US subprime auto loans are highly stressed, with a new delinquency peak of 1.8%. Rising living costs, interest rates, lack of stimulus, negative equity, declining vehicle values, and rising rates are putting pressure on borrowers.
As the name implies, loss aversion is our instinct to not just prefer a gain over a loss but to prioritize avoiding losses over almost anything. It might sound wise to try avoiding losses but taking it too far could keep you from realizing your financial goals.
Leadership shifts at the sector and style levels warrant some additional caution, as well as a closer look as to what investors are buying when it comes to "growth vs. value."
Though equities have proven resilient, more of the long-expected effects of the Federal Reserve’s (the Fed’s) rapid interest rate-raising policy arrived in April.
Markets posted a strong first quarter, though it was a rollercoaster ride. The path forward will likely stay turbulent, with bank turmoil likely tightening credit conditions and the Fed still wrestling with inflation.
The big economic story today will be the end of the regular meeting of the Fed and what it decides to do about interest rates. Markets are expecting a 25 bp increase, to a range of 5 percent to 5.25 percent, with a slight bet on no hike at all.
In the early 2020s, the stock market looked much like basketball used to: a big man’s game. As examples, money management firms like Vanguard and Blackrock lumbered to higher heights of assets while the passive firms swallowed more market share.
We are one third of the way through 2023, and it has certainly been interesting in the bullion markets thus far.
Despite its commitment to curbing China’s geopolitical ambitions, the Biden administration has done little to counter the country’s expanding economic footprint in South America. Given the region’s crucial role in the fight against climate change, the US can no longer afford to take its southern neighbors for granted.
As of April 25, the Bloomberg U.S. Mortgage-Backed Security (MBS) Index was trading at an option-adjusted spread of 65 bps, which ranked in the 91st percentile since 2010. We believe moves in the asset class have been overdone and that current valuations present an opportunity.
Lending standards are a lot like carbon monoxide since they operate in the back ground. When the Senior Loan Officer Opinion Survey (SLOOOS) showed that banks significantly increased lending standards in the third quarter, no one on Wall Street noticed.
With markets sending mixed signals, see why it may make sense for equity investors to look at earnings and the impact of a recession.
For nine of the last fifteen years, few people thought about the Fed. Sure, we discussed QT and QE, but the Federal Reserve held interest rates at zero year after year.
Jerry Parker and I discuss the importance of mindset, and how it made him the only Turtle trader to succeed out of 20 that were all taught the same rules by the same trend-following legends.
The Fed is likely to lay the groundwork for a pause, and push back against an early pivot.
In the past three years, special purpose acquisition companies (SPACs) experienced stratospheric growth, became a manic bubble as sponsors raised new IPOs with a relentless fervor along with a market happy to oblige.
There have been glimmers of hope in 2023 that the inflation fixation of 2022 was a transitory phenomenon. In particular, the market has begun to more closely monitor jobs market data releases to try to spot signs of a labor market and wage slowdown.
The pandemic hurt small retailers by hastening the transition to digital commerce and emptied office buildings by turning living rooms into workspace. But it also fueled a warehouse building boom and unleashed a torrent of pent-up travel-and-leisure spending when economies reopened, underscoring the diversity of commercial real estate.
Next week also brings what could be a pivotal Federal Reserve policy meeting. We use this word “pivotal” to say an event is important. Taken literally, it means to turn in a different direction than you were previously going.
In life, there are things that we should be convicted and committed to. For example, the love for our families, spouses, and religious beliefs. We can also be convicted about other things, such as political ideologies, social issues, and environmental causes.
Cryptocurrency adoption in the U.S. increased amid fears of a full-blown banking crisis, a new poll finds. According to Morning Consult, 22% of Americans, over one in five, said they owned at least one form of crypto in April, representing a four-percentage-point increase from January.
Key Takeaways
The current Federal Reserve’s (Fed’s) tightening cycle is approaching an end. This has been one of the most forceful as well as the fastest tightening cycle in history. However, because the federal funds rate was well below the neutral federal funds rate, the time it has been above that neutral level has not been that long.
Yesterday JP Morgan introduced a new model to quantify the last 20 years of Federal Reserve statements and speeches. While we aren’t privy to the details of the AI model, we will just assume that the model properly captures dovish and hawkish language.
The University of Michigan’s Consumer Sentiment Survey will give us more information on US consumers’ inflation expectations. The survey respondents’ inflation expectations, as other analysts have pointed out, are highly correlated with gasoline prices, which rose in March by 3.7%.
The volume of SPAC IPOs and mergers has reverted to pre-hype levels. Funding from public and private investors has plunged, while redemptions by existing investors have increased sharply.
Portfolio Manager John Paul Lech explores the defining changes of the last three years and how they have informed his approach to the years ahead.
My grandmother always had something witty or wise to share. One of her favorites had me imagining vivid pictures of pounds of medicine in bottles and spoonfuls of colorful liquids.
Fear of missing out, or “FOMO,” seems to be a common trend with investors. Whether it was GameStop, AMC, Bitcoin, or the FAANGs, the last few years has seen some investors exhibit FOMO as they chase the hottest trends in the market.
Economic fundamentals are lining up for a return of QE. Yes, inflation is still on the high side but falling so rapidly that at least some central banks will be willing to take action before inflation is back to 2%.
Over the last week, the market saw volatility pick up after approaching the upper end of what we believe is the near-term trading range.
Although investing in in-state municipal bonds may have tax advantages, there can be good reasons to buy out-of-state munis.
Although the House narrowly approved a bill designed to jumpstart negotiations, the issue is far from resolved.
Every news item these days seem to swing between extremes. When in reality, these bank failures are not atypical. Read our latest insight to learn what similarities these recent bank failures have with previous failures and what the warning signals are.
A few months ago, the internet was filling up with predictions that we’d have a 2008-style crash in home prices. The thinking was that the increase in interest rates would cause mortgage payments to skyrocket and price out an entire generation of homebuyers.
India’s ability to attract foreign investment has long been hampered by subpar infrastructure and excessive bureaucracy. But reputations can obscure real change.
With the European Market’s earning season fully upon us, let’s look at expectations for the month ahead. According to our proprietary analytics, the European energy and real estate sectors have experienced the highest level of downward revision to sales of all sectors on both a one- and three-month basis.
Higher bond yields and improved total return potential may offer advisors a compelling opportunity to move cash off the sidelines.
Over the past year, the municipal bond market has seen increased volatility stemming from rising interest rates across the yield curve.
Discussion about inflation and the Feds efforts to fight it, the recent bank failures, and the odds of a U.S. recession.
Why Scope 3 emissions hide as much as they reveal, and what investors can do about it.
Direct indexing is an innovative investment strategy that can solve a variety of investor challenges. We discuss the five main benefits of incorporating direct indexing in a client’s portfolio.
Short-term Treasury yields skyrocketed throughout 2022 reaching levels not seen in almost 15 years. In early October, the yield of the 6-month T-bill topped 4% for the first time since 2007 and by the end of the month had topped 4.5%.
The sudden collapse of two US regional banks and the forced acquisition of Credit Suisse in Europe introduced a third dimension to the existing policy dilemma of balancing inflation and growth objectives: financial stability.
In the spirit of being a good corporate citizen working to build a better world, Franklin Templeton is launching a Diversity, Equity and Inclusion (DEI) webpage that will highlight the company’s DEI efforts.
We favor high yield bonds and natural resource stocks as inflation still shows persistence, earnings expectations deteriorate and worries mount over a stalling U.S. economy.
Investors in European bank shares have been rattled by recent turmoil in the sector. But many banks are in much better shape than widely perceived, and the sector is subject to much tighter regulation than in the US.
China’s domestically driven economic growth has not yet translated to Emerging Market stock performance, which has tended to have been weighed down by international political tensions.
We hope you enjoy the latest NewsLetter from Harold Evensky.
The latest IMF reports shows the mounting risks facing emerging markets.
