Chairman of Investments and Global Chief Investment Officer Scott Minerd leads Guggenheim Partners’ macroeconomic and investment research functions. Together, our team of economists, strategists, and analysts provide insights and analysis on markets and opportunities via weekly
Macro Views, in-depth Market Perspectives, Sector Reports, and media appearances.
July 06, 2015
Staring into an Abyss
With a resounding "NO" vote on the Greek referendum to accept the terms of Europe's proposed "bailout", market pundits are out in force talking about the coming turmoil. I think investors and policymakers alike would be wise to step back and put this unexpected outcome into perspective for the long term.
June 25, 2015
Sunny with a Chance of Turbulence
Despite the fact that returns across U.S. investment categories are pretty dismal year to date, markets are pricing optimistically and it seems the sunshine has brought growth back to the U.S. economy. Recent data from the Bureau of Labor Statistics showed a 280,000 increase in employment in May. Additionally, building permits rose 11.8 percent in May, better than the 3.5 percent decline forecast by economists, while the pace of existing home sales hit its fastest rate since late 2009. Taking everything into account, the likelihood that the U.S. economy will suffer a recession in the next year or two would appear to be extremely remote. Still, seemingly isolated events could yet sour the mood.
June 19, 2015
Connecting the Dots
This week, the Federal Open Market Committee expressed a more dovish outlook for the long term, but one that clearly puts September in the crosshairs for an interest rate hike after six long years at the zero bound. In the meantime, we are becoming vulnerable to some sort of summer risk-off trade. At this stage, it would be prudent to prepare for a risk-off period by the opportunistic liquidation of lower-quality high yield and bank loans, which have appreciated in price this year, and selectively taking gains in stocks while increasing holdings in cash and Treasury securities, as a precaution in preparation of a potential looming summer dislocation.
June 12, 2015
Against this Rosy Backdrop
As expected, the second quarter bounce back has taken hold. The rebound in U.S. growth is supported by continued employment and wage growth and tailwinds from lower energy prices over the past 12 months. Add a stable dollar and the rebounding European economy into the mix and even exports should help to keep U.S. growth on track. But against this rosy backdrop, bond yields have risen more than I would have expected and seasonals have turned against stocks.
May 15, 2015
The shock of just 0.2 percent GDP growth for the first quarter should have driven rates down. Since 2010, GDP disappointments like this have led 10-year Treasury yields to fall by 5.5 basis points on average in the two days following the release. This time around, the opposite occurred—yields rose by double that, and continued to rise. Many have speculated about what caused this sell off because it was so out of line with what one would expect following a surprisingly weak GDP print. I think the reason had more to do with what was happening in Europe than what was going on in the U.S. economy. European bond market volatility has been extreme. Violent convulsions like these are not based on fundamental changes but relate to technical factors resulting from market distortions created by quantitative easing and macroprudential policy. Similarly, the backup in U.S. rates is likely a result of market machinations.
May 08, 2015
Dog Days of the U.S. Expansion
The U.S. economic expansion is now over 70 months old and is entering its mature phase, having already exceeded the average length of prior cycles of 57 months. There are still some golden, halcyon summer days ahead and it would be premature to put on our winter clothes just yet. However, when all is said and done, the easy money in this expansion has already been made and investors should be thinking about the winter to come.
April 30, 2015
Where Is the Prudence in Macroprudential Policy?
While you may not be familiar with the concept of macroprudential policy, it is one of the most important factors in determining the long-term growth potential of the U.S. economy and the ability for all its citizens to share in that growth. Without significant adjustment, actions taken by policymakers today may come at a great cost to future generations.
April 24, 2015
Sine of the Times
For the past 30 years, 10-year U.S. Treasury yields have shown a clear downward linear trend, falling from over 10 percent in 1985 to less than 2 percent today. If we assume the secular, linear downward trend in yields will continue in the near term, the model currently predicts rates will bottom at 0.82 percent in March 2016. I am not necessarily predicting that U.S. 10-year Treasury yields will test zero, but there are many powerful secular and fundamental forces at work that signal the risk to U.S. interest rates remains to the downside.
April 14, 2015
High-Yield and Bank Loan Outlook - April 2015
How high yield bonds and bank loans can help investors position for the Federal Reserve’s upcoming rate tightening cycle.
April 10, 2015
‘It’s the Weather…!’
Severe weather conditions have had a profound impact on economic activity in the United States. When you look at the data, the winter ravages in first quarter are clear. Consumer spending declined in December and January, and was basically flat in February, while nonfarm payrolls were up by just 126,000 in March—the smallest gain since December 2013. Based on our analysis of retail sales, industrial production, and government spending, I wouldn’t be surprised to see U.S. economic growth near zero or even negative in the first quarter.
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