When the Fed ceases its massive buy program in July, it will be a de facto increase in interest rates. Who is going to step in and fill the void? The conclusion of QE2 is a well known fact, but are the consequences well understood and is this the only market dynamic that will push rates higher?
If inflation is going to rise globally, it will most likely surface first in emerging market countries. But this also reflects why emerging markets are so attractive in the first place – their growth outlook is more robust and output gaps (where they exist) are closing much more rapidly than in the developed world.
Corporate profits for firms in the S&P 500 have marched upward for six straight quarters from early 2009. Indeed, with the reports almost all in for the fourth quarter of 2010, corporate profits advanced 38% from the prior year. With this growth in earnings, we believe the value of equities remains attractive at 13.6 times forward estimated earning...
Fears have risen that the likes of the ECB and the Bank of England might join the queue of central banks in tightening mode, as higher than expected CPI readings help fuel upward moves in inflation expectations. We suspect that these fears are overdone. But, it does mean that inflation will remain center stage for the moment at least.
The short-term uncertainty in the financial markets is likely to rise, and investors will likely be looking to raise liquidity, especially given the continued turmoil in the Middle East and North Africa and the trade deficit hiccup in China. That said, we do not expect the engine of global growth to stall anytime soon. We would view weaknesses in t...
The art market appears to be on the upswing worldwide with record-breaking prices in the past year. However, the biggest growth surge has come from China, not only because of the increasing number of collectors there but also because of renewed enthusiasm for the country's art.
Private investment in cleantech means making choices among the various sectors – such as renewables, smart grid technologies, energy storage, and transportation technologies – and then considering the relative stage of companies within those sub-sectors.
Fears of supply disruptions, regime change and further declines in the U.S. dollar are helping to drive oil prices higher. Yet, there seems to be sufficient capacity to offset supply shortfalls. Looking forward, fossil fuels and renewable alternatives both need to be developed to help secure our energy independence.
The increase in the lifetime gifting limit, combined with the temporary nature of the current estate and gift tax law, open a window of opportunity for wealth transfer. Leveraged gifts can safeguard the benefits of this situation by compressing the value of the gift for tax purposes while amplifying the impact of the wealth transfer.
Expected changes in gift, estate, and generation-skipping taxes after 2012 has led many families and advisors to conclude that 2011-2012 presents a valuable, two-year window of opportunity to update estate plans. However, certain developments suggest the best results may be obtained by acting sooner rather than later.
The recent recession has certainly had a major impact on the financial condition of most municipalities. While we believe this may lead to an increase in defaults over the next few years, we do not anticipate widespread defaults or major losses at the bondholder level. Any defaults that do occur will likely be well telegraphed and identifiable thro...
We have begun recommending that investors use recent equity market weakness to rebalance portfolios and lift international equity allocations. We have further suggested that investors prioritize shifting allocations toward international equity strategies with a higher allocation to Japan.
We expect 2011 growth will fall into the lower end of the 3.25% to 3.75% range. Pockets of economic weakness are likely to persist – in unemployment, housing and consumer confidence – but the general economic climate is far healthier than was the case a year ago. Political and geo-political issues, we believe, are the most significant threats to co...
While we believe the scale and scope of current market risks are not enough to topple the markets, we feel a correction of some magnitude is warranted given how a confluence of risk factors could adjust global growth expectations. As such, we are recommending a modestly more defensive posture despite seemingly attractive valuations.
There is no simple solution to measure the overall risk of a security or portfolio with one statistic. The author recommends that investors use a variety of measures, including spread duration, rating breakdowns, and the average price of securities in each rating category.