The slow improvement in consumer borrowing interest remains a threat to the U.S. dollar against some, but not all, developed-market peers. But its steepening influence on sovereign yield curves has likely peaked.
All eyes are on China's holdings of U.S. Treasuries because of the trade war, but Japan has quietly sold more since the trade war started.
Today topics include Trump vs the Fed, bond traders dump U.S. Treasuries, reasons for Tuesday's melt-up, the FOMC minutes, the money management business, diversifying during volatile periods, momentum investors have it too easy, the M&A boom and the student loan crisis.
There is an old line about history rhyming instead of repeating. Risk-off is different in 2018, but we are still in the longest risk-off cycle since December 2016. The next phase of the cycle has favored U.S. dollar strength.
Investors are seeking short duration as the new risk-off destination of choice in 2018. Bouts of no-to-positive correlation between equities and U.S. Treasuries could exacerbate the need to discover what the new 'balanced portfolio' will become.
The midterm elections are three weeks from today. Democrats continue to hold a sizable lead in the House while Republicans hold a lead in the Senate. However, below the surface, these races might be closer than they appear.
A transcript of our October 11, 2018 conference call.
Today's topics include bearish fund managers, Saudi Arabia and crude oil, earnings, the U.S. 10-year yield, timing the rate hikes, Yellen calls out Trump, hedge funds may be done offloading, the stock/bond correlation, Brexit and Goldman says the worst is over.
The wealth management industry is so dominant that they own half of all outstanding ETFs. Their most popular strategy is a variation of the 60/40 portfolio. This has not been working this year and lots of questions are being asked.
Average wage growth near 3.0% year-over-year is masking a significant divergence between manufacturing and services labor. Their gap in growth currently nearing 2.0% has historically explained waves of physical and mental stress felt by consumers.