central banks will soon tone down their hawkish rhetoric. Equities started the fourth quarter on an upbeat note after one of the worst Septembers on record due to oversold technical conditions, negative sentiment, and the hope (probably misplaced) that the Fed […]
The Long View
Given the extraordinary downside volatility affecting both equity and bond prices this past quarter, we felt an early commentary might be appreciated. We’ll cut to the chase – Our longer-term view for your portfolios is much more positive than what is currently being discussed in the financial press because we own some of the best-run-companies […]
War and Inflation = A Nasty Cocktail
Investor attention has pivoted over the past few weeks from the war in Ukraine back to the accelerated unwinding of global monetary accommodation. While the war could still pose further threats to economic growth, global bond markets have struggled as central bank policy rate expectations move higher. As the war settles into an apparent stalemate […]
2022 Outlook?
Monetary and fiscal policies certainly helped jump-start the current economic expansion—as is customary in the aftermath of every recession. But expansions also become self-sustaining, which is why policy juice eventually ends. In our view, this recovery has an abnormally large number of “sustainable forces” that are likely to keep the expansion healthy long after monetary […]
