Howard Marks Says Distress Coming, Fed Support Isn’t Forever

Oaktree Capital co-chairman Howard Marks says that while the Fed’s efforts have bolstered debt prices, the support is temporary and credit markets will become distressed when the Fed support lets up. This according to a recent Bloomberg article. Marks told Bloomberg, “Those of us in the markets believe that stocks and bonds are selling at prices they wouldn’t sell at if the Fed were not the dominant force. So, if the Fed were to recede,… Read More

Seven Mind-Blowing Charts from the COVID-19 Crisis That Deserve Your Attention

By Justin Carbonneau (@jjcarbonneau) They say a picture is worth a thousand words. The pictures and charts outlined below may actually be worth much more: 30 million unemployed. $7 trillion on the Fed’s balance sheet. Just how much the Amazons, Googles and Large Cap technology stocks have delivered over other areas of the market like value. A 250% increase and a 50% decrease in Internet search trends and behavioral shifts. 40 years of falling interest… Read More

Long-Term Coronavirus Damage Must Be Reduced by Fed

In a new series on the “economic cures” for the coronavirus, the Financial Times is offering insights from leading commentators and policymakers on “how to alleviate a devastating global slowdown”. This article, co-authored by Ben Bernanke and Janet Yellen, discusses the role the Fed must play to reduce long-term damage. Here are highlights: The Fed’s recent actions of lowering interest rates (to nearly zero) and preparing to purchase $700 billion in Treasury debt and mortgage-backed… Read More

“The Fed is Clueless” says Bob Rodriguez

A recent article in Advisor Perspectives offers highlights of an interview with Robert Rodriguez, award-winning fund manager and former managing partner at Los-Angeles-based asset manager FPA. Here is a summary of his comments: “Monetary policy has gone from the ridiculous to the absurd. The Fed, in my opinion, is clueless and is driven by theories with little basis in reality.” He believes that the central bank has been “consistently on the wrong side of economic… Read More

Drunkenmiller and Warsh: Perspective on Fed Tightening

In an article for The Wall Street Journal, co-authors Stanley Druckenmiller (chairman and CEO of Duquesne Family Office LLC) and former Federal Reserve Board member Kevin Warsh argue that the Fed should suspend its “double-barreled blitz of higher interest rates and tighten liquidity.” “The Fed created quantitative easing as a novel crisis-response tool a decade ago,” the article explains. “It bought assets from the public and stocked them away for safekeeping. Market participants understood the… Read More

How the Fed’s Rate Hikes Affect Investors

A recent Vanguard blog addresses the issue of the Fed’s ongoing rate hike program and how it will affect investors. Here are highlights: “Higher yields on cash are good news for savers”—the article notes that since the Fed started raising rates in December 2015, investors have moved more than $60 billion into money market funds, and those inflows could rise with further rate hikes. Mixed outlook for bonds—”Bond investors might cringe at our outlook for… Read More

Paul Tudor Jones Sees Year-End Rally Spoiled by Fed

In an interview last month with CNBC, famed hedge fund manager Paul Tudor Jones predicted a strong year-end market rally but argued that the Fed’s continued rate hike campaign will lead to a downturn. This according to an article in Chief Investment Officer. “I think this is going to end with a lot higher prices forcing the Fed to shut it off,” said Jones. While he doesn’t predict a stock market crash (like he did… Read More

Jeffrey Gundlach’s Market Worries

 DoubleLine Capital CEO Jeffrey Gundlach, who “sounded alarms about housing in 2006” doesn’t see any disasters in the offing, according to a recent article in Barron’s. “But that’s no reason to relax,” the article adds. The article outlines comments from an interview with the celebrated bond-fund manager. Here are some highlights: “Periodically,” says Gundlach, “the world is afflicted by mass psychosis,” alluding to the subprime mortgage crisis and the dot com bubble. He cites the cryptocurrency… Read More

Ray Dalio Says Market Surge Ahead

 At the recent World Economic Forum in Davos, Switzerland, billionaire Ray Dalio told CNBC that the coming tax cut could lead to big gains for the U.S. stock market. “We are in a Goldilocks period right now,” said the Bridgewater CEO. “Inflation isn’t a problem. Growth is good,” he said, predicting a “market blow off” rally fueled by cash from banks, corporations and investors. “There is a lot of cash on the sidelines,” he added. “If… Read More

The Effect of Quantitative Easing on Investment Cycles

By Jack Forehand (@practicalquant) —  “Hindsight gives us the illusion that the world makes sense, even when it doesn’t make sense” — Daniel Kahneman This time is different. If there is one phrase in investing that I have seen consistently lead to bad outcomes, that is it. It is what you heard over and over again in 1999, when investors felt that we were in a new world and the rules of valuation that held up… Read More