Demands by market actors for accommodative policy linked to a diminished global and domestic economic outlook resulted in a reduction in the federal funds rate by 25 basis points to a range between 1.75% and 2%. In our estimation, this is likely not the final rate cut of 2019 by a central bank clearly concerned with the direction of trade policy, a modest exogenous supply shock in oil markets and political pressure from the executive branch to reduce rates. … READ MORE >
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Opportunities for insurers in a low yield bond environment
Lower yields on bonds, underscored by an inverted yield curve and 10-year rates below 2%, are cause for insurance companies to reevaluate their fixed-income investment positions. … READ MORE >
Modest supply shock to global oil to boost US retail gas prices
The attack on the Saudi oil production facility at Abqaiq over the weekend will temporarily remove roughly 5.7 million barrels of oil production per day, or about 5% of total global supply, and is set to send U.S. retail gas prices 15% higher. As long as the geopolitical situation on the ground does not change, we will not expect the supply shock to spur a recession at this time. … READ MORE >
Fed preview: Difficulty and divided FOMC
Monetary policy is difficult under the best of circumstances. The cross currents of the trade war, a modest exogenous supply shock in oil markets, political pressure from the executive branch to reduce interest rates are among the factors that make the upcoming FOMC meeting one of the more challenging policy decisions in some time. … READ MORE >
The RSM Brexit Stress Index eases on moves to curtail abrupt withdrawal from EU
The RSM Brexit Stress Index eased again this week, as Parliament took additional steps to prevent a reckless exit from the European Union. The index fell to 1.24 standard deviations above normal levels of stress at market close on Friday, from 1.42 a week earlier. Though still high, this suggests an improvement from the dire conditions of just two weeks ago. … READ MORE >
Retransmission fees give lift to TV broadcast revenue as advertising declines
It may come as no surprise that advertising revenue for broadcast television has been declining for the past decade as on-demand streaming options such as Netflix and Amazon Prime have proliferated. According to second-quarter 2019 Nielsen data, traditional television viewing among 18- to 24-year-olds fell more than 50% from five … … READ MORE >
Real estate dry powder hits record levels amid stock market volatility, rising property values
Real-estate focused private equity funds are sitting on record amounts of dry powder amid stock market volatility and rising property values. That amount reached $345.2 billion in the United States through August 2019, the highest level since research firm Preqin first began to track the data in 2000. … READ MORE >
The RSM Brexit Stress Index: Reacting to a Parliamentary dose of recession prevention
The RSM Brexit Stress Index surged sharply during the week amid attempts by Boris Johnson, the Conservative Party prime minister, to curtail objections to a no-deal Brexit but eased at week’s end as Parliament regained control of government. … READ MORE >
August hiring slows: Jobs report shows unflattering shape of things to come
August hiring slowed to 130,000 jobs, reflecting late-cycle business dynamics and the impact of the trade war that is now spilling over into the real economy. After adjusting for Census Bureau hiring the top-line hiring increase was only 105,000 jobs, just above the 100,000 necessary to stabilize the unemployment rate … READ MORE >
Public scrutiny over ESG holdings will cause universal reporting change
As environmental, social and governance investing continues to grow in popularity, investors need to carefully evaluate how their holdings will be viewed by the public. Asset managers must balance their desire to promote ESG consciousness with their fiduciary duty to drive financial returns. … READ MORE >