The Fixed Income Channel

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.

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.

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.

Low Volatility is the equity factor winner for 2018

In the fourth quarter, Dividend Yield was also a strong competitor.

New Research on the Value of Global Diversification

Despite representing about one-eighth of global equity market capitalization, and despite the attractive valuations and growth prospects, the vast majority of U.S. investors have portfolios that dramatically underweight emerging market stocks. Here’s why that is a costly mistake.

Retests, Recessions, and Rallies

Recently, much has been written, and said, about a retest. The reference is about the major indices pulling back to their recent December closing lows, creating a double-bottom in the charts.

An Annuity Hater Revisits SPIAs

I take a lot of flak when I write about annuities. That criticism has come from the insurance industry, because I have been highly critical of products like fee-laden variable annuities with complex menus of riders. But recent discussions and a new analysis have led me to reconsider SPIAs as a source of longevity insurance at a reasonable cost.

US/China Trade Conflict Creates Factor Opportunities

Low Volatility and Quality offer potential benefits in stressed markets.

Gold and Commodities Set to Soar in 2019

Goldman Sachs is bullish on commodities and gold, recommending an overweight position for both. The investment bank also raised its 12-month price forecast for gold up to $1,425 an ounce, a level last seen in August 2013.

Our January 2019 Market Commentary: “Mixed Messages”

Investors received a lump of coal for Christmas…and a lot of mixed messages. This commentary explores the apparent contradictions, as well as reviews past bear markets.

A Slowdown is in the Bag, but What About a Recession?

There is little doubt that the US economy is in a state of slowdown. The big question, is “How will the economy emerge from this slowdown?” Will it be with renewed growth like 2016? or Does it fall into a full-blown recession a la 2007? The answer to that question is unknowable at this point in the cycle.