/perspectives/global-cio-outlook?page=6

Global CIO Outlook

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


 

The Sustainable Development Quotient

Scott Minerd discusses the importance of transitioning sustainable development into an institutional asset class.


March 05, 2015

The Great Monetary Expansion

While the United States is potentially headed toward a period marred by winter distortions, accommodative monetary policy by the People’s Bank of China, which cut its benchmark deposit and lending interest rates by 25 basis points last Saturday, provided further evidence—if any was needed—that the global economy will remain flush with liquidity for some time to come. The takeaway from this is that the great global monetary expansion is far from over and the outlook for stocks remains positive.


February 19, 2015

The Glass Ceiling on Rates

Once the Federal Reserve commences down the road of raising rates, how far will they ultimately go? Based on research we’ve conducted on the impact of higher rates on U.S. debt burden, it appears the terminal value for the federal funds rate—the point at which the Fed stops tightening in a cycle—is around 2.5 to 3 percent, a lot lower than many people expect.


February 13, 2015

When Patience Disappears

Market observers keen to anticipate the Federal Reserve’s next move are wise to follow the trail of verbal breadcrumbs laid down by St. Louis Fed President James Bullard, a policymaker I hold in high regard. When Fed policy seems uncertain or even inert, Dr. Bullard’s public statements have historically been a Rosetta stone for deciphering the Fed’s next move.


February 05, 2015

The Good News Behind GDP's Decline

On Friday, it was announced that U.S. gross domestic product rose an annualized 2.6 percent in the fourth quarter—a marked slowdown from the 5 percent growth we witnessed in the third quarter of 2014. But what the market took to be bad news was actually a sign of economic strength.


January 29, 2015

Good Company, Bad Stock

The U.S. economy is in the best shape out of any economy in the world, but it reminds me of a great business with a bad stock. Despite its underlying economic strength, I believe U.S. equity markets are likely to underperform those of less healthy economies in the long run. When I look around the world at economies that have many more problems than the United States, I see more upside potential for equity valuations and market performance in places like Europe, China and India.


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.

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