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Global CIO Outlook

Guggenheim Global Chief Investment Officer Scott Minerd offers insights on macroeconomic trends and the potential impacts on global investment opportunities.


 

“A Drunk Man in the Snow”: The Random Walk of Interest Rates

Scott Minerd, Chairman of Investments and Global CIO, joins CNBC for an exclusive two-part interview to discuss his view on rates and a new CIO Outlook.


January 23, 2015

The Consumption of Davos

The European Central Bank’s announcement of quantitative easing quickly became the consuming topic at the World Economic Forum’s Annual Meeting. While I view this as arguably the most monumental event in the history of the European Union, the question remains whether it will be enough to stimulate Europe’s flagging economy.


January 15, 2015

Buy the Rumor, Sell the News

At current levels of overvaluation, the only factors holding interest rates down are the expectation of declining inflation as a result of the oil shock and the prospect of quantitative easing in Europe. This means we may be facing the old Wall Street adage of “buy the rumor, sell the news” when it comes to Treasury prices. Once the one-time effect of declining oil prices has passed, inflation is likely to return to the underlying trend, which is higher than today. This, combined with European Central Bank announcement of quantitative easing, could mark the end of the recent spike down in interest rates.


January 09, 2015

Supply Shock and Awe

The 1985-86 bear market in oil was the result of oversupply—too much oil was brought online relative to demand. During that period, prices declined more than 67 percent over four months or so. When oil prices started to rise again in April 1986, credit spreads started to tighten a few months later and within 12 months, the stock market was up over 20 percent. If history is any guide—and in this instance, I believe it may be—we are likely to see a similar situation play out today. But investors beware in the near-term. Even at $48 per barrel, oil is still a falling knife.


December 16, 2014

A Tale of Two Markets

Investors should prepare for an extended period of depressed oil prices—oil still has substantial downside room to run before reaching a level of stability. As oil continues its decline, pressure is increasingly mounting on credit markets, especially high-yield corporate bonds, where energy-related borrowers represent 15-20 percent of the market. The flip side is that as spreads widen, we get closer to the levels where large investors start to see value.


December 04, 2014

The Dark Side to Falling Oil Prices

Russia needs oil at $100 a barrel to support its economy, and many other oil-dependent economies rely on oil prices well north of current levels. A recession in countries such as Russia will have significant knock-on effects, particularly for European exporters, creating another headwind for the beleaguered euro zone economies. An oil-price-induced negative feedback loop would stifle global growth and could even lead to political instability in any number of oil-dependent nations.


October 28, 2014

Europe Must Act Now

Things in Europe are bad and policymakers appear already to have fallen behind the curve. Quantitative easing in Europe is coming, but too slowly to avert a severe slowdown and perhaps even a hard landing. Mario Draghi, ECB president, has made it clear that the ECB must increase its balance sheet by at least €1 trillion—a tough mandate as the balance sheet will continue to shrink in the coming year as the earlier longer-term refinancing operation assets roll off. The reality is the ECB will need to purchase at least another €1.5 trillion in assets, and even that may not be enough.


October 02, 2014

Banquo’s Grain and U.S. Interest Rates

The U.S. economy is strong enough to suggest higher interest rates ahead, but a number of factors suggest U.S. Treasury yields could move lower.


September 18, 2014

Why the Pennant Race Could Coincide with Market Volatility

While the U.S. economy is gaining momentum, investors should nevertheless brace for volatility in the next few weeks.


August 19, 2014

Don’t Fight the U.S. Treasury Rally

A number of factors seem likely to drive U.S. 10-year Treasury rates lower in the near term, including increasing demand, decreasing supply, and tension in Ukraine and Iraq that is triggering a flight to quality. As Treasury yields fall, a wave of mortgage refinancing could drive yields even lower, creating a compelling opportunity to rebalance portfolios.


July 24, 2014

The Hangover

The Fed’s not taking the punch bowl from the party, but investors should be wary of the hangover.

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