For the first time since the dot.com bust in 2001, the difference between the equity earnings yield on the forward-looking S&P 500 less the yield on the 10-year Treasury has turned negative. … READ MORE >
equity markets
How real is the wealth effect in a bull market?
Using a back-of-the-envelope calculation, we estimate that the sharp rebound in equities last year contributed to an increase of roughly $900 billion in households’ stock wealth, or $288 billion in consumer spending. … READ MORE >
Risk metrics: Monitoring distress in the U.S. financial sector
RSM highlights what we consider the most important market indicators and their long-term trends. … READ MORE >
RSM U.S. Financial Conditions Index: Pricing in the cost of uncertainty
The RSM US Financial Conditions Index remains more than 0.2 standard deviations below normal. This is a indication that investors are requiring additional compensation for the risk of lending and the increased cost of investing in an environment of heightened uncertainty. … READ MORE >
U.S. financial conditions tightening due to equities rout
U.S. financial conditions have tightened in recent days as investors have pulled back on riskier assets, a decline that if it continues implies a risk to the nascent U.S. economic rebound. … READ MORE >
The case for active investing has grown stronger recently, but can it last?
For much of the past decade, equity markets enjoyed a bull market that was accompanied by the rise in popularity and the outperformance of passive investment strategies. Then the coronavirus hit. As markets plunged in March, the case for actively managed investments grew stronger as those funds performed better than passively managed funds … READ MORE >
Defying gravity: The growing disconnect between the real economy and surging equity markets
There is a growing disconnect between the real economy and equity valuations that, if sustained, will result in slower growth and increased regulation of the investment industry. And that, in turn, will further undermine the legitimate underpinnings of capitalism. … READ MORE >
Real economy faces severe test as coronavirus challenges to business activity mount
Volatility across asset markets and the end of the 11-year bull market run in equity prices strongly implies that the current business cycle will soon come to an end, if it hasn’t already done so. … READ MORE >
Monitoring financial risk during pandemics
Global market participants have priced in the reopening of the Chinese economy on or around February 10, while the World Health Organization has cautioned that it is too early to declare the virus is at its peak. … READ MORE >