Posted on November 8, 2013 by Ken Taubes
Now is a good time to take stock in the current macro environment from a market perspective. Here’s what we think could happen at the end of this year and next year:
Stocks and Bonds
- It’s been a good year so far for equities. The S&P 500 is up around 24% and the NASDAQ is up 30% year to date through 11/5/13.
- High yield bonds represented by the BofA ML High Yield Master II, convertibles bonds represented by the BofA ML All U.S. Convertibles Index and preferred stocks represented by the BofA Adjustable Rate Preferred Securities Index have clearly outperformed investment grade bonds represented by the BofA ML Corporate Bond Master Index.
- High yield bonds are up about 6%. U.S. investment grade bonds, despite the Fed’s wanting to get rates back down, are still looking at roughly minus 1.6% returns .
- The current economic environment has clearly favored the equity markets and instruments linked to equities. (more…)
Filed under: Equity Market Insights, Fixed Income Market Insights, Ken Taubes, Macroeconomics | Tagged: Bonds, Capital Markets, Fed policy, Fed tapering, Ken Taubes, QE Tapering, the Fed | Leave a Comment »
Posted on October 2, 2013 by Ken Taubes
Yesterday was the start of a new fiscal year for the U.S. federal government, but failure to agree on a spending plan in time for that deadline left federal coffers short. As a result, a partial government shutdown took effect. It’s important to emphasize that this was a partial government shutdown. Many services remain operational, such as our active military, Medicare/Medicaid, Social Security and airline travel.
What Should Investors Know?
The shutdown may prevent the release of economic statistics in the coming days and this does present an inconvenience. However, the markets yesterday were relatively calm. Equities were flat, to slightly up; bonds were selling off and the dollar seemed to be weaker. But there was no appreciable market movement and it was one of the quietest trading days we’ve had in credit /fixed income for some time. Of course, the longer the shutdown lasts, the more anxious the markets will get.
We expect that this impasse will be resolved one way or another and that the shutdown will be short-term in nature. However, it is not yet clear what the resolutions will be, so it’s difficult to gauge the actual length of the shutdown. That being said, we don’t expect a meaningful disruption in the markets that would cause great concern to investors.
Filed under: Equity Market Insights, Fixed Income Market Insights, Ken Taubes, Macroeconomics, Political | Tagged: Capital Markets, debt ceiling, government shut down, Ken Taubes | Leave a Comment »
Posted on September 20, 2013 by Ken Taubes
The Fed’s decision on Wednesday caught the markets off guard – rather than begin tapering, as most expected, it held off, announcing it would stay the course. The market seemed thoroughly surprised, which is why the reaction was strong and aligned directionally across most markets – we saw U.S. Treasuries and equity markets rally, while the dollar weakened.
This reaction is ironic because the Fed has gone through a lot of trouble to reduce volatility through forward guidance, press conferences, etc., The Fed’s “body language” since May has suggested that they were going to taper and, had they done so, the markets probably would not have reacted much at all. I thought the Fed was in a good position to start their tapering in U.S. Treasuries because most of the economic data has been improving.
Filed under: Equity Market Insights, Fixed Income Market Insights, Ken Taubes, Macroeconomics | Tagged: Capital Markets, Fed Action, Fed tapering, Ken Taubes, U.S. Treasuries | Leave a Comment »
Posted on April 15, 2013 by Ken Taubes
We had a little flush of activity in the first quarter, which we believe will lead to much better GDP – potentially well over 3% – than people anticipated in the beginning of the year. We look at this activity as a little bit of a catch-up, for a couple of reasons: (more…)
Filed under: Europe, Ken Taubes, Macroeconomics, Uncategorized | Tagged: Bank of Japan, Central Banks, China, Europe, Fed policy, Ken Taubes, Slow growth, US GDP | Leave a Comment »
Posted on November 20, 2012 by Ken Taubes
Like a lot of people, I’m electioned out and glad it’s over. In a recent conversation with political strategist Greg Valliere we discussed the country’s biggest hurdle now: the fiscal cliff, where automatically programmed spending cuts and tax increases meet at the end of the year. It’s front and center for Congress to get a deal done, and Republicans and Democrats face a complicated set of negotiations and compromises to make that happen. Greg thinks it will be an extraordinary period of “introspection, reflection, naval gazing and finger-pointing.” That’s a given, of course – but I do see some light on the horizon.
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Posted on November 8, 2012 by Ken Taubes
The big surprise of Tuesday’s outcome is that the estimated $6 billion spent in support of elections across the country resulted in no change in the composition of the government. We have the same president. The House is still controlled by Republicans and the Senate is still controlled by Democrats. The Republicans fell short of expectations by losing ground in the Senate.
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