By Herb W. Morgan, III, Efficient Market Advisors
Over the last two weeks, I have had dozens of conversations with investors, industry peers and colleagues about what caused equity markets to so aggressively decline. There is no shortage of theories ranging from theories about pending presidential impeachment to an imminent recession. The one theory that holds the most water is that electronic program trading has to be primarily to blame.
The genesis for what was an orderly market decline was no doubt the confluence of a myriad of factors. For starters, the US Federal Reserve is implementing two powerful tightening tools by simultaneously raising the Federal Funds Rate while pulling $50 billion of liquidity from the system each month through balance sheet run off. The European Central Bank (ECB) has announced the end of its bond-buying program, without implementing fiscal reforms to its structural deficiencies. China’s economy is downshifting while it is in the midst of a trade war with the world’s most powerful nation. Continue Reading Here
By Herb W. Morgan, III, Efficient Market Advisors
The probability of a rate hike at next week’s Federal Open Market Committee Meeting (FOMC) is now greater than 75%. Still, it has been a roller coaster of a ride with a range of 80% down to 65% during the turmoil of the last few months.
It would seem the voting members of the FOMC are keenly aware of the last two instances where the Fed arguably caused recessions by raising rates too aggressively. In both the 1999-2000 and 2004-2006 hiking cycles, the Fed killed the full employment master while feeding the price stability mandate. Continue Reading Here
By Herb W. Morgan, III, Efficient Market Advisors
Like that party that just keeps going past midnight, it seems nobody told the equity markets 2017 has ended. At this writing, the S&P500 Index is up 6.3% in 2018, the MSCI EAFE Index is up a similar 6.5% and the MSCI Emerging Markets Index tops them all with an 8.7% return[1]. All of this, while echoes of Burns’ Auld Lang Syne are still rattling in our champagne-soaked heads. But soon the market’s momentum will meet the reality of the economic, corporate and geo-political developments of 2018. One cannot live on momentum alone. So, will the fundamentals ultimately deliver more upside or should investors be less sanguine? Continue Reading Here
BY HERB MORGAN, EFFICIENT MARKET ADVISORS
With most financial talk today centered on the resiliency of global equity markets it’s worth noting that commercially important interest rates have more than doubled in a short period of time. Research and commentary of late seems keenly focused on the inability of 10-year US Treasury yields and other bond rates to drift higher. Pundits wonder if this is related to an impending recession. It seems central bank liquidity from Fed reinvestment, along with BOJ & ECB purchases is finding its way into the US financial markets sending signals that in past cycles surely would have predicted an economic slowdown.. Continue Reading Here
The financial and non-financial press seems laser focused on what they call the switch by investors to passive investment management, citing primarily the growth of Exchange Traded Fund (ETF) assets.
Little time goes by between articles which come to the mistaken conclusion that investors have abandoned active management for passive. They cite two major reasons for this: first is cost-savings; and second is the avoidance of active manager failure. While it is reasonable to assert that investors are looking for both cost savings and efficiency drivers, I am less convinced that investors are becoming more passive in their approach to their portfolios. Continue Reading Here
Investor’s Business Daily
by APARNA NARAYANAN
Has the stock market taken its skis off for a breather? Or does a spread-eagled spill lie ahead? Those questions niggle at ETF investors as U.S. stocks stall for the second time since the Nov. 8 election, but perhaps they should not cause undue concern.
Smart ETF investors, like the best skiers, don’t get stuck looking at the tips of their skis. They push forward when fear creeps in, taking in the full view of the landscape, refining their action plan, and trusting themselves to make a successful run.
That is what Herb Morgan, the founder, CEO and CIO of Efficient Market Advisors, is doing. His outlook for the second quarter is cautious, but a wider perspective of political shifts under President Trump and global economic conditions makes him bullish on stocks for the year ahead.
Continue Reading Here
December 9, 2016 -
EMA in the News, News
San Diego Business Journal
By SARAH DE CRESCENZO
Friday, December 9, 2016
San Diego-based firm Efficient Market Advisors LLC said it now directly or indirectly invests more than $1 billion on behalf of investor clients and their financial advisors through its investment portfolios of exchange traded funds.
Read the Full Article Here
