Best Blogs of the Week

Best Blogs of the Week #276

As we transition from summer to fall, multiple posts cover the perceived high prices in the US equity markets. Here are two of our favorites.

American Century – Navigating Risks Amid High Prices and High Hopes – While expectations that a Trump presidency will be pro-growth seem reasonable, the actual impact will not crystallize until policies move forward. These uncertain policy outcomes, coupled with higher interest rates, inflation and trade restrictions, could create headwinds.Transition

WisdomTree – Is the Current U.S. Equity Market Rally Sustainable? – Market valuations have extended; however, correlations themselves have not gone up but, rather, have consistently declined. With a current base number of .16, they have enough upside to go before they reach alarming levels. (Sources: WisdomTree, Bloomberg, as of 7/31/17) In other words, any market correction now would probably offer investors ample time to cut their allocation to U.S. equities. In such an environment, missing on market participation because equities have run up a lot may be a painful strategy. In my opinion, for a moderate to aggressive allocation there is more to gain by riding equity allocations—especially to fundamentally strong companies and indexes built with a sensitivity to valuations.

Best Blogs of the Week #275

Formats matter in blog posts. This week I highlight three important blog components. Not shockingly, high-quality posts have:

  1. an excellent title
  2. at least 1 compelling or different graphic
  3. high-quality, concise writing


Best title comes from…

Aberdeen for “Week in review: White House meltdown

A compelling chart from …

M&G for “Be wary of our obsession with anniversaries


High-quality writing comes from …

Invesco for “Global fixed income: What market threats lie ahead?” with this

  • The good: The synchronized global cyclical upswing will likely continue, in our view. This would mean good growth with inflation generally below major central banks’ targets — a situation that would encourage policy normalization but without too much tightening.
  • The bad: In the longer term, however, the trends don’t look as positive. Adverse demographics and low productivity growth are likely to restrict economic growth prospects in developed and emerging markets.
  • The ugly: Key political and policy threats in the US, Europe and China represent downside risks to the current cyclical upswing.


Best Blogs of the Week #274

Five high-quality posts this week made the best blogs of the week (as we pass the 5 1/4 years of cataloging the industry’s blog utilization). We haven’t highlighted five posts in a single week for over 2 years.

Aberdeen – Week in review: Europe grows while the UK slows – The positive news, combined with U.S. dollar weakness caused by President Trump’s political woes and the slower-than-expected pace of U.S. Federal Reserve interest-rate hikes boosted the euro against the dollar to its highest level in two and a half years.

BlackRock – Dispelling 3 myths about the markets and economy – Broad inflation will likely follow unemployment much more slowly during this cycle than it has historically, and it may well not dramatically overshoot the Fed’s 2% inflation target for a long time.

Invesco – What to make of the US dollar’s doldrums? – The results showed a significant -0.75 correlation between the US dollar and commodity prices, with the strongest commodity performance represented by the oval in the chart below.


Vanguard – What should clients use as a benchmark for success? – Many clients seem to believe that the S&P 500 is a reasonable performance benchmark. After all, it is the most widely discussed proxy for U.S. stocks and stock market returns.¹ So when they look at the performance of their portfolios and wonder how they’re doing, it’s understandable that the return of the S&P 500 comes to mind. However, while this index is one benchmark for returns, it is certainly not the right one for typical clients, whose portfolios tend to be fairly diversified between stocks and bonds.

Wells Fargo – Are markets on the verge of a correlation shift? – We could be on the verge of another shift in correlations, one that favors equity and credit exposure, unlike the last few years where it paid to invest in very high quality and long maturity fixed income securities.

Best Blogs of the Week #273

Two posts this week enveloping oft-used terms: smart beta & correlation.

BlackRockThe geekiest (and most important) number nobody is discussing – During the past 25 years, there has been a tendency for correlations to be higher when Fed policy is tighter. With the Fed tightening monetary conditions for the first time since the crisis, stock-bond correlations may be heading higher.

MainStay – Smart Beta: It’s Turning Up Everywhere – Some represent relatively minor tweaks to existing broad-based indexes, while others are more narrowly tailored to capture return from a specific geography, investing style, or asset class. As with any innovation, a great deal of education will be needed to help all different types of investors understand just how these different factors function and which approaches might be appropriate for them.


Best Blogs of the Week #272

Solely one blog post to include this week to discuss the impact of market-weighted and factor-based ETFs

Invesco – Are smart beta ETFs skewing stock valuations? – Despite the growth of smart beta, market-cap-weighted strategies still account for the vast majority of ETF ownership. Those ETFs do not have the rules-based mechanisms cited by critics as contributing to herding behavior.