Economy

Mid-Quarter Update: Spotlight on US Corporate Profits December 04, 2019

Posted by Steven Vannelli, CFA in Economy

US corporate profits are down from the 2014 peak. In this mid-quarter special report, we dive deep into corporate profits, taxes, profit margins and the increasing government debt levels that have propelled stock and bond prices higher, in our view, leading to rising equity and government…

Consequences of an Inflection in the Chinese Yuan November 21, 2019

Posted by Steven Vannelli, CFA in Economy, Markets, Portfolio Management

As hopes for a trade deal fade, similar to May and August, the CNY is devaluing against the USD again. In our work there are a handful of fairly mechanical relationships that should follow if the CNY continues to devalue. First, in the US, stocks…

Economic Growth Has Not Hit Bottom Yet November 21, 2019

Posted by Bryce Coward, CFA in Economy, Markets

Even as left tail risks to US and global economic growth seem to have been mitigated over recent weeks (more accommodate financial conditions, rising of some PMI data, worst case trade outcome seemingly a lower probability now), incoming data continue to suggest the nadir of…

4Q Growth Expectations Crashing: A Tailwind for Bonds November 15, 2019

Posted by Steven Vannelli, CFA in Economy

Today’s US economic data releases have sent growth expectations plunging for fourth quarter GDP. First, retail sales ex-autos and gasoline rose only .1% in October, well below the .3% expectation. Second, industrial production fell twice as much as expected in October, dropping -.8% compared to…

Not So Fast on the Cyclical Chinese Recovery November 14, 2019

Posted by Bryce Coward, CFA in Economy, Markets

This morning investors were unfortunately treated to a rather disappointing package of October Chinese economic data. Three of the most important hard data series were reported: fixed asset investment, industrial production and retail sales. Each was lower than the previous month and missed expectations, suggesting…

Not QE? October 18, 2019

Posted by Bryce Coward, CFA in Economy, Markets

Last week the Federal Reserve announced the re-commencement of large scale asset purchases in order to alleviate funding pressures that had been bubbling for several months. Much effort has been made by Fed Chairman Powell and other missionaries to explain why this round of asset…

Hard Data Gets Put to the Test October 03, 2019

Posted by Bryce Coward, CFA in Economy

United States and indeed global economic data have been weak – at least that is the unabated message from the PMI data that were released this week on both manufacturing and services. At this stage everyone knows the survey data, or “soft” data, are weak….

International Value: Optionality on Reflation September 27, 2019

Posted by Bryce Coward, CFA in Economy, Markets, Portfolio Management

At some point the global economy will get a dose of reflation. Whether that comes from the current central bank easing cycle, fiscal policy response, coordinated fiscal-monetary action, or a détente in the US-Sino trade dispute is not yet known. However, when it happens a…

Confirmation of the Deterioration in Consumer Confidence September 25, 2019

Posted by Steven Vannelli, CFA in Economy

In our mid-quarter update, we highlighted the plunge in the University of Michigan’s consumer confidence indicator, suggesting that “good feelings” among consumers were starting to fade. Often surveys offer a leading glimpse into economic activity. A more confident consumer is more likely to make those…

Is the Bond Rally Over or is This a Correction in a Downtrend in Treasury Yields? September 13, 2019

Posted by Bryce Coward, CFA in Economy, Markets, Portfolio Management

With interest rates on the 10-year US treasury bond having moved nearly 50bps higher over the last 10 days it is certainly worth asking the question if we’ve seen the low in interest rates or whether this is more of a correction in an ongoing…

A Deep Dive into Consumer Confidence September 04, 2019

Posted by Steven Vannelli, CFA in Economy

In this mid-quarter special report, we do a deep dive into the University of Michigan survey and discern what it may mean for the vigor of the consumer moving forward, prospects for a recession and consequences for asset allocation. Download the slides here: A Deep…

With Friends Like These it’s No Wonder Bonds Continue to Rally August 15, 2019

Posted by Bryce Coward, CFA in Economy, Markets, Portfolio Management

How in the heck can the 30 year Treasury bond yield be trading at just 1.97%, an all-time low, when just 10 months ago it was up at 3.46% and “breaking out” to the upside? We were supposed to have a bond-pocalypse, after all, with…

German Banks: Cutting Off Nose to Spite Face August 07, 2019

Posted by Steven Vannelli, CFA in Economy

Today Germany’s second largest bank, Commerzbank, reported a fourth straight quarter of falling revenue and projected lower profit for the year, suggesting clients have been impacted by trade tensions. Chief Executive Officer Martin Zielke describes the situation: “Despite all the successes we have made, challenges…

3 Reasons Why More Tariffs are Bullish for Government Bonds August 01, 2019

Posted by Bryce Coward, CFA in Economy, Markets, Portfolio Management

Today’s news of 10% tariffs on a the remaining $300bn of imports from China took markets by storm with US stocks moving from a 1% gain to almost a 1% loss on the day. Meanwhile, gold closed at a 6-year high of $1445. But the…

The Debt Ceiling Impasse Has Meant Mini QE Since May – Will Mean QT When Resolved July 18, 2019

Posted by Bryce Coward, CFA in Economy, Markets

When the US government gets near its statutory debt limit, congress must lift the debt limit in order for the Treasury to continue to issue debt to pay for government expenses. Simple enough. However, even after the debt limit is reached, the Treasury can use…

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Economy

Mid-Quarter Update: Spotlight on US Corporate Profits December 04, 2019

Consequences of an Inflection in the Chinese Yuan November 21, 2019

Economic Growth Has Not Hit Bottom Yet November 21, 2019

4Q Growth Expectations Crashing: A Tailwind for Bonds November 15, 2019

Not So Fast on the Cyclical Chinese Recovery November 14, 2019

Not QE? October 18, 2019

Hard Data Gets Put to the Test October 03, 2019

International Value: Optionality on Reflation September 27, 2019

Confirmation of the Deterioration in Consumer Confidence September 25, 2019

Is the Bond Rally Over or is This a Correction in a Downtrend in Treasury Yields? September 13, 2019

A Deep Dive into Consumer Confidence September 04, 2019

With Friends Like These it’s No Wonder Bonds Continue to Rally August 15, 2019

German Banks: Cutting Off Nose to Spite Face August 07, 2019

3 Reasons Why More Tariffs are Bullish for Government Bonds August 01, 2019

The Debt Ceiling Impasse Has Meant Mini QE Since May – Will Mean QT When Resolved July 18, 2019

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