What’s up with US dollar LIBOR?
The widely quoted benchmark rate is now at post-crisis highs
Time to read: 4 min
The last time we wrote about the US dollar London lnterbank Offered Rate (LIBOR) was in 2016, when the spread between LIBOR and the Overnight Indexed Swap (OIS) rate increased due to market dislocations leading up to US money market fund reform. Now in early 2018, we have seen LIBOR rates rise and LIBOR-OIS spreads widen again, causing us to ask the same question — what’s up with LIBOR?
In our opinion, there are three factors driving LIBOR rates higher:
ContinueTrade talk tempers Asian market optimism
Quality and valuation may become more important to investors if volatility continues
Time to read: 3 min
Investors began 2018 with a generally optimistic view, but this euphoria faded by quarter-end as protectionism and talk of a US/China trade war became a key concern. Despite investor pessimism, we expect further volatility might create the opportunity to invest in high-quality Asian equities at lower valuations.
Pre-negotiation posturing
Market volatility spiked as US President Donald Trump started delivering
ContinueArtificial intelligence: What is it, and why are companies adopting it?
Predictive analytics is transforming large data sets into actionable items
Time to read: 3 min
Technology companies are known for innovation, and it doesn’t take long for a revolutionary new technology to take hold and become a part of people’s daily lives. In my view, investors shouldn’t be threatened by technology. Rather, they should be skeptical of companies not utilizing technology to its fullest potential.
One common theme we find when considering the largest companies within the Nasdaq-100 Index is the early embrace of artificial intelligence (AI). Even the chief executive officer of Alphabet (the parent company of Google) acknowledged the importance of artificial intelligence in the company’s first quarter 2016 earnings call.1 While not all companies
ContinueHitting ‘the number’ in retirement
Your portfolio balance, your budget and your lifespan are all critical inputs into your retirement plan
Time to read: 3 min
I’m going to hit the number this year — the one that people often associate with retirement. To be clear, I am not retiring this year, but when retirement is closer than it used to be, there are a few more numbers that command your attention. There’s your portfolio balance: the investments, savings, and IRA/401(k) balances that you’ve been building up all these decades. There’s the amount of money you pull from your portfolio each year for your expenses. And then there’s the number of years you need your money to last.
Number 1 – Your portfolio
While you are working, you contribute to your IRA or 401(k), maybe with a company match; if the markets are flat or up,
ContinueGeopolitical tensions impact more than just stocks and bonds
Weekly Market Compass: Missile strikes and sanctions affect prices of oil, aluminum and more
Time to read: 4 min
The last week has seen a flurry of geopolitical events — from US sanctions on Russia to missile strikes on Syria — that have affected the prices of various commodities as well as some currencies.
Missile strikes in the Middle East
First of all, there are growing problems in the Middle East.
ContinueLooking for quality growth in a volatile world
A weak 1Q rattled investors, but we welcome the opportunity to find quality companies at attractive valuations
Time to read: 3 min
Early this year, concerns over higher inflation and interest rates led to a rise in volatility, and global equity indices ended the quarter down in most markets. However, despite the weak start to 2018, the Invesco International and Global Growth team sees positive signs among a number of important Earnings, Quality and Valuation (EQV) measures. The recent spike in volatility is a welcome development for investors like ourselves who emphasize valuation as a critical input to risk and return potential.
The quarter in review
In dollar terms,
ContinueHow did factors perform during a roller coaster first quarter?
Growth, momentum factors prevail after a volatile start to the year
Time to read: 5 min
Equities experienced heightened volatility during the first quarter of 2018, with the S&P 500 Index surging 7.55% from Dec. 31 2017, through Jan. 26, 2018, before dropping nearly 8% through quarter-end.1 Early in the quarter, market activity was buoyed by upward revisions to corporate profit outlooks following federal tax cuts in December, coupled with a squeeze on short volatility positions.
However, this momentum eased in the final two months of the quarter as investors became uneasy over a number of developments:
ContinueChina: SOE reform is making good progress
How could positive developments in SOE reform benefit the Chinese economy — and investors?
Time to read: 6 min
2018 marks the 40th anniversary of China’s “reform and opening-up” program. As an integral part of the Chinese economy, the state sector has undergone tremendous transformation over the decades, and state-owned enterprise (SOE) reforms have been closely scrutinized by the investment community. After all, inefficient SOEs, which we believe are generally highly geared and less profitable, represent a large part of China’s debt problem and hinder productivity growth. Without reform measures, many SOEs will remain unprofitable and might default on their liabilities, putting strains on the financial system and unsettling the economy.
While disappointments in this area have been common, we have seen some positive developments recently. SOEs have
ContinueWhy manager selection is critical for alternative investors
The difference between the top and bottom performers can be significant
Time to read: 4 min
The recent (and long-awaited) return of market volatility has put alternatives back on the radar screen. But not only must investors familiarize themselves with the different types of alternatives that are available to them, they must also assess the skill level of the managers running these funds. Manager selection is a question that all investors face, of course, but it’s especially critical for investors in alternatives because these managers have greater freedom in their investment strategies. This freedom leads to a wide dispersion between the top-performing and below-average alt managers, and that dispersion is typically greater than what is found in traditional equity investments.
Comparing top and bottom managers
ContinueAs US-China trade drama continues, is a risk-off stance warranted?
Weekly Market Compass: The key drivers of stock market optimism remain intact, for now
Time to read: 4 min
Last week saw an acceleration of the protectionist rhetoric between the US and China. The week ended on a down note, with US President Donald Trump tweeting a proposal for another $100 billion in tariffs, swiftly followed by China, despite its important holiday, promising to match the most recent round of tariffs and fight the US “at any cost.” Following China’s threat, Trump admitted that the US may feel some “pain,” while US Treasury Secretary Steven Mnuchin conceded that, though unlikely, “there is the potential of a trade war.”
While we are far from a trade war at this juncture, the heightening
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