Investment Insights Podcast: Who is the next Fed Chair?

Holland_Podcast_150x126Tim Holland, CFA, Senior Vice President, Global Investment Strategist

On this week’s podcast (recorded October 30, 2017), Tim discusses who President Trump might announce as his nominee for Chair of the Board of Governors of the Federal Reserve System.

Quick hits:

  • The three leading candidates seem to be Fed Governor Jerome Powell, Stanford Professor John Taylor and Chairwoman Yellen.
  • While any prediction tied to the Trump Administration comes with a heightened level of risk, we believe Mr. Powell will be chosen by the President to serve as the next Fed Chair.
  • If Mr. Powell does become the next Fed Chair, we don’t expect much of a change near-term concerning U.S. monetary policy.

For Tim’s full insights, click here to listen to the audio recording.

 

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Investment Insights Podcast: Your Third Quarter Status Report

Hart_Podcast_338x284Chris Hart, Core Investment Manager

On this week’s podcast (recorded August 30, 2016), Chris is back on the mic to provide a market update as the end of the third quarter draws near. Discussion topics include the health of global and domestic markets and reaction to the latest Fed meeting, but here a few quick hits before you listen:

  • So far in the third quarter, despite major indices posting modest losses last week, markets continue to move higher as we approach Labor Day and the end of summer.
  • Fed Chair Yellen is still not willing to commit to a rate hike, but also noted that the case for a rate hike has strengthened in recent months.
  • While the September rate hike probability fell to less than 10% post-Brexit, it has now moved to 42% according to Haver Analytics in recent weeks.
  • Overall, we remain constructive on risk assets, but believe prudence is warranted and volatility should continue to trend higher.

For the rest of Chris’s insight, click here to listen to the audio recording.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Investment Insights Podcast – Central Banks Back Economies

miller_podcast_graphicBill Miller, Chief Investment Officer

On this week’s podcast (recorded March 17, 2016), Bill explains why recession concerns should continue to lessen and what to expect from the upcoming earnings season:

What we like: Recent Wall Street Journal survey indicates that investors are becoming less fearful of a recession; that trend should continue as central banks across the world are firmly standing by their economies–Janet Yellen most recently

What we don’t like: Second quarter earnings season likely to have residual effects from the weak first quarter; markets may trend sideways for a time; corporations have been the largest buyers of stock but have to step aside during earnings season

What we’re doing about it: Continuing to look for opportunities within high-yield, energy and natural resources

Click here to listen to the audio recording

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Investment Insights Podcast – November 6, 2015

miller_podcast_graphicBill Miller, Chief Investment Officer

On this week’s podcast (recorded November 5, 2015):

What we like: Clearer reasoning into why the economy was weak during summer months; inventories were too high, so businesses (smartly) quit building inventory allowing a drawdown; final demand for goods and services was positive; ultimately, slowdown seems temporary, lending itself to a positive outlook for fourth quarter; Central banks supporting economic growth via quantitative easing measures.

What we don’t like: Janet Yellen stated that she may in fact raise interest rates (by December); spooked the bond market as it seemed unlikely until 2016.

What we’re doing about it: Evaluating the soon-to-be-released employment report and its impact on Yellen’s potential decision.

Click here to listen to the audio recording

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Investment Insights Podcast – September 18, 2015

miller_podcast_graphicBill Miller, Chief Investment Officer

On this week’s podcast (recorded September 18, 2015):

What we like: Janet Yellen announced no hike to interest rates; investors had been tracking her policy decision for weeks, making it a distraction, but now some of that stress is alleviated; Yellen was decisive and clear that they wouldn’t raise rates near-term and when they do, there will be fair warning; investors can now focus on the global economy as opposed to that and Fed policy

What we don’t like: As we shift focus to the economy, economic data is currently mixed; employment, housing, and auto are good, manufacturing and production not as much; China, Europe, and Japan have patchwork economic data as well–some good, some bad.

What we’re doing about it: Focusing on growth for investors; watching for earnings reports in early October; leaning more bullish

Click here to listen to the audio recording

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change.

In the Conversation: No Surprises Here

Tom WilsonTom Wilson, Managing Director, Wealth Advisory &
Senior Investment Manager

After completing their two days of meetings, The Federal Reserve decided to leave the Federal Funds Rate unchanged. As noted in yesterday’s blog, this was the consensus opinion of what would take place today.

The Fed noted that general business conditions had improved since their last meeting in July. They specifically noted the continued improvement in the labor markets, strength in the housing sector, and modest improvement in consumer and business spending. On the negative side, they stated that export growth has been soft and that inflation continued to run below the committee’s longer-term target. In addition, Fed chair Janet Yellen commented that weakening global growth had also contributed to today’s low level of inflation.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change.

Investment Insights Podcast – July 29, 2015

miller_podcast_graphic Bill Miller, Chief Investment Officer

On this week’s podcast (recorded July 23, 2015)

What we like: Mid-cycle economy call; more consumer, residential and employment focused economy; 42-year low for unemployment; strong housing

What we don’t like: Possible monetary mistake from Janet Yellen; potential rise in interest rates will cause concern in investors’ minds

What we’re doing about it: Watching how strong the economy is and listening to what Janet Yellen is communicating

Click here to listen to the audio recording

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change

Investment Insights Podcast – July 24, 2015

miller_podcast_graphicBill Miller, Chief Investment Officer

On this week’s podcast (recorded July 17, 2015):

What we like: The Greeks and Europeans worked out a deal, strong start to earnings season

What we don’t like: Attention shift to Janet Yellen’s plan to raise interest rates; raise could go into early next year

What we’re doing about it: Destinations reallocation maintained risk exposure; covered shorts and adding to our long positions in Europe

Click here to listen to the audio recording

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change.

Monthly Market and Economic Outlook: March 2015

Amy MagnottaAmy Magnotta, CFASenior Investment Manager, Brinker Capital

Global equity markets delivered solid gains in February, helped by a stabilization in crude oil prices, signs of better economic growth in Europe, and a short-term resolution in Greece. It was a “risk-on” environment for U.S. equities, with the S&P 500 gaining 5.8%, despite more mixed economic data. Cyclical sectors, like consumer discretionary and information technology, posted gains of more than 8%, while the more defensive utilities sector fell more than -6% during the month. In the U.S. growth outpaced value, but there was little differentiation by size.

International developed equities were slightly ahead of U.S. equities in February despite continued U.S. dollar strength. European equities in particular exhibited strength ahead of the ECB’s quantitative easing program. Emerging market equities had positive returns in February, but lagged developed markets. Brazil, India and China were all relatively weak, while emerging European equities fared the best. A ceasefire agreement with Ukraine, as well as the stabilization in oil prices, helped boost Russia’s currency and their equity markets, which gained more than 22% in USD terms.

U.S. Treasury yields rose in February, with the yield on the 10-year Treasury note climbing 32 basis points to 2.0%. In her comments to Congress, Fed Chair Yellen laid the groundwork for the Fed’s first rate hike this year, which could come as early as June. All sectors in the Barclays Aggregate were negative in February, with Treasuries experiencing the largest decline. High yield credit spreads tightened meaningfully during the month and high yield bonds gained more than 2%. Municipal bonds were slightly behind taxable bonds for the month.

Our outlook remains biased in favor of the positives, while paying close attention to the risks. We feel we have entered the second half of the business cycle, but remain optimistic regarding the global macro backdrop and risk assets over the intermediate-term. As a result our strategic portfolios are positioned with a modest overweight to overall risk. A number of factors should support the economy and markets over the intermediate term.

  • Global monetary policy accommodation: Despite the Federal Reserve heading toward monetary policy normalization, the ECB and the Bank of Japan have both executed bold easing measures in an attempt to support their economies.
  • U.S. growth stable: Economic growth has improved over the last few quarters. A combination of strengthening labor markets and lower oil prices are likely to provide the stimulus for stronger-than expected economic growth in the near-term.
  • Inflation tame: Reported inflation measures and inflation expectations in the U.S. remain below the Fed’s 2% target.
  • U.S. companies remain in solid shape: U.S. companies have solid balance sheets are beginning to put cash to work. Earnings growth has been decent and margins have been resilient.
  • Less uncertainty in Washington: After serving as a major uncertainty over the last few years, Washington has done little damage so far this year; however, Congress will still need to address the debt ceiling before the fall. Government spending has shifted to a contributor to GDP growth in 2015 after years of fiscal drag.

However, risks facing the economy and markets remain, including:

  • Timing/impact of Fed tightening: The Fed has set the stage to commence rate hikes later this year. Both the timing of the first rate increase, and the subsequent path of rates is uncertain, which could lead to increased market volatility.
  • Slower global growth: While growth in the U.S. is solid, growth outside the U.S. is decidedly weaker. The Eurozone is flirting with recession and Japan is struggling to create real growth. Growth in emerging economies has slowed as well.
  • Geopolitical risks: Issues in Greece, the Middle East and Russia, could cause short-term volatility.
  • Significantly lower oil prices destabilizes global economy: While lower oil prices benefit consumers, should oil prices re-test their recent lows and remain there for a significant period, it would be a negative not only for the earnings of energy companies, but also for oil dependent emerging economies and the shale revolution in the U.S.

While valuations have moved above long-term averages and investor sentiment is neutral, the trend is still positive and the macro backdrop leans favorable, so we remain positive on equities. The ECB’s actions, combined with signs of economic improvement, have us more positive in the short-term regarding international developed equities, but we need to see follow-through with structural reforms. We expect U.S. interest rates to remain range-bound, but the yield curve to flatten. Fed policy will drive short-term rates higher, but long-term yields should be held down by demand for long duration safe assets and relative value versus other developed sovereign bonds.

However, as we operate without the liquidity provided by the Fed and move through the second half of the business cycle, we expect higher levels of market volatility. This volatility should lead to more opportunity for active management across asset classes. Our portfolios are positioned to take advantage of continued strength in risk assets, and we continue to emphasize high conviction opportunities within asset classes, as well as strategies that can exploit market inefficiencies.

Asset Class Outlook Comments
U.S. Equity + Quality bias
Intl Equity + Country specific
Fixed Income +/- HY favorable after ST dislocation
Absolute Return + Benefit from higher volatility
Real Assets +/- Oil stabilizes; interest rate sensitivity
Private Equity + Later in cycle

Source: Brinker Capital

Views expressed are for informational purposes only. Holdings subject to change. Not all asset classes referenced in this material may be represented in your portfolio. All investments involve risk including loss of principal. Fixed income investments are subject to interest rate and credit risk. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting and financial reporting. Past performance is not a guarantee of similar future results. An investor cannot invest directly in an index.

Investment Insights Podcast – February 25, 2015

Bill MillerBill Miller, Chief Investment Officer

On this week’s podcast (recorded February 24, 2015):

What we like: Yellen’s comments to Congress; supportive of economy; interest rates likely not to rise until later in the year; ECB buying sovereign bonds; Japan and China supportive of their economies; global synchronized expansion

What we don’t like: U.S. stocks getting more expensive; Apple stock at high altitude; additional valuations are high

What we’re doing about it: Keeping an eye open on when to add protection to some portfolios

Click here to listen to the audio recording

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change.