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Bond ETFs

Higher Rates Will Hurt Stocks More Thank You Think (Part 2)

By | Bond ETFs, Currency ETFs, Current Affairs and ETFs, Emerging Market ETFs, ETF Philosophy, ETF Strategy, Europe ETFs, International ETFs, Large Cap ETFs, Small Cap ETFs, Special Sectors ETFs, Technology ETFs, US Markets and ETFs | No Comments

In my previous week’s commentary, I explained why higher interest rates will hurt stock assets more than many might think. Naysayers pointed to the fact that rate levels are still quite low on a historical basis. Unfortunately, these folks are neglecting to place their comprehension of borrowing costs in context. Take a look at the last 20 years of U.S. monetary policy via the Federal Funds Rate (FFR). The Federal Reserve’s tightening phase from the 4% level up to the…

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Stuck Between A Rock, A Boulder And A Hard Place

By | Bond ETFs, Current Affairs and ETFs, ETF Philosophy, ETF Strategy, Large Cap ETFs, US Markets and ETFs | No Comments

If the Federal Reserve raises the federal funds rate much further, it risks triggering a recession. That’s not my opinion; rather, it is the opinion of Neel Kashkari, president of the Federal Reserve Bank of Minneapolis. Kashkari’s thesis? When shorter-term rates rise above longer-term ones – a phenomenon known as yield curve inversion – the financial markets are anticipating an economic slowdown in the near future. Additionally, Kashkari does not care why longer-term Treasury yields are flat or falling (e.g.,…

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Non-Diversification: Free Stock Risk Without The Reward

By | Bond ETFs, Current Affairs and ETFs, Emerging Market ETFs, ETF Philosophy, Europe ETFs, Financial ETFs, International ETFs, Large Cap ETFs, Popular Posts, Small Cap ETFs, Technology ETFs, US Markets and ETFs | No Comments

Let me be quick to acknowledge that yield curve inversion can have considerable lag time before a recession. And for that matter, the U.S. Treasury bond curve can invert long before a stock market bear. For instance, 10-year yields fell below two-year yields in February of 2006. That was approximately 22 months before the recession officially hit in December of 2007. What’s more, between 2/2006-10/2007, the S&P 500 managed to climb more than 20%. There’s more. The 1990s Treasury bond…

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Is The World’s Largest Hedge Fund Wrong About Stock Assets?

By | Bond ETFs, China ETFs, Commodity ETFs, Current Affairs and ETFs, Emerging Market ETFs, ETF Philosophy, ETF Strategy, Europe ETFs, Global ETFs, Large Cap ETFs, Special Sectors ETFs, Technology ETFs, US Markets and ETFs | No Comments

Bridgewater Associates has roughly $160 billion under management, making it the largest hedge fund on the planet. Exchange traded funds like Vanguard FTSE Emerging Markets (VWO) the SPDR Gold Trust (GLD) and the S&P 500 SPDR Trust (SPY) head the list of top holdings. Last week, Bridgewater said, “We are bearish on financial assets as the U.S. economy progresses toward the late cycle, liquidity has been removed, and the markets are pricing in a continuation of recent conditions despite the…

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The Fed Is About to Kill The Credit Boom

By | Bond ETFs, Consumer ETFs, Current Affairs and ETFs, ETF Philosophy, ETF Strategy, Financial ETFs, Large Cap ETFs, Popular Posts, Special Sectors ETFs, US Markets and ETFs | No Comments

Did seven years of zero percent rate policy, three rounds of quantitative easing (QE) and “Operation Twist” provide a consequence-free credit boom? Or will “too-low-for-too-long” monetary manipulation eventually lead to a credit bust – one with adverse effects for asset prices as well as economic growth? It is not particularly difficult to understand that the mid-2000s credit expansion became an unsustainable bubble for households. At the pre-crisis peak in the fourth quarter of 2007, household financial obligations as a percent…

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The Big Bad Bull Gets Meeker And Weaker

By | Bond ETFs, Commodity ETFs, Consumer ETFs, Current Affairs and ETFs, ETF Philosophy, ETF Strategy, Financial ETFs, Large Cap ETFs, Popular Posts, Special Sectors ETFs, US Markets and ETFs | No Comments

Can the U.S. economy grow without the federal government overspending? Apparently not. Since the financial crisis in 2008, GDP has only grown alongside massive Treasury debt issuance. Some might argue that it does not matter how the economy expands as long as it is expanding. After all, the U.S. is still capable of paying the interest on its mushrooming obligations. On the flip side, the bond market does not believe that the near-term economic picture will be quite so rosy. The paltry 0.18%…

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Do Not Blame China For U.S. Dependence On Debt, Deficits And Low Rates

By | Bond ETFs, Current Affairs and ETFs, ETF Philosophy, ETF Strategy, Large Cap ETFs, Popular Posts, Special Sectors ETFs, US Markets and ETFs | No Comments

Over the 10 trading days (2 weeks) through April 6, the S&P 500 averaged a daily range of 2.3%. According to Dana Lyons of the Lyons Share, that kind of volatility ranks in the 94th percentile since the S&P 500 began in 1950. Similarly, it is uncommon to see at least seven 1%-plus price swings in a brief period like two weeks. We actually had eight. More remarkably, it is rare to witness this type of price movement when it…

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Why Aren’t Stocks Climbing The Wall of Worry Anymore?

By | Bond ETFs, Current Affairs and ETFs, ETF Philosophy, ETF Strategy, Global ETFs, Large Cap ETFs, Materials ETFs, Popular Posts, Technology ETFs, US Markets and ETFs | No Comments

According to Bank of America’s research team, 87% of prior bull-to-bear transitions involved increases in volatility. That’s not particularly surprising. Anyone who has experienced a stock bear probably remembers months and months of extraordinary price swings. In the current bull portion of the bull-bear cycle (3/09-?), each of the previous corrections offered buying opportunities. For example, there were two 10%-plus volatile price pullbacks during the earnings recession (2015-2016). Earnings per share across the S&P 500 kept shrinking, yet buying the…

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The S&P 500 and Stephen Hawking: A Theory on “Peak Everything”

By | Bond ETFs, Consumer ETFs, Current Affairs and ETFs, Dividend ETFs, ETF Philosophy, ETF Strategy, Europe ETFs, Large Cap ETFs, Special Sectors ETFs, Technology ETFs, US Markets and ETFs | No Comments

The NASDAQ served up an annualized return of 66% in its final two years of dot-com mania. Only after the balloon had burst did people begin to question the lunacy of paying 10x revenue for the privilege of being a shareholder. Ironically enough, since early 2016, the top 10 growth names in tech collectively produced an annualized return of 67%. That’s right. The NYSE FANG+ Index has topped turn-of-the-century craziness. For the current bull-bear cycle, then, we may be witnessing…

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If Consumers Stop Spending, Stocks And Real Estate Will Slide

By | Bond ETFs, Consumer ETFs, Current Affairs and ETFs, ETF Philosophy, ETF Strategy, Large Cap ETFs, Real Estate ETFs, Special Sectors ETFs, US Markets and ETFs | No Comments

Here is an economic data point that you will not hear about in the mainstream financial media: U.S. wage growth in 2017 had been the weakest since 2010. In fact, labor costs rose a paltry 0.35% on a year-over-year basis. Are higher wages for workers, then, right around the bend? Some believe that the tighter labor market is about to spark wage inflation. Yet it seems that this could be wishful thinking. Actual inflation has shown up in housing costs (e.g., rent, repairs,…

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