The Financial Times – Is This Obscure Wall Street Invention Responsible for the Market Selloff? The surge in market volatility this week, after a long period of tranquility, left investors seeking a culprit. Critics began pointing to an obscure investment strategy pioneered by the world’s largest hedge fund, Bridgewater Associates. So-called risk-parity funds aim to… Continue reading Bridgewater Defends Risk Parity Funds
Bloomberg.com – Peter Coy: With Yellen Out of the Picture, Get Ready for Trump vs. Powell The new Fed chief will butt heads with the president if rate increases cool economic growth. If this turns out to be more than a shudder, Trump may start looking for someone to blame. And that someone could be… Continue reading The New Celebrity Death Match
The Financial Times – Bank of England warns of larger rises in interest rates The Bank of England said on Thursday that earlier and larger interest rises are likely in the months ahead to damp the effects of a stronger global economy on UK inflation. In a hawkish quarterly inflation report that pushed the pound… Continue reading The Bank Of England Wants To Combat Inflation With Faster Rate Hikes
While Trump’s tax cuts have been the focus of many headlines over the past several weeks, the dramatic cut in regulations under his administration should not be overlooked. The chart below, which shows the number of pages in the Federal Register, is our favorite measure to illustrate this. Whenever a new regulation is made, it must be… Continue reading Trump Continues Cutting Regulations
As we recently discussed, the Congressional ballot has tightened in recent weeks. Note that Trump’s average approval rating (rolling 5-day average of all polls) bottomed on December 17. Around the same time, the Democrats advantage over the Republicans in the Congressional ballot began to dwindle. Trump’s approval rating is still in a class… Continue reading Political Update
The velocity of fund flows has yet to accelerate, even during the recent bout of volatility. The failure to see dramatic swings between risk and safe assets suggests a lack of contagion following the VIX spike.
Short ETF investors are having a challenging week, and not just in the volatility space. The chart below shows the running total of net flows for short crude oil ETFs during the current risk-on cycle. As crude oil rallied through January, investors increased their short exposure to a peak of $484 million the week of… Continue reading Short ETF Timing is Hard
Volatility in the bond market rose above 60 yesterday from its low of 44 in late November.
Last Friday we highlighted an interactive visualization of payroll charts in Newsclips. Below are a few charts from it we found most interesting. For those who missed Friday’s post, the interactive charts below break down the labor market in a number of categories. Each tab defaults to show what we consider some of the more… Continue reading A Look at the Payroll Report
As the orange line below shows, negative-yielding debt has outpaced positive-yielding debt since the beginning of 2017 on a total return basis. The next chart shows the OAS (black), average maturity (brown) and average duration (red) of the negative-yielding bonds in Bloomberg’s Agg Index. We are not sure what these metrics mean when yields are negative.
The DJIA is up 41.18% since the election while the S&P 500 is up 29.66%. Despite the drop this week, the DJIA is still up 0.89% since the beginning of 2018 and the S&P 500 is up 0.94%. The NASDAQ is up 39.59% since the election and up 3.14% since the beginning of 2018.… Continue reading Stock Total Returns Since The Election