The Economic Insights Channel

“Bad” Advice Can Add Value

I deal with many advisors. Some of them give advice that could be considered “bad,” but the benefit to their clients is tangible. Here are a few examples.

Agency MBS: Time to Rethink Prepayments

In our view, a combination of positive macroeconomic factors is likely to keep prepayment speeds higher than the market projects.

Fed Will 'Wait & Watch' Before Raising Interest Rates

Fed Chair Jerome Powell used the “patient” word again last week. He also added new words that the Fed can “wait and watch” before raising rates again. And he added another new word, that whenever interest rate increases resume, they will be “gradual.” The stock markets loved it!

Fourth Quarter 2018 - The Year When Nothing Worked

2018 will be broadly remembered as a year when nothing worked and daily stock market volatility spiked. This contrasted with 2017 where seemingly everything pushed higher, and volatility was low. But in 2018, nearly every single asset class and all but one major stock market index (Brazil) around the globe posted negative returns.

How the Mighty Have Fallen

Although the FAANGs were the poster children of the fourth-quarter market rout, losses were broad-based across sectors and countries. These losses were strong reminders of how important it is to pay attention to a company’s stock price in addition to focusing on its fundamentals and long-term growth prospects.

Is Good News Bad or Good?

With unemployment below 4% (considered full employment by the Fed) and wage inflation pressure still positive, the Fed will want to continue to remove the stimulus from its policy. This means continuing to hike interest rates, albeit it at a reduced pace from the last two years.

International and Global Markets Commentary and Investment Outlook

Business uncertainty resulting from trade frictions will continue to put downward pressure on economic growth. As a result, investor confidence may remain fragile (recent price declines appear to reflect this). Concerns are unlikely to dissipate soon, but we contend that international growth stocks represent a good investment opportunity.

Dr. Jekyll Economy Meets Mr. Hyde Markets

In the famous book, Strange Case of Dr. Jekyll and Mr. Hyde, Dr. Jekyll and Mr. Hyde were one human being with a split personality. Dr. Jekyll healed people and Mr. Hyde murdered them. This economic environment and the U.S. stock market have the same kind of split personality.

What’s Next for the Dollar, Gold, Stocks & Bonds?

The quip, “if you aren’t confused, you aren’t paying attention” needs to be replaced: “with the Fed confused, you better pay attention.” You may want to buckle up. Let me explain.

Weighing the Week Ahead: Will Corporate Earnings Results Change the Message of the Markets?

It is a light economic calendar without any of the most important reports. The government shutdown will command increasing attention as long as it continues. Finally, there is some real competition in financial news – the start of earnings season.

3 Ways to Protect Clients' Investments This Year

Stock market participants for most of the past few years have eschewed protection. It was all about making large amount of gains. Almost every advisor lost clients from “cocktail party” conversations about who had made the most money recently.

Emerging Markets Outpace Developed Markets in the Final Quarter of 2018

Numerous uncertainties weighed on investor sentiment in 2018 and led to a down year for emerging markets overall, although the fourth quarter saw some outperformance versus developed markets.

Empire State Manufacturing Survey: Slight Growth in January

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 3.9 was a decrease of 7.6 from the previous month's 11.5. The Investing.com forecast was for a reading of 10.75.

December Producer Price Index: Core Final Demand Down 0.1% MoM

Today's release of the December Producer Price Index (PPI) for Final Demand came in at -0.2% month-over-month seasonally adjusted, down from last month's 0.1%. It is at 2.5% year-over-year, unchanged last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at -0.1% MoM, down from 0.3% the previous month and is up 2.7% YoY NSA. Investing.com MoM consensus forecasts were for -0.2% headline and -0.1% core.

Weekly Gasoline Price Update: Regular and Premium Mostly Unchanged

The price of Regular and Premium are mostly unchanged from last week. According to GasBuddy.com, California has the highest average price for Regular at $3.25 and Oklahoma has the cheapest at $1.86. The WTIC end of day spot price closed at 50.51, a 4.1% increase from this time last week.