Scott Minerd discusses the importance of transitioning sustainable development into an institutional asset class.
As this bull market climbs its “wall of worry,” we can see its underlying strength. Valuation concerns and the risk of a major correction appear overblown, as we should see a continued rebound in economic fundamentals over the coming months.
The Federal Reserve has started to highlight “forward guidance” as a way to keep interest rates lower for longer – and get the exhausted hamster off the treadmill of quantitative easing. We still think tapering remains farther off than most investors expect.
Both bond and equity markets are well-positioned, regardless of whether the U.S. Federal Reserve tapers its asset purchase program.
There remains significant upside for risk assets, but in this liquidity-driven market there is also an increasing risk of a “melt-up” such as the one that preceded the bursting of the tech bubble in early 2000.
With the U.S. economic expansion entering its fifth year and the global economic picture improving, it appears equities in Europe and Asia can still rise.
Ultra loose U.S. monetary policy continues pushing asset values higher at home and abroad. Seasonal factors should also provide a tailwind and lift asset prices across nearly every investment class.
With the partial government shutdown and Washington gridlock behind us for now, interest rates should continue declining and conditions are pointing to a period of renewed strength across asset classes.
The U.S. Federal Reserve’s decision in September to delay at least for now any reduction in its asset purchases drove U.S. Treasury rates down materially from the highs seen over the summer, easing concerns about the impact of higher rates on economic growth. Now as we start the fourth quarter, the below-investment grade investment outlook appears positive, and more positive for high yield bonds than bank loans.
Volatility from the government shutdown and other political developments in Washington D.C. will likely continue to rise. Despite this, the reduction in output from this will be short-term, and investors still have several attractive options for deploying capital across asset classes in the United States and globally.
While U.S. stocks are increasingly due for a consolidation, the outlook for global equities is improving. Now appears to be a good time for investors to increase allocations toward Asia and Europe.
In addition to serving as Global Chief Investment Officer of Guggenheim Partners and Chairman of Guggenheim Investments, Scott Minerd is also a member of the Federal Reserve Bank of New York’s Investor Advisory Committee on Financial Markets, an advisor to the Organization for Economic Cooperation and Development, and a contributing member to the World Economic Forum. Minerd is regularly featured in leading financial media outlets, including Financial Times, Barron’s, Bloomberg, CNBC, Fox Business News, Forbes, and Reuters.
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Global CIO Scott Minerd calls in to Bloomberg TV to discuss the policy response to the crisis.
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