Thornburg’s investment team keeps an eye on the macro but focuses squarely on the fundamentals and portfolio fit of each stock and bond selected. This July 17 macro overview is a sample of an internal weekly note to our distribution team that features big-picture highlights from the week that was.
Supporting the beaten-down labor market is the Federal Reserve’s “major focus,” not inflation nor risk asset prices. Doing “whatever we can and for as long as it takes.”
Digitization in banking and retail comes in the wake of a massive cellular network rollout, creating attractive investment opportunities in India.
Thornburg’s investment team keeps an eye on the macro but focuses squarely on the fundamentals and portfolio fit of each stock and bond selected. This July 17 macro overview is a sample of an internal weekly note to our distribution team that features big-picture highlights from the week that was.
Supporting the beaten-down labor market is the Federal Reserve’s “major focus,” not inflation nor risk asset prices. Doing “whatever we can and for as long as it takes.”
Digitization in banking and retail comes in the wake of a massive cellular network rollout, creating attractive investment opportunities in India.
While energy investment retrenches in the wake of COVID-19’s historic impact on oil and gas markets, consumers will benefit as economies reopen. Selective and patient investors should too.
Coronavirus has sent economies swooning, toppling consumer price indices. Rebounds in stock and bond markets on policy stimulus don’t mean market volatility is over, or that inflation is dead.
A review of academic research on actively managed funds backs data on active manager outperformance during February’s coronavirus-fueled markets fallout.
COVID-19 and the socio-political responses to it present an opportunity for both market timers, those who try and trade around the shifts in market direction, and long-term investors.
The Fed chopped its key rate after equities and bond markets tanked last week. The move risks fueling already frothy risk asset prices amid weakening global growth due to COVID-19, which has badly disrupted global supply chains and increasingly damped some services industries.
Coronavirus-induced market volatility is another in a long string of blows to the global economic recovery. But investors should look through the disruptions for free-cash-flow companies with healthy balance sheets and resilient, if not robust earnings.
If the novel coronavirus’ spread hurts some industries, others are positioned to benefit from the fallout. Examining the short- and long-term implications of the virus' effect on global supply chains.
Exogenous factors often knock well-positioned markets temporarily off track, sometimes repeatedly. But dislocated share prices ultimately re-align with business fundamentals, earnings growth and attractive valuations.
After false starts in the last few years, we believe emerging markets are set to deliver strong performance in the year to come thanks to accelerating and broad-based drivers.
As “strategic competitors,” bilateral friction won’t go away anytime soon, but extensive economic integration and shared interests should facilitate longer-term accords and investment.
China’s GDP is changing, and creating new investment opportunities. Thornburg PM Lei Wang discusses the outlook for Chinese stocks, the market implications of the political turmoil in Hong Kong and prospects for European equities.
Supply and demand growth in liquefied gas benefits some producers more than others. For investors in U.S. upstream gas producers and Gulf Coast LNG infrastructure, caveat emptor.
While the Fed met expectations in its latest interest rate reduction, it signaled that hikes are a long way off.
Recent stress in repo markets reflect the confluence of a shrunken Fed balance sheet amid steady economic growth and increasing capital and liquidity regulations on banks.
Longer-term investors should focus on an energy company’s structural advantages in terms of asset base quality, operational efficiency and financial discipline, not the price of oil and gas.
A rising Treasury yield amid better economic data, easing macro risk and a few more monetary injections may be spurring the rotation. Corroborating, so far, a “mid-cycle adjustment”?
The market has bid up Brazilian assets in anticipation of economic reforms, but the optimism should be well measured and individual securities well picked.
The Fed is poised to join the global easing bandwagon, fueling a surge in risk asset prices. As market distortions from easy money grow, so does the importance of security selection and portfolio allocation.
As downward pressure on negative bond yields builds, a flexible approach helps in the search for attractive, relative values.
After a turbulent May, China and emerging markets appear poised to resume their ascent from the first quarter, even as trade-related air pockets remain likely.
The Fed is tasked with keeping prices stable, unemployment low and long-term interest rates moderate. The monetary alchemy with such unstable elements is coming under review.
Big-ticket, ultra-short notes force muni SMAs with low minimums to buy longer-term paper at rich prices, likely giving clients more heartburn than total return.
Despite sprinting higher so far this year, developing country equities appear well positioned to sustain their momentum, and with less volatility.
Spectacular first-quarter market returns are quite a bounce back from the December 26 lows, when all anyone could think of was fleeing risk exposures. Many markets saw their best quarter...
Turns out price matters for excess returns, and that what’s worked before doesn’t necessarily persist into the future. “Many factors aren’t real.”
Caveat emptor: current technical supply and demand flows favor issuers more than buyers. But diligent, disciplined investors can always find attractively priced, fundamentally sound bonds.
While investors should be cognizant of the complexities and risks around Brexit, they should be just as aware of the opportunities in select U.K.-based businesses.
Will emerging markets stocks rebound in 2019? Attractive valuations, strong forecast earnings growth, structural reforms, and an abating dollar headwind suggest they will.
It appears the “Powell Put” has been exercised as the Fed chief declares no “pre-set” course on rates and no “hesitation” to change its balance sheet runoff. But does the economy still need Fed accommodation, or do markets just want it?
The U.S. Federal Reserve has roiled markets with its latest rate hike and comments from Chairman Jerome Powell, who disappointed many investors as insufficiently dovish in his December 19 remarks.
The trade conflict and Fed rate policy are buffeting markets at a time China was already grappling with debt challenges at home. But the volatility may be masking good economic fundamentals globally, reform efforts in China, and attractive investment opportunities.
Conventional market wisdom two years ago didn’t look right for long, as gains in industries seen as politically favored faded while one sector expected to suffer quickly rebounded.
Positive catalysts are in place in all three countries, and across emerging markets valuations and earnings expectations make for a potential rebound in 2019.
Preparations ahead of a hurricane and rebuilding after it temporarily boost tax receipts in affected areas. But longer-term effects on muni markets are usually negligible.
Even before the market selloff, downtrodden value stocks were perking up as pricey growth stocks stumbled. But durable index-level shifts are harder to call than individual stock price disconnects from business fundamentals.
Deep declines are usually followed by rebounds that leave emerging market stocks with gains by year end, as the structural tailwinds are driven by steadily expanding middle classes. Meaningful, consistent exposures to the asset class are key to capitalizing on the long-run double-digit returns.
High-yield returns have been great lately, as technical flows, fundamental factors and good economic growth align. But tight spreads, lofty net leverage and event risk don’t make for smooth sailing ahead.
Investors interested in long/short equity mutual funds would be well advised to consider more than their much-more competitive fees vs. private hedge fund peers. To genuinely hedge the long components of a portfolio, look for lower net long exposures in a long/short equity allocation, and added value on the short side even in rising equity markets.
If the efficient markets hypothesis is questionable at the stock level, it’s more so at the index level. As the number of indices skyrockets, the number of companies declines, and passive flows grow, active price discovery becomes more and more valuable.
Turkish asset prices have plummeted this year, bringing their valuations to historically low levels. That presents potentially attractive opportunities to investors looking for quality stocks at bargain-basement prices.
The volatility of short-term rates, however, means the variable rate structure isn't a silver bullet.
Supply and demand dynamics, along with political fuel injection, may keep crude prices running hot.
Emerging market stocks are trading near bear market territory, but that’s par for the course for longer-run, rising returns.
Team performance matters more than star players or a large resource base. And in a rapidly changing world, Totaalvoetbal can help teams adapt.
Many forces undercut and bolster the greenback. Rather than accepting unknown risk around its near- or long-term direction, dollar-based equity investors may be better served using currency hedges so they can focus more on the individual merits of overseas securities.
Risk to the euro resurfaces in an unlikely governing coalition and challenging economic agenda, but Italy’s top stocks don’t face the same perils as its government bonds.
High-quality bonds and defensive stocks are on the ropes. And U.S. blue-chips look poised to roll over, if history is any guide. But what if it isn’t?
The Fed chairman makes clear the bar for slowing monetary tightening is higher nowadays, and argues emerging markets are much better positioned to handle higher U.S. yields than they were before.
Bond supply is plummeting, but so is demand. And rates are rising. Where are the silver linings?
Stocks slide on rising rates and yield curve inversion concerns, but a recession doesn't look likely, judging by other economic data and the high-yield bond market.
Yet the earnings potential of developed and emerging markets stocks is real, since they are at earlier points in their respective business cycles.
Facebook’s margins could ebb this year, but they remain at elevated levels and profits could still grow meaningfully.
While U.S. tech giants are effective monopolies, they are so in an unconventional way, making taxing them easier than breaking them up.
China has dropped norms to allow President Xi Jinping to remain in power after his second term ends. While worrisome at first blush, the populist turn and consolidation of power likely has near-term economic and financial market benefits, and longer-term political risks.
Not necessarily the Fed, whose own research suggests wage growth is not a reliable indicator of future inflation. But markets, it appears, aren’t sure what to think.
EM ETFs suffered deviations in their market prices relative to their net asset values, with their total returns materially underperforming the broad emerging market index.
Investors worried about wage and inflation data should appreciate the underlying strength of the economy, not to mention strong corporate earnings. The market volatility is creating better entry points for longer-term investors.
Samsung is no longer a stodgy conglomerate (or chaebol in Korea) that just makes consumer and industrial electronic devices and equipment, along with some home appliances. Its sales of semiconductor chips and panels account for nearly half of total revenues.
At the beginning of every year, a number of investment professionals at Thornburg voluntarily place their informal, internal-only bets on which three securities—from stocks to currencies or other financial assets—might together produce the best beta-adjusted returns in the year ahead. In 2017, the winner was Sean Sun, whose three picks included bitcoin. The cryptocurrency skyrocketed last year, of course, helping Sean win the prizeless competition by a wide margin.
The Central Bank of Mexico has raised the policy rate a quarter point to 7.25%, its highest level in nearly nine years. Banxico, as the Mexican monetary authority is known, had been widely expected to...
Emerging market assets have mostly had a gangbuster 2017 across the board, from stocks to bonds and currencies. But some macroeconomic headwinds and “idiosyncratic” or country-specific risks...
Four-hundred million Chinese millennials will soon account for more than half of China’s domestic consumption. As a group, they are larger than the working populations of the U.S. and Western Europe...
In an unexpected move, the government of India has announced a $32 billion plan to recapitalize the country’s sour-loan laden public sector banks, its biggest step so far in addressing a lingering problem...
Investors have looked beyond divisive, populist politics in the U.S., the U.K., Spain, and elsewhere in Europe, focusing instead on accelerating global economic growth and surging industrial metals prices...
As third-quarter earnings season gets underway in earnest this week, equity market participants are expecting company fundamentals and reported results to be larger drivers of performance for large...
When can a country's bluechip stocks be a bargain if they're trading at historically high forward earnings valuations after posting world-beating returns over the last two decades? Right now, if they're Indian ...
The U.S. Federal Reserve has announced the October start of the slow reversal in the unprecedented expansion of its balance sheet following the 2008 Global Financial Crisis. Chairwoman Janet Yellen...
The Iditarod is considered one of the world's most grueling and dangerous races. Sled dogs travel 1,100 miles through increasingly treacherous arctic terrain. The dogs and mushers traditionally run the entire day and then rest at night...
Future growth projections for electric vehicles vary dramatically, but all reflect real opportunities for fundamentals-focused investors surveying the links in supply and production chains.
Can long/short alternative equity strategies work as a “bridge” between equity and fixed income? It’s an interesting question recently posed to us by a wealth advisory team. Both asset classes become...
Most U.S. risk asset prices have enjoyed a long ride higher amid slow-but-steady economic growth, scant inflation and still ample central bank monetary support. But if fund flows are any indication of...
A common misperception is that American depositary receipts, which bundle ordinary shares of an overseas-listed company into a U.S.-traded security, don’t carry currency risk. Driving the confusion is...
Geopolitics is shaking global markets, with the epicenter of the latest tremors coming from the Korean Peninsula. Fiery rhetoric out of Pyongyang is nothing new. But it is certainly novel coming from the...
When the curators at Merriam-Webster convene to select their Word of the Year for 2017, they might consider “Amazonization” for their short list. Since the June 15th announcement of Amazon’s...
How smart are “smart beta” products? As factor-based investing is the latest fashion in the allocation trend to passive exchange traded funds, the performance of the most popular among smart beta...
In the early 1960s, a meteorologist undertook a mission to predict the weather. Unique to his approach at the time was his extensive use of computers to assist in the predictions. He began running...
Among the lingering misconceptions about emerging markets is that they are proxy plays on commodities, prices of which presumably drive returns in developing country stocks. Historical...
Bank loan funds have been widely touted as a great way to help fixed income investors ride out a rising interest rate cycle. Also known as levered loan or senior loan funds, they are, after all, high...
If China is a master of incremental reforms to gain admission to select economic and financial circles, only to bend the rules after access is granted, MSCI appears well aware of its playbook. Whether...
After years of excellent equity returns at home, U.S. investors appear increasingly interested in moving their chips into less crowded trades abroad, where economic growth is on the upswing, earnings cycle...
Despite weaker economic data of late, the U.S. Federal Reserve matched market expectations in raising its benchmark interest rate June 14, 2017 a quarter point, setting its new range to a still highly...
China’s Baosteel Group is now the second-largest steel company in the world after ArcelorMittal, but it is the undisputed leader in the Middle Kingdom, where roughly half the world’s steel is produced. I...
"When a measure becomes a target, it ceases to be a good measure." This insight comes from economist Charles Goodhart, whose precept refers to the tendency of individuals or organizations...
Brazilian asset prices tanked May 18 following a local media report implicating President Michel Temer in alleged hush-money payments to former lower house Speaker Eduardo Cunha, who is now...
The political squalls blowing from north of Mexico’s border took a heavy toll on the Aztec nation’s asset prices at the beginning of the year, but as we noted a few days after Donald Trump, whose...
After nearly a decade of conservative administrations, South Koreans have elected a leftist human rights lawyer as president. Moon Jae-in's pledges to take a conciliatory tact with Kim Jong-un’s volatile regime...
After falling more than 6% in a week, oil prices pared their losses Friday, May 5, rebounding 1.6% as the “tug of war” between Organization of Petroleum Exporting Countries (OPEC) and U.S. shale...
It's the Rorschach economy. After much weaker-than-expected U.S. first-quarter gross domestic product (GDP) data, it seems economists' views range from....
European asset prices have surged since independent Emmanuel Macron emerged as the decisive winner in the first round of the French presidential election...
In contrast to last year’s volatility in the first quarter, global equity markets showed strong returns during the first three months of 2017. Economic indicators and earnings around the world are beating...
Morningstar’s director of exchange-traded fund research penned an interesting article April 12 on the total cost of ETF ownership, which we also wrote about in a recent article examining the latest...
The U.S. Federal Reserve has released the minutes from its March monetary policy meeting, suggesting that the unwinding of trillions of dollars in debt on its balance sheet could start later this...
Chinese Premier Li Keqiang once told a U.S. diplomat that China's official GDP data was “man made,” according to Bloomberg. To glean more accurate measures of growth, he instead looked at...
South Africa’s political tensions intensified on March 30 following President Jacob Zuma’s sweeping cabinet reshuffle, which included replacements of respected finance minister Pravin Gordhan and his deputy ...
Recently, much has been made about the divergence between hard and soft data on economic fundamentals in the U.S. On March 28, the Conference Board reported that its consumer confidence...
The U.S. Federal Reserve shifted gears at its March 15, 2017, monetary policy meeting, lifting its key Federal funds rate a quarter-point to a 0.75-1.00% range. Although the increase was widely flagged...
After leaving its benchmark interest rate near zero for eight years and then lifting it just once in each of the last two, the market has grown accustomed to discounting U.S. Federal Reserve indications...
The International Energy Agency (IEA) Friday reported the best compliance on an oil output cut agreement in the history of the Organization of Petroleum Exporting Countries (OPEC). While this is...
For a country steeped in its customs, India's government and central bank have taken a liking to the element of surprise. The policy announcements have been far from pleasant, causing people...
In the wake of Donald Trump’s November electoral victory, investors focused on his pro-growth agenda of tax reform, deregulation and infrastructure spending, not on his protectionist and...
Over the last 10- and 15-year periods, the MSCI emerging market consumer discretionary, consumer staples, and health care sectors have massively outperformed energy and materials. This...
After three straight years of declines, developing country stocks regained some ground in 2016. Yet the MSCI Emerging Market Index's 11.2% total return in 2016 came with marked volatility along...
Markets this year have gotten off on the right foot. Over the first three weeks of 2017, the S&P 500 Index added 1.3% to its 12% gain in calendar 2016, while the Bloomberg Barclays U.S. Aggregate...
Many investors might see bank loans as “fixed income” without duration risk, given their floating-rate structure. They may use them as a way to reduce their exposure to rising risk-free rates without...
Recent municipal bond market movements mark a transition from a period of significant overvaluation to fair or even under-valuation. This can be a painful process for muni market...
The December U.S. jobs report wasn’t particularly surprising, though a couple of nuances are worth considering for fixed income investors. While the economy added 156,000 jobs, which was a bit...
