Jeffrey Gundlach said that 2019 will mark the start of a period when bond markets must reckon with the rising federal deficit. In his most passionate comments ever on this topic, he said the exploding national debt and liabilities involving pension funds, state and local government governments and Social Security have reached a stage that is “totally unthinkable.”

The return of volatility in the fourth quarter should not be overlooked. The landscape has changed which will create opportunities for alert investors and downside risk for others.

Secular markets, bull or bear, are not defined by price movements.

Talk about destroying a narrative. On Friday, the Labor Department reported 312,000 new jobs in December, with an additional 58,000 from upward revisions to prior months. Recession talk got crushed.

I expect to spend this year Living Dangerously. Yes, I’m thinking of the 1982 film starring a very youthful Mel Gibson and Sigourney Weaver, based on an earlier Christopher Koch novel. It has an Asian setting and features corrupt politics, neophyte journalists, international intrigue plus a gender-bending Chinese dwarf. If you aren’t sure how all those fit together, then welcome to 2019. We are all stuck in this craziness and can only make the best of it.

It can be difficult to remain calm in the midst of stock market action like we’ve seen over the past couple of months—but discipline is necessary during more tumultuous times. Although we do see rising risk of a recession, we don’t see a repeat of 2008 in the cards. Absent a recession—even if we enter a “formal” bear market (at its recent closing low, the S&P was down 19.8%)—additional weakness may be somewhat limited. Recession-related bears tend to be longer and grizzlier than non-recession bears. Until we get more clarity on the health of the economy, we continue to suggest investors remain defensive.

This morning's employment report for December showed a 312K increase in total nonfarm payrolls, which surprised forecasts.

The January Absolute Return Letter is always about the pitholes one could fall into in the year to come and, lo and behold, financial markets are behaving as if we have already fallen into one. December was a most difficult month, and January hasn't exactly started with all guns blazing either.

It’s taken for granted in financial circles that lower oil prices are a boon for stocks, as they fuel an economy-boosting cycle in which money saved at the pump ultimately flows to the market. But oil prices that are too low could be too much of a good thing.

Just seven short weeks ago, the floating-rate loan market was standing tall with a 4.0% year-to-date return through October. Not only were loans on pace for the 5%+ calendar year mark that many anticipated, they had performed with remarkably low volatility and a performance profile that trumped all major asset classes.

Equity markets send a timely reminder about diversifying into alternatives.

When the “bull is running” we believe we are smarter and better than we actually are. We take on substantially more risk than we realize as we continue to chase market returns and allow “greed” to displace our rational logic. Just as with gambling, success breeds overconfidence as the rising tide disguises our investment mistakes.

With only one trading day left in 2018, the price of gold has so far beaten the S&P 500 Index for the month of December, the fourth quarter and the year. What might surprise some readers is that it’s also outperformed the market for the century.

FINRA has released new data for margin debt, now available through November. The latest debt level is down 2.48% month-over-month.

The accompanying chart is a way to visualize real GDP change since 2007. It uses a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. Here is the latest overview from the Bureau of Labor Statistics.

I am going to offer some different thoughts than the mainstream media spin on Jerome Powell, his press conference, and the Federal Reserve.

Continued US dollar strength has focused attention on weaker commodity prices and dented investor enthusiasm for emerging markets in recent months—stoking fears that the current climate could lead to a repeat of the 1997-1998 Asian Financial Crisis.

Like politics, investing philosophies are polarizing: be it a debate on active vs. passive or direct investments vs. funds. For fixed income, we lay out differences between indexed exposure to high yield and bank loans vs. fundamentally selected portfolios—and recognize there may be room for both in portfolios.

We believe that investors “overbought” good news through the first three quarters of 2018, and now are “overselling” bad news.

A decade after the subprime bubble burst, a new one seems to be taking its place in the market for corporate collateralized loan obligations. A world economy geared toward increasing the supply of financial assets has hooked market participants and policymakers alike into a global game of Whac-A-Mole.

Overoptimism and overconfidence are two well-known psychological traits of our species. They are particularly dangerous in the late stages of an economic cycle where these terrible twins result in investors overestimating return and underestimating risk – a potentially lethal combination of errors.

The media and some market observers are bracing for a blizzard of BBB-rated bonds to get downgraded to junk as the credit cycle turns. We expect it will be closer to a flurry.

"Travel on all roads and streets changed by -0.8% (-2.1 billion vehicle miles) for September 2018 as compared with September 2017. Travel for the month is estimated to be 260.6 billion vehicle miles."The 12-month moving average was down 0.07% month-over-month and up 0.4% year-over-year. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) is down 0.159% month-over-month and down 0.6% year-over-year.

Bob Browne is an executive vice president and chief investment officer for Northern Trust, which had $1.1 trillion in assets under management as of September 30, 2018. In this interview, he discusses his firm’s capital market outlook and the six themes that will drive investment returns over the next five years.

Recent fundamental changes in the leveraged finance markets mean that actively managing credit exposure is more important than ever.

Roller coasters usually come with padded steel bars that lock and protect the rider. But factor funds, just like traditional active funds, do not come with similar safety features.

Several years into the recovery from the global economic crisis, the jobs of central banks have only become more difficult. How are indebtedness, inequality, inflation and instability contributing to their problems, and what can we expect from future interest rate decisions?

We see a synchronized global slowdown in 2019. We position cautiously but anticipate opportunities ahead.

In our 2019 Fixed Income Outlook, Matthews Asia's fixed income team discusses possible tailwinds for Asia bonds ahead.

Public policy can be corporate-friendly or corporate-unfriendly. But what if it’s corporate-uncertain? Then investors are faced with volatility. Part I of our Year Ahead investigates the current corporate-uncertain environment.