The British exit (Brexit) from the European Union (EU) was back in the news on Tuesday, after the British Parliament voted against British Prime Minister Theresa May’s proposed Brexit deal. This was not the first time lawmakers rejected a proposal put forth by May’s government; however, the proximity of this vote to the March 29 deadline to withdraw from the EU was cause for concern.
“Now’s not a good time to invest,” or “I’m waiting for the right conditions” are familiar refrains we hear from investors and advisors alike. Fortunately for long-term investors who don’t take regular withdrawals from their portfolios, the sequence of returns doesn’t affect the ultimate investment outcome.
Happy birthday bull market! The longest running bull market in United States history hit a major milestone last week, turning 10 on March 9. It sure has been an interesting and exciting 10 years.
The nonpartisan Congressional Research Service (CRS) paints a placid picture of the federal budget process. The president and White House staff, CRS explains, begin developing the president’s annual budget outline “approximately 18 months prior to the start of the fiscal year to which it applies.”
With less support from recent market-friendly trends, global equities declined. The U.K. is set to hold Brexit votes with a deadline less than three weeks out.
Global small cap stocks have had a strong 2019 so far, outperforming large caps by more than three percentage points. This is not a rally worth chasing, in our view. As the pace of the global expansion slows, we prefer large cap equities. We favor exposures to firms with quality markers such as strong balance sheets.
There is an old Chinese proverb that states, “When the winds of change blow, some people build walls and others build windmills.” In other words, some people embrace change while others fear it. I’ve come to the conclusion that the speed of the change has much to do with how a change is received. Just look at the past week, when we saw abrupt changes in the direction of the wind for central banks, followed by largely negative reactions.
U.S. Treasury rates fell last week across the yield curve, led by 5- and 10-year maturities. The European Central Bank (ECB) surprised markets with a new round of stimulative bank financing, and U.S. Federal Reserve (Fed) officials indicated the Fed will likely hold firm on rates at the March meeting. These dovish actions helped spark a risk-off mode for financial markets, benefiting Treasuries and other government bonds.
U.S. stocks came under pressure last week, experiencing only their second weekly decline of 2019. The S&P 500 Index fell more than 2%, with higher-risk areas of the market experiencing the worst losses. Small caps came under pressure, as did health care, financials and energy.
During a meeting with a handful of financial representatives in early January, with the underlying context of a flat yield curve, the single most relevant question on their collective minds was, “What should fixed income investors do with regard to their current and future investments?”
It’s a timeless question that’s puzzled people from Cicero in Ancient Rome to rappers like Kendrick Lamar today: Can money really make you happier?