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    1. Insights

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    Insights to empower better decisions

    Tools and resources necessary to help you make informed investment decisions and build stronger portfolios

    EXPLORE OUR FLAGSHIP INSIGHTS

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    Liquidity Insights

    Discover our vast array of liquidity insights covering global investment news and trends.

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    Market Insights

    Market Insights

    Simplify the complex with our thought-provoking insights written by our global team of strategists.

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    Eye on the Market

    Explore timely commentary on the economy, markets, and investment portfolios by Michael Cembalest.

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    Portfolio Insights

    Portfolio Insights

    Get perspectives and analysis from our investment teams to help guide portfolio decisions.

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    OUR EXPERTS CAN GUIDE YOU THROUGH PERIODS OF EXTREME TURBULENCE

    LIQUIDITY INSIGHTS EYE ON THE MARKET MARKET UPDATES
    LIQUIDITY INSIGHTS

    RBA hikes rates, but pivots from a “pre-set path”

    At its monetary policy meeting on August 2, the Reserve Bank of Australia (RBA), in-line with expectations, hiked the base rate by 50bps to 1.85%, taking total rate hikes to 175bps over the past 4-months.

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    When does unusually large become usual?

    On July 27, the Federal Open Market Committee (FOMC) raised its Federal Funds Rate target range by 75 basis points (bps) to 2.25% - 2.50%. There were no dissenters.

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    Fed gets aggressive on inflation

    The Federal Open Market Committee matched market expectations for a 75bp increase to its target range, which now sits at 1.50%-1.75%. It also raised the Interest on Reserve Balances and the overnight Reverse Repo Rate by an equivalent amount to 1.65% and 1.55%, respectively.

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    Tempered Expectations

    The FOMC met market expectations for a 50bps increase to its target range, which now stands between 0.75% and 1.00%, and raised the Interest on Reserve Balances (IORB) and the overnight Reverse Repo Rate (RRP) by the same amount to 0.90% and 0.80% respectively.

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    PBOC’s muted monetary policy and its implications for CNY interest rates

    The latest muted actions by the PBoC suggest the central bank is reaching the limits of monetary policy, which are expected to have direct implications for onshore interest rates.

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    Fed lift-off

    On 15-16 March, the Federal Open Market Committee (FOMC) held its two-day meeting and raised its federal funds rate target range by 25 basis points (bps) to 0.25%-0.5%, with one dissenting member calling for a 50bps increase.

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    Monetary Authority of Singapore – Cautious optimism as recovery continues

    At their latest semi-annual policy meeting, the MAS' comments was modestly upbeat and the central bank revised up their headline inflation target - both of which could have implications for SGD cash investments.

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    EYE ON THE MARKET

    The second gear of the Manchin-Schumer bill

    Whenever there’s a tax/spending bill passed by Congress, the Congressional Budget Office “scores” the bill with respect to its impact on deficits, debt and GDP.

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    Long Hot Summer Reading List

    Most summer reading lists are carefully curated, inspirational elegies to the human spirit. This is not that. See today’s note for links to reading materials on energy, economics, finance, the Supreme Court, geopolitics and COVID/cancer research as this long hot summer rolls on. Also, a look at the recently unearthed “Shakespeare’s Annotated Guide to Bitcoin”.

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    Independence Days

    Europe’s energy crisis, China’s commodity trade war with Australia and other examples of resource nationalism (India and Indonesia restrictions on exports of wheat, sugar and palm oil) have reinforced the following: relying on essential food and energy imports is a risky proposition with respect to supply, price, currency stability and national security.

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    Eye on the Market 12th Annual Energy Paper

    The Elephants in the Room. We start with a global summary of the energy landscape, including the energy crisis in Europe. We continue with a detailed assessment of the hydrogen economy, whose liftoff is still many years away.

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    Dearly beloved

    JP Morgan CEO Jamie Dimon stated last week that he expects a “hurricane” resulting from the end of the largest fiscal and monetary experiment in history, and from the ongoing impact of Russia’s invasion of Ukraine on food and energy prices.

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    Bear Market Barometers

    The slowdown induced by central bank tightening is just starting. You can be patient when adding risk to portfolios; earnings will eventually decline and markets are not pricing in high risk of recession.

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    The Tide Goes Out: Growth Trade Aftermath

    A combination of rising rates, the Russian invasion of Ukraine and years of investor acceptance of unprofitable new companies (the “YUCs”) led to a sharp repricing of growth stocks in Q1 of this year.

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    Surveying the Damage

    Surveying the Damage: Russia’s recurring war on Ukraine, equity market declines and the opportunity for bottom-fishing investors, the energy price surge/recession outlook in Europe, the impact of rising metals prices on EV battery costs, and the COVID situation in Hong Kong

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    China and the Russian invasion of Ukraine; full steam ahead for the Fed

    In this note we examine the latest on China’s economy and markets. But first: comments on China’s connection to the war in Ukraine since its financial and energy decisions may dilute the effectiveness of sanctions on Russia:

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    Russia/Ukraine update: Energy implications

    The brief note covers the price Europe is now paying for allowing its energy reliance on Russia to reach extreme levels, and the implications for the durability of sanctions placed on Russia if Russia retaliates with energy sanctions on Europe.

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    Risk unwind, supply chains and the Ukraine

    Global markets have had to digest a lot of bad news in a very short period.

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    The Maltese Falcoin

    In this piece, we examine the adoption trends, capital flows and use cases for cryptocurrencies and blockchains. Use cases include crypto as a store of value, cross border remittances, decentralized finance, non-fungible tokens and blockchain adoption in financial services.

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    Eye on the Market Outlook 2022 - Reflation: Endgame

    A look at the consequences of reflation for equity markets that are already pricing in plenty of good news.

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    Manchin and the reconciliation bill

    You have all seen the news articles by now. The short version: Pelosi encouraged House Democrats to pass a bill that Manchin said all along he would not agree to. Read more for our thoughts on the fallout

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    The Middle Ages

    On equity markets, the Lombards, SPAC investors, Bone-setters, George Washington, COVID bots and Omicron

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    The Thing

    Some things just cannot be talked about. So in this year’s Thanksgiving piece, I wrote about something else.

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    Help Wanted

    In this Eye on the Market: early signs of goods bottlenecks easing; the more persistent issue of US labor shortages; the US, Taiwan, China, treaty changes and semiconductor capacity; and an update on the most over-indebted US states

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    Dude, Where’s My Stuff?

    The global supply chain mess will require increased vaccination and acquired immunity, semiconductor capacity expansion and the end of extraordinary housing/labor supports to resolve. A close look at some very anomalous charts on shipping, semiconductors, inventories, labor shortages, foreclosures and mortality.

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    Your Fall 2021 syllabus

    Greetings students. We look forward to seeing you back on campus. Your Fall 2021 syllabus is attached. Syllabus update: Biology BI66 “The Origins of COVID” has been cancelled until further notice.

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    Spaccine hesitancy

    Topics: if people avoided SPACs instead of avoiding COVID vaccines, the US would be both wealthier and closer to herd immunity. An update on our SPAC analysis from last February, and a look at the strange mathematical paradox that ends up understating some critical COVID vaccine efficacy data.

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    Red Med Redemption

    Red Med Redemption: A visual depiction of politics, ideology, vaccine resistance and the Delta variant. Other topics: US economic recovery update, and big tech reliance on acquisitions to fuel growth at a time of rising anti-trust enforcement. We conclude with a new “Investor Odds & Ends” section that covers NYC hotel/office markets and possible changes in personal, corporate and international tax rates.

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    Thy Brother’s Keeper

    COVID and the Delta variant; the Fed as firefighter and arsonist; US-China economic divorce picks up steam; and the pig-snake inflation timetable (how long until we know if there’s a permanent wage/price rise).

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    Food Fight: 2021 private equity update

    Every two years, we take a close look at the performance of the private equity industry given its rising share of institutional and individual portfolios. Our findings this year: the private equity industry is still outperforming public equity, but this outperformance narrowed as all markets benefit from non-stop monetary and fiscal stimulus, and as private equity acquisition multiples rise. We examine manager dispersion, benchmarks, co-investing, GP-led secondary funds, the torrid pace of industry fundraising and manager fees in this year’s piece.

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    Election 2020 - Praying for Time

    The election as referendum on America: how well does the “system” work, and for whom?

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    The Needle and the Damage Done

    The cost of engineering a US recovery as the world waits for a vaccine; Biden agenda on taxes/spending; Tech stocks (2020 vs 1999); COVID and The Fountainhead; US election rules, dates and process in light of derogatory comments on mail-in voting by the President and Attorney General

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    The Bounce

    The US recovery; The flood of money and market returns; Globalization lives; Reducing COVID mortality through vascular treatments; Realistic timetables for never-been-done before vaccines; Sweden’s COVID experiment is not what you think

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    The Day After

    Tracking the rebirth of the US consumer with real time data as a function of infection levels and state policy. Additional topics: no evidence yet of material second waves of COVID infection, and a round-up of the latest news on vaccine trials (Moderna, Oxford, Sinovac) and anticoagulants.

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    Zoom Room

    In this week’s Eye on the Market, we review topics from our recent client Zoom calls. Topics include: risk of inflation, second waves of infection, the effectiveness of lockdowns and Biden’s taxation and spending agenda.

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    Ready or Not: The US prepares to reopen

    An update on the COVID-19 crisis as the US prepares to reopen despite having one of the highest infection rates in the world. Additional topics: monoclonal antibodies and anti-viral trials; the growing gap between markets and the economy; S&P 500 earnings haves and have-nots; regional equity performance (Europe loses again) and leveraged loans at a time of rising bankruptcies.

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    State's Rights

    In this week’s note, we discuss the latest news on US infection trends and reopening plans, Remdesivir trial results and whether US fiscal stimulus is “enough”.

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    Are we there yet?

    Lockdown relaxation and economic reawakening…are we there yet?

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    COVID and culture

    In this week's note, we take a close look at country and regional virus data, and examine the pitfalls of over-extrapolating trends that often reverse.

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    The equity rally and herd immunity

    After the equity rally, P/E multiples are back at around 16x 2021 consensus earnings.

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    Man vs Nature Part II

    Virus trends and head-fakes, convalescent plasma and U.S. vs. China lockdowns.

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    Man vs Nature: what the government can and cannot fix

    There are things the government can try and fix during a pandemic and other things which it can't.

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    John Stuart Mill and the road from ruin to recovery

    There are some difficult days ahead as quarantines and lockdowns grow. I want to share something with you from John Stuart Mill as we head into the unknown.

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    Coronavirus (COVID-19) research compilation

    Michael Cembalest, Chairman of Market and Investment Strategy, has compiled his extensive research on coronavirus.

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    The pandemic gap

    A lot of data is being made available on the coronavirus, but most of it requires careful analysis before drawing conclusions.

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    Berning Man

    Confounding almost every forecast we saw last week, Senator Biden appears to have emerged from Super Tuesday with a sizeable delegate lead. Why might the night have turned out so differently from what was expected just a few days ago?

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    COVID-19 update

    A Coronavirus update: severity, consequences and implications for investors.

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    Millions and Trillions

    Answers to questions on the coronavirus, US megacap stocks, the cost of Democratic Healthcare plans, the Iowa caucus and the problem with the student loan system.

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    Rotten Tomatoes

    Consensus reactions to the Phase I US-China deal are very skeptical, but may be missing the broader point. A brief note on what happened, and the alternatives.

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    Ghosts of Christmas Past

    After a very positive year for investors in 2019, we expect lower positive returns on financial assets in 2020 as some Ghosts of Christmas Past reappear.

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    War of the Worlds

    How a discussion about China and Hong Kong morphed into a chart war about Trump, Hoover, Taft, Rachel Maddow and Anderson Cooper.

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    The Armageddonists

    While recessions and bear markets are a fact of life, something peculiar happened after the Global Financial Crisis: the rise of the Armageddonists.

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    Warren Peace

    A close look at the Progressive Agenda, China’s deteriorating welcome mat in DC and US Tech IPOs.

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    Active Management and QE-distorted markets

    Michael Cembalest analyzes the performance of over 6,700 domestic and international active equity managers and discusses the challenges they face.

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    Cold Turkey

    A brief comment on a proposal from leading Presidential candidates to ban hydraulic fracturing everywhere, immediately.

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    So long Yellow Brick Road

    It was a long, hot summer at the Heritage Foundation. An update from the front lines of the Trade War.

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    Lost in Space: The Search for Democratic Socialism in the Real World

    Michael went on a search for Democratic Socialism in the real world, and ended up halfway around the globe from where he began.

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    Listen when people tell you who they are

    Michael discusses how he should have taken Trump at his word on tariffs, and the impact of the widening trade war on global growth and equity markets as proposed tariffs approach pre-war levels.

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    Smoot Hardly

    The US-China trade war, prescription drug price legislation and the 2020 election.

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    Energy Outlook 2019: Mountains and Molehills

    Topics: unattainable objectives of the Green New Deal; overview of the world’s decarbonization challenges; Germany’s energy transition; Trump’s War on Science.

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    MARKET UPDATES

    How should I think about investing in alternatives?

    There are three roles that alternative investments can play in a diversified portfolio – they can provide income, diversification, or enhance returns. Importantly, these are not mutually exclusive; some alternatives – like core real assets – can provide a combination of both income and diversification.

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    Has the Fed shifted more or less hawkish?

    For investors, further tightening is ahead; however, a data-dependent committee suggests an increase in the federal funds rate to above 3.5% in this cycle is now less likely.

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    Is the 60/40 dead?

    Since emerging from the Financial Crisis, a 60/40 portfolio of U.S. stocks and bonds has earned a whopping 11.5% average annual return. However, 2022 has been a particularly challenging year for the 60/40, which declined 16.1% in the first half of the year.

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    Is there a role for private real estate in my portfolio?

    What has not come into question is whether investors will need alternative sources of income and diversification. As such, it seems increasingly likely that private real estate will be part of the broader investment conversation in the years to come.

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    Are we already in a recession?

    Looking ahead, we recognize that recession risk has risen. That said, it seems premature to make a call that we are already in recession today.

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    Does investing in European equities still make sense?

    The tragic war in Ukraine has led to an indiscriminate sell-off in European equities. While headlines weigh on sentiment, the 1Q earnings season was strong for Europe.

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    Will the Fed tip the economy into recession?

    For investors, the Fed has laid out a hawkish path for rate increases with the intent to front load rate hikes. With such aggressive tightening this year, recession risks have risen further in 2023.

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    What should I know about quantitative tightening?

    Even as QT commences, long-term rates are likely to trade range bound between 3.00%-3.5% and be little impacted by balance sheet reduction at first. That said, as bank reserves decline to levels that may restrict bank activity, markets will likely signal the Fed may need to change course.

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    Are you worried about an earnings recession?

    While rising interest rates and a more hawkish Federal Reserve (Fed) help to explain what has gone on with valuations, it was not as clear why earnings estimates continued to move higher. Interestingly, however, companies have begun guiding earnings expectations lower in recent weeks, as it appears too difficult to continue ignoring rising costs and economic growth that is decelerating back toward trend.

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    Should I time the bottom in today’s market?

    Long-term investors are facing a number of challenges today. Multi-decade-high inflation is eroding purchasing power and portfolio values, and recent volatility across capital markets has made the investment landscape look perilous.

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    Are bonds attractive?

    The spike in yields through the first five months of this year has led to some very ugly returns in fixed income.

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    Are we in or headed towards a recession?

    The US economy is showing signs that the post pandemic surge is beginning to moderate, but we do not think a recession is imminent. Nonetheless, stocks are near correction territory, consumer sentiment has soured to levels last seen in 2011, geopolitical tensions are elevated, and prices are higher everywhere; all of which challenge this view.

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    How do investors navigate market volatility?

    The war in Ukraine is causing surging commodity prices, COVID lockdowns in China are exacerbating strained supply chains, and 40-year-high inflation has prompted the Fed to aggressively tighten monetary policy. Together these dynamics are also creating uncertainty about future growth.

    Read more

    1Q22 Earnings: Don’t stop believin’

    A re-rating of valuations has led to negative equity returns year-to-date, but importantly, earnings estimates have continued to trend higher. In an environment of rising rates, earnings will be the key driver of returns.

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    When will China’s economy and markets find their footing?

    The Year of the Tiger was expected to be a year of stabilization for China’s economy and of recovery for its equity market, following last year’s tough Year of the Ox. However, instead of positive surprises, investors have continued to grapple with uncertainties, both new and old.

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    Tax planning? Or a plan for taxes?

    At the end of the day, active tax management is a way to take advantage of volatility. Volatility is a hallmark of the capital markets, but it also tends to derail investors and undermine their ability to reach their long-term retirement goals.

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    How aggressive will the Federal Reserve (Fed) tighten monetary policy?

    At its May meeting, the Federal Open Market Committee (FOMC) voted to raise the Federal funds target rate range by 0.50% to 0.75%-1.00% and signaled similar 50 basis point rate increases would be on the table for the next couple of meetings.

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    Does China’s “COVID zero” approach threaten global supply chains?

    Since the onset of the pandemic, global supply chains have been stressed, weighing on economic growth and lifting consumer core goods inflation. Supply chain issues had seemed to peak in December, with some encouraging improvement in the first two months of 2022.

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    How do geopolitics highlight the need for more sustainable innovation?

    Although climate change is a key consideration in sustainable investing, sustainable investing is more broadly about finding companies that are durable in the long run and identifying risks that traditional company analysis may not capture.

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    What’s going on with the housing market?

    U.S. home prices have experienced incredible appreciation over the last decade, with particular strength in the years since the COVID-19 pandemic outbreak.

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    What should investors expect for 1Q22 earnings?

    With financials kicking off the first quarter earnings season this week, our current estimate for 1Q22 S&P 500 operating earnings per share (EPS) is $51.01 ($42.80 ex-financials), representing year-over-year growth of 7.6%.

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    Why is there so much demand for labor?

    The March employment report showed that the U.S. economy continues to recover in the aftermath of the COVID pandemic, with the labor force exhibiting signs of multi-generational tightness.

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    Has the sell-off created an opportunity in growth stocks?

    2022 has seen a volatile start, with many of the growth names that performed well in the initial stages of the pandemic – as well as over the prior cycle – under pressure.

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    Should investors hedge the currency when investing in international equities?

    Over the last 15 years, international equities have underperformed U.S. equities by a cumulative 270%. Currency played a role in this underperformance, subtracting 25%, as foreign currencies steadily weakened against the U.S. dollar.

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    Just how hot is the labor market?

    One of the most critical levers to reduce carbon emissions globally is transportation. Transportation accounts for 16% of global greenhouse gas emissions, with nearly three-quarters coming from passenger travel and road freight.

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    Is market timing worth it during periods of intense volatility?

    2022 will likely remain volatile for equity markets, as central banks normalize alongside persistently hot-inflation and geopolitical issues result in prolonged uncertainty.

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    What’s been driving the equity market rebound?

    Last week marked the best week for U.S. equities since November 2020, with the S&P 500 erasing almost half of its year-to-date losses. The S&P 500 is now only down 6.4% versus its max drawdown of 13% in 2022.

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    How might markets perform as the Federal Reserve hikes interest rates?

    For the first time since December 2018, the Federal Open Market Committee (FOMC) voted to raise the Federal funds target rate range by a ¼ percent to 0.25%-0.50% at its March meeting and made clear further increases would be appropriate to tame inflation.

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    Does the case for investing in EM equities still hold?

    Emerging market (EM) equities are underperforming for a second year, down -16.4% year-to-date after last year’s -2.2%.

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    What are the impacts of rising energy prices?

    Before Russia’s invasion of Ukraine and its impact on commodity markets, we thought inflation might finally see its peak in February.

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    How should investors position for a yield curve inversion?

    An inverted yield curve driven by short rates rising more than long-term yields has preceded every US recession since 1960 and is therefore a closely watched metric among investors regarding the outlook for the economy and markets.

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    Has the outlook for monetary and fiscal policy changed?

    While geopolitical tensions have reached a boiling point overseas, American investors have recently faced a set of potentially market-moving events at home: President Biden’s first State of the Union address and Federal Reserve Chair Powell’s testimony in front of Congress on monetary policy.

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    How should I think about geopolitics and volatility?

    Despite the horrible human and social impact, the conflict in Eastern Europe is currently noise for the market. Time will tell how things evolve, but the key risk is that higher commodity prices – and energy prices in particular – fail to be transitory.

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    Should I worry about Russia/Ukraine tensions impacting markets?

    Geopolitical tensions involving Russia and Ukraine have been a source of market volatility, especially since February 11th when President Biden warned there was a “very distinct possibility” of a coming Russian invasion of Ukraine.

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    Will the Federal Reserve hike rates by 50 basis points in March?

    Since the start of the year, markets have meaningfully repriced expectations for rate hikes from the Federal Reserve (the Fed) this year; projections have risen from 2-3 25 basis point (0.25%) increases to 6-7 currently.

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    How would international equities perform during a U.S. boom-bust recession?

    In both a U.S. led boom-bust recession and global synchronous growth, international equities could outperform, suggesting a key role for the asset class in portfolio construction.

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    Do investors really chase performance?

    Time and time again, investors get caught up in the good times and buy an asset when its price is inflated, only to turn around and sell it once optimism has receded and the price has fallen.

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    Why do advisors need to re-think retirement income?

    Retirement income can be a challenge for many advisors, and advice given to clients has often relied on rules of thumb based on assumptions of how households spend post-retirement.

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    What does the Social Cost of Carbon mean for investors?

    Regulatory action on carbon emissions is likely to intensify over the coming years, and companies that are actively addressing these risks could have a competitive advantage in the future.

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    What to expect in China from the Year of the Tiger?

    2021 was a year of steady reform introduction by Chinese authorities, focused on the long-term goals of improving the quality of growth and on addressing non-economic priorities like inequality, leverage, and decarbonization.

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    Jay be nimble, Jay be quick: How to position for a more hawkish Fed?

    Fixed income can still play defense during periods of market turbulence and investors would be wise to maintain exposure through a more active approach as rates grind higher.

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    4Q21 earnings bulletin: Unpacking the boxes

    Fourth quarter earnings are off to a solid start and the more cyclical sectors are leading the charge.

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    What is the outlook for alternatives in 2022?

    There are plenty of opportunities across the alternative investment landscape. However, any allocation to alternatives should be outcome-oriented.

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    Is the case for international equities just about discounted valuations and currencies?

    2022 and beyond should present investors with those in the form of above trend international growth and stabilization in China.

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    December recap: Are investors positioned for monetary shifts in 2022?

    There was no shortage of market catalysts to begin December, with the emergence of the Omicron variant and hawkish comments from Federal Reserve (Fed) Chair Powell stirring the markets.

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    What will happen to the top 10 S&P 500 companies in 2022?

    2021 was a better year than expected for U.S. equities, as a 34.5% increase in earnings expectations offset a 7.6% decline in valuations, leading to a price return of 26.9%.

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    Is Build Back Better dead?

    This week, hopes of passing the Build Back Better (BBB) Act, the climate and social spending package, were dashed when Senator Joe Manchin of West Virginia said he would not vote for it due to concerns over further stoking inflation and increasing the national debt.

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    Should I expect a year-end correction?

    Although lockdowns and restrictions may drag on economic activity in the near term, we see three key drivers of economic growth in 2022.

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    How can employer-sponsored plans better serve younger adults?

    It is key that employers innovate the employee experience for younger professionals. Explore how employer-sponsored plans can better serve young adults.

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    Has the Federal Reserve (Fed) shifted more hawkish?

    Overall, investors should be prepared for an active Fed over the next few years. We expect the Fed to begin raising rates in June, and deliver one hike per quarter thereafter.

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    Does a continued inflation heatwave mean a more hawkish Fed?

    The November CPI report showed consumer prices rising at their fastest pace in nearly 40 years as surging gasoline prices, vehicle prices, and owner’s equivalent rent continued to drive inflation upwards.

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    November recap: How were portfolios positioned for November markets?

    Although risk assets enjoyed positive returns for most of November, the emergence of a new COVID variant and a hawkish pivot from the Fed prompted a risk-off environment to close the month, with investors positioned accordingly.

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    Is volatility higher because of omicron?

    Volatility has come roaring back, with the S&P 500 seeing its worst 2-day performance in over a year and the VIX back above 30 for the first time since February.

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    When will China’s economy find its footing?

    It is now becoming clear that Chinese policy makers no longer focus exclusively on the quantity of growth, but also on its quality. In addition, several other policy goals are taking priority as well, such as deleveraging, decarbonization, common prosperity and public health.

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    Is Jay here to stay?

    President Biden voted for continuity in monetary policy with his renomination of Jerome Powell to another four-year term as Federal Reserve Chair. He also elevated Governor Lael Brainard to Vice Chair, replacing Richard Clarida.

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    What progress was made at COP26?

    Some areas of the agenda were advanced, true progress may have been postponed to the end of 2022, when countries are expected to recommit or strengthen their net zero commitments, which currently fall short of limiting global warming to 1.5 degrees Celsius.

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    Why are rates moving, just not higher?

    Rates have experienced some big swings recently, even though they have traded within a fairly narrow range over the past couple of months.

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    What does Fed policy mean for a fixed income portfolio?

    Looking forward, while we don’t yet know which of the previous periods the next cycle will best resemble, the market is currently pricing Fed “liftoff” in mid-2022, with a total of five hikes complete by the end of 2023.

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    Where do we stand on infrastructure spending?

    From our vantage point, it seems like a given that the President will sign the bipartisan bill into law. Looking at the budget reconciliation package, a deal will get done but it may come down to the wire.

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    Are all global central banks on the move?

    Investors should not paint all central banks with the same brush stroke as normalization will come in different shades: some central banks are already or close to being on the move, others will remain somewhat patient until next year, while others will remain firmly on hold.

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    How will the FOMC begin to reduce policy support?

    Tapering is not tightening, and while purchases will slow in the months ahead, the balance sheet will still expand by roughly $400 billion from now until mid-2022 and settle at around $9 trillion.

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    When will supply chain disruptions be resolved?

    Semiconductors have come into focus as one of the best examples of the supply constraints faced by the global economy.

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    3Q21 earnings bulletin: Supply pains

    Despite a slowdown in 3Q21 economic growth, corporate profits have been better than expected. Investors should use profits as a guide, as rising interest rates could pressure multiples and leave earnings as the main driver of returns.

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    Inflation: A Somewhat Sticky Situation

    As we emerge from this pandemic with inflation now rising at its fastest pace since the 1980s, the biggest question for investors is whether some of this inflation will prove “sticky”.

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    What can we expect from the U.N. Climate Change Conference?

    The last summit in 2015 resulted in the Paris Agreement, an international treaty addressing climate change mitigation (by aiming to limit the increase in global temperatures by 1.5 degrees Celsius above pre-industrial levels), climate adaptation, and climate financing. Therefore, we anticipate meaningful discussion on these topics: achieving net zero, fiscal efforts , climate financing, carbon pricing.

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    What challenges are the Chinese economy and markets facing?

    Recent economic data affirms China’s slowdown as the economy normalizes while still facing lingering pandemic obstacles and the consequences of its intentional long-term reforms.

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    Has the government run out of funding?

    While these fears were warranted following the near technical defaults experienced in 2011 and 2013 due to the same debt ceiling issue, by a narrow vote, the House raised the debt ceiling on October 12th by $480 billion to $28.9 trillion, averting a technical default.

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    Is inflation still transitory?

    While higher inflation and a recent slowdown in economic growth have stoked stagflation fears amongst investors, we continue to expect inflation to tame in the coming months.

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    Why do investors love technology companies?

    Most investors seem to agree that technological adoption looks set to continue, but more and more we see people questioning the price they are paying for this exposure.

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    Why are oil prices soaring?

    While it was expected that easing pandemic conditions would support demand for oil, the move in spot prices this year has caused investors to question whether these price pressures will persist and lead to higher inflation.

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    Should investors worry about stagflation?

    The result of the supply bottlenecks has been slower sales and inventory build-up than desired, depressing growth. In addition, the short supply of goods and services has led to higher prices, with input and output price indices accelerating at record speed this year.

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    The debt ceiling dilemma: what should investors know?

    From an investment perspective, elevated uncertainty will likely fuel additional volatility in both equity and credit markets through the first half of October.

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    What is behind the rise in volatility?

    Rising volatility reflects a broader distribution of outcomes – clearly, the events of recent weeks have forced investors to broaden their horizons and embrace a wider range of scenarios.

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    Should global investors worry about the Chinese company Evergrande?

    Chinese equities can still provide investors higher return and low correlation to other equity markets, while Chinese bonds can provide higher yields and low correlation to the global bond market.

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    Is Fed tapering all but certain?

    The Federal Open Market Committee (FOMC) sent a slightly hawkish signal to markets on its monetary policy outlook, recognizing that the delta variant has slowed economic progress, but also that inflation may prove somewhat stickier than they previously assumed.

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    What are the driving forces behind ESG investing?

    Sustainable investing, which considers environmental, social, and governance factors (ESG), is a philosophy most investors are aware of, but not all may fully understand it, as it has evolved meaningfully over the past few years.

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    How is private equity doing in a post-pandemic world?

    As we move into the final months of 2021, it has become increasingly clear that the private market momentum which began to build in the back half of 2020 has shown no sign of abating.

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    Is the pandemic changing the long-term outlook for Social Security?

    Due to pandemic-related unemployment, funding from payroll taxes is down, but this is expected to be temporary, so it shouldn’t set back the program significantly.

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    Cash crusade: What are banks doing with the cash from quantitative easing?

    Until there is a resolution on the debt ceiling, net Treasury bill issuance is likely to remain materially negative in the coming month, putting continued downward pressure on short term interest rates.

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    Cash crusade: Where does money created via QE actually go?

    As tapering moves to the forefront of policy discussions, investors should understand the mechanics of quantitative easing, how money is created and flows into the financial system, and the impact it’s having on financial markets.

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    Where are Millennials investing their money?

    With greater attention being paid to younger Americans by the investment management industry, financial professionals are increasingly curious about the what, why and how of Millennial money management.

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    What is the cost of extreme weather?

    Extreme weather has prompted policy makers to focus on more resilient infrastructure and investments to mitigate climate change, which has meaningfully exacerbated extreme weather events.

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    Achieving net zero: The path to a carbon-neutral world

    Governments are aligning behind the goal of achieving net zero emissions by 2050, but dramatic changes to the global economy will be required to get us there. Learn more about the policies and innovations that could pave the way to a carbon-neutral world.

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    When will the semiconductor shortage be resolved?

    While a variety of different input costs have been rising, a shortage of semiconductors has led to tight supply and demand dynamics around the world.

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    When will U.S. debt become unsustainable?

    With U.S. federal debt at 100.1% of GDP, the highest since World War II and rising, investors wonder what the breaking point could be.

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    Have markets recovered from the COVID-19 recession?

    Investors have had to process a torrent of information and wild swings in sentiment so far this year.

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    Should I expect a market correction?

    The S&P 500 has marched steadily higher from its March 23rd low against a backdrop of investor skepticism. In previous posts, we have discussed how this rally is being driven by three things.

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    Will the Fed cause inflation?

    The balance sheet of the U.S. Federal Reserve (Fed) has increased by 2.9 trillion USD since the start of March, meaning that in just over eleven weeks it has grown more than it did in the five years following the Financial Crisis.

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    How will COVID-19 affect Sustainable Bonds?

    Global governments have been swift and bold in supporting their economies, building a bridge to get consumers, small businesses and corporates over the present abyss to the other side. Given the unknown breadth and depth of the abyss, more stimulus may be required.

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    Has all EM behaved the same way this year?

    Year-to-date, emerging market (EM) equities are down -17.6%, as a combination of the COVID-19 recession and the oil price shock has led to downward revisions to earnings expectations, as well as weaker currencies relative to the U.S. dollar.

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    Has the Fed done enough?

    Ultimately, the Fed’s next step will be dictated by the pathway of the virus, says Dryden.

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    A Dramatic Backdrop Shift: 2020 Election update

    The next president will necessarily have a different policy agenda now given the events that have unfolded than he would have at the beginning of the year.

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    Infrastructure resiliency during the COVID-19 crisis

    Infrastructure resiliency during the COVID-19 crisis

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    Is now the time to invest in small cap stocks?

    Global markets have roiled in the face of COVID-19 and social distancing, and many investors are looking to “pick up the pieces,” eagerly hunting for the next big opportunity.

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    What does post-COVID leverage mean for investing?

    While many changes are likely to emerge, one clear trend, with far-reaching macro and market implications, is the increase in leverage, says Azzarello.

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    Why are oil prices negative?

    Earlier this week, oil prices turned negative for the first time in history, with WTI trading as low as -$37 a barrel.

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    What will the reopening of the economy look like?

    Over the past two months investors have digested the COVID-19 shock: the fast spread of the virus around the world, the social distancing measures implemented and the resulting economic and earnings recession.

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    1Q20 earnings: Virus oddity

    1Q20 earnings season will provide an important first look at how the ongoing pause in global activity is impacting corporate earnings.

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    What does COVID-19 mean for real estate?

    The industries most impacted by social distancing account for 20% of payroll employment, and consumer spending across those industries account for 20% of GDP.

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    What are the risks and opportunities in high yield?

    Today’s objectively complicated credit market may be an excellent source of future portfolio growth, says Dryden.

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    Will American small business fire its workers?

    Ultimately, how high the unemployment rate gets is dependent on one key question: will American small business fire its workers, says Manley.

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    A COVID-driven spike in claims

    Initial claims for unemployment insurance surged to the highest level ever: 3,283,000, spiking from a slightly revised 282,000 last week.

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    The COVID-19 Relief Bill-Holding the Economy in Suspended Animation

    This paper, written by Dr. David Kelly, reviews the U.S> relief bill and its investment implications.

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    What is the Fed doing and what does it mean for fixed income?

    The U.S. Federal Reserve (Fed) has pulled out its alphabet bazooka in an effort to ensure sufficient liquidity and the smooth functioning of financial markets, while also providing credit to businesses that are affected by the spread of COVID-19 and the stall in global economic activity.

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    What will an earnings recession look like?

    As economists continue to revise down their 2020 GDP estimates, a lot of clients have been asking us about the potential impact on earnings.

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    Can the Fed do more?

    This past Sunday, the U.S. Federal Reserve (Fed) fired a last desperate salvo in an attempt to stabilize financial conditions, the second emergency inter-meeting cut in two weeks.

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    What policy response would help to stabilize markets?

    Coming into this year, we expected an improvement in global economic growth, as 2019’s policy uncertainty clouds dissipated.

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    The investment implications of COVID-19: An update

    The COVID-19 crisis confirms, once again, the value of a diversified portfolio, says David Kelly.

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    What does the latest oil price collapse mean for investors?

    It is important to avoid trying to predict the future; rather, clients are best served by monitoring the present situation and maintaining composure.

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    Should I buy the dip?

    There is not a clear answer. However, what we can provide perspective on, is where we are finding value, according to David Lebovitz.

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    How does Super Tuesday affect the election campaign ahead?

    Former Vice President Joe Biden made a surprise comeback during the Super Tuesday contests, paving the way for a two-person race to the Democratic nomination.

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    Monetary medicine of limited effectiveness

    Even with this Fed action, there will likely be calls for fiscal action to support to businesses suffering from the response to virus fears, says David Kelly.

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    Should I be concerned about the correction in U.S. equities?

    Sentiment, and valuations, are likely to keep markets relatively contained until there is clarity about the extent and length of the outbreak, says Tyler Voigt.

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    What do you like more, value or growth?

    Equity investors spend a lot time looking for where earnings growth will be strong; what doesn't get as much attention is what happens after they're generated.

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    Cash: it’s what you do with it that matters

    "Equity investors spend a lot time looking for where earnings growth will be strong; what doesn't get as much attention is what happens after they're generated."

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    Should investors worry about the jobs market?

    Taken at face value, the fall in job openings is concerning and warrants careful monitoring.

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    What does the coronavirus mean for investors?

    Financial markets have fallen sharply on concerns of the coronavirus, a respiratory illness first identified in Wuhan, China, spreading globally.

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    What is priced in to equity markets?

    Equity market valuations have risen substantially in recent months, with the forward P/E ratio of the S&P 500 now at a level of 18.6x.

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    Should investors worry about inflation?

    Investors are now asking whether inflation could return, threatening the rally in financial markets.

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    Should I wait to buy the dip?

    Buying the dip - the coveted strategy (almost) all investors like to employ.

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    Will tensions with Iran cause an oil spike?

    Rising geopolitical tensions with Iran have led to some fears over potential oil supply shocks out of the Middle East.

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    Why should I stay invested?

    Rising geopolitical tensions with Iran have led to some fears over potential oil supply shocks out of the Middle East.

    Read more
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