Quarterly Strategy Update: Dynamic Undercurrents

Q3 cover

Since the start of this year, the US Treasury market is signaling a scenario of rising growth expectations and falling inflation expectations, as reflected by the various components that comprise interest rates. In this quarter’s strategy update, Portfolio Manager Steven Vannelli, CFA, explores the following: Monetary policy: We examine the demographic shifts causing people to spend […]

Threats for Small Caps

1

With some exceptions, smaller-cap stocks in the US tend to pay higher taxes than their larger-cap peers. As such, speculation that corporate tax rates may be cut has stoked the performance of US small caps recently. In addition to the concern that tax reform and/or tax cuts may get stalled, there are three other factors […]

The Fundamental Case for Miners

Miners of all sorts have been put in the penalty box in recent years for massively over-investing from 2008-2013 on the thought that China’s infrastructure investment boom, and the commensurate demand for raw materials, would last forever. The over-investment and excess supply drove commodity prices lower and with it the performance of miners. For example, […]

Shifting Currents in the US Treasury Market

1

Employing basic bond math, we can decompose the US Treasury bond into two pieces: real rates and break-even inflation expectations. Because real rates (TIPS) and nominal rates (US Treasuries) are directly observable, break-even inflation is relatively easy to determine. Taking this logic one step further, we can actually decompose a US Treasury bond into three […]

Investors Should Pay Attention to the Foreign Materials and Energy Sectors, They Are Fast Becoming Leadership

We’ve been talking at length recently about the attractiveness of foreign, cyclical stocks here, here, here, and here just over the last month. While foreign developed markets are attractive, emerging markets are especially attractive from a valuation perspective and are also benefiting from what we think is just the beginning of a persistently weak US dollar environment. […]