Risk aversion is on the rise again as investors begin to question President Trump’s trade policies and as we’ve begun to see changes in asset allocations.
Equity markets trended lower after the Fed’s March meeting minutes were reported. In the minutes, some FOMC members sound concerned about the rise in equities.
After the election results were announced in the US, the Dollar Index (UUP) surged to levels above the 103 mark in anticipation of fiscal stimulus, tax breaks, improving economic conditions, and the possibility of rate hikes.
Global growth is expected to drag itself into greener pastures supported by the improving global and US factory output and sentiment indicators.
The US Fed has gradually increased interest rates without spooking the fixed income markets and continues to project future hikes.
The US Fed remained on its course of normalizing rates, announcing its first hike for 2017 of 0.25% in March.
Trump is unlikely to back down on other election promises that he made during his campaign.
The S&P 500 Index (SPY) and the US dollar (UUP) (USDU) have witnessed some pressure after the failure of the proposed American Health Care Act.
As the Federal Reserve begins to tighten the credit cycle, the potential impact on various equity sectors varies.
After remaining subdued for the past few months, gold futures last week recorded their highest weekly gain of 2.4% since February 3.
Higher interest rates affect bonds much more than stocks because interest rates and bond prices are inversely proportional to each other.
The increase in interest rates has a ripple effect on the economy and the stock market (SPXL).
Despite the stellar run that financials (FAS) have had since the US elections in November 2016, financials are trading at very reasonable levels.
VAN ECK: In fixed income, investors have to deal with this more volatile environment, and we see four different ways they can go with it: Number one, you can shorten…
BUTCHER: How do you expect the Trump administration to affect your outlook? VAN ECK: As an investor, you have to filter out a lot of the noise and just look…
JAN VAN ECK: U.S. equities were affected because corporate earnings turned positive only when energy companies started recovering in the third quarter. In fixed income, high yield improved after investors…
Buoyed by the improving economy, US corporate earnings jumped 7.9% YoY (year-over-year) in 4Q16, according to data from Thomson Reuters.
According to Morgan Stanley, US high yield bonds (IGHG) (LQDH) generated a return of 14.4% in 2016.
Donald Trump’s corporate tax plans have the potential to infuse immense liquidity in the economy.
The S&P 500 Energy Select Sector (XOP) (OIH) is trading at the highest PE ratio of ~32x relative to the other sectors based on EPS estimates for 2017.