2020 Outlook: A Marshmallow World

It’s a marshmallow world for capital markets as we enter 2020. Name the asset class, and it had a stellar year in 2019. U.S. stocks? Up over +30%. Stocks across the rest of the world? Higher by more than +20%. Investment grade corporate bonds? Up nearly +20%. High yield bonds? +14%. Long-Term US Treasuries? +15%. Gold and silver? +16% each. Even long struggling commodities posted high single-digit returns this year. If you were allocated to risk assets in 2019, you likely enjoyed a good year.

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3 Questions About Today’s Strong Economy

I’m hearing a lot about the strength of the U.S. economy lately. Just this afternoon, I heard one pundit on the radio describe the U.S. economy as “stellar.” Another said it’s “booming.” Knowing that the economy is an important determinant of market returns over time, it’s worthwhile to take a closer look. Is the U.S. economy really so strong right now?

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Stocks Are Primed For A Correction

U.S. stocks have had a fantastic year in 2019. Overall, the benchmark S&P 500 Index is poised to finish the year up 30%-plus.  This great year must be considered in a broader context, however. It’s worth remembering that U.S. stocks bottomed on Christmas Eve exactly one year ago after having plunged more than -20% peak to trough in 2018 Q4. Thus, much of the 2019 advance in the S&P 500 was a recovery of the decline that preceded it at the end of 2018. After trading effectively flat from the end of January 2018 through the start of October 2019, U.S. stocks have staked fresh new ground in 2019 Q4 with a definitive move to the upside.

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Next Up For The Bucking Bond Bull

From September 16, 2019

The bond bull market has sent investors on a wild ride as of late. After yields plunged sharply (and prices soared) through August, U.S. Treasury yields have sharply reversed higher (and prices have fallen) thus far in September. What should investors expect from this bucking bond bull going forward?

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Why The Next Recession Matters So Much

From June 28, 2019

The U.S. Federal Reserve is on the record. It will stop at nothing to prevent the next recession. But given that recessions historically have taken place once every three years on average at least until the last couple of decades and we somehow survived as an economy, it is reason to question why preventing the recession today is so important. The answer? The fate of the U.S. stock market hangs in the balance.

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