There are many reasons to be optimistic about the economy. Nobody can predict exactly how our nation’s budgetary constraints will play out, but it is important not to lose sight of them, especially when the economy is strong.
The Fed has raised interest rates multiple times this year, leading to considerable discussion about the possibility of an inverted yield curve
All of this indicates that the Fed’s decision to keep rates low for so long could have been based on the premise that a weaker economy necessitates a lower neutral rate.
The Muni market is a good place for investors to have a positive social impact with their investment holdings. Our firm has not offered a specific ESG strategy, but we have always placed an emphasis on these types of Muni investments.
We have concerns about the rapid growth of Muni ETFs and the liquidity mismatch that exists. Investors may suffer performance drag caused by this mismatch during periods of stress in the Muni market due to negative fund flows caused by investor redemptions.
An investor who has an account at a brokerage firm is at a severe disadvantage in the Muni market.
We believe an excellent investment opportunity currently exists in the Natural Resources and Energy (such as gold and oil) markets.
The strategy seeks to create portfolios of Closed End Funds (CEF’s) that provide a high level of current income with the potential for capital appreciation.
We do not believe current economic conditions warrant a Fed policy which is so restrictive it might create an inverted yield curve. Unfortunately, the Fed has a history of tightening credit conditions until something breaks. We would like to believe this time will be different.
The fear of catastrophic trade wars, which would send the economy into a tailspin, has recently helped to increase volatility in the equity markets.
The recent tax cuts have created a sense of euphoria in the equity markets as investors believe the cuts will serve as a driver of economic growth. While we believe they may stimulate growth in the short term, we are concerned about the mentioned headwinds for the economy and their drag on economic activity.
New rule (G-15) will require brokerage firms to disclose the mark-up or mark-down on bonds. The transparency caused by this rule will make fee-based models using Separate Account Managers more attractive going forward.
Our research shows inflation tends to be a late-cycle phenomenon. Since the fiscal stimulus is coming more than 8 years after the beginning of this economic recovery we should see some upward pressure on prices this year.