Economic Insights

Investors and advisors have a lot on their plates these days and keeping clients engaged while helping them protect themselves and sleep at night is as difficult as it’s ever been. I thought I would spend a little time this week highlighting some important ideas that can help streamline the process of keeping happier clients and helping them reach their goals in difficult markets.

Since Quantitative Easing (QE) was first unleashed in the 2008 Great Financial Crisis (GFC), the Fed has generally found it easier to grow its balance sheet than shrink it. Their huge bond portfolio has depressed government bond yields, which are the benchmark from which all other fixed income securities are priced. The MBS and loans on bank balance sheets mostly originated within the last few years. From mid 2019 until early last year, the ten-year yield was below 2%.

Since Quantitative Easing (QE) was first unleashed in the 2008 Great Financial Crisis (GFC), the Fed has generally found it easier to grow its balance sheet than shrink it. Their huge bond portfolio has depressed government bond yields, which are the benchmark from which all other fixed income securities are priced. The MBS and loans on bank balance sheets mostly originated within the last few years. From mid 2019 until early last year, the ten-year yield was below 2%.

In my 30-year career working in financial services, I have been a Financial Advisor, a professional trader, and a long-term investor of iconic brands (along with a host of other roles in the industry). As someone who has worked directly with advisors for most of my career, I have a lot of empathy for you and your team during these tumultuous times. Managing hundreds or thousands of client portfolios is hard enough, but managing their emotions through a cycle is a monumental task, particularly now.

In the "return generation business", institutional investors have a big edge over retail investors. The WHY is what's most important: institutional investors have access to the smartest asset managers in the world, have the time, experience, and resources to assess all potential investment ideas, have a long-term time horizon (wide lens investing), and act opportunistically when asset prices get weak.

The 3-month and 30-year yield curve can provide valuable insights into the state of the economy and future market volatility. By paying attention to the shape of the yield curve, investors can better understand market sentiment and adjust their strategies accordingly.

Let's talk athleisure because it's a powerful secular growth theme and there's some absolutely dominant brands in the category. We can't talk about sneakers and footwear without leading with Nike. Nike is one of the most recognized and loved brands around the world. Once called Blue Ribbon Sports, Nike was founded by Bill Bowerman and Phil Knight in 1964.

We experienced a decade of quantitative easing and declining interest rates that culminated with an unprecedented multi-trillion-dollar infusion of capital in 2020. But three years later, the party had to end. However, we shouldn't cry because quantitative easing is over, we should smile because it happened 🙂 In remembrance of the last decade, I would like to highlight 11 things that were only possible thanks to 0% interest rates.