An inverted yield curve occurs when the interest rates (yields, to be more specific) on short-term bonds are higher than the interest rates on long-term bonds. The specific trigger compares the 10 year treasury to the 2 year treasury.
China was the largest U.S. trading partner in 2018, with $737 billion in goods and services exchanged between the two nations, accounting for 13% of all U.S. trade. What do the trade wars mean to markets? Who is right and who is wrong? What impact will they continue to have?
The FOMC has raised the funds rate nine times since December 2015, with four increases in 2018 alone. As recently as September 2018, the committee projected three more increases in 2019. That dropped to two projected increases at the December meeting.
On the eve of Thanksgiving the Nasdaq is down more than 15% from its all-time highs. The S&P 500 is off 10%. Many strong growth stocks are down 30% to 40%. This quick and volatile correction has everyone wondering if this is just the tip of the iceberg with interest rate increases and trade fears dominating the news.
In 2011 one of the largest asset management firms, GMO, stated that the S&P was worth no more than 950. They also stated that “risk avoidance looks like a good idea” and that their 7 year projection for large cap U.S. stocks was just 2.7% per year.
If you are like most investors then you probably have a long position in the stock market. Your portfolio goes up and down with the market. Your investment returns are relative to stock market returns. How can you protect your portfolio?
Exchange-traded funds (ETFs) have become increasingly popular since they were introduced in the United States in the mid-1990s. Their tax efficiencies and relatively low investing costs have attracted investors who like the idea of combining the diversification of mutual funds with the trading flexibility of stocks.
On December 14, the Federal Open Market Committee (FOMC) voted unanimously to raise the federal funds rate by 0.25% — to a range of 0.50% to 0.75%. This was the second increase since December 2008, when the benchmark rate was lowered to a near-zero level (0% to 0.25%) during the Great Recession.