The recent outlook for the U.S. economy is not particularly grim, but expectations for a sharp uptick in growth due to the policies of the Trump administration are waning following last week’s unsuccessful attempts to repeal Obamacare. An important question looms: Can the White House and Congressional Republicans pivot successfully to tax reform? The consequences are significant; another legislative failure could severely undermine the idea that the so-called “Trump bump” in economic performance remains credible.
Continue reading
Benchmarks play a crucial role in investment analysis, but selecting the right one poses a significant challenge. Choosing an irrelevant benchmark can be more detrimental than having no benchmark at all. The positive aspect is that the risk of error can be greatly minimized by utilizing a selection of random benchmarks derived from a portfolio’s holdings.
Continue reading
If you’re searching for a promising forecast for the government’s upcoming first-quarter GDP report, the New York Fed’s model offers a glimmer of hope. Currently, the bank’s projection indicates that U.S. output is expected to grow by 3.0% in Q1 (as of March 24), a significant increase from the 1.9% seen in Q4. However, such optimism is becoming increasingly rare. Estimates from other institutions suggest that Q1 growth will likely mirror the sluggish rate observed during the final quarter of the previous year.
Continue reading
Foreign bond markets experienced a favorable week, largely due to the recent decline in the U.S. dollar. The standout performer was inflation-linked government bonds outside the U.S., which recorded the highest gains among the major asset classes, based on a review of various exchange-traded products.
Continue reading
Edited by Edward L. Glaeser, et al.
Summary via publisher (Chicago University Press)
The last thirty years have witnessed significant transformations and crises within global financial markets—not solely in politically unstable regions but within the developed world, including the Great Recession in the U.S. and banking crises in Japan and the Eurozone. As we endeavor to understand what triggered these crises and how to diminish risks to prevent future occurrences, the fields of finance and economics have also evolved significantly, as scholars and researchers have advanced their perspectives to better address recent challenges.
Continue reading
How has your factor strategy been performing lately? This question resonates with an increasing number of investors as “smart beta” products gain traction in portfolio design. Even if you’re not fully on board with factor investing, it’s beneficial to periodically review these risk premia to understand the broader trends influencing stock performance. Let’s take a look at eight ETFs which represent the usual key players in the U.S. equity factor market.
Continue reading
In theory, constructing portfolios based on risk factors makes a compelling argument. However, in practice, the effectiveness of this approach remains uncertain.
Continue reading
Why are investors returning to safe-haven Treasuries? It seems that many are beginning to recognize an increase in political risk in the U.S. Alternatively, the softer estimates for first-quarter GDP growth may be influencing sentiment. Coupled with a heavily valued stock market, these factors contribute to the renewed interest in Treasuries, making them a favorable option once again.
Continue reading
The risk of a recession appears minimal for the U.S.; however, some signs indicate that the slow growth observed in the final quarter of last year may persist into Q1.
Continue reading
Can you say whipsaw?
Last week saw a rise in all major asset classes according to a range of exchange-traded products that reflect the vital components of the global markets. This increase followed a previous week where significant declines were observed across the board. While volatility may appear subdued over extended periods for many markets, the past two weeks have certainly been a rollercoaster ride.
Continue reading
