Inflation or Why Raise Interest Rates

The minutes of the Fed’s April 26-7 meeting convinced almost everyone that the Fed will raise interest rates at its next meeting in June, but left them wondering why.  Most of the subsequent discussion centered on the labor market and how close the economy is to full employment. There was also some whispering about inflation. Read more […]

Industrial Metals On Pace For Worst Month In 4 Years

While most of the markets have calmed as investors wait for Brexit and the Fed rate decision, industrial metals are crashing. The S&P GSCI Industrial Metals Total Return is down 8.7% month-to date (through May 23, 2016,) and on pace to record its worst month since May 2012, when it lost 9.7%. At this rate, the Read more […]

Rieger Report: Puerto Rico munis see a bounce (last gasp?)

The rocky road that is the Puerto Rico municipal bond market continues.  Last week’s bi-partisan Puerto Rico Restructuring Bill also referred to as the ‘rescue bill’ has created a reason for the bond market to react positively.  There are ramifications to the ‘rescue bill’ however including potentially eroding bondholder (creditor) provisions for repayment.  Meanwhile, bondholders of the Puerto Read more […]

Don’t Blame Tight Supplies for Rising Home Prices

The S&P/Case-Shiller National Home Price Index shows prices of existing single family homes rising 5.3% annually in the last few months, well above the rate of inflation. Recent comments cite the low inventory of homes for sale as a leading factor in higher prices. Housing markets are local and some communities may be seeing house Read more […]

The Fed’s New Normal

Since the demise of Bear Stearns and Lehman Brothers in 2008, Federal Reserve policy has focused on containing market turmoil and disruption.  Current Fed policy built on a massively expanded balance sheet (first chart); the quantitative easing that inflated the balance sheet and the Fed funds rate glued to the zero lower bound (second chart). Read more […]

Growth, Value and Apple

The news that Berkshire Hathaway purchased a billion dollars of Apple stock sparked questions – Will S&P DJI re-classify Apple as a value stock? How are stocks divided between growth and value? Among growth and value, which is ahead year-to-date? Currently S&P DJI classifies Apple as a growth stock. Growth-value classifications are reviewed annually in December Read more […]

How Active Should Active Management Be?

Most active managers fail most of the time, at least if we take their underperformance of passive benchmarks as evidence of failure.  The evidence of this failure is so widespread, and so consistent, that even dyed-in-the-wool active managers no longer deny it. Instead, we often hear that the cause of unsuccessful active management is that it isn’t active Read more […]

Asian Fixed Income: A Quest for High-Quality Chinese Corporate Bonds

In a previous piece, we highlighted the emerging credit risk in Chinese corporates. Nevertheless, a recent survey reinforced the belief in the long-term future of China’s onshore bond market and pointed to an expected increase in exposure to Chinese bonds.[1]  As China’s bond market continues to grow, it may be important for market participants to Read more […]

Rieger Report: Consumer Driven Economy? Uh Oh

The credit default swap (CDS) market is beginning to show spreads widening for consumer discretionary entities which is a bad signal for the economy.  Credit spreads between the consumer discretionary sector and high grade bonds have jumped wider in recent weeks to end last week at 84bps.  The bonds of these entities haven’t reacted too much as they closely match the Read more […]

Rieger Report: Oil State Municipal Bonds Doing Fine

The municipal bond market has been buffeted by pension shortfalls, Puerto Rico, Chicago, Detroit and other news worthy events.  Oil, however, is not yet one of the major forces impacting the municipal bond market.  In February 2016 oil dependent states and their municipal bonds were showing signs of weakening as the price of oil continued its plummet.  Read more […]