Has the Market Become Too Complacent Too Quickly?
The market has not become too complacent and continues to register the many potential risks on the horizon.
Investment Planning
What’s the Outlook for US Equities Given the Earnings Recession?
Risks to US equities remain firmly skewed to the downside, but as long as the Fed remains on hold and the twin earnings headwinds of weak oil/strong dollar continue to fade, US equities could continue to muddle along near recent levels.
Investment Publications Highlights: April 2016
April’s publication summarizes three articles focused on oil markets. The first reviews different approaches to developing oil price expectations, arguing that each has faults; the second suggests oil prices may have hit a bottom in February; and the third highlights “good”, “bad,” and “ugly” aspects affecting oil prices today.
VantagePoint: Second Quarter 2016
In this edition of VantagePoint, we discuss the potential implications of negative interest rate policy (NIRP). In addition, we consider the potential for sustained outperformance in value stocks, which experienced a sharp revival in the second half of the first quarter, noting that we would continue to own value in portfolios, but would not broadly overweight just yet. Energy-related assets and emerging markets equities seem a better way to obtain value-based exposures today. At the same time, we are keeping a close eye on credit markets in search of value opportunities. Finally, we review the outlook for Treasury Inflation-Protected Securities (TIPS), which we believe offer modest opportunity to outperform relative to nominal Treasuries should headline CPI follow the increase experienced in some of the stickier prices in the index.
Will Value Stocks Continue to Outperform?
Prospects are tenuous for sustained outperformance of value stocks on the whole. We recommend owning value stocks, but would not broadly overweight just yet.
Pondering the Consequences of “Brexit”
As the cacophony surrounding the 23 June “Brexit” referendum grows, just how much the United Kingdom stands to lose or gain from leaving remains unclear, and investors with substantial exposures to British assets would do well to pay attention to sentiment.
Investment Publications Highlights: March 2016
March’s publication summarizes three articles discussing the implications of the UK’s June 23 referendum vote on EU membership. The first argues that the UK economy stands to lose from an exit vote even under optimistic assumptions, the second highlights how the uncertainty connected to the vote is already taking a toll on the UK economy, and the third suggests investors should trim exposure to peripheral EU countries.
Are Eurozone Equities Still Poised to Outperform in 2016?
Yes, but the amount of outperformance could be limited, and growing macro-driven volatility will likely cap the absolute level of returns.
Investment Publications Highlights: February 2016
February’s publication summarizes two articles discussing the economy and its impact on markets. The first argues that while recessions are likely to occur more frequently in the future, the probability of a near-term recession in developed markets is low, and the second suggests valuations, not economic growth rates, drive equity market returns.
Is the Strong-Dollar Cycle Over?
The US dollar may remain under pressure in the near term, but we doubt the strong-dollar cycle is over.