Global CIO Commentary by Scott Minerd
U.S. economic data continues affirming our positive outlook for the U.S. economy. The Job Openings and Labor Turnover Survey showed that the number of job openings waiting to be filled in the United States rose by 289,000 to 4.5 million in April -- the highest since September 2007 -- as employers sought more workers to satisfy demand in a growing economy. As those positions get filled in the coming months, we can expect a dip in the U.S. unemployment rate. At first blush, the less-than-expected rise in retail sales of 0.3 percent for May seemed uninspiring. However, sometimes the devil is in the details and the revisions can be more important than the headlines. April retail sales were revised upward to a 0.5 percent increase, supporting our positive outlook for second-quarter GDP growth.
Overseas, there are renewed signs of life in China’s economy. I have long contended that China would likely turn to renewed export growth to offset domestic demand problems. Supporting my view, exports grew in May by 7 percent from the same month last year and the trade balance expanded rapidly, thanks to improving economies in Europe and the United States. China has enacted a number of policies in recent months to support the housing market and overall economic growth, and the latest data -- including rising retail sales and industrial production -- seem to confirm that conditions are improving.
The latest round of monetary policy actions by the European Central Bank should be positive for the euro zone, and indirectly for the United States. In Europe, the risk is that the euro will depreciate, which makes buying U.S. Treasury bonds and other U.S. assets attractive for European investors as interest rates are significantly higher in the United States than in Europe. Indeed, yields on Irish 10-year debt have at times drifted below that of U.S. Treasuries, underscoring this interest rate differential.
On balance, the global economy appears to be firing on all cylinders. In the current environment, U.S. stocks and bonds should continue performing well. However, with most U.S. fixed-income assets now richly priced, we must guard against the pitfalls of overvaluation. For now however, as I wrote in my Market Perspectives commentary last week, the outlook remains positive.
Exports to U.S. and Europe Give China Near-Term Boost
With domestic demand dampened by a slowing housing market and troubles in the banking sector, China must reaccelerate exports to keep economic growth rates at acceptable levels. Luckily for Beijing, economic improvements in the United States and Europe are coming just in time to boost exports. While China needs more reforms to ensure sustainable economic growth, the brighter outlook for the euro zone and the United States, which together account for nearly one-third of Chinese exports, should help the Chinese economy in the near term.
CHINESE EXPORTS AND U.S./EURO ZONE DEMAND
Source: Haver, Guggenheim Investments. Data as of June 18, 2014.
Guggenheim Investments represents the investment management businesses of Guggenheim Partners, LLC ("Guggenheim"). Guggenheim Funds Distributors, LLC is an affiliate of Guggenheim.
Read a prospectus and summary prospectus (if available) carefully before investing. It contains the investment objective, risks charges, expenses and the other information, which should be considered carefully before investing. To obtain a prospectus and summary prospectus (if available) click here or call 800.820.0888.
Investing involves risk, including the possible loss of principal.
*Assets under management is as of 09.30.2022 and includes leverage of $17.0bn. Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Partners Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Partners Europe Limited, Guggenheim Partners Japan Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management. Securities offered through Guggenheim Funds Distributors, LLC.
Guggenheim Investments. All rights reserved.
Research our firm with FINRA Broker Check.
• Not FDIC Insured • No Bank Guarantee • May Lose Value
This website is directed to and intended for use by citizens or residents of the United States of America only. The material provided on this website is not intended as a recommendation or as investment advice of any kind, including in connection with rollovers, transfers, and distributions. Such material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. All content has been provided for informational or educational purposes only and is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation. Investing involves risk, including the possible loss of principal.