U.S. employment figures are proving to be surprisingly robust. According to a report from the Labor Department, companies added 217,000 jobs in July. While this is a decrease from June’s gain of 259,000, it underscores the economy’s ability to generate employment at a healthy rate. The concerning dip in May, when private sector employment fell by 1,000, now seems like an anomaly in the broader trend.
Continue reading
The U.S. stock market has recently achieved new highs, closing just shy of a record on August 4. Notably, the S&P 500 has consistently closed at or near its peak for several weeks, oscillating within a narrow range. From a technical standpoint, this recent display of strength appears bullish. However, one might wonder about the market’s hesitance to move decisively following the recovery from several sharp selloffs. Is this simply a phase of consolidation leading to greater heights, or are investors beginning to question whether the rally that started in February was primarily based on speculation rather than solid fundamentals?
Continue reading
The Sharpe ratio has been a cornerstone of quantitative risk metrics since its introduction half a century ago. Despite the emergence of numerous competitors, this classic measure continues to hold its ground. Its enduring popularity can perplex some analysts, yet the Sharpe ratio remains deeply woven into discussions and analyses of risk management. Its straightforward nature contributes to its appeal, although it also opens the door to potential misuse. Complicated methodologies do not hold the exclusive right to flawed applications in risk analysis.
Continue reading
In recent years, the yield on the 2-year Treasury bond has been gradually increasing. While this ascent has been slow from a low starting point, it remains the most affected by rate expectations. Conversely, the yield on the benchmark 10-year bond has been on a downward trajectory. However, this long-standing divergence may be coming to a close as the 2-year yield begins to decline. Should this trend persist, it would signal a less optimistic outlook for economic growth and inflation.
Continue reading
The U.S. economy continues to experience sluggish growth. The recent Q2 GDP report reveals that challenges remain, yet consumer behavior does not appear to be a contributing factor. Personal consumption expenditures rose by 0.4% in June, marking the second consecutive month of growth, as reported by the Bureau of Economic Analysis . This increase propelled the annual rate to 3.7%, nearing the strongest growth seen in nearly a year. While various elements pose challenges to the economy, weak consumer spending is not among them.
Continue reading
The expected risk premium for the Global Market Index experienced a resurgence in July, reaching a 14-month peak. This unmanaged market-value weighted mix of the major asset classes is projected to yield an annualized 3.8% risk premium over the long term, which is moderately higher than last month’s projection. (For a detailed explanation of the equilibrium-based methodology used in generating these forecasts monthly, see the summary below.)
Continue reading
Foreign stocks drove market gains in July. Developed market equities outside the U.S. (MSCI EAFE) led the performance rankings with a 5.1% total return last month, narrowly surpassing emerging-market stocks (MSCI Emerging Markets), which recorded a 5.0% gain. Also noteworthy was foreign real estate shares (S&P Global ex-U.S. Property), achieving a 5.0% uptick, effectively tying with emerging-market equities for the third strongest performance among key asset classes.
Continue reading
● Invest in the Best: Applying the principles of Warren Buffett for long-term investing success
By Keith Ashworth-Lord
Summary via publisher (Harriman House)
This book delves into the investing philosophy of Business Perspective Investing, as exemplified by Benjamin Graham and Warren Buffett. It guides readers to understand that the mentality behind purchasing shares in a company is akin to acquiring the entire business.
Continue reading
The U.S. stock market has been hovering at or near historical highs, prompting some analysts to speculate that the enduring equity bull market may still have room for growth. However, when compared to the bond market, the relative returns in favor of stocks seem to be showing signs of fatigue. Is this an indication that the recent equity surge is nearing its peak? Perhaps, but there remains potential for a revived relative-return advantage for stocks if fixed-income investments falter due to a significant reversal of the long-term trend of falling interest rates.
Continue reading
This week, an intriguing question gained traction after analyst Paul Westra of Stifel Financial Corp. highlighted it in a research note. Bloomberg published a story on July 26 discussing this potential scenario, suggesting that “this doesn’t bode well for restaurants and could signal trouble throughout the broader economy.” The primary takeaway is that the U.S. might face a recession in early 2017. However, the challenge lies in predicting macroeconomic scenarios over the next six months, given the complexities of an $18 trillion economy and the unpredictability of future events.
Continue reading
