Hawks on the Horizon
HiddenLevers examines three potential market outcomes with the rise of hawkish monetary policy from the Federal Reserve. Will we see a yield inversion? Could we see a 1987 repeat crash? How will hawkish policy play out.
Unicorns Blowing a Bubble
The number of unicorns (private venture-backed companies valued at over $1 billion USD) has ballooned in the past year to 174 from a mere six in 2013. The valuation is only a number given at a certain point in time, and like their namesake, these companies are meant to be rare and magical. So what’s the big fuss? According to several Unicorn founders, the term makes a positive psychological impact on their teams. “It absolutely gives us credibility and the ability to hire some very important people,” says Apoorva Mehta, CEO of Instacart, a web-based grocery delivery company.
Currency Wars: Fed, Brexit, and Yuan Crisis Potential
Thus far, 2016 has shaped up to be an unprecedented year. The old guard of the Republican party has been usurped and a socialist insurgency has taken hold within the Democratic electorate. For the first time since the late 1930s, populist politics are in vogue, taking hold in both major political parties.
RIP Central Banks: Examining Negative Rate Scenarios
Beneath the turmoil in emerging markets and commodities, global central banks have resorted to unprecedented measures to stoke growth. Interest rates in Japan and parts of Europe are now negative, with Japanese 10 year bonds recently yielding 0%! Despite central banks' best efforts, increasing growth has been close to impossible. Long terms changes to the global economy have made central bankers increasingly irrelevant and sowed the seeds for deflation and slow growth.
The price of oil has had a dramatic effect on markets since the start of the year. WTI was down over 9.0% in January and domestic markets followed oil downwards, returning approximately -5.0% the first month of this year. In an effort to break through the noise surrounding oil, HiddenLevers recently analyzed the commodities market and in this post will summarize the good, bad and ugly outcomes for oil and its broader effect on the global economy.
EM Loses Footing
The start of the year has been bleak for investors. Domestic equity markets markets have had their worst start to the year ever and equity trading in China has been halted twice after markets in Shanghai cratered.
Healthcare Hijinks and the Affordable Care Act
Depending on who you ask, the Affordable Care Act (AKA Obamacare) has been either a total failure or a great success. Those who remain skeptical of the bill point to ballooning insurance premiums as evidence the act has failed. Conversely proponents of the measure look to increasing insurance rolls as evidence the act has succeeded. Regardless of your views, the act has had a profound impact on the largest sector in the US economy.
Rising Rates? How About Some Inflation First?
Some pundits have expressed surprise the Fed did not raise rates in September, citing low unemployment and improving GDP numbers as evidence the Fed has gone too far with its dovish policies. Unfortunately, many market commentators gloss over the relationship between interest rates and inflation. HiddenLevers examined the effects of inflation in our End of Inflation webinar, and we have summarized some of our takeaways below.