Positive developments around a COVID-19 vaccine were recently released which bolstered stocks and steepened the curve of government yields. A highly effective vaccine is expected to restore confidence and improve nominal growth.

Almost every component of GDP fired on all cylinders in the third quarter. Expenditures grew in consumer spending, housing, and in businesses as inventories and investments were rebuilt.

Investors are being pulled into stocks, which is good and can help retool the economy. This allows companies to access cheap capital through equity markets and make investments in labor and assets.

Some of the US stock indexes have gone on to meet new all-time highs in what was a surprisingly fast recovery. That is a pretty good leading indicator that the economy is moving in the right direction.

Despite the recent economic challenges, global equities have rebounded tremendously off of the deep lows experienced in March.

The magnitude of monetary stimulus in the economy has reignited the debate on inflation. Government debt markets are pricing in growing inflation expectations in the coming years.

The unpredictable nature of economic change is a complicating factor in the field of investing, and ultimately affects both the risk and return of investments.

Without intervention in capital markets, corporations would have probably had a harder time acquiring new capital. To date, corporations have raised approximately double the amount of new debt that is normally issued around this period of time in past years.

The effects of the Coronavirus crisis are now beginning to show up in earnings and economic data. Economic numbers have deteriorated, but shrinking economies come as no surprise to anyone given the widespread impacts of COVID-19. The US economy contracted at an annualized rate of -4.8% in the first quarter of 2020 and unemployment claims have climbed into the millions. The Eurozone saw similar annualized declines in GDP of -3.8% annualized as a whole.

Forecasts indicate that it will take many years for dividends to return to the levels of 2019. However, as a new cycle for the dividend growth rate emerges, stocks may find themselves in the next bull market cycle.

With information changing every day, we want to do our best to keep you and your clients updated with expert perspectives on financial markets, investor education, and investment strategy. Learn about monetary policy, fiscal policy, and more from our investment team.

With information changing every day, we want to do our best to keep you and your clients updated with expert perspectives on financial markets, investor education, and investment strategy. Learn about bear markets and more from our investment team.

Diversified investors are inherently prepared for a range of outcomes. Some balance between stocks and bonds has likely done better as fear has risen in riskier markets.

Things are beginning to improve relative to last year in the macro-economic backdrop that should help global growth going forward. However, an unexpected outbreak of a disease that started in China has now begun to trim earlier held estimates for growth.

One of the biggest challenges the new year faces may be its political uncertainties. The US will likely be in the spotlight because of its election year.

The highs in equity prices have caused implied volatility in stocks to sink to a new low. …high equity prices and low volatility have dramatically cut the costs of buying protection and many savvy investors were actively buying put options at reduced premiums in November.

Researchers are suggesting that emerging-market equities trade at an almost two-decade level of cheapness compared to US growth equities.

To convince institutional money to hold more US Treasury debt pending no outside inference, institutions are essentially asking for a higher rate of return on US Treasury collateral. The latest flash signal in the repomarket may support the notion that government deficits don’t really matter until they do.

The historical record for monthly price volatility since 1970 indicates that there is more whipsaw action ahead for the rest of the year. The 3 leading months for volatility are September, October, and November.

The Federal Reserve gave financial markets what was expected by lowering the target rate for the Fed Funds by 25 basis points. The Fed called the rate cut a mid-cycle adjustment and not the beginning of a new easing cycle. The markets read this as two cuts and done or maybe even one and done.